FOPLADE- Análisis Financiero.

MARKET LOOKS FOR STRONGEST US GROWTH SINCE 2006
- Risk environment more constructive today, though conditions remain tenuous.
- GDP releases from both Canada and the US to provide signpost for markets.
- Raw materials prices to support longer term CAD gains.
- EU deficits & soft CPI depress EUR; month-end flows could provide minor support.

FX Market Update

Global conditions are more supportive of risk trades today as equities in Europe are showing more buoyancy. The USD has lost ground through European trading after being well supported by another session of sharp equity selling in Asia. The USD index is now trading near flat on the day. NZD and CHF are leading, however with only modest gains, while EUR and JPY are lagging. Though global financial markets are looking a bit more stable today, the environment remains rather tenuous with volatility still likely to favour the downside in asset prices as downward momentum in the MSCI World index continued to build through yesterday. The ultimate currency market implication is that USD support is still in effect as the dollar index has pushed to its highest level (intraday) since August. This implies pro-cyclical growth currencies are still under pressure, and though we remain constructive on these currencies from current levels against the greenback, the macro-financial environment suggests some downside risk remains and that it may be beneficial still to wait on the sidelines a while longer for more attractive entry levels into long pro-growth FX trades.
• The release of Q4 GDP in the US provides an opportunity for a sentiment shifting event as expectations are set for the most robust quarterly growth read since Q1 of 2006. While all expect natural economic recovery momentum (inventory restocking, etc.) to help push a very positive read, financial markets, including FX, will be more heartened by evidence of self-sustaining (that is to say, non-policy induced) growth momentum taking hold. The one month rolling correlation between the USD and US short yields has rapidly broken down and moved negative over the past two weeks, so it is difficult to gauge the dollar’s reaction to a much better (or worse) than expected GDP print. The devil is likely to be in the details but given the once again strong negative USD-equity correlation, an equity boost on an upside surprise in growth should push the dollar lower, and vice-versa on a GDP disappointment.
• Federal Reserve Chairman Ben Bernanke was confirmed for a second four-year term by the US Senate yesterday. This removes the market risk of further uncertainty over the fate of US monetary policy stewardship, though this does not mean that the Fed or Chainman Bernanke will be insulated from further criticism regarding the handling of US monetary policy through the crisis and recovery S.T.

Americas

USDCAD (1.0650) • CAD is up 0.2% against the USD and trading in the upper echelon of major currency performers today. Greater stability in crude oil is helping CAD’s case; the one month rolling correlation between CAD and oil has been rebounding sharply and now stands at 0.8. Additionally, CAD is likely receiving better support ahead of the US GDP release as a rebounding US economy, and domestic demand in particular, will benefit Canada directly more than any other of the G-10 countries. Canada will see November monthly GDP data today (the market expects 0.3% m/m), though the impact is likely to be overwhelmed by the US growth data. More relevant to longer term CAD trends (but with nil immediate market impact), raw and industrial product price data will also be released today. Increases in raw materials prices correlates extremely well with Canadian terms of trade, which is of course supportive of CAD strength (see middle graphic). With an expectation of a 1.4% m/m gain in December’s raw materials price index, this long term fundamental dynamic supports our positive CAD view over the course of 2010. In the short term USDCAD is finding resistance just below the 1.07 level and we remain focused on the 1.0750 as a key topside level on USDCAD during this period of USD strength. S.T.

Europe

EURUSD (1.3955) • EUR is trading relatively close to yesterday’s close and has made only one failed attempt to move back above 1.40. • As fears over Greece escalate and general risk aversion continues to plague the market, EUR has had little ability (or reason) to rally. The members of the EU monetary zone are jointly accountable to each other and there is no bail out system in place. Currently there are close to 9 members who have breached the deficit rules, and issues in Greece have increased fears over the other weaker states. A major hurdle will be on February 3rd, when the EU will provide an assessment of the Greek budget. As the chart on page 1 highlights, CDS levels have increased for most of the weaker states as well. Since December 1, CDS levels on Portugal have increased 97bpts, while they have increased 60bpts on Spain and have been relatively flat on Ireland. Until there is more clarity on the path for the weaker member states, upside in EUR will be capped.
• Fundamental data from the Eurozone was mixed. The unemployment rate dropped back to 10%, while CPI came in softer than expected at just 1.0% y/y. Softer inflation speaks in part to excess slack in the economy and will remove some pressure on the ECB to move to a more hawkish stance. This will also cap upside in EUR.
• Today is month end, which could create some rebalancing flows. Underperformance from European equities could create some buying pressure as global managers rebalance their weights.
• Technically, yesterday’s close below 1.40, only added to the already bearish near-term outlook. Though we continue to believe that EUR will close the year above 1.40, for short-term traders all evidence points to further near-term downside. A closing weekly low below 1.40 will be particularly bearish. C.S.
GBPUSD (1.6150) • Sterling continues to trade in its narrowing range and is hovering just below its 50, 100 and 200 day moving averages (1.6239, 1.6288 and 1.6223, respectively). The ability of GBP to hold within its range over the last five months is noteworthy and speaks to its potential outperformance in the near-term. • Supporting the currency today has been the release of positive fundamental data. GfK consumer confidence improved from December and Nationwide house prices increased 1.2% m/m and 8.6% y/y. Yesterday’s comments from S&P that the UK banking system is no longer the most stable globally should come as no surprise. Markets initially used it as an excuse to sell GBP, but focus on this seems to have tamed through the Asian and European sessions. • Today’s pivots suggest that buying pressure will be found at 1.6063, while selling pressure will emerge at 1.6228 - see table. C.S.

Asia / Oceania

USDJPY (90.30) • USDJPY is trading back above 90 but with little conviction. • Finance Minister Kan commented today that “we’ll work together with the BoJ to take a comprehensive and powerful approach to overcome deflation”. There is clear pressure on the BoJ, which over time could begin to weigh on the credibility of the BoJ. The release of the minutes from the BoJ’s emergency meeting in December highlight that it was called due to instability in currency markets. Accordingly, its response (introducing the $110bn loan program) appears to have been at least in part targeted towards creating a reaction from yen. Today, Shirakawa commented that the BoJ will not use monetary policy to influence FX policy. C.S.
USDCNY (6.8268) • There is some market anticipation over what China will post for its PMI in the early Asian session (Sunday evening for North America). Consensus is looking for 56.5. Considering the nervousness of markets over the outlook for global growth there is some risk associated with the release. C.S.

Commodities

Oil (73.90) • Oil prices formed a doji (open and close at the same level) yesterday, which highlights indecision in the market. It is currently trading between its 100 and 200-day moving average (75.49 and 69.97, respectively). C.S.
Suggested Reading
EU Signals Last-Resort Backing for Greece, T. Barber & D. Oakley, FT (January 29, 2010) Bernanke wins new term as Fed chief, Tom Braithwaite, James Politi, FT (January 29, 2009) Darling rules out help for Greece, Chris Giles, FT (January 29, 2009) Vice-premier defends Chinese Policy, David Piling, FT (January 28, 2010) Portugal minister hits at rating agencies, Peter Wise, FT (January 28, 2010)

Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com



*************************
The Plaza Futures Group



EL MUNDO Y LAS FINANZAS.

Fonds pour les investissements et le développement.

FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.

FOPLADE- Análisis Financiero.

GROWTH OUTLOOK PROVES MOST IMPORTANT VARIABLE
-Reassurance on the global growth outlook provides a lift to commodity currencies.
-FOMC inches towards a hawkish stance; but tighter policy is still months away.

-Moody’s warns on Portugal's fiscal situation adding to downside EUR pressure.
-RBNZ leaves rates on hold, signals mid 2010 rate increase.

FX Market Update

With the risk of the FOMC behind us, markets are generally positive today. Equities rallied in Asia and Europe, though remain well off their highs; commodities are stronger and the USD is mixed, with commodity currencies stronger and CHF, EUR and JPY weaker. General risk aversion is abating as the VIX dropped back to 23; however Greek spreads have climbed to a new record, which highlights the ongoing problems for the EUR. • The FOMC turned more positive on the outlook for growth, is concerned with the reluctance of employers to add to payrolls and recent weakness in the housing market and inflation concerns are inching higher. The dissention of Thomas Hoenig highlights the small step towards a more hawkish FOMC bias. However higher interest rates are still many months away and there are many hurdles to get through before we will see tighter policy. Scotia Economics has the first US hike in Q3 and from there the Fed raises rates aggressively, ending Q410 at 1.25% and Q211 at 2.25%. • The reaction to yesterday’s FOMC statement (equities rallying, bond yields dropping, EUR weakening and commodity currencies outperforming) was interesting and hints that in the current environment the market is more concerned with the global growth outlook than the path of interest rates. It also highlights that the USD is no longer a one way trade and an investment strategy that is played through the non-USD crosses should prove a rewarding one in 2010. In this environment we favour the commodity currencies. • The FOMC officially elected Bernanke as the Chair of the FOMC, which means that even if he is not confirmed as the Chair of the Fed he will still lead the rate setting committee for 2010. • President Obama’s State of the Union address held little for short-term currency traders, but the market has reacted positively. His focus was on job creation, the deficit and increasing exports, which would be helped by a weaker USD, however the true test for the medium-term USD trend will come with the ability of the US government to credibly deliver a plan on fiscal restraint. • Jobless claims are expected to drop back to the 4-week moving average of 450k. Considering the relevance of employment in determining the path of US interest rates from here, any surprise (particularly an upside surprise) will drive a currency response. Also today is the release of durable goods orders, expected to increase 2.0% and 0.5% ex transport. However the real test for currency markets will come with the release of tomorrow’s US GDP, where Scotia Economics expect an above consensus release. This would be good for the USD and commodity currencies. C.S.

Americas

USDCAD (1.0573) • Abating risk aversion, stronger commodities and a firmer global growth outlook has given CAD (and commodity currencies) a lift. There is no data from Canada today, which will leave markets driving off of the broader market trends. • The downtrend in USDCAD has been challenged, however as long as there is not a break above 1.0750 (the December high), we will maintain that the outlook for commodity currencies is strong and that CAD can rally even in the midst of a broader USD rally. Essentially what is good for the US economy is also good for Canada. We continue to expect USDCAD to move sustainably to parity by the end of Q210 and that it will close the year at 0.97 (a stronger CAD). The key risk to our view is a substantial change in the outlook for global growth; however for now we believe that most indications still point to an ongoing economic recovery. • Today’s pivots indicate that there would be short-term buying pressure at 1.0535 and selling pressure at 1.0665 (see table on page 2). C.S.

Europe

EURUSD (1.4008) • EUR is off 0.2% against the USD and holding near the bottom of the performance charts. EUR continues to feel heavy pressure and has suffered under the yoke of a 12 session downtrend (with resistance holding at 1.4075) while the longer term downtrend off of the December high of 1.5141 comes in at 1.4365 today. Apart from the ongoing punishment that the currency is taking on behalf of the Greek situation; witness yesterday’s surge in Greek bond yields which took the 10 year up over 50 basis points in one day to the current 6.827% (see graphic), recent German inflation and employment data are hardly supportive. German CPI fell by 0.7% m/m in January while unemployment data (though better than expected) showed that the positive momentum in the country’s jobs market has fizzled in the time since October. Downside technical momentum continues to build as evidenced by EURUSD’s MACD and today’s intraday low which pushed the pair to its weakest level since mid July. The crossover of the 50-day moving average through the 100-day m.a. from above (on January 14th) has spelt doom for EURUSD with the next major level of support coming in the 1.3750 to 1.3825 range. If the Greek problems were not enough, Moody’s has warned on Portugal saying the country needs “a credible plan for deficit reduction” if it is to avoid further downward pressure on its ratings. We cannot find a short term reason to be bullish EUR at the moment given the current political-economic environment and the strong technical downtrend in EURUSD, thus we suggest that near term short positioning continues to hold the best risk reward profile. S.T.
GBPUSD (1.6253) • Sterling remains an outperformer, gaining 0.4% against the greenback today. Yesterday’s comments from Bank of England policymaker Andrew Sentance continues to reverberate in the market and perhaps lead some to believe that the Bank of England may be more hawkishly positioned for rate increases than previously thought. However, we’d note that the Bank has fully expected inflation to show a temporary upside impetus (see the November projection) in late 2009 and early 2010 before fading well back below the 2% level by mid 2010. This suggests that as long as the market/public is fully confident in the Bank’s credibility and expectations are not impacted by the short term blip, the BoE should retain a more dovish bias than perhaps what Mr. Sentance’s comments would suggest, particularly given the still very weak UK economy. Cable is seeing uptrend support off of the January 7th low come in at 1.6120 today, while the 100-day moving average at 1.6295 could pose near term resistance. S.T.

Asia / Oceania

USDJPY (90.27) • The yen is trading down 0.3% against the USD as the weakest performing major. Yesterday’s FOMC statement, which the market interpreted as a hawkish shift, helped US short yields to surge thus boosting the fortunes of USDJPY as the rolling 1-month correlation between the US-Japan rate differential and USDJPY remains at very elevated levels (0.86). The incipient upward momentum in the pair will require short rates in the US to sustain their relative elevation in order to challenge the sharp downtrend in USDJPY off of the January 8th high which holds at 90.80 today. S.T.
NZDUSD (0.7125) • NZD is benefitting from the more constructive macro financial environment today as NZDUSD is trading up 0.7%. Yesterday the RBNZ kept rates on hold at 2.5% as the market expected. The policy communication highlighted the improved global and regional economic environment (in Australia, China and emerging Asia) though concerns were raised over a sustained recovery in its trading partners. Most key, the RBNZ said that if the economy continues to recover in line with their December projections, policy stimulus would begin to be removed around mid-2010. NZDUSD seems to have halted its weakness above 0.70, a level that looks to be providing solid support for the pair. However general USD strength, should it sustain itself, risks another hard test of this price point. S.T.

Suggested Reading

Chinese whispers drive up Greek yields, Tony Barber et al., FT (January 26, 2010) Warning over sell-off in bond market, David Oakley, FT (January 27, 2010) Why we should expect low growth amid debt, Carmen Reinhart, Kenneth Rogoff, FT (January 27, 2010) Mexico’s Central Bank May Buy Dollar Reserves From Market, Jens Gould, Jose Arrioja, BB (January 28, 2010)

Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com



*************************
The Plaza Futures Group


EL MUNDO Y LAS FINANZAS.

Fonds pour les investissements et le développement.

FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.

FOPLADE- Análisis Financiero.

USD VULNERABLE TO TODAY’S FOMC STATEMENT BIAS IMF upgrades global growth view but warns on lack of autonomous private demand.
-USDCAD option market pricing shows heightened concern for further upside.
-Currencies show only minor movements leading into the FOMC decision.
-Sentiment, risk aversion, sovereign risk & low growth profile all weigh against EUR.

FX Market Update

The FX market is defying the generally dim global market environment today as many majors are in the black against the USD despite continuing weakness in global equities. Asian equities fell again, though recording smaller losses, while European bourses are in the red. Commodities are mixed and US yields are nudging higher. This has left CAD, NOK and JPY as underperformers while GBP significantly outperforms.
• We’d expect the FX trading to be muted in the later stages of the North American morning as markets prepare for the FOMC statement. There is only one way that the Fed will be heading with monetary policy at this point, and that is in a tightening direction, which is why the risk bias to the announcement lies in the introduction of a change in verbiage regarding the “extended period of time” that rates are expected to remain low. There is also the risk of further development along the lines of liquidity management which the Fed will be proactive on in order to maintain public confidence in its ability to usher the economy out of the lax monetary environment of the day. However, we do think that ahead of Mr. Bernanke’s confirmation and the current tenuous nature of global markets that we may see downward pressure on the USD out of no major changes in the communication, though any shift towards a more hawkish stance should be constructive for USD price action. Incidentally, it will be interesting to note the reaction of global markets to any Fed announcement of tightening (whenever it comes), particularly as it compares to the reaction to similar Chinese steps. While it is likely that any hawkish Fed bias would prove USD supportive, it is more unlikely that it would have the same widespread impact on global financial markets (equities, commodities and FX) that similar Chinese moves have had, a signal of the ongoing global economic power shift.
• Yesterday the IMF released its World Economic Outlook Update which upgraded world economic growth by 0.8% in 2010 and 0.1% in 2011 (to 3.9% and 4.3% respectively). While positive, the IMF noted that there were still few indications that autonomous private demand (that which is not policy induced) was taking hold in advanced economies and that the rebound would be weak by historical standards. This leads the IMF to consider further policy support as crucial in order to sustain the recovery in the near term, though commitment to eventual concrete fiscal consolidation will be important. It is interesting to note the degree to which major economies are expected to regain lost ground following the “Great Recession”. It is of particular note the gap between the growth profile of emerging economies and advanced economies, but also that the US is expected to do much better than other advanced economies (note the beleaguered Eurozone). Additionally, the IMF foresees inflationary pressures being much more pronounced in EM economies in 2010, which argues for an earlier exit to loose policy relative to developed economies and a greater degree of EM currency strength (particularly in EM Asia). S.T.

Americas

USDCAD (1.0630) • CAD has been volatile, but is now flat against the USD and underperforming the other primary currencies. No data until Friday’s GDP suggests that USDCAD remains at the whim of USD trends and the market’s reaction to the Fed announcement. The options market is showing that the bias of concern is still for further USDCAD upside (see middle graphic) as the premium for USDCAD calls over that of USDCAD puts holds at its highest level since mid December of 2008. However, such extreme option market positioning can also signal that a rapid change in market sentiment is imminent. S.T.

Europe

EURUSD (1.4075) • EUR briefly touched down to a new six month low during today’s European session. Sentiment against EUR continues to be bearish. Today’s focus will be the FOMC but the other near-term concerns remain risk aversion, sovereign issues, a lower relative growth profile (see top chart on page 1) and softer inflation data, which are all weighing on EUR. These are real issues for the Eurozone and we expect them to limit EUR gains going forward, with our near-term bias for further EUR downside. However, we do not think there is sufficient reasons for the USD to sustain a long-term rally against EUR and accordingly hold on to the belief that in the medium-term the USD might not weaken at the pace we previously thought, but that all in all the USD will remain at weak levels.
• In the last 12-hours there have been two developments that are highlighting near-term weights against the EUR. In a report issued today, the European Commission said it will propose stepping up the procedure to have Greece take action to correct its deficit. Secondly, regional CPI data from Germany has been soft, with most reports showing a month-over-month drop of over 0.6%. This should provide some leeway to the ECB, but still leaves the council with a difficult mandate, as they attempt to implement monetary policy across such diverse economies.
• Technically, EUR has not reached oversold levels (the RSI is only 31) and most studies and patterns continue to be in sell territory (including moving averages, candlestick patterns and the daily and weekly MACD). Accordingly, for very short term traders we argue that short positions should prove rewarding. Support from here lies at 1.40 and a break below could increase selling pressure. Significant resistance lies at the 200-day moving average of 1.4325. • Today’s pivots indicate that there would be short-term buying pressure at 1.4007 and selling pressure at 1.4164 (see table). C.S.
GBPUSD (1.6210) • Sterling is stronger today, but is unable to break out of its recent narrowing pattern. The 50, 100 and 200 day moving averages are all converging (1.6257, 1.6299 and 1.6209, respectively). This pattern will need to be broken in the near-term and it is this break that will foreshadow the move from current levels. Today’s pivots indicate that there would be short-term buying pressure at 1.6124 and selling pressure at 1.6299 (see table). • The BoE’s Sentance commented today that “while the combination of above-target services inflation and rising import prices persists, it will be difficult for the MPC to keep inflation on target”. Rising inflation will continue to be a significant hurdle for the MPC. C.S.

Asia / Oceania

AUDUSD (0.9000) • Australian Q4 inflation came in above expectations at 0.5%m/m and 2.1% y/y. This offsets some of the dovishness from the soft PPI release earlier this week. The RBA meets on February 1st and is expected to increase interest rates by 0.25% to 4.0%. • AUD has now broken through its 50 and 100-day moving averages (0.9088 and 0.9041, respectively) and looks vulnerable to further near-term downside. However, we continue to maintain that in a period of improving global growth AUD should appreciate. C.S.
USDCNY (6.8268) • The PBoC’s Zhu commented today that a stable renminbi is good for China and good for the world. • China’s leading indicators dropped back from the October high to 104.80. This is still well above the average of the last 20 years and provides further reassurance that the outlook for China remains strong. C.S.
Suggested Reading
Obama faces backlash on spending freeze, Krishna Guha, Edward Luce, FT (January 26, 2010) Geithner braced for grilling on AIG, Tom Braithwaite, FT (January 26, 2010) Senate Action Shows Difficulty of Cutting U.S. Budget Deficits, Brian Faler, BB (January 27, 2010) Bullwhip Hits Firms as Growth Snaps Back, Timothy Aeppel, WSJ (January 27, 2010) A Bleak Budget, But Slightly Better, John McKinnon, WSJ (January 27, 2010) For Inflation Tips, Look to ‘5yr5yr Breakeven’, Tom Lauricella, WSJ (January 27, 2010) Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com



*************************
The Plaza Futures Group



EL MUNDO Y LAS FINANZAS.

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FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.

FOPLADE- Francia estudia prohibir el 'burka' solo en los servicios públicos
Una comisión parlamentaria pide la prohibición del velo integral en las administraciones, los hospitales, las escuelas y el transporte público

ANA TERUEL - París - 26/01/2010


Tras seis meses de debate y más de 200 audiciones, la misión parlamentaria encargada de examinar la posibilidad de regular el uso del velo integral -esencialmente el niqab y el burka- en Francia ha entregado hoy sus conclusiones. A falta de un consenso sobre su "prohibición total", que incluiría su uso en la calle, los diputados de la comisión recomiendan que la prenda no se tolere en los servicios públicos, esencialmente las administraciones, los hospitales, las escuelas y el transporte público.

La comisión opta por el voto de una resolución -no vinculante- de condena de la prenda por ser considerada "contraria a los valores de la República", acompañada de una disposición que prohíba "disimular el rostro" en los servicios públicos. De aprobarse, las cerca de 1.900 mujeres que visten el velo integral en el país, según el Gobierno, podrían así ver rechazada la entrada al metro, a una oficina administrativa o a un centro médico. El informe incluso contempla la posibilidad de que dicha prohibición se extienda por motivos de seguridad a los espacios privados abiertos al público, como son los comercios o los bancos, y que sea motivo de rechazo de la obtención de la nacionalidad francesa.

El informe se hace eco también de las dificultades jurídicas que supondría ampliar la regulación a todo el espacio público, es decir, también a la vía pública. Su "anulación por parte del Consejo Constitucional [que ya obligó a modificar la ley antidescargas y censuró la tasa sobre el carbono] o una condena de Francia por parte de la Corte Europea de Derechos Humanos sonaría como una derrota para la República", advierten los parlamentarios.

La misión parlamentaria rebaja así las ambiciones del presidente del partido gubernamental en la Asamblea Nacional, Jean-François Copé, que pese a todo ha reiterado que en los próximos días presentará una propuesta de ley para la prohibición total, que prevé castigar el uso del velo integral con una multa de 750 euros. En cualquier caso, la propuesta no se debatiría hasta la primavera, una vez se hayan celebrado las elecciones regionales de finales de marzo.

El propio presidente, Nicolas Sarkozy, que ha anunciado públicamente su rechazo al burka por considerarlo un "signo de esclavitud", ha pedido que cualquier acción parlamentaria no se realice hasta pasados los comicios. El mandatario desea lograr un consenso político lo más amplio posible, una tarea que parece de momento difícil. De hecho, el informe de la comisión ha sido aprobado por la mínima (con un voto de diferencia) y boicoteado por los parlamentarios socialistas.

Mientras tanto, el debate ya ha provocado graves tensiones. La semana pasada, el imán Hassem Chalghoumi salió a la palestra para abogar públicamente por la prohibición del velo integral. Hoy ha anunciado que su posicionamiento le había valido amenazas de muerte por parte de un grupo de islamistas radicales que le visitaron en su mezquita de Drancy, en las afueras de París. "Quieren que me calle", ha explicado a Radio Oriente. "Mi voz es la de la mayoría, trabajo por el futuro de nuestros hijos y de la República, para que el Islam encuentre su lugar", ha añadido.


EL MUNDO Y LAS FINANZAS.

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FOPLADE- Análisis Financiero.

GLOBAL GROWTH CONCERNS DRIVE RISK AVERSION
• Concerns over global growth weigh on markets and boost the USD.
• USDCAD continues to move higher as USD strength is ongoing.
• UK GDP growth disappoints at 0.1% q/q, but marks the end of record recession.
• Greece issues debt in market but at a premium to ensure success.
• Japan leaves monetary policy unchanged, S&P lowers country’s credit rating outlook.

FX Market Update

The USD is on firmer footing as concerns over global growth continue to have investors favouring risk averse positions. A warning on Japan’s rating, ongoing problems in Dubai, lower than expected Q4 UK GDP, risks over Portugal’s budget and confusion over China’s tightening stance have markets fairly bearish as we move into the North American open. Also giving the USD a boost is Obama’s proposal to freeze domestic spending for 3-years.
• As of yesterday the market was pricing in a 40% chance of a 25bpts Fed funds increase at the August 10 meeting and a 72% chance at the September 21st meeting. Just two weeks ago there was a 72% chance that the first hike would come at the August meeting. Accordingly, the market has pushed out the expectations for higher interest rates. However, over these same two weeks the USD has gained ground over every primary currency, with most currencies losing 3% (the one exception being Japan). We have reiterated that monetary policy and interest rates will be a significant driver of the USD this year, but over the last two weeks this has not held true. The main influences over the last few weeks have been: 1) The impact of sovereign risk on the EUR; 2) Concerns over the outlook for global growth if China continues to tighten monetary policy; 3) A changing political sphere in Washington; and 4) A shift in sentiment to a far less USD bearish position. Once these influences begin to stabilize, we think there will be a reversion to focusing on relative monetary policy. We expect tomorrow’s FOMC meeting to provide a fairly balanced statement, with the reference to ‘extended period’ in place.
• Today, we will receive an update on US housing prices through CaseShiller’s home price index, which is expected to increase +0.3% m/m. Consumer confidence is expected to rise to 53.5, but as the top chart highlights this is still historically low. C.S.

Americas

USDCAD (1.0643) • CAD is a mid performer today, having lost 0.6% against the USD, but outperforming most of the other commodity currencies. • The near-term drivers for USDCAD are mixed. As we noted above relative interest rates have not been a solid near-term driver of currencies. This is also true with USDCAD. Since the beginning of December the Canadian 2-year bond yield has been moving higher, gaining 20bpts over the last six weeks. The US 2-year bond yield has gained an advantage over the US 2-year but USDCAD has moved higher. Sentiment towards CAD had held in quite well, in light of recent price activity we suspect that this has waned somewhat. However working in favour of a higher USDCAD (weaker CAD) has been concerns over the outlook for global growth. This has been reflected through lower commodity prices, copper has held up well, however oil has dropped 11% from its December highs. Concerns over global growth and the impact of tighter Chinese monetary policy have also been evident in weakening equity prices. As the middle chart highlights, USDCAD and equities are still very much in sync. Accordingly for USDCAD to revert back to its medium term downward trend we will need to see some evidence that expectations for global growth have not been too bullish. As we look out to mid-year, we continue to expect CAD to outperform, however we are cautious in the near-term. • There is no domestic data in Canada until Friday, which will leave USDCAD trading off or risk aversion, the outlook for global growth and the broader USD move. Support lies at the 100-day moving average of 1.0565, while resistance comes in at the December high of 1.0747. C.S.

Europe

EURUSD (1.4074) • EUR is off 0.6% against the USD, though the currency is an outperformer today against a good number of the majors. EURUSD sold off through Asian trading as equities came under pressure, but stability was found above 1.4070 and EURUSD gained on the back of better than expected German IFO data which saw business confidence in Germany rise to its highest level in 18 months in January. The Greek issue that continues to plague EUR sentiment saw a bit of development today (we are hesitant to call it good news however) as Greece sold €8bn in 5-year bonds in the country's first debt issuance since being downgraded. Though such a sale looks positive on the surface, the government added a premium of 0.3% to comparable bonds already trading in the market in order to ensure a smooth issuance. The fact that this was required (the bonds initially yielded 6.2%) shows that the Greek issue is still nowhere from being resolved and thus markets will continue to require a risk premium for Greek assets. EURUSD topside resistance looks likely to be heavy at 1.42 while the downside of Friday's 1.4067 low (a level being threatened as we go to print) shows support. S.T.
GBPUSD (1.6117) • Sterling is one of the weaker performing majors today, off 0.8% against the USD though GBPUSD remains above its two week low (achieved on Friday) of 1.6078. A weaker than expected Q4 GDP print is responsible for the selling as the market looked for a gain of 0.4% q/q but received only 0.1% q/q. Services provided a drag relative to where expectations were set as the market looked for a greater than reported 0.1% expansion in that sector of the economy. This marks an end to the six quarter UK recession, though the degree to which the UK’s economy limped out the record long recession means that GBP sees no strong justification to rally out of its 1.5-month range that has been capped below 1.65. This also hits at the outlook for the Bank of England as the market has pushed short yields in the UK lower, with the two year interest rate swap having fallen past 2009 lows (see graphic). S.T.

Asia / Oceania

USDJPY (89.68) • The yen is being boosted by risk aversion and is the only currency to be recording gains against the USD with a very strong 0.7% increase. The Bank of Japan left its monetary policy unchanged, perhaps against the bias in the market that the BoJ would undertake additional policy steps to battle deflationary forces (helping support JPY today). The yen seems to have shaken off Standard and Poor’s lowering of the outlook on Japan’s sovereign credit rating on a slower than expected pace of fiscal consolidation. S&P cited the risk that the country could see its AA rating cut if economic data remained weak and measures to help support growth are not forthcoming. USDJPY has broken below 90 in the most convincing fashion since December and is now trading at a one month low. S.T.
USDCNY (6.8268) • It is being reported that Chinese banks have begun to restrict new loans on direction from financial regulators in the country. Asian equities sold off overnight with Chinese shares suffering some of the worst selling (Shanghai was down 2.4% while Shenzhen was off 3.1%). The global financial market environment continues to show concern for financial/monetary conditions in China, a factor which could continue to weigh on global bourses and commodities. S.T.

Commodities

Oil ($74.57) • Crude is down today, though still showing stability above support at $74. The market will await API crude inventory data this afternoon after last week’s 1802K decrease. Weekly inventories have on average fallen by around 1000K since the end of October. S.T.

Suggested Reading

Investors flock to Greek bond issue, Tony Barber, David Oakley, FT (January 25, 2010)
UK economy emerges from recession, Daniel Pimlott, FT (January 26, 2010)
Beijing acts to curtail bank lending binge, Jamil Anderlini, FT (January 26, 2010)
Budget Freeze is Proposed, Laura Meckler & Jonathan Weisman, WSJ (January 26, 2010)
Bernanke Gains Backing in Senate, Sudeep Reddy & Greg Hitt, WSJ (January 26, 2010)
Default-Bet Anomaly: Firms Over Countries, Gregory Zuckerman, WSJ (January 26, 2010)

Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com



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The Plaza Futures Group



EL MUNDO Y LAS FINANZAS.

Fonds pour les investissements et le développement.

FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.

FOPLADE- Análisis Financiero.


FOCUS TURNS TO EXPECTATIONS FOR FOMC & GDP • The focus turns to the FOMC - interest rates should dominate USD trading from here.
-Rumours circle that Davos bankers will lobby against Obama reforms.
-Expectation that Greek bond issue will be well received gives a boost to EUR.
-CFTC data - sentiment grows more bearish against EUR, stays bullish CAD & AUD.

FX Market Update

• The USD is on weaker footing as equities and commodities recover lost ground. Rumours that Davos bankers will lobby against Obama’s bank reforms combined with an expected solid response to the Greek bond issue and comments from PIMCO that the end of the USD bear market is nearing have given markets a lift. Last week was a difficult one with risk aversion coming back into the market and the USD benefitting from political and fundamental developments. Several charts are hinting at a period of stabilization on the horizon, which implies that the recent USD move might be nearing completion.
• The focus this week has turned to the FOMC decision on Wednesday. Any hint that the FOMC is on the verge of turning more hawkish will extend the near-term USD bid tone further. However, a dovish tone could stabilize the EUR and other currencies. The combination of inflation expectations remaining contained, December nonfarm payrolls dropping back to a loss of-85k, jobless claims moving higher and ongoing volatility in the pattern of the recovery should limit any hawkishness in the Fed’s tone. However, the ongoing general improvements in the economy could provide for a more balanced statement. At some point the reference to “extended period” will have to be removed, however we are not convinced it will occur at this meeting. The other focus will be any change or guidance on the MBS buying program.
• Also this week will be the release of US Q4 GDP, with consensus looking for a gain of 4.6% q/q. Scotia Economics is of the view that the risks is to the upside due to the impact of inventories. Should GDP surprise higher it would lend support to the USD. • Today the US will release existing home sales, but as the chart on page 1 highlights, it is expected to weaken notably due to the significant recent drop in pending home sales.
• The Senate has provided some reassurance this weekend that Chairman Bernanke will be confirmed. If he is not confirmed by January 31st, Vice-Chair Kohn will become acting Fed Chair until another nominee is confirmed. However, the FOMC will vote for their chair at this week’s meeting, accordingly as long as they vote for Bernanke, which it is widely expected they will, Bernanke will remain the Chair of the FOMC even if he is no longer the Fed Chair.
• The weekly CFTC Commitment of Trader’s data which shows the speculative positioning in the FX futures market confirmed the trends we have been seeing in the market. Sentiment against the EUR continued to grow, with the net short EUR position now standing at $4.5bn. However, sentiment towards the commodity currencies continued to be bullish, with the AUD net long increasing to $5.8bn and the CAD net long staying essentially unchanged from the previous week at $4.5bn. To put this into context, the largest net long in CAD recorded in the last six years was $8.3bn in the fall of 2007. Accordingly, though the net long CAD position is large and leaves the currency vulnerable, it is not at the extreme level we saw back when CAD reached parity in 2007. C.S.

Americas

USDCAD (1.0550) • CAD is stronger today, but is underperforming the rest of the commodity block. We continue to believe that CAD should outperform most of the majors, even during a bout of USD strength, particularly if the strength is driven off of fundamentals and not risk aversion. Fundamental positives for the USD are also generally good for the Canadian economy and hence CAD. It is also interesting to note that since the recent low in the USD was hit on November 26th, CAD and MXN have outperformed significantly. This speaks to markets looking at trading CAD, MXN and USD as a NAFTA block. This is an old theme that we haven’t seen in a few years, but it is possible we will return to this in the midst of an economic recovery. C.S.
Europe
EURUSD (1.4180) • EUR is off of last week’s lows (1.4029) and has gained 0.3% against the USD today. • The only data released today has been German GfK consumer confidence, which dropped to 3.2 - the lowest reading since last July, but above the 3.1 consensus estimate. • Technically the pattern formed last week is somewhat encouraging for bulls, however it would take a break and close above 1.4288 (last Wednesday’s open) for any bullish signals to really be triggered. • Greek 5yr CDS spreads remain elevated at 340 and the spread of Greek 10yr bonds over bunds is also close to its highs at 296bpts. As the charts on page 1 highlight, these spreads continue to be key near-term drivers of EUR. This morning’s jump higher in EUR was the result of the expectation that the Greek 5yr issue will be well received. This highlights the sensitivity of EUR to developments in Greece. At some point the bad news on sovereign risk will be priced in and EUR will be provided with the opportunity to stabilize. We think we are approaching this period. C.S.
GBPUSD (1.6150) • Sterling has climbed off of Friday’s lows, but remains below its 100 and 200-moving averages (1.6305 and 1.6192, respectively). There was no data released from the UK today. The focus is on comments from Chancellor Darling in the Sunday Times where he said that new US bank proposals would not have prevented the crisis and that there were serious shortcomings in Obama’s plan. Markets have welcomed this commentary. However, offsetting some of the positive developments today is news that the UK has raised the terrorism threat level substantial to severe - meaning an attack is highly likely. C.S.

Asia / Oceania

USDJPY (90.25) • USDJPY is trading within Friday’s range, has recovered from earlier losses and is moving either side of its 100-day moving average of 90.32. • After the North American close the BoJ will release its interest rate decision. The Bank is widely expected to leave rates on hold at 0.1%, but any developments on emergency loan programs and any subsequent commentary will be important. With ongoing yen strength, rhetoric from the BoJ will be scrutinized. C.S.
AUDUSD (0.9050) • AUD has firmed today, gaining 0.5% against the USD and outperforming most of the primary currencies. • PPI came in well below expectations, dropping -0.4% q/q and -1.5% y/y. The release was a good example of how a strong currency dampens inflation as the cost of imported goods dropped significantly. • On a medium term basis, we think the outlook for AUD remains strong. As long as the global recovery story remains in tact, the prospects for Australia and by default AUD are solid. We hold a 0.97 year-end target for AUD. C.S.

Commodities

Oil (74.71) • Oil has moved off of Friday’s lows, but still looks vulnerable. The 30-day rolling correlation between CAD and oil is at 0.78. Accordingly, developments in the oil price continue to be an important near-term driver of CAD. C.S.
Gold (1103.00) • The gold chart is interesting. Friday’s pattern formed a doji (open and close at the same level), which indicates indecision in the market. This morning’s move higher is positive and a close above Thursday’s open of $1,111.40 would be particularly encouraging for bulls. C.S.

Suggested Reading

National Economies Hinge on Shaky Withdrawal from Stimulus, Marcus Walker, WSJ (January 25, 2010) The Profit and Pain of Stimulus, Tom Lauricella, WSJ (January 25, 2010) Direct Bidders Get Treasury Sale Focus, Deborah Lynn Blumberg, WSJ (January 25, 2010) Alistair Darling Warns Barack Obama Over Banking Reforms, David Smith and Iain Dey, Times Online (January 25, 2010) Davos Bankers to Lobby Against Obama Reforms, Katie Allen, UK Guardian (January 25, 2010) Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com



*************************
The Plaza Futures Group


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FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.

FOPLADE- Réunion d'urgence à Montréal pour sauver Haïti
S. K. (avec AFP)
25/01/2010 | Mise à jour : 15:15 |

Wismond Exantus, 25 ans, a été retrouvé samedi, quelques heures après la fin officielle des recherches décrétée par le gouvernement haïtien.


Lundi, les «pays amis» sont réunis au Canada pour faire le bilan de la situation et passer à l'essentiel : la reconstruction de la région sinistrée.

Une vie de plus a été sauvée en Haïti : un jeune homme de 25 ans a été dégagé samedi des ruines de Port-au-Prince, quelques heures après la fin officielle des recherches décrétée par le gouvernement haïtien.

Sous les acclamations des badauds, Wismond Exantus a été extrait sur une civière d'un étroit tunnel creusé dans les débris et évacué en ambulance lors d'une opération à laquelle participaient des secouristes français. «Je me sens bien», a indiqué le miraculé sur son lit d'hôpital, après être resté onze jours prisonnier des gravats. Coincé dans les ruines d'une épicerie, dans une petite poche où il pouvait légèrement bouger et taper sur des objets pour tenter d'attirer l'attention, il a survécu, a-t-il raconté, en buvant du Coca-Cola et en grignotant «quelques petites choses».

Réunion des donateurs à Montréal

Dimanche, les Haïtiens se sont rassemblés dans les lieux de culte du pays encore debout pour se recueillir et pleurer les 150 000 morts du séisme du 12 janvier, selon le décompte provisoire du gouvernement. Au total, 133 personnes ont été dégagées vivantes des ruines par les équipes de secours internationales. Officiellement, la phase de ­recherches est terminée depuis vendredi soir.

Les équipes légères de recherches et de secours ont commencé à plier bagage, mais celles disposant de matériels lourds de levage et forage sont désormais employées à déblayer les décombres. Selon le ministère haïtien de l'Intérieur, la moitié des maisons de Port-au-Prince, Jacmel et Léogâne, les trois villes les plus affectées, sont détruites. On compte plus de 194 000 blessés et un million de sans-abri.

Lundi, les «pays amis» d'Haïti, dont les États-Unis, la France, l'Espagne, le Brésil, les Nations unies et l'Organisation des États américains tiennent à Montréal une réunion pour faire le bilan de la situation et coordonner l'aide puis passer à l'essentiel, la reconstruction du pays avec la préparation d'une conférence, prévue en mars. Les besoins sont immenses : lors d'une première réunion internationale sur la reconstruction de l'île, le président de la République dominicaine voisine, Leonel Fernandez, avait chiffré à 10 milliards de dollars le montant de l'aide nécessaire pour rebâtir le pays. «On ne va pas reconstruire Haïti à l'identique, a toutefois estimé une source diplomatique française. Il faut traiter les problèmes structurels. Ce ne sera pas un exercice seulement financier, on parlera de gouvernance et de coopération régionale.»

À Port-au-Prince, les habitants enterraient dimanche leurs morts, alors qu'un semblant de retour à la normale était visible dans certains quartiers. Aux abords des marchés publics et sur les trottoirs des hauts quartiers de la capitale, de nombreux petits commerçants avaient étalé leurs marchandises, provoquant d'importants embouteillages. Du côté des opérations humanitaires, la distribution de nourriture, d'eau, de soins médicaux et d'abris se poursuit. Samedi, les troupes des ­Nations unies ont toutefois dû procéder à des tirs d'avertissement et lancer des gaz lacrymogènes, après qu'une distribution eut dégénéré.

Près de 610 000 personnes sont hébergées dans 500 camps de fortune et plus d'une trentaine d'hôpitaux de campagne fonctionnent. L'Organisation internationale pour les migrations (OIM) a souligné qu'il faudrait 100 000 tentes supplémentaires. Un bâtiment de la ­Marine française, le Sirocco, était attendu dimanche au large de Port-au-Prince, avec 2 000 tonnes de matériel. Le navire, un transport de chalands de débarquement, apporte des moyens de déblaiement, des pelles mécaniques, 200 palettes de fret humanitaire, ainsi que quatre hélicop­tères de l'armée de terre française.


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FOPLADE- Nigeria: 150 corps retrouvés dans des puits
Lefigaro.fr, avec AFP
23/01/2010 | Mise à jour : 16:28 |

Au moins 150 cadavres ont été retrouvés dans des puits du village de Kuru Karama, près de Jos (centre du Nigeria), théâtre cette semaine de plusieurs jours d'affrontements entre chrétiens et musulmans.

"Nous avons retrouvé jusqu'à présent 150 corps dans des puits", a déclaré le chef du village, Umar Baza. "Selon les récits de survivants, des personnes qui avaient fui les attaques ont été tuées dans des embuscades", a-t-il ajouté. "Nous avons une liste des personnes déplacées de ce village qui se sont réfugiées dans trois camps et (...) il y a toujours 60 personnes portées disparues", a expliqué le responsable, joint au téléphone depuis Kano.

"Nous pensons qu'il y a d'autres corps dans les puits, a expliqué Umar Baza, mais le niveau de décomposition rend difficile les opérations d'extraction. Nous avons donc décidé de recouvrir les puits avec du sable".

18 000 déplacés (Croix-Rouge)

Les combats avaient éclaté dimanche dernier à Jos, apparemment à cause d'un différend foncier entre deux propriétaires, l'un chrétien l'autre musulman, et s'étaient vite étendus aux communes voisines. Les autorités fédérales ont envoyé l'armée en masse dès mardi à Jos mais pas dans les environs de la ville.

Aucun bilan officiel des violences de la semaine n'a encore été publié mais, selon le Comité international de la Croix-Rouge (CICR), au moins 160 personnes ont été tuées et 18.000 déplacées.

Human Rights Watch (HWR) a demandé samedi au vice-président nigérian, Goodluck Jonathan, d'ordonner immédiatement une enquête. Dans un communiqué publié à Lagos, l'organisation rapporte des déclarations de témoins selon lesquelles des groupes d'hommes armés -- présumés être chrétiens -- ont attaqué une population majoritairement musulmane à Kuru Karama mardi matin. "Après avoir encerclé la ville, ils ont poursuivi et attaqué des habitants musulmans dont certains avaient cherché refuge dans des maisons et dans des mosquées locales, tuant beaucoup de personnes qui tentaient de s'enfuir", y compris en les brûlant, selon le communiqué.

Des renforts militaires envoyés sur place

Dans une allocution télévisée jeudi soir, le vice-président a promis que le gouvernement poursuivrait les auteurs de ces violences. "Ceux qui, par leurs actions ou leurs déclarations, ont encouragé ou attisé les braises de cette crise, seront arrêtés et rapidement traduits en justice", a-t-il déclaré.

Des renforts militaires ont été envoyés dès mardi soir dans la région. Pour éviter un cycle de représailles, la sécurité a été renforcée dans plusieurs villes du nord (Kano, Kaduna, Maiduguri), une région à majorité musulmane, dominée par l'ethnie haoussa. La précédente flambée de violence à Jos, fin 2008, avait fait entre 300 et 700 morts.



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FOPLADE- Análisis Financiero.




VIX JUMPS HIGHER HIGHLIGHTING MARKET NERVOUSNESS Canadian retail sales is the only fundamental release expected.
-Market focus will shift to FOMC statement to be released on Wednesday.
-Rumours circle over the potential for the PBoC to rise interest rates on the weekend.
-As the VIX moves higher, carry trades come under pressure.

FX Market Update

Markets are changing rapidly as we go to print; however some currencies have managed to put in gains against the USD in the last 12-hours, with outperformance from AUD and EUR; underperformance by GBP and CAD essentially flat. Markets are nervous as the VIX jumped up to a one-month high and G7 currency vol has begun to move off its recent lows.
• This proved an important week and one that has had a significant impact on FX markets. The main developments were generally USD positive as they either increased the safe-haven bid of the USD or drove risk aversion. Accordingly the markets are left evaluating whether recent developments - outlined below - have already been priced into markets or whether there is more USD strength on the horizon. The key concerns are: 1) Increasing fears that China will soon tighten policy in an effort to cool the economy -- we still maintain that developments to date will actually prove a medium-term positive as they will decrease the risk that the market is faced with a surging Chinese asset bubble followed by the popping. However for now the market looks at tighter policy in China as negative for global growth and therefore commodity currencies. 2) Issues surrounding sovereign risk, the impact on the greater Eurozone of its weaker countries and how the ECB will implement policy over such a diverse set of countries. This has left sentiment towards the EUR at remarkably negative levels. 3) President’s Obama proposal on the size and scope of financial institutions. The release, which still leaves a lot of questions, immediately conjured up thoughts of position liquidation, worries over USD outflows and brought two-way risk back into the market. 4) The Republican win in Massachusetts, which has altered support for President’s Obama’s health reforms and will most likely have a positive impact on the US deficit. Accordingly, as we close this week we think it was one with important developments that could have ongoing near-term effects on markets.
• However, we also note that next week the market’s attention will turn to the FOMC meeting to be held on Wednesday January 27th. There is little debate that the FOMC will leave interest rates on hold; however focus will be on any changes to tone, the “extended period” language, or the emergency programs. • The DXY (USD index) hit its recent low on November 26th (74.17) and has since climbed 5.3%. Currency returns since then are noteworthy - see top chart - and highlight how the market has interpreted recent events. CAD has outperformed (gaining 1.0%), speaking to our view that CAD can still outperform in a period of USD strength. AUD has lost a mere 1.0% as the strong fundamentals have supported it. GBP has been a mid-performer, losing 2.2% as it has been supported by recent economic data releases. EUR has underperformed miserably losing 6.0%. C.S.

Americas

USDCAD (1.0500) • USDCAD has had a volatile early session and has retraced earlier losses to enter the North American session close to yesterday’s lows. So far it has not been able to break above the 100-day MA of 1.0568. Today’s close will be important for near-term traders, anything above 1.0514 would be near-term bullish. Outside of the very near-term, we continue to believe that USDCAD will move lower in the months ahead. • In yesterday’s MPR, the BoC reiterated much of what Governor Carney said on Tuesday. Including that the strength of CAD has dampened the outlook for growth and is a key risk to inflation going forward. The Bank has made slight adjustments to its growth outlook, but they continue to see final domestic demand playing an important role as net exports subtract from growth in 2010. C.S.

Europe

EURUSD (1.4130) • EUR has recovered from yesterday’s losses and has gained 0.3% against the USD as we move into the North American open. This is a positive sign; however there is a long way to climb before the technical outlook will turn bullish. Sentiment remains bearish against the EUR. Today’s release of CFTC speculative positioning data could prove interesting as it will shed some insight into whether EUR shorts are still building positions. • Industrial new orders came in stronger than expected, rising 1.6%m/m and dropping just -1.5%y/y. Next week the Eurozone will release important fundamental data, including unemployment, and CPI. C.S.
GBPUSD (1.6165) • GBP is essentially flat against the USD and has lost ground against the other primary currencies as we move into the North American open. • UK retail sales disappointed, coming in at just 0.3% m/m (cons. 1.1%) and 2.1% y/y. However, generally data releases this week have been positive for the GBP as inflation was higher than expected, unemployment dropped to 7.8% and public finances (which are still bleak) at least came in above expectations. Accordingly, netting out the noise, developments for GBP were more positive than for most other majors this week. We hold a 1.67 year-end forecast for GBP. C.S.
EURCHF (1.4705) • EURCHF has dropped noticeably away from the SNB’s previous line in the sand of 1.50, with very little reaction. Today it is recovering some of yesterday’s losses, but it remains well below levels we saw in early December. C.S.

Asia / Oceania

USDJPY (90.20) • USDJPY has broken through and is now flirting either side of both its 50-day moving average and 100-day (90.14 and 90.35, respectively). Also important was that today’s brief dip below 90 in USDJPY, was the first time we have seen this type of yen strength since Finance Minister’s Kan has been in power. Today he was quoted as saying that the government should not ask the BOJ to take specific policies but they are working together to support the economy. • Technically, the three-year USDJPY downtrend remains in tact and should continue to put downward pressure on USDJPY. A significant break below 90 will be important from both a fundamental and technical perspective. • As the VIX moves higher the carry trade could be pressured, which would cause some buying back of yen positions. • The BoJ will release its interest rate decision in the early part of the Asian session on Tuesday January 26th. C.S.
USDCNY (6.8269) • Rumours are circling widely in markets that the PBoC will raise interest rates this weekend. China has not tightened policy since December 2007. Though tighter policy will help to slow growth and avoid an acceleration of an asset bubble, it is difficult for China to have real control over its monetary policy while they peg their currency to the USD. • We continue to expect Chinese authorities to allow some measured appreciation of the yuan in the coming months. C.S.

Commodities

Oil (76.00) • Oil is testing its 100-day moving average of 75.22, a break below would be a technically bearish signal. The 30-day rolling correlation between CAD and oil is at 0.75. Further downward pressure on oil will most likely come in tandem with upside pressure on USDCAD. C.S.
Gold (1094.25) • Gold has had two difficult sessions, losing 3% and dropping from 1138.20 to 1094.25. The metal is currently testing its 100-day moving average of 1087.13, a break below would be bullish and most likely come in tandem with further USD gains. C.S.

Suggested Reading

The Great Piggy Bank of China, Samuel Brittan, FT (January 22, 2010) A Fearful Europe Trails Petulantly in US Wake, Philip Stephens, FT (January 22, 2010) New Bank Rules Sink Stocks, Jonathan Weisman, D. Paletta & R. Sidel, WSJ (January 22, 2010) Fed’s Bernanke Faces Tighter Vote in Senate, Sudeep Reddy & Damian Paletta, WSJ (January 22, 2010) China Targets Inflation as Economy Runs Hot, Terence Poon & Andrew Batson, WSJ (January 22, 2010) Investors Fret Over Obama’s Bank Assault, Jamie Chisholm, FT (January 22, 2010) Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com



*************************
The Plaza Futures Group



EL MUNDO Y LAS FINANZAS.

Fonds pour les investissements et le développement.

FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.

FOPLADE- España propone una "respuesta conjunta" de la UE para los huérfanos haitianos
Unicef denuncia el secuestro de al menos 15 niños. - Guantánamo se prepara para recibir a damnificados

ELPAÍS.com / EFE - Washington - 22/01/2010


La ONG Unicef ha denunciado hoy el secuestro de al menos 15 niños no acompañados en hospitales de Haití. "Lamentablemente hemos constatado el rapto de 15 niños en diferentes hospitales de Haití y sospechamos que han sido secuestrados por redes de trata a través de Santo Domingo", ha afirmado en rueda de prensa Jean Claude Legrand, asesor de protección de la infancia de Unicef. Tras el seísmo, hospitales y centros de acogida se han visto desbordados por el alto número de niños huérfanos.


Ante esta denuncia y la respuesta masiva que ha provocado la llamada a la adopción, España propondrá a los países europeos la creación de un marco legal común para regular las adopciones internacionales. El ministro de Exteriores, Miguel Ángel Moratinos, se reunirá el próximo lunes con los ministros del ramo de los 27 para tratar de establecer la "respuesta conjunta" europea respecto a la especial situación de Haití, según ha anunciado hoy la vicepresidenta del Gobierno María Teresa Fernández de la Vega en la rueda de prensa posterior al Consejo de Gobierno.

La propuesta española, que responde a la petición del vicepresidente de la Comisión Europea, Jaques Barrot, de abordar la cuestión, contempla tres puntos principales: agilizar la tramitaciones de las adopciones que ya están en marcha y facilitar los trámites de acogida, mejorar la protección de los menores no acompañados en el país caribeño, y estrechar la colaboración con las ONG de ayuda a la infancia que están sobre el terreno, como Unicef y Cruz Roja.

De la Vega ha recordado que la legislación española prohíbe expresamente las adopciones internacionales en caso de catástrofe o conflicto, cuando no existe una autoridad que pueda garantizar que los niños en adopción han perdido, realmente a sus padres.

Refugiados a Guantánamo

Mientras tanto, el Gobierno de Estados Unidos ha informado que la base militar de Guantánamo, que alberga a presuntos terroristas, se prepara para recibir si es necesario a damnificados del terremoto.

La mayor Diana Hayne ha dicho en declaraciones a la cadena de televisión CNN que las fuerzas militares se disponen a recibir un posible flujo de haitianos que huyen de la destrucción dejada por el movimiento sísmico la semana pasada. La mayor ha agregado que la base ya ha instalado alrededor de 100 tiendas de campañas cada una de las cuales cuenta con 10 camas y también hay servicios sanitarios.

Hayne ha indicado que no existe indicación alguna de una migración masiva desde Haití, a unos 300 kilómetros de la base naval. No obstante, la portavoz ha dicho que la base se está preparando "como medida de precaución" porque disponer todo para recibirlos "tarda un tiempo".

La base se ha convertido en un importante centro de los esfuerzos de ayuda estadounidense para Haití a través del envío de agua potable y alimentos. Además, según el general Douglas Fraser, comandante del Mando Sur de EE UU, la Marina ha establecido allí un centro logístico para dar a apoyo a los barcos de EE UU en la región. "Guantánamo tiene valor como centro estratégico para el desplazamiento de suministros y personal a las áreas afectadas en Haití", ha manifestado Hayne a CNN.

Según la portavoz, los refugiados haitianos quedarían instalados a más de tres kilómetros donde se encuentran los alrededor de 200 presuntos terroristas que todavía permanecen en el centro de detención.



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CHINA RELEASES STRONG Q4 GROWTH; USD STABILIZES The outlook for CAD is still strong, even in the midst of a bout of USD strength.
-Several majors fall below their 100-day moving averages, accelerating USD strength.
-EUR is pressured by rising Greek CDS spreads, which have jumped to 345.
-China’s Q4 GDP comes in surprisingly strong at 10.7%.

FX Market Update

• After China released surprisingly strong Q4 growth, the market is mixed. The USD is losing some of its earlier gains as profit taking on USD longs takes hold. AUD has gained 0.1% against the USD, while CAD is flat and GBP and JPY are losing ground. However, currencies are generally at far weaker levels than they were a few sessions ago.
• Yesterday there was an important shift in the USD. Most currencies have now dropped below their 100-day moving averages, including EUR, GBP, CHF, NZD, NOK and AUD and CAD are within 100 points of theirs (please see the table on page 2 for specific levels). This highlights the important shift in sentiment that the market has undergone and warns that for the near-term investors are increasingly nervous to be short the USD. We have not changed our outlook on CAD - see CAD section below, nor have we changed our medium term outlook for the other majors; however we do think sentiment can be an important near-term driver of currency markets. The driver of yesterday’s strength in the USD was a combination of the Massachusetts Republican win, tighter loan standards in China, increasing concerns over Greece and technicals.
• We have never used PPP as an important part of our valuation process as currencies can stay well above or below their PPP value for years at a time. However, we have noticed a resurgence in references to it - most likely to help support a bullish USD case. Accordingly we thought it might be interesting to include a chart of PPP valuations (see top chart) for reference purposes. Though NOK, AUD and EUR are all considered 15%+ overvalued; CAD, GBP and JPY are actually quite close to fairly valued.
• There is some focus on the increasing percentage of direct bids in recent Treasury auctions - the identity of these bidders are unknown since they go directly to the Fed. For instance 12% of yesterday’s 4-week bills went to direct bidders, almost three times higher than the more traditional level. There are a host of reasons why bidders might want to hide their identity and the impact on the USD is debatable. However it is an interesting trend that bears paying attention to in coming auctions.
• Today’s earnings reports will include Google and AMEX while expected fundamental releases include jobless claims, Phily Fed & leading indicators. C.S.

Americas

USDCAD (1.0480) • USDCAD broke briefly above its 50-day moving average of 1.0499 but has since drifted lower. We recognize that sentiment towards the USD has turned favourable, but we have made no changes to our view on USDCAD and continue to believe that we will reach parity on a sustainable basis in Q210. Even in the midst of a period of broad USD strength, we think CAD can outperform as many of the factors that could prove bullish for the USD will also work in CAD’s favour. In summary, CAD should outperform in 2010 due to its relative fundamental position, which includes a reasonably strong growth profile, a better relative fiscal position and minimal sovereign risk. In addition, we expect that with the ongoing global recovery commodity prices should move higher, benefitting CAD. Finally, we think sentiment is still favourable for the medium-term outlook on commodity currencies - and confirmation from Russia yesterday that they have started to buy CAD assets can only help. • Can CAD rally alongside the USD? Historically, we have seen several periods of this. In the current environment, an improving US economy, tighter monetary policy in both the US and Canada and nervousness surrounding the EUR should all work in CAD’s favour. We continue to look for CAD strength in 2010. • Today the BoC will release its Monetary Policy Report, which will give us further insight into what the Bank’s outlook is. C.S.

Europe

EURUSD (1.4050) • EUR dropped further during the Asian and European sessions and is now moving closer to a test of the psychologically important 1.4000. Technically, the currency is weak and has not yet entered oversold territory (its RSI is currently at 29). • As the middle chart highlights, EUR has been moving in tandem with Greek CDS spreads. As fears over the future of Greece and the implications for the EU and EUR escalate there is increasing downward pressure on EUR. We find ourselves increasingly cautious about the near term trading outlook for EUR and will look to changes in sentiment to guide us. As long as sentiment remains as bearish the EUR as it is, the currency will struggle to rally; however once we see some stabilization in sentiment, the outlook for EUR should improve. • Fundamental data from the Eurozone today included a weaker than expected PMI, with services dropping to 52.3, manufacturing increasing to 52 and the composite falling to 53.6. The release was generally weaker than expected, but still above the important 50 - expansionary level. • The ECB published their monthly report, which was inline with Trichet’s comments last week. Highlighting that the recovery is underway and medium to longer-term inflation expectations are firmly anchored. The report also encouraged its member countries to prepare fiscal adjustment strategies, while Trichet commented today that EU member country deficits must be cut in a timely fashion. C.S.
GBPUSD (1.6130) • GBP has dropped below its 50, 100 and 200-day moving averages (1.6303, 1.6309 and 1.6178, respectively). EURGBP has managed to recovery some of yesterday’s losses, but has not yet broken above yesterday’s open. • The January release of UK CBI factory orders showed an improving trend, with total orders less negative at -39. C.S.

Asia / Oceania

USDJPY (91.80) • Yen is the weakest performing currency today as USDJPY is trading back above 91.00. Japan’s leading index remains well off its lows, but dropped slightly from last month’s reading. C.S.
USDCNY (6.8270) • In the fourth quarter China’s real GDP grew at a surprisingly strong 10.7% (and Q3 was revised up to 9.1%). Strong growth from China, combined with small increases in monetary policy, is reassuring for global growth. Chinese inflation data came in higher than expected with CPI jumping 1.9%y/y and PPI increasing 1.7%. Accordingly, inflationary pressures combined with strong growth will increase pressure on Chinese authorities to tighten policy and to allow some appreciation of the yuan. We view today’s releases as positive for the global economy, commodities and commodity currencies like CAD. C.S.

Commodities

Oil (77.75) • Oil has recovered some lost ground and so far the 50-day moving average has held on a closing basis (77.11). Oil has had a difficult few sessions as the combination of a stronger USD, rumours of JAL selling off their oil hedges and increasing investor risk aversion have all pressured the commodity. Today’s oil inventory report (delayed by a day because of the US holiday on Monday) is expected to show an increase of 2.4m. C.S.
Gold (1104.75) • Gold remains under pressure as the USD rally pressures commodities. The 100-day moving average is the next level of support and lies at 1086.23. C.S.

Suggested Reading

CIC Places Focus on Emerging Asia, Ellen Sheng and Rick Carew, WSJ (January 21, 2010) Prospect of Chinese Tightening Lifts Dollar, Peter Graham, FT (January 21, 2010) Avoid False Alarm on UK Inflation, FT (January 21, 2010) Global Jitters Boost Dollar, Fabio Alves, WSJ (January 21, 2010) ECB Monthly Bulletin, ECB (January 21, 2010)

Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com




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The Plaza Futures Group





EL MUNDO Y LAS FINANZAS.

Fonds pour les investissements et le développement.

FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.

FOPLADE- Análisis Financiero.

CHINA, REPUBLIC WIN & TECHNICALS PUSH USD HIGHER USDCAD higher on weak inflation release and a broadly stronger USD.
-Republican senate win in Massachusetts puts healthcare reforms in doubt.
-EURUSD break of the 200-day moving average accelerates USD strength.
-Tighter lending policy in China drives fears of slower growth into markets.

FX Market Update

The USD is broadly stronger today. The return pattern isn’t that noteworthy, with most currencies having lost between 0.5 and 1%; however several currencies have broken through or are testing important levels, which is adding momentum to USD strength. EUR has dropped violently below its 200-day moving average of 1.4298, GBP is struggling to stay above both its 50 and 100-day moving average (1.6312 and 1.6311, respectively), AUD is flirting with a break below its 50-day moving average of 0.9119, while USDCAD has broken above its 21-day moving average of 1.0393. This implies that there could be an important shift taking place in currencies and adds importance to today’s closing levels.
• Developments in China, where the chief banking regulator has said that some banks have been asked to cut lending for the rest of January are weighing on markets and providing a boost to the USD. The impact of tighter policy in China sends fears of slower growth throughout the market, but in the medium term we think it will help to stabilize growth and avoid the shock of a sudden popping of an asset bubble. Today the Shanghai index fell by 3% and the negative tone has been carried through the European session and into the North American open. • An upbeat report from IBM is doing little to offset weakness in the financial sectors. Earnings will continue to be an important driver today.
• Chances of President Obama’s healthcare reforms being passed are facing a major setback as Republican Brown has won the Massachusetts’ Senate seat. This will have an impact on the fiscal outlook for the US and accordingly the USD.
• Yesterday’s release of November TIC data proved interesting. Net long-term inflows jumped up to $126.8b as total net TIC flows increased by $26.6b. However China’s holding of US Treasurys dropped (see middle chart) during November, even as their reserves grew by $61 billion. The TIC data is volatile and one release doesn’t create a trend; however as the US deficit becomes a key weight for the USD, the details behind the TIC data will become increasingly important.
• Today, there is a slew of US data including PPI, housing starts and building permits. C.S.

Americas

USDCAD (1.0383) • Today USDCAD has drifted higher as the USD is broadly firmer. • Today’s CPI release was softer than expected, providing reassurance that inflation in Canada is well contained. • Yesterday’s statement by the Bank of Canada was very similar to December’s. Highlighting an improving global economy that is still reliant on fiscal and monetary stimulus and a relatively strong growth outlook for Canada as inflation remains contained. They also noted the strength in CAD as a key risk going forward as it dampens the outlook for growth and weighs on inflation. We do not think today’s run-up in USDCAD is a reflection of the Bank’s comments but instead has to do with fears over the impact on global growth and commodity prices of tighter policy in China. The USD is broadly stronger today. Still it is noteworthy that even though CAD has lost ground against the USD it is still outperforming many of the other majors. We believe this is a theme we will see played out over and over again this year. EURCAD has broken to a new 2-year low and looks poised for further downside. • Technically, USDCAD is clearly losing downside momentum, and is in the midst of breaking above important levels. Support comes in at today’s open of 1.0314 and resistance lies the 50-day moving average of 1.0499. A crossing of the 9-day moving average (1.0312) above the 21-day (1.0393) would be a USDCAD bullish signal. C.S.

Europe

EURUSD (1.4150) • EUR has lost a percent against the USD and is underperforming GBP significantly. • Greece remains the key headline in the Eurozone, with Martin Wolf’s commentary in the FT garnering some attention today. His comments highlights that there are several vulnerable members of the Eurozone and the outcome is far from known. As he says “the Greek government has promised to slash its fiscal deficit from an estimated 12.7 per cent of gross domestic product last year to 3 per cent in 2012. Is it plausible that this will happen? Not very. But Greece is merely the canary in the fiscal coal mine”. The road ahead for the Eurozone is a difficult one and it will most likely cause some erratic trading in the EUR. Near-term technicals are turning increasingly bearish as the currency has dropped below its 200-day moving average of 1.4298 and support from the December low of 1.4218. We are increasingly cautious on the near-term outlook for the currency. Support from here lies at 1.4118, the 61.8% Fibonacci of the March to December 2009 rally. • ECB commentary in the last 12-hours was in line with previous comments. ECB council member Stark sounded fairly dovish as he commented that Eurozone growth will slow in the first half of 2010, while inflation pressures remain in the background. While ECB Nowotny pointed out the problems associated with consumer foreign currency loans (essentially a form of carry trades). C.S.
GBPUSD (1.6270) • GBP is struggling against the USD, but outperforming many of the majors. EURGBP is now trading at a five month low and looks poised to move lower still. • Governor King commented yesterday that in order to reduce global trade imbalances and avoid a repeat of last year’s crisis pressure needs to turn to the adjustment of real exchange rate. His speech was interesting and we have included a link to it in today’s Suggested Readings. • Fundamental releases from the UK were strong today, with jobless claims coming in at a surprising -15k, while the unemployment rate dropped to 7.8% (consensus had been 8.0%, while October’s release was at 7.9%). C.S.

Asia / Oceania

USDJPY (90.93) • USDJPY has simply retraced yesterday’s move higher. Support comes in at the 100-day moving average of 90.40. Early in tomorrow’s Asian session, Japan will release its all industry activity index. C.S.
USDCNY (6.8270) • Tonight’s release from China could prove an important market driver in the next 24-hours. Q4 GDP is expected to jump 10.5%. Any upside surprise could reverse today’s market activity. C.S.

Commodities

Oil (77.75) • Oil is holding in fairly well, considering news from China. It has dropped significantly from its January highs, but continues to trade above its 50-day moving average of 77.10. The 30-day rolling correlation between oil and CAD has dropped to 0.74. C.S.

Suggested Reading

The Greek Tragedy Deserves a Global Audience, Martin Wolf, FT (January 20, 2010) Foreign Buyers Shift to Long-Term Treasurys, Tom Barkley and Brad Davis, WSJ (January 20, 2010) Jobless Total In First Fall for 18-months, Brian Groom, FT (January 20, 21010) China Tells Banks to Halt Lending, Jamil Anderlinie and Sundeep Tucker, FT (January 20, 2010) Speech by Mervyn King, BoE (January 19, 2010)

Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com




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The Plaza Futures Group



EL MUNDO Y LAS FINANZAS.

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FOPLADE- Análisis Financiero


BoC EXPECTED TO MAKE LIMITED CHANGES TO STATEMENT USD on stronger footing, reversing its losses from yesterday.
-BoC will be key USDCAD event; we do not expect major changes in Carney’s tone.
-UK inflation surges above expectations; providing a lift to GBP.
-Doubts over ability of EUR to ever gain top reserve currency status weighs on EUR.
-Another jump in Chinese yields; and Minister of Commerce pushes for yuan stability.

FX Market Update

• The USD is on stronger footing today. Equities and commodities are generally weaker as markets continue to be fairly nervous. The one exception to USD strength is a strong GBP on the back of inflation fears. The UK released CPI that was well above expectations, increasing speculation that the BoE will have to turn hawkish even as the economic recovery is still fragile. In addition, Greece and Eurozone weakness continue to be a focus for traders, limiting the recent attempts by EUR to push higher.
• There is also some focus on whether or not the EUR will really prove to be an alternative to the USD as a reserve currency. As sovereign risk weighs on the Eurozone some worry that it diminishes the prospects for EUR. We would argue that the shift to a new reserve currency will take years if not decades to play out and that currently there is no real alternative. The US is the only country to host the deepest capital markets in the world combined with a freely floating exchange rate. Accordingly, we would expect it to retain the reserve currency status for many years to come. Still, the potential for a shift to another currency will still weigh on the USD as when an alternative does emerge it will remove significant buyers of USD.
• Looking at the 52-week high and low versus today’s level provides further evidence that the market is notably bullish commodity currencies, neutral EUR and JPY and neutral to bearish the USD. USDCAD is just 1% from its 52-week high and AUD is only 2% away; however EUR and JPY are 6% and 7%, respectively and the USD is 4% from its low. Accordingly, with both CAD and AUD flirting with new highs as the other currencies struggle well below theirs it highlights the momentum behind them. We, like many, are also bullish the commodity currencies against both the USD and EUR.
• Today, the somewhat volatile TIC data will be released, which will provide an update on who is buying Treasurys and to what extent. Earnings will also be important today, with Citigroup releasing at 8am (EST) and IBM after the North American close. C.S.

Americas

USDCAD (1.0290) • USDCAD has retraced yesterday’s losses as we lead into the Bank of Canada release. We expect the BoC to sound slightly more upbeat than it did in December, but we do not anticipate any major changes. Accordingly, we expect the overnight target to remain at 0.25%, the BoC to reiterate that they are on hold until the end of Q210 and that commentary regarding CAD is in line with what the Bank has already said. CAD is just 2% stronger today than it was on December 7th (the day before the last meeting) and CERI, the BoC’s trade weighted index, is 3% stronger; however we would argue that some of this strength is due to Type 1 (fundamental factors), which requires less of a response by monetary policy. The top chart highlights the close correlation between CAD and the CRB index over the last 12-months. Accordingly, we expect the BoC to continue to cite CAD strength as a key risk going forward, but we do not expect them to firm their tone with regards to CAD strength. Currently, the market is pricing in a 97% change that the BoC increases interest rates at the July 20th meeting. • Technicals, remain bearish USDCAD. Support lies at the October low of 1.0207; while resistance comes in at congestion of 1.0320 followed by the 21-day moving average at 1.0401. C.S.

Europe

EURUSD (1.4300) • EUR’s attempt to rally continues to fail and the currency is testing a break below its 200-day moving average of 1.4293. A close below this level would be bearish and open up a test to the psychologically important 1.4000. • Weighing on EUR today was a disappointing ZEW (economic sentiment), coming in at 46.4 in the Eurozone (cons. 48) and 47.2 in Germany (cons. 50). In addition, as we mentioned in the first section there is some focus on whether or not the EUR will really prove to be an alternative to the USD as a reserve currency. • Today, EURGBP has reached a new four-month low and looks technically weak. It is now trading below its 50, 100 and 200-day moving averages (0.8969, 0.9002 and 0.8844, respectively); and has broken below support of 0.8835 that held through the fall. The next level of support lies at the July highs of 0.8690/0.8700. C.S.
GBPUSD (1.6340) • Sterling is outperforming noticeably today, as it is flat against the USD and up 0.7% against EUR. The currency has also broken above its 50 and 100-day moving averages (1.6318 and 1.6311, respectively); a close above these levels would be near-term bullish for GBP. • Inflation data came in well above expectations, with headline surging 0.6% m/m and 2.9% y/y and core increasing a surprising 2.8% y/y. RPI also jumped far more than expected. Accordingly, there are clear inflationary pressures in the UK that will complicate matters for the BoE. With headline at 2.9%, it is just 0.01% away from where the Governor will need to write his letter of explanation. We have long expected the BoE to remain one of the more dovish central banks; however should we see a repeat of these inflation pressures next month (noting that the January reversal of the VAT will complicate things), the BoE will be placed in a difficult position. The central bank will have little choice but to focus on controlling inflation even as growth remains fragile, but we are not convinced this is the recipe for currency appreciation. • Also benefitting sterling is the official news that Kraft will buy Cadbury for $19.7billion. C.S.

Asia / Oceania

USDJPY (90.85) • The yen is flat today. The headlines overnight surrounded the announcement of the JAL bankruptcy and the potential impact of fuel hedges being sold off and the cash raised being repatriated back (these are estimated to be worth over $400m). We doubt this will have a real impact on USDJPY going forward. • Japanese consumer confidence was disappointing, dropping from 39.9 in November down to 37.9 in December. C.S.
USDCNY (6.8277) • The yield on the one-year auction increased by a further 8bpts to 1.9264%. Accordingly speculation that monetary policy in China is slowly tightening continues to rise. However, comments from the Minister of Commerce, Deming, who said that his “personal view is that a relatively stable yuan is in the interest of the world economy”, has dampened some of the speculation over the currency. Still we continue to believe that authorities in China will soon allow some measured appreciation of the yuan. C.S.

Suggested Reading

Split Views Over Greece: Bond Fears, Stout Euro, Neil Shah, WSJ (January 19, 2010) Swiss Bank Will Stop Providing Liquidity to European Markets, G. Smith & N. Koeppen, WSJ (January 19, 2010) Cadbury and Kraft Agree £11.7bn Deal, FT (January 19, 2010) Inflation Fears Spook Markets, FT (January 19, 2010) Massachusetts Senate Vote Likely to be Close, FT (January 19, 2010) Bank Fee Plan Has Merits But Lacks Financial Clout, Mohamed El-Erian, FT (January 19, 2010) Please consider voting for us in Euromoney's FX Poll 2010 between January 14 and February 26. The link can be found at http://www.euromoney.com/stub.aspx?stubid=92.
___________________________________
Camilla Sutton, CFA, CMT Sacha Tihanyi
Currency Strategist Currency Strategist
Scotia Capital Scotia Capital
416-866-5470 416-862-3154
Camilla_sutton@scotiacapital.com Sacha_tihanyi@scotiacapital.com



*************************
The Plaza Futures Group


EL MUNDO Y LAS FINANZAS.

Fonds pour les investissements et le développement.

FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.