FOPLADE- Análisis Financiero

QUIET MARKETS, EVEN AS SOROS GOES BEARISH EUR

• CFTC speculative positioning data highlights that traders are short EUR & long CAD.
• No Canadian data until Friday; USDCAD is biased for downside.
• Greece to test the market with bond issuance.
• NZDUSD finding better support as New Zealand rates stabilize.

FX Market Update

Currency markets have had a quiet Asian and European session. The bias today is for
short USD positions as the markets digest George Soros bearish EUR comment
in the FT - see Suggested Readings. • On a year-to-date basis, MXN, JPY,
CAD and AUD have outperformed all the primary currencies and GBP and
EUR have underperformed. We expect to see ongoing outperformance by this same
group through the end of the first quarter and into the second. The combination of
better than expected US economic releases (which benefits CAD and MXN specifically),
a global recovery that is ongoing (which boosts commodity prices and decreases risk
aversion) and relatively hawkish central banks should maintain momentum behind these
currencies. • This week’s CFTC speculative positioning data saw a further
move away from the USD as a one way bet and instead the relative currency
outlook increase in importance. Speculators continue to favour AUD and CAD over
EUR and GBP. • This week’s highlight will come with developments in the Greek bond
market and Chairman Bernanke’s testimony. Last week’s increase in the discount rate
created a stir, even though the Fed had warned that this was approaching and that it
should not be interpreted as tighter monetary policy. • Today’s WSJ article “Low Inflation
Always Best?” - see Suggested Reading, provides a solid overview of why many
policy makers are beginning to argue that we should be comfortable with a higher inflation
rate. C.S.

Americas

USDCAD (1.0381) • It has been a quiet Asian and European session for USDCAD as it
moves into the North American session essentially where it closed on Friday. •
USDCAD has moved into the lower half of its five month 1.0207 to 1.0870
range and we think it will continue to be biased to move lower (strong
CAD). In the current environment, the most important driver for CAD is the outlook for
global growth. As long as the recovery story remains intact, which we think it has - CAD
should be strengthening. Forty-five day rolling correlations (see top chart) are a useful
tool to help us examine what is currently driving the market. Currently, the strongest
positive correlation is between CAD and the S&P index, followed closely
by oil, the strongest negative correlation is with the VIX. Essentially, as risk appetite
improves, fears over the outlook for global growth diminish, equities and oil move
higher, the VIX drops and CAD strengthens. We expect the global growth story to
remain intact and hence expect CAD to continue to strengthen. The drop in
correlation between CAD and EUR is a reassuring signal, as it highlights that no longer
are euro specific issues driving the whole market, but instead are impacting just
the EUR. This is a healthy sign for markets generally, but also increases the chance that
a CAD rally materializes. The low correlation between CAD and 2-year bond yield
spreads is reflecting the market’s comfort with the priced in path of the Fed and BoC.
The importance of interest rates as a driver of CAD should begin to increase in the coming
months. We expect that when USDCAD does break its five month range, it
will be to the downside (CAD strength) and that it will sustainably reach
parity mid-year and close 2010 at 0.97. For near-term traders, pivot points suggest
that today’s buying pressure will emerge at 1.0331 and selling at 1.0490. • This
will be a light data week for Canada, with only the current account expected on Friday.
Today, the BoC’s Jenkins will speak on a panel, but there is no media access, press
conference or published remarks and accordingly it should be a non-event for the currency.
C.S.

Europe

EURUSD (1.3613) • EUR is trading near flat to 0.1% lower after cutting gains in Asian trading when the USD was pressured lower by robust equity performance. There is a lack of Eurozone economic data today to help guide the euro’s performance, however EURUSD is trading back above the 1.35 level after USD buying following the Fed’s discount rate move last week pushed the pair below 1.35 to a nine month low. Intraday resistance sits near the 1.3655 level while the pair has failed to breach 1.3600 in trading today.
• Speculative positioning has shown that no relief is in sight for the euro as the net short position reaches yet another historical high (see middle graphic) at nearly 60K contracts or $10.2bn, by far the largest net short position of all the majors. Thus the market remains extremely short EUR as IMM data shows that shorts outnumber longs by a ratio of 2.7 to 1. This helps to suggest that EURUSD shorts are at risk of being hit by a squeeze. However, it would likely take very strong and broadly based USD selling pressures to entice a squeeze on euro positioning as it is difficult to find a reason why the market should get excited about the euro’s prospects in the very near term. • Monetary and inflation data this week willprovide perhaps the potential for an upside surprise to spur expectations for the ECB, however
given weak economic and credit conditions in the Eurozone, we doubt this is likely.
Additionally, it is expected that Greece could launch a multi-billion euro bond
issue in coming days which will test the market’s faith in Greece and its faith in weakly
implied Eurozone support. Greek Prime Minister Papandreou stated that if it is unable
to borrow money at similar rates as other Eurozone members, it would seek help from other European countries. S.T.
GBPUSD (1.5482) • Sterling has failed to gain any upside momentum in today’s trading and
is underperforming, down 0.1%. Support in the 1.5550 area that had previously helped to arrest GBPUSD’s decline was broken last week with the Fed discount rate announcement, pushing cable back below 1.55 for the first time since May of last year. The pair has yet to find its legs though buyers are coming in at 1.5430 today ahead of last week’s low near 1.5357. S.T.

Asia / Oceania

USDJPY (91.26) • JPY is up 0.3% after USDJPY failed to challenge its 200-day moving average
last week (currently at 92.25). While the pair is under pressure, uptrend support off of the
February 4th low is currently protecting the 90 level (trend support at 90.30). S.T.
NZDUSD (0.7013) • The kiwi found support against the USD at its 200-day moving average last week, and is now a top performing currency as NZDUSD is up 0.3% today. The rate outlook in New Zealand has stabilized as the 2-year swap rate has found support at the 4.2% yield level over the past two weeks, the same period over which NZDUSD has been able to stabilize and find upside impetus (see bottom graphic). Look for support in the pair at the 200-day (0.6930) while the topside is constrained at the intraday high at 0.7040 which corresponds to downtrend resistance off of the January 20th high. S.T.

Commodities

Oil ($79.85) • Crude is flirting with the $80 level, pushing as high as $80.50 in Asian rading.
The strong two week uptrend in crude is still intact, with the 2010 high at $83.95
within striking distance. S.T.




EL MUNDO Y LAS FINANZAS.

Fonds pour les investissements et le développement.

FOND DU PLACEMENT PER DEVELOPPEMENT OVERSEAS CORPORATION.