see the disclosures appendix for important disclosures and analyst certification research ing com currency view 24hr call usd minutes from the fomc meeting released last night were slightly
disappointing for usd bulls like ourselves with the doves seeming to be
firmly in control indeed a few fomc members felt that there might be a case
to expand the fed’s asset purchase scheme should economic growth
weaken or the mortgage market were to deteriorate that places even more
pressure on this week’s nfp to show continued improvement such that
when the fed meets on jan 26-27 slack in the labour market will seen to be eroded at a faster rate elsewhere this year’s bullish start for risk and
commodities might have to contend with asian tightening china nudged its
t-bill yields 4bp higher overnight and we are looking for a surprise korean
rate hike tomorrow which could briefly hit asian equities neutral usd today eur the eurozone will see confidence figures today which are expected to
show continued improvement fear over greece have abated somewhat with 5 year sovereign cds now 30bp off their highs the greek government
needs to submit its budget plan to the european commission by the end of
january and the greek debt agency says there is no need to front-load borrowing plans the first large bond redemption is seen in april however a
eur4-5bn greek t-bill sale expected next week could prove a good test of
sentiment expect eur usd to consolidate in a 1 4300-4450 range today elsewhere nothing is expected from the uk mpc meeting while eur chf
has been the big mover over the last 24 hours target 1 46 jpy japan appointed a new finance minister kan to replace the
experienced fujii who had resigned on grounds of ill health kan is seen as
having far less experience and also far less willing to rein in japan’s debt
problems we view this is a jgb negative usd jpy could soften today krw we are outside of consensus looking for the first bank of korea rate
hike tomorrow the 7 day repo rate has been held at 2 00 since last april
and our asian team believe that fears over the impact of administered price
rises on core inflation can prompt bok into an early 25bp hike that could
briefly upset asian equity markets and see usd krw correct higher however higher korean rates should ultimately suck in more hot money as
the market questions bok intervention resolve while it is tightening key data releases and events country gmt data event forecast consensus prior
eurozone 1000 dec business climate indicator 1 43 1 56
uk 0930 dec pmi services 56 0 56 8 56 6 1200 boe announces interest rate 0 5 0 5 0 5 1200 boe announces apf size £bn 200 200 200
canada 1500 dec ivey pmi 52 0 51 0 55 9
7 january 2010 daily fx strategy usd & oil end of a beautiful relationship page 2 economics global 10 year yield change last 24 hrs bp -3 0 3 6
nok
aud
eur
nzd
sek
jpy
chf
gbp
usd
cad
source reuters 5 year cds change last 24hrs bp 0
100
200
300
jp
y
p
ln g
er
u
s
d
s
ek
g
bp
h
u
f
au
st
ria
g
re
ec
e
-15
-10
-5
0
5y cds 1day chg rhs source reuters change versus usd last 24hrs -0 25 0 25 0 75 gbp
jpy
cad
eur
nzd
chf
sek
nok
aud
source reuters chris turner head of fx strategy london 44 20 7767 1610 chris turner@uk ing com 2
daily fx strategy january 2010
usd & oil end of a beautiful relationship commodity prices have performed strongly since mid-december with crude oil prices up almost 20 and the far broader crb index gaining nearly 10 while this has coincided with usd stability it follows sharp usd appreciation in 1h december when commodities fell in recent years the usd has of course experienced a strong negative correlation with commodities this need not remain the case in 2010 and we suggest price action since mid-december as a potential sign of things to come i e that usd can appreciate without commodity prices declining when us growth prospects are improving fig 1 oil prices vs eur usd fig 2 eia heating oil inventories 5yr history 30
40
50
60
70
80
90
jan09 apr09 jul09 oct09 jan10
1 20
1 25
1 30
1 35
1 40
1 45
1 50
1 55
1 60
wt i oi l prices eur usd rhs us$ bbl 20
30
40
50
60
70
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
20
30
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70
ave min 00-08 max 00-08
2008 2009 000s source ecowin source bloomberg ing _ strong oil price performance of late wti crude at us$82 bbl matches the high in october can also be attributed to geopolitical factors e g the recommencing of attacks by the emancipation of the niger delta mend on nigerian oil facilities and escalating military tension between colombia and venezuela the attempted christmas day airliner attack has also pushed fears of terrorist activity back into the limelight the recent and ongoing impact of cold weather conditions is also playing its part although this is of little surprise at this time of year with energy inventory draws the norm current weather patterns are somewhat extreme the us national weather service said on monday that heating demand is set to be 21 above average levels in the us this week heating demand for natural gas 18 above average 30 for electricity and heating oil demand 11 above average historical records for snowfall have also been set in parts of europe and asia this situation is highlighted by figure 2 showing that eia inventories of heating oil have slumped recently by far more than usually expected however we do not believe upside price pressure on commodities either today or in the months ahead necessitate a weaker usd a key element here is the response of usd to us economic data recent weeks have seen a more positive usd reaction to good data something not seen through most of 2009 we attribute this to the view that the fed’s exit from qe and zirp are no longer such a remote prospect a fed draining excess liquidity and rising short-dated us yields ahead of rate hikes in 2h10 can be a catalyst for a durable trend usd appreciation previously weak usd prospects saw speculative players exacerbate moves by looking for higher oil prices global policymakers have since attempted to clamp down on this while today oil prices are being boosted by cold weather and geopolitical tension however in 2010 we see good cause for energy prices to rise for more constructive reasons i e growing confidence over a us-led global economic recovery and rising resource demand rather than dent usd prospects this scenario supports our forecast for a trend appreciation of usd majors this year tom levinson london 44 20 7767 8057 oil prices up 20 since mid-december oil prices boosted by geopolitical and terrorist fears cold weather has led to a slump in inventories of heating oil more positive usd reaction to good data of late perhaps as fed hikes are near rising oil prices in 2010 can be usd supportive research analyst contacts developed markets title telephone email london mark cliffe global head of financial markets research 44 20 7767 6283 mark cliffe@uk ing com rob carnell chief international economist 44 20 7767 6909 rob carnell@uk ing com james knightley senior economist uk us scandinavia 44 20 7767 6614 james knightley@uk ing com chris turner head of foreign exchange strategy 44 20 7767 1610 christopher turner@uk ing com tom levinson foreign exchange strategist 44 20 7767 8057 tom levinson@uk ing com amsterdam maarten leen principal economist 31 20 563 4406 maarten leen@mail ing nl martin van vliet senior economist eurozone 31 20 563 9528 martin van vliet@mail ing nl dimitry fleming economist netherlands us 31 20 563 9497 dimitry fleming@mail ing nl padhraic garvey head of investment grade debt strategy 31 20 563 8955 padhraic garvey@ingbank com jeroen van den broek head of investment grade credit strategy 31 20 563 8959 jeroen van den broek@ingbank com wilson chin senior debt strategist 31 20 563 8956 wilson chin@ingbank com maureen schuller senior credit strategist 31 20 563 8941 maureen schuller@ingbank com han tong quantitative strategist 31 20 563 8957 han tong@ingbank com mark harmer head of investment grade credit research 31 20 563 8964 mark harmer@ingbank com eleonore lamberty senior credit analyst 31 20 563 8976 eleonore lamberty@ingbank com roelof-jan van den akker technical analyst 31 20 563 8178 roelof-jan van den akker@ingbank com
brussels peter vanden houte chief economist belgium eurozone 32 2 547 8009 peter vandenhoute@ing be carsten brzeski senior economist germany eurozone 32 2 547 8652 carsten brzeski@ing be oscar bernal economist france 32 2 547 3995 oscar bernal@ing be julien manceaux economist switzerland 32 2 547 3350 julien manceaux@ing be philippe ledent economist belgium 32 2 547 3161 philippe ledent@ing be milan paolo pizzoli senior economist emu italy greece 39 02 89629 3630 paolo pizzoli@ing it emerging markets title telephone email london charles robertson head of research & chief economist emea 44 20 7767 5310 charles robertson@uk ing com agata urbańska senior economist emerging europe 44 20 7767 6970 agata urbanska@uk ing com courtney ruesch research assistant 44 20 7767 5567 courtney ruesch@uk ing com bratislava eduard hagara senior economist slovakia 421 2 5934 6392 eduard hagara@ing sk bucharest nicolaie alexandru-chidesciuc chief economist romania 40 21 209 1294 nicolaie alexandru@ing ro vlad muscalu economist romania 40 21 209 1393 vlad muscalu@ing ro budapest david nemeth senior economist hungary 36 1 255 5581 nemeth david@ing hu istanbul sengül da ğdeviren head of research & chief economist turkey 90 212 329 0752 sengul dagdeviren@ingbank com tr pınar uslu senior economist turkey 90 212 329 0751 pinar uslu@ingbank com tr mert yıldız economist 90 212 329 0753 mert yildiz@ingbank com tr kiev alexander pecherytsyn head of research ukraine 38 044 230 3017 alexander pecherytsyn@ingbank com daria volchenko research analyst 38 044 590 3587 daria volchenko@ingbank com manila joey cuyegkeng economist philippines 632 479 8855 joey cuyegkeng@asia ing com mexico city salvador moreno chief economist latin america 52 55 5258 2199 salvador moreno@americas ing com ezequiel garcia economist mexico 52 55 5258 2064 ezequiel garcia@americas ing com moscow stanislav ponomarenko head of research russia 7 495 755 5480 stanislav ponomarenko@ingbank com tatiana orlova economist russia kazakhstan other cis 7 495 755 5489 tatiana orlova@ingbank com mumbai deepali bhargava economist india 91 22 2499 8114 deepali bhargava@ingvysyabank com
new york h david spegel global head of emerging markets strategy 1 646 424 6464 david spegel@americas ing com diego torres corporate debt strategist 1 646 424 7247 diego torres@americas ing com prague vojtech benda senior economist czech republic 420 2 5747 4432 vojtech benda@ing cz sao paulo zeina abdel latif chief economist brazil 55 11 4504 6131 zeina latif@americas ing com singapore tim condon head of research & chief economist asia 65 6232 6020 tim condon@asia ing com prakash sakpal economist asia 65 6232 6181 prakashb sakpal@asia ing com warsaw mateusz szczurek chief economist poland 48 22 820 4698 mateusz szczurek@ingbank pl rafal benecki senior economist poland 48 22 820 4696 rafal benecki@ingbank pl grzegorz ogonek economist poland 48 22 820 4608 grzegorz ogonek@ingbank pl disclosures appendix a n a lyst certification the analyst s who prepared this report hereby certifies that the views expressed in this report accurately reflect his her personal views about the subject securities or issuers and no part of his her compensation was is or will be directly or indirectly related to the inclusion of specific recommendations or views in this report important disclosures company disclosures are available from the disclosur es page on our website at http research ing com the remun e r a t i o n of resea r c h analy s t s is not tied to specific investment banking transactions performed by ing group although it is based in part on overall revenues to which investment banking contribute s e c u r i t i e s pric es prices are taken as of the previous day’s close on the home market unless otherwise stated c o n f l i c t s of int eres t policy ing manages conflicts of interest arising as a result of the preparation and publication of research through its use of internal databases notifications by the relevant employees and chinese walls as monitored by ing compliance for further details see our research policies page at http research ing com foreign affiliates disclosures each ing legal entity which produces research is a subsidiary branch or affiliate of ing bank n v see back page for the addresses and primary securities regulator for each of these entities amsterdam brussels london new yor k singapore tel 31 20 563 9111 tel 32 2 547 2111 tel 44 20 7767 1000 tel 1 646 424 6000 tel 65 6535 3688 bratislava tel 421 2 5934 6111 bucharest tel 40 21 222 1600 budapest tel 36 1 235 8800 buenos aires tel 54 11 4310 4700 dublin tel 353 1 638 4000 geneva tel 41 22 593 8050 hong kong tel 852 2848 8488 istanbul tel 90 212 367 7011 kiev tel 380 44 230 3030 madrid tel 34 91 789 8880 manila tel 63 2 479 8888 mexico city tel 52 55 5258 2199 milan tel 39 02 89629 3610 moscow tel 7 495 755 5400 paris tel 33 1 56 39 32 84 prague tel 420 257 473 111 santiago tel 56 2 659 2700 sao paulo tel 55 11 4504 6000 seoul tel 82 2 317 1800 shanghai tel 86 21 6841 3355 sofia tel 359 2 917 6400 taipei tel 886 2 2734 7600 tokyo tel 81 3 5210 0100 warsaw tel 48 22 820 5018 research offices legal entity address p r i ma r y secur i t i e s regul a t o r amsterdam ing bank n v foppingadreef 7 amsterdam netherlands 1102bd netherlands authority for the financial markets bratislava ing bank n v pobocka zahranicnej banky jesenskeho 4 c 811 02 bratislava slovak republic national bank of slovakia brussels ing belgium s a n v avenue marnix 24 brussels belgium b-1000 banking finance and insurance commission bucharest ing bank n v bucharest branch 11-13 kiseleff avenue po box 2-208 011342 bucharest 1 romania romanian national securities and exchange commission budapest ing bank n v hungary branch dozsa gyorgy ut 84 b h 1068 budapest hungary hungarian financial supervisory authority hong kong ing bank n v hong kong branch 39 f one international finance centre central hong kong hong kong monetary authority istanbul ing bank a s ing bank headquarters eski buyukdere cad ayazaga koyyolu no 6 maslak 34467 istanbul turkey capital markets board kiev ing bank ukraine jsc 30-a spaska street kiev ukraine 04070 ukrainian securities and stock commission london ing bank n v london branch 60 london wall london ec2m 5tq united kingdom authorised by the dutch central bank manila ing bank n v manila branch 21 f tower i ayala avenue 1226 makati city philippines philippine securities and exchange commission
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