Timing of Moody’s Downgrade Sweep of Euro Members Surprises

 Late yesterday Moody’s Investor Service announced that they were cutting the debt ratings of several Eurozone countries, including most notably Italy, Portugal and Spain. Moody’s also said, citing the debt crisis, that it might also consider a downgrade to Austria, the U.K. and France. The Moody’s decision follows S&P’s downgrade earlier this year, so for the most part, traders were generally unsurprised by the announcement except for the timing, which analysts expect will have only little enduring impact on the Euro. Indeed, the EUR/USD is currently flirting with the opening price of 1.3168, and a bullish sentiment prevails on OpenBook.

On the OpenBook, quite a few traders of the EUR/USD pair seem to be content with scalping small returns. Over the past few hours OpenBook guru Gavinwright has closed out a string of long positions in the pair with gains ranging from 0.5% to 6% and holds several more open longs with the first target approaching. Guru pyruss is another who is waiting for a Euro recovery to hit break even on his long position which targets 1.3197, with several more longs behind it that would need a more sustainable rally. Likewise guru MPL1983 is sitting on two open longs already showing a profit. One OpenBook trader who held out for a higher gain was mcmkiama08 who closed a short position in the EUR/USD pair when it hit 1.3141, giving this trader a 64% return.

Later, Eurostat will be releasing December’s industrial production figures for the EMU and a consensus of analysts forecasts a year-over-year decline to -1.0% from the previous print of -0.3%. Also expected are the EMU and German ZEW surveys of economic sentiment for February, which analysts expect could show some improvement. The forecast is for the EMU survey to improve to -21.1 from -32.5 and the German survey to improve to -15.0 from -21.6.

 

OpenBook’s Aussie Bulls Buy on Dip as China’s Trade Balance Surprises

China’s General Administration of Customs earlier reported that January’s trade balance rose to a 27.30 billion surplus from December’s 16.52 billion, well above the consensus call for a decline to 10.40 billion. With China being Australia’s largest export partner, the news struck the AUD/USD pair almost immediately, which fell from a recent 6-month peak of $1.0845 to 1.0715 as of this writing; sentiment on OpenBook favors bulls by a 2-to-1 ratio as traders look to buy at the dip. Also weighing on the commodity-linked currency is growing doubts that Greece will be able to survive given the harsh austerity demands required as a prerequisite to the next bailout loan.

Trader nurmohd, who just started trading on OpenBook, has successfully executed 15 trades in the pair, and his 100% allocation to the Aussie-Dollar has returned 110% profit. In the past 24-hours this trader has opened and closed both longs and shorts, with each trade returning a profit of no less than 92% with the highest trade returning 126%. Whether this string of successes could be chalked up to beginner’s luck isn’t obvious, but close watching of this trader is clearly warranted.

According to the report imports dropped 15.3% in January as compared to the previous year, while exports dropped 0.5%. Analysts point out that the Chinese trade data could be deceiving, distorted by seasonal data and last month’s Lunar New York holiday and that overall demand remains positive. GDP is expected to accelerate given that Beijing has begun implementing stimulatory measures.

OpenBook trader powerfrank from Germany closed a short position in the pair to a 43.7% return; this trader with 104 followers and 9 copiers has recorded a 160% profit over the past six months. This trader allocates 70% to currencies and 30% to commodities, with the AUD/USD allocation representing 2.5% of the portfolio, and the return on it has been 9.3%.

Copyright 2012 eToro Blog

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TradeTheNews.com Asian Market Update: China trade balance surprises, Australia cuts CPI and GDP outlook

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(CN) CHINA JAN TRADE BALANCE: $27.3B V $10.4BE (6-month high)
- (CN) CHINA Q4 CURRENT ACCOUNT: $59.8B V $53.4B PRIOR; 2011 CURRENT ACCOUNT: $201.1B
- (AU) RESERVE BANK OF AUSTRALIA QUARTERLY POLICY STATEMENT: INFLATION OUTLOOK PROVIDES SCOPE TO CUT RATES
- (JP) JAPAN JAN DOMESTIC CGPI M/M: -0.1% V 0.1%E; Y/Y: 0.5% V 0.8%E
- (PE) PERU REFERENCE RATE LEFT UNCHANGED AT 4.25%, AS EXPECTED
- (NZ) NEW ZEALAND JAN NZ CARD SPENDING TOTAL M/M: 1.0% V 0.7%E; RETAIL M/M: 1.2% V 0.5%E
- (PH) PHILIPPINES DEC TOTAL EXPORTS Y/Y: -20.7% V -17.4%E; TOTAL MONTHLY EXPORTS: $3.3B V $3.3B PRIOR
- (IN) INDIA DEC INDUSTRIAL PRODUCTION Y/Y: 1.8% V 2.6%E

***Markets Snapshot (as of 05:30GMT)***
- Nikkei225 -0.2%
- S&P/ASX -0.9%
- Kospi -0.9%
- Taiwan Taiex -0.6%
- Singapore Straits Times -0.3%
- Shanghai Composite +0.5%
- Hang Seng -0.6%
- S&P Futures -0.5% at 1,341
- April gold -0.5% at $1,733/oz
- March Crude -0.4% at $99.47
***Overview/Top Headlines***
- Lack of a bailout agreement for Greece weighed heavily on markets today, on top of a large trade surplus and shrinking imports/exports from China in January. With a trade surplus of $27.3B, it was a 6 month high. Imports fell 15.3% much lower than expected and down from the increase of 11.8% prior. Exports fell one-half of a percent, a smaller decline than expected but down from the increase of 13.4% prior. Oil imports rose, copper and iron ore imports declined. After the trade data all markets that were not already in negative territory declined and those that were continued to fall, with the exception of China. AUD/USD was hit double today falling over 100 pips from yesterday's session to $1.0702, first the RBA cut GDP and inflation forecasts for the year then the China trade data (China is Australia's largest trading partner). RBA said that the outlook for consumer prices provides "scope for easier monetary policy should demand conditions weaken materially." Commodities were all weaker as well, wheat fell for the 4th consecutive day, corn declined for the second consecutive day and copper was down in the session but continues to track higher in its longer term trend. Greenback was positive against emerging markets with risk appetite weaker.
- EU's Juncker affirmed that Greece must pass its latest austerity measures into law and come up with €325M in spending cuts before the EU will issue a second round of bailout funds to the country. Greece is set to vote on the measures over the weekend according to PM Papademos, he also noted that Greece will need to decide if it will stay in the Eurozone by Feb 15th. EUR/USD was not too concerned, seeing some slight weakness testing down to $1.3255.
***Speakers/Geopolitical/In the press***
- (HK) Hong Kong Monetary Authority (HKMA) will loosen the calculation of yuan-denominated assets in the statutory liquidity ratio, to allow more lending - HK press
- (ID) Indonesia Central Bank Gov: Still room to maneuver monetary policy to support the economy; Current forex level is still good for trade
- (FR) Fitch's Stringer: Reiterates most likely will not resolve negative outlook on France until next year at the earliest; France still has the capacity to keep AAA rating
- (CN) China Jan land sales in 300 cities fell 62% y/y to 56.78M sq meters and -63% m/m - Chinese press
- (JP) Japan Fin Min Azumi: Will intervene in the forex market as appropriate; Will make any FX decision myself; Will not hesitate to take unilateral intervention
- (JP) Japan Cabinet Office Economic Planning Association: Cut Japan's FY12/13 GDP outlook to 1.86% from 1.89% - Nikkei News
***Equities***
- Acer, 2353.TW: Guides Q1 shipments to be better than previously guided decline of 10-15% q/q; Q2 may be "slightly better than Q1"
- DBS.SG: Reports Q4 Net S$731M v S$693Me; Rev S$1.92B v S$1.73B y/y
- Alibaba.com, 1688.HK: Chatter that the company will take the Hong Kong listed company private; Yahoo may end up with direct stake as a result of the deal - financial press
- NCM.AU: Reports H1 Net profit A$659M v A$438M y/y; Rev A$2.34B v A$1.97B y/y
- Sapporo Holdings, 2501.JP: Reports FY11 Net ¥3.16B v ¥8.1Be, Op Profit ¥18.9B v ¥20Be, Rev ¥454.1B v ¥466Be
- ANZ.AU: Cuts 3-year fixed mortgage rate by 15bps; Raises variable mortgage rates by 6bps
***US Equities***
- ATVI: Reports Q4 $0.62 v $0.56e, R$2.41B v $2.2Be; approves $1B share buyback program (7% of market cap); increases dividend to $0.18 from $0.165; +1.0% afterhours
- EXPE: Reports Q4 $0.58 v $0.54e, R$787M v $812Me; -3.7% afterhours
- LNKD: Reports Q4 $0.12 v $0.07e, R$168M v $160Me At the end of Jan passed 150M member point; Jan was strongest hiring for LinkedIn itself in the history of the company (2/3rds were for sales) - conf call; +8.9% afterhours
- NUAN: Reports Q1 $0.34 v $0.36e, R$360.6M v $392Me; -13.4% afterhours
***FX/Fixed Income/Commodities***
- (CN) China Water Official: Will invest CNY140B into water projects this year - Chinese press
- USD/CNY: (CN) PBoC sets yuan mid point at 6.2937 v 6.2952 prior close (new yuan high since the July 2005 revaluation)
- GLD: SPDR Gold Trust ETF daily holdings rise by 1.2 tons to 1,278.3 tons (3rd consecutive days of increase, highest since 1,280 on Dec 15th)
- CME cutting margin requirements on Gold (cuts by 11.7%), Silver (cuts by 13.5%), Copper (cuts by 13%), and Crude Oil futures (cuts by 8.9%)

Australia Surprises by keeping Rates on Hold

February 7th, 12:56 pm
 Japanese Finance Minister Jun Azumi warned markets today over the strengthening of the nikkei. In a surprise move, the Reserve Bank of Australia kept rates on hold at 4.25%. Analysts were expecting the RBA to deliver a third round of rate cuts after it cut rates by 25 basis points in November and December. The RBA said that it was keeping rates on hold because growth is on track and inflation is close to target. RBA Governor Glenn Stevens said, “Much remains to be done to put European sovereigns and banks on a sound footing, but some progress has been made.” With regards to inflation, Stevens said that he expects underlying inflation to fall within 2% to 3% target range over the next one to two years. Stevens said that the Australian economy has shown strong growth with some differences between the mining industries compared to the rest. The AUDUSD rallied 100 pips after the rate decision.
OpenBook trader molla01 was one of the best prepared traders for today’s rate decision. This trader had been adding long exposure to his account on the AUDUSD during the last twenty four hours. The trader has been an Aussie bull and believes in trading with the trend. This is despite the overwhelming bearish sentiment on the AUDUSD ahead of the rate decision. OpenBook trader molla01 is now floating profits between 65% and 79% on his open exposure. It remains to be seen if this trader will close his positions or wait for his Take Profit of 1.0825 to be reached. The trader has already gained 137% this week and is up 740% in the last thirty days. This trader only trades the AUDUSD and uses medium risk strategies. The trader has 5 copiers and 30 followers so far on OpenBook.
Asian markets ended in the red with the Japanese Nikkei down 0.08%, the Hang Seng down 0.05%, the Shanghai index down 1.69% and the Australian S&P ASX down 0.45%. Traders on OpenBook continue to be primarily bearish on AUDUSD with average limits at 1.0650 and stops at 1.0900.
OpenBook trader karimderras was also prepared for today’s action by the Reserve Bank of Australia. Moreover, this trader closed two positions with gains of 96%. The trader used a high risk strategy buying near 1.0777 and closing near 1.0801. The trader has been previously bearish on AUDUSD but has now become an Aussie bull.