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Faros Morning Update - Stronger PMI Data

|Includes: KEF, ProShares Ultra Semiconductors ETF (USD)
Stronger PMI Data  

Asia started off with a bit of fireworks as a USD/JPY ‘mis-hit’ was initially read as a BoJ intervention wave and we saw USD/JPY spike from 80.30 up to 81.40 for a brief moment.  The first reaction was a wave of bank reports that the BoJ ‘appeared to be intervening’ but no one had ‘confirmation’.  As the dust settled a bit and USD/JPY started to come off a Japanese official was on the tapes saying ‘no comment’ on JPY intervention.  A few moments later markets started to talk about an ecommerce platform ‘mis-hit’ in which someone in the market mistakenly paid the wrong big figure into the Asian open.  USD/JPY quickly retraced back to 80.60 and is 80.40 now.


China and India PMI came in better than expected with 54.7 vs. 53.8 in the former and 57.2 vs. 55.1 in the latter.  We also saw similarly strong inflation and export numbers out of Korea as well, and all this news added fuel to a regional equity rally that saw regional bourses up 1.5% to 2%.  USD/CNY fixed at 6.6886 vs. 6.6908.  USD/CNY 1yr was hit on the back of aggressive offshore selling, dropping 100 pips.  A China Commerce Ministry official was on the tapes indicating that ‘currency wars’ are worsening as Asian countries intervene in FX markets. 


USD/HKD backed up a bit after the HKMA was on the tapes saying that a change in the USD peg was not in the cards. 


AUD/USD rallied through 0.9900 on the back of a softer USD, China PMI and a bid in Gold and Silver and we open NY at 0.9885 now after 0.9800 the Asian open.  AUD/NZD tested back to the 50 day at 1.2925 and remains in a bearish pattern for now, a break back through 1.3000 would negate that.


USD/KRW the outperformer overnight on the export and inflation data and we saw USD/KRW trade down to 1116 area with the market talking about ‘smoothing’ around the 1118 area from the BoK.  The 1110/1111 zone important below. 

EUR/USD made a brief move through 1.4000 as AUD/USD broke 0.9900 but the volumes were relatively light and EUR/USD continues to hold a relatively tight 50 pip range for now ahead of QE and US elections. 


GBP/USD better bid on the higher than expected UK construction PMI and we see EUR/GBP looking a little vulnerable on this move through 0.8700.  GBP/USD high was 1.6090 after a brief dip to 1.6000 and we are 1.6060 now. 


We heard of models selling EUR/NOK on the better than expected Norway PMI and we see the pair taken down to 8.1255 early in London before coming back 8.1470 now.  EUR/SEK also traded heavy with a move to 9.2500 overnight from 9.3000 area the close and we hold the 50 day for now at 9.2708. 


EUR/HUF traded down to the 270.00 level which was the short term target on the failure to break the 200 day at 275.55 and the budget approval over the weekend which saw the Hungarians meeting EU targets by 2011 added fuel to the HUF fire.  A US investment bank went out with a short EUR/HUF trade idea on the interest rate outlook.


EUR/PLN continues to hold above its 50 day at 3.9553 on what appears to be a medium term basing pattern.  A pattern which appears in place on the dailies, weeklies and monthlies.


USD/CAD on the bottom end of the recent range with 1.0150 the level to watch below and 1.0350 area the zone on the topside. 


Brazil elected its first ever female President and she has promised to seek Lula’s advice ‘a lot’ and markets now look forward to her first speech in which she will address fiscal austerity.  Holidays tomorrow will keep liquidity low today. 

Good Luck

Disclosure: I do not hold positions in the products mentioned