Discussion in 'Index Futures' started by hermit_trader, Nov 24, 2006.
The Bund and the ESTX50/DAX suddenly jump at 9:30 ECT. What happened?
The Euro just broke above $1.30 for the first time since April 2005...
wow, that is one of the biggest moves in Euro-FX I have seen of late.
Wonder what news just broke...
I can't find any news.
So trading Bund/ESTX also need to watch the FX?
In this instant someone should have seen the euro, because the market thinks that buying the euro and selling the dollar, means some central banks are diversyfing from Treasurys to Bunds.
Hope it helps.
From 4Cast via Oanda, on currencies:
* 24 Nov 06: 08:44(LDN) - FX NOW! EUR/USD, USD/JPY Flows - Stoploss city (part 3)
We've already talked about the catalysts to this latest bout of USD selling, the follow through moves have really been led by the break through 1.30 and 1.3050 in quick succession, the volley of stoploss buy orders, and the lack of EUR supply seen initially. With a more regimented order system on USD/JPY, this led to restricted downside on USD/JPY despite the Japanese suggestions that the Japanese authorities would 'allow' some strengthening of the yen to help counter inflation risks if rates are not rising! Some supply is now starting to be seen, but with an effective holiday still in the US, this has the makings of a very jittery day. C.F.
* 24 Nov 06: 08:11(LDN) - FX NOW! GBP/USD, USD/CHF Flows - Reserving a place for sterling? (CNY)
USD selling for the first part of the European morning once more. This time, we are told, impact coming from a background story we wrote about earlier quoting PBOC vice governor Wu Xiaoling saying that (East) Asian countries reserves are at risk from the depreciation in the value of the USD. Though obviously not rocket science, this sort of comment can again encourage more buying of 'alternate currencies - and though for most this means a much larger holding in EUR, it also means that sterling is up there on the shopping list. The CHF is no longer an obvious choice - but, of course having lost at least a part of its old safe haven status, is acting nowadays as a fast EUR. Whilst option related trade will at least delay a move through 1.30 on EUR/USD, the CHF has less standing in the way. C.F.
Forex - Euro surges to 19-month high vs dollar; Pound off highs on GDP revision
Friday, November 24, 2006 5:23:23 AM
LONDON (AFX) - The euro stabilised comfortably above the 1.3050 level against the dollar after surging higher earlier as comments by the deputy governor of the People's Bank of China caused massive across-the-board selling in the US currency.
4CAST analyst Chris Furness said comments by a People's Bank of China official that east Asian currency reserves are at risk from the recent depreciation in the dollar 'encouraged buying of alternate currencies', particularly the euro.
PBoC deputy governor Wu Xiaoling was earlier quoted in an academic paper as saying, 'The exchange rate of the US dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for east Asian reserve assets'.
The euro pushed through two big options barriers at 1.30 usd and 1.3050 usd to reach a 19-month high of 1.3087 usd.
The euro is continuing to benefit after yesterday's key German Ifo business climate survey unexpectedly surged to equal the 15-year high of 106.8 reached in June 2006, as well as from lower volumes as a result of the US Thanksgiving holiday yesterday.
'The rise in the German Ifo business climate indicator for November - to match the peak recorded in May - has reinforced investor confidence in the decoupling theme (that the euro zone economy can grow despite the slowdown in the US),' said Naeem Wahid, currency analyst at HBOS.
'This is the largest bias in favour of euro calls over euro puts since late 2004,' he said.
Meanwhile, other currencies also benefited, with the pound surging to a 23-month high of 1.9336 usd and the Australian dollar reaching its highest level in over six months of 0.7780 usd. The dollar also fell to a five-and-a-half month low against the Swiss franc of 1.2100.
The pound came off highs, however, moving back down towards the 1.30 level mark after UK data released this morning showed a downward revision to annual third quarter GDP growth to 2.7 pct from 2.8 pct previously. Quarterly growth, however, was confirmed at 0.7 pct.
Analysts had expected both the quarterly and annual rates to be left unrevised.
Elsewhere, the yen also benefited from the dollar's broad losses, with the US currency dropping to a two-and-a-half month low of 115.68 yen.
The Japanese currency's gains were less pronounced, however, allowing the euro to jump to a day high of 151.52 yen, close to the record high of 151.70 reached early this week.
London 1005 GMT Singapore 3.04 pm (0704 GMT)
Funny thing is, all those news are already in the charts. 1.2979 (Eur/Usd) resistance has been 'screaming out' to be broken and it finally popped. I was uncertain this morning which way to take the trade, but as soon as price has broken through that resistance level, it was pretty clear that the odds are in favour of traders long Euro.
BTW I recall B1S2 mentioning that whenever Euro FX climbs S&P tanks and vice versa. I think Euro has led today, S&P decline followed.
And a bit on Bonds:
European govt bonds, gilts sharply higher on dollar slump
Friday, November 24, 2006 5:58:58 AM
LONDON (AFX) - European government bonds were sharply higher, benefiting from an across-the-board slump in the dollar which has taken the euro to 19-month highs against the US currency.
The euro has surged this morning, firstly breaking through the 1.30 level against the dollar and later above the 1.31 mark to reach its highest level since April 2005.
Analysts attributed the move to a speech overnight by the deputy governor of the People's Bank of China, who said east Asian foreign exchange reserves are at risk from the fall in the value of the dollar.
John Radcliffe at Thomson IFR Markets said the 'massive spike down in the dollar ... has put a bid under European government bonds, especially at the short end'.
Meanwhile, better-than-expected regional CPI inflation figures out of Germany failed to have any impact on bonds, with developments in currency markets having the overriding influence.
'The German States CPI data suggest that the markets have already seen the best of the recent rundown in inflation,' said David Brown at Bear Stearns, adding that German inflation 'should be on a rising trend' over the coming months.
The Federal Statistics Office uses consumer price data from Baden-Wuerttemberg, Hessen, North Rhine-Westphalia, Saxony, Brandenburg and Bavaria to determine its provisional CPI for Germany.
Meanwhile, over in the UK, the picture was similar for gilts, which rose sharply on the back of the slump in the dollar.
Gilts were also helped higher by UK data this morning showing a downgrade in third-quarter annual GDP growth to 2.7 pct from 2.8 pct previously, though quarterly growth was left unrevised at 0.7 pct.
Do the FX run before the index/bonds?
Separate names with a comma.