Movements on the Pacific Area Rates

THE EMPLOYEMENT SITUATION FOLLOWING THE ELECTIONS

The U.S. will start the first week of December with lots of important macroeconomic data, but still waiting to know the evolution of the fiscal cliff and debt ceiling: on December 3rd, the manufacturing ISM, on December 5th the non-manufacturing ISM, but also on December 7th one of the indicators that is able to influence the expectations on new monetary policy measures by the Fed, that is the unemployment rate in November and the non-farm payrolls, both scheduled for the same day. The forecasts indicate the release of 100,000 new payrolls and the unemployment rate at 7.9% in November. On the same day, the consumer confidence will be published.

ATTENTION TO THE ECB

There are no important data coming from Europe in the coming week, except for the usual monthly appointment with the ECB meeting (December 6th), from which the market is not expecting anything special. The only two indicators to follow will be the manufacturing PMI (December 5th) and the German Industrial Production (December 7th). However, EURUSD confirms its strength coming back above the average at 50 and 200 days.

LOWEST AUSTRALIAN RATES FROM 2009

December 4th is going to represent quite an important day for Aussie, as a cut of the official rates at 3%, the low from 2009, will happen. This will be followed on December 5th by the GDP of the third quarter of 2012 and on December 6th by the unemployment rate of November. Concerning this last point, AUDUSD has a very interesting peculiarity linked to the volatility that characterizes the eight days following the announcement by the RBA. The graph lets us know that a volatility of at least 159 pips is guaranteed. So if the market will exceed the resistance of 1.05 after the meeting, then we will go long on AUDUSD; alternatively we will go long on EURAUD at 1.2350. Also coming from the oceanic continent the announcement on interest rates by New Zealand (expected unchanged at 2.50%).

Trade: long AUDUSD over 1.05 stop 1.0330 or long EURAUD at 1.2350 stop 1.2240

Trade: long AUDUSD

It is interesting to note how AUDNZD follows faithfully the spread trend between official Australian and New Zealand rates. At the moment we are at 75 basis points, but if the market is right (and therefore Australia will cut 25 basis points), then we will go down to 50 bp. Surprises are what really creates the volatility and not surely what we were expecting from the market. Therefore, considering the presence of a strong support at 1.26, we will enter long at 1.261, stop loss 1.252, trusting on the continuation of the long-term trend.

Trade: long AUDNZD at 1.2610 stop 1.2520

Trade: long AUDNZD

BRIC COUNTRIES

CHINA
December 3RD HSBC PMI manufacturing
December 5TH HSBC PMI services
BRAZIL
December 3RD trade balance
December 4TH industrial production
RUSSIA
December 5TH inflation

CONCERNING LAST WEEK

The Brazilian inflation has fallen below 7%, but the rates are still unchanged at 7.25%. USDBRL failed to overcome the resistance of 2.10 and so buying Real at the current levels is correct.

USDZAR has almost reached our target at 9.10 before retracing below 8.80. Adjusting the stop loss at 8.80 is correct, but due to the bullish reaction on Friday, we come back long on USDZAR, stop loss 8.75.

Trade: long USDZAR at stop 8.75

Our short on NZDJPY is above 68.00. For those not yet in position, we reconfirm our bearish view to take advantage of the proximity of the resistance that has been trying for years to hold the bullish attempts of NZDJPY. Stop loss above 69.80.

Trade: long NZDJPY at stop 69.80

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