FX daily - 12-Sep.

12.09.13
 
 Economic data:


Italy industrial production -4.3% vs. -2.7% yoy
EC industrial production -2.1% vs -0.2% yoy, -1.5% vs -0.3% mom. 
 
16:30 – US, jobless claims
 
Traders and strategists’ views:
 
EUR
UBS: According to ECB’s Hansson the ECB has discussed another LTRO which I find quite interesting. I am pretty sure that the ECB is not very happy about the recent rise of the EUR especially against the JPY but for the moment the pain threshold might not have been reached. Europe needs inflation and not deflation in my view.
 
GBP
Both markets suggest that the positive GBP story seems to be priced for now. Nevertheless I still think there is more room for GBP outperformance in the medium term.

 
GS: Reduced long position as momentum has stalled post the squeeze above 1.5800, with aim to buy on dips at 1.5740/50
 
AUD
GS: Happy to hold onto shorts now with 0.9220 and then 0.9180 the next downside pivots to keep an eye on, and a stop at 0.9360
 
Tim Toohey shows that Australian trend employment is now in contraction and at its weakest level since 2003. We still expect a 25bp rate cut in November.
 
News & risks
 
Syria
 
Kerry and Lavrov are entering negotiations today and tomorrow.
Key question is whether the UN resolution falls under chapter 7, implying that military force could be used if Syria fails to comply with its provisions.
 
Putin in his direct speech to americans: “…reports that militants are preparing another attach – this time against Israel…”
 
Even if a resolution is agreed, most analysts believe that the practical difficulties of securing and destroying the stocks will be huge.
“The bottom line is no one has ever done anything remotely like this, ever,” said Dan Kaszeta, an independent defence consultant. He said Syria’s chemical weapons stocks were estimated to be being held in multiple sites, and it would likely take “thousands” of soldiers to protect them.
 
Putin direct speech to american people - http://www.nytimes.com/2013/09/12/opinion/putin-plea-for-caution-from-russia-on-syria.html?ref=europe&_r=0

"...Reports that militants are preparing another attack — this time against Israel — cannot be ignored"

"...It is alarming that military intervention in internal conflicts in foreign countries has become commonplace for the United States. Is it in America’s long-term interest? I doubt it. Millions around the world increasingly see America not as a model of democracy but as relying solely on brute force"
“Whose soldiers are you going to put on the ground to protect these things in the middle of an ongoing multi-party conflict, which country is going to sign up its troops to do that?” he said.
 
Fed meeting
 
HSBC economics change forecast on the timing of QE tapering to September, from December. We expect that the FOMC will vote to reduce its monthly purchases of longer-term Treasury securities and agency MBS by USD15bn (USD10bn for Treasuries, USD5bn for MBS), starting in October and bring QE3 to a close by June of 2014.
 
Upcoming debt ceiling.
 
The government is running out of money between October and December.