Monday, June 7, 2010

EUR/USD vs ES & HU 10- Yr Yield Sprds vs DE Flows - Now its Hungary!!

EUR/USD vs ES & HU 10- Yr Yield Sprds vs DE Flows - Now its Hungary!!

Monday, June 07, 2010 7:57:00 AM

* 07 Jun 10: 11:57 GMT (LDN) - FX NOW! EUR/USD vs ES & HU 10- Yr Yield Sprds vs DE Flows - Now its Hungary!!

EUR/USD's dive that built momentum on Friday and breached the psychologically key 1.2000 level was fuelled by the ongoing concerns about the international debt markets. Uncertainty in the debt markets has undermined the equity markets and the knock on for the FX market is that USD and JPY outperform the rest of the market. EUR/USD's fall through the 1.2000 was dealer led, but they did not take the initiative until equities had fallen over. Now, the news from Hungary, as well as a few other names, has undermined equities and FX once again. The story just keeps going.... M.B.

* 07 Jun 10: 11:08 GMT (LDN) - FX NOW! EUR/USD vs S&P Futures Flows - Asians extend Friday's trends, eurozone takes profits

It is a new week, but the story has not really changed for markets in general. Debt problems continue to dominate the headlines, with Hungary being featured as a potential flash point. Politics is also playing its part. G20 coverage has unearthed differences of view/focus between US Treasury Sec Geitner and ECB's Trichet. Asians did what Asians do in reaction to the news and sent equities spinning along with EUR. USD and JPY came out on top overnight. Eurozone traders did not share the same misgivings and seem happy to cover shorts in advance of the N. American open. S&P futures have bounced off lows of 1052 and climbed to 1069+. That equity bounce has had the usual impact on the FX market dragging EUR up off its lows and giving AUD and CAD a big boost. Once profits are booked and positions are manageable, it will be the N. Americans that set the tone and direction for the remainder of what is likely to be an order driven session. M.B.

* 07 Jun 10: 10:04 GMT (LDN) - FX NOW! EUR/USD, EUR/JPY Flows - EUR higher prior to strong German Factory Orders release

German factory orders for April were up 2.8% m/m, not at the 5 m/m pace seen in March, but well above market estimates in the 0.4% m/m area. EUR has not reacted in any significant way to the April report. In advance of the better than anticipated data, EUR was working its way higher after setting of stops in EUR/USD at 1.1960 and working its way more methodically higher vs JPY. Technically, the next levels to watch include 1.2020 for EUR/USD and 110.00 for EUR/JPY. M.B.