MORNING BRIEFING : Record budget deficit in the U.S.

[RTFX-Trading]

MORNING BRIEFING :  Record budget deficit in the U.S.

What’s new :
United States: President Obama present his budget proposal
United States: Volcker called for greater control of banking risks
Europe: After its sharp decline, the EUR initiates a technical correction
Australia: Central Bank of Australia keeps its interest rates unchanged
Switzerland: The index of consumer sentiment in better shape
France: The exchange parity index at the next G7

Today:


Rates in Asia and Indices:
EURUSD: 1.3935-1.3886.
USDCHF: 1.0607-1.0556.
EURUSD: 1.5975 - 1.5920.
EURJPY: 126.62 - 125.85.
USDJPY: 90.91 - 90.58.
Dow Jones: 10'185 +1.17%.
NASDAQ: +1.11% 2'171.
S & P 500: 1,089 +1.43%.
Nikkei: 10'371 +1.63%.
Shanghai +0.73% 2'962.
Gold: $ 1'103 .65.
Crude oil: $ 73.36

Comments:

In the presentation of his budget, which covers both the mastery of public funds and the fight against unemployment, Mr. Obama said he expects to see the budget deficit peaked at 1,560 billion dollars.

In his next delivery to the U.S. Senate Mr. Paul Volcker, one of President Obama’s economic advisers and former head of the Fed (Federal Reserve Bank) should call on Congress to limit the scope for risk-taking by large banks to prevent a recurrence of a situation where the State must guarantee the survival of private companies by using public funds. The stock market could suffer, while the USD and the JPY could find additional support.

After the sharp drop in recent days, reaching its lowest level against USD in 6 months, the EUR has responded with a technical rebound, which should test the barrier around 1.3990-1,40. While various technical indicators suggest near the end of this downtrend, the financial problems of Greece continue to weigh on the EUR, with the market wondering if a possible aid to Greece would come from other members of the euro zone.
The surprise announcement by the Central Bank of Australia of unchanged interest rates at 3.75%, while the market expected an increase of a quarter of a point, caused an immediate reaction, the AUD loosing against all currencies, even if an increase is still expected for the next meeting of the BCA. This break should bring additional support to save heaven currencies such the USD and JPY.

The index of consumer sentiment in Switzerland, after very poor figures in October to -14 points, rebounded to -7 points, consumers expecting a improvement in the pace of unemployment ‘s increase and an improvement of the general economic conditions.

A French official declared that the issue of parity of exchange rate should be addressed at the next G7 summit. Another attempt to force China to liberalize the exchange rate of the Yuan?

Good day.

Pascal Bovay
RTFX Ltd
Trading desk

RTFX Ltd is licensed to conduct investment services business by the Malta Financial Services Authority. This information does not constitute an offer or solicitation and is provided for information purposes only. This information shall not be deemed to constitute advice and should not be relied on as such to enter into a transaction or for any investment decision. Any opinions expressed in this document represent the views of RTFX Ltd at the time of preparation. They are thus subject to change without notice. RTFX Ltd believes that the information contained herein is accurate as at the date of publication. However, no warranty of accuracy is given by RTFX Ltd and no liability in respect of any errors or omissions, including any third party liability, are accepted by RTFX Ltd or any director, officer or employees.