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G7 statement coming in at 10 am
UK JAN CPI -0.5% PPI 0.2% m/m as exp
Cable update.
UK CPI & PPI coming up at 9.30
Cable breaks the 1.5630 level
Commerzbank and UBS on the Euro
Obama calls North Korea test provocative
Swiss Jan CPI -0.3% as expected
Euro sliding towards 1.3350 level
ECB’s Constancio: may need public money in bank failures
France Current Account: E-3.6B in Dec from E-2.8B in Nov
Barclays announces 3700 job cuts
North Korea confirms Nuclear test
AUD/USD Orderboard
EUR/USD Orderboard
USD/JPY Orderboard
World Bank chief economist calls on G20 to coordinate policies
Option expiries
Trade ideas
European calendar Tue 12.02.2013

G7 statement coming in at 10 am

Posted: 12 Feb 2013 01:44 AM PST

I’m hearing that a statement is due out on currencies. Don’t know as yet if it’s a coordinated one or just a UK one.

UK JAN CPI -0.5% PPI 0.2% m/m as exp

Posted: 12 Feb 2013 01:32 AM PST

Most came in as expected.

CPI m/m -0.5% y/y 2.7%

The core CPI (exc food & energy) came in lower at 2.3% to 2.4% exp.

PPI

Output m/m 0.2% from -0.1% y/y 2.0%
input m/m 1.8% moderately higher than 1.2% exp y/y also pushed higher to 1.3% from exp 0.1%

RPI 3.3% from exp 3.2% y/y

Core CPI coming in lower at 2.3% while the overall rate stays at 2.7% highlights the pressure still inflation on from higher food and energy prices. I briefly mentioned this here.

Input prices are also up to 1.8% m/m & 1.3%y/y also reflecting the pressures producers and manufacturers are facing.

It’s a head banger for the BOE as while they see the core CPI coming down to target the external ingredients are a thorn in their side.

I’m wondering if the G7/G20 is going to comment on oil prices as well as currencies as this is still a big issue in global growth.

Cable update.

Posted: 12 Feb 2013 01:30 AM PST

1.5600 didn’t last long and we tripped through stops just below to a low of 1.5572.

As pointed out by Orly and Ricardo we’ve gone through soon important tech levels (i’ll get a chart up shortly).

UK CPI & PPI coming up at 9.30

Posted: 12 Feb 2013 12:56 AM PST

As you can see from the expected figures, CPI month on month is forecast to fall 1%

This will be a big figure to watch ahead of the BOE inflation report on Wednesday. However, a more important figure to look at fundamentally is the PPI. Input prices (prices paid) are expected to rise by 1.4% following recent steady prices in the last quarter 2012. Output prices (prices charged) are only rising marginally and still averaging flat over the last 6 months. This indicates reluctance on the part of producers to pass on the higher costs. This is consistent with why the UK has a flatlining economy at the moment and will have for some time. Until demand picks up for what is being produced, producers can't pass on higher costs and are just taking the hit on their profit margin.

This brings me onto another point. We are hearing the term 'currency wars' bandied about and it is topic of the day everywhere. Now for all the positives and negatives of weak/strong currencies in a country's economy and what the politicians would like, it shouldn't be stoked as a prominent tool for encouraging growth. The problem we are facing is a lack of growth. When you boil it all down to the basic level, at the moment businesses would just like to be selling their goods and services first and foremost. So, to a certain extent, just like the PPI situation, producers have had to suck up a currency loss to get their goods sold. While a weaker currency may benefit them it's only likely to reduce their losses rather than act as a boost to profits. Businesses can't afford to just sit and wait for a more favourable currency. Only once the man at the bottom starts buying again will growth pick up and only then will businesses start to be bothered about the currency problem.

Cable breaks the 1.5630 level

Posted: 12 Feb 2013 12:48 AM PST

Don’t know why as of now.

We’ve hit stops through 1.5620 and heading for 1.5600

Looks like sterling selling all round.

EUR/GBP has popped to 0.8567.

GBP/CHF has crumbled to 1.4360.

GBP/JPY approaching overnight lows of 1.4683

Commerzbank and UBS on the Euro

Posted: 12 Feb 2013 12:41 AM PST

FXstreet

Karen Jones, Head of FICC Technical Analysis at Commerzbank, suggested, "We suspect that the market may well have topped, however key support remains the 1.3164 7 month uptrend and a close below here is required to negate the up move completely

Strategists G.Yu and G.Berry at UBS inform the Swiss bank is again bullish on the cross, adding, "While strong support at 1.3270 holds, the risk is for resumption of strength. Resistance is at 1.3472 ahead of 1.3564

Make of it what you will. Just a couple in a sea of many opinions.

Obama calls North Korea test provocative

Posted: 12 Feb 2013 12:30 AM PST

In his nighcap and slippers…

U.S. President Barack Obama called North Korea's nuclear test a threat to regional stability that undermines United Nations Security Council resolutions and warrants "swift and credible" action by the international community, according to a White House statement.

I would love to have heard his initial reaction after getting woken up by that phone call. It would probably be the same as me when my kids ambush me in bed at 4am.

Swiss Jan CPI -0.3% as expected

Posted: 12 Feb 2013 12:19 AM PST

m/m -0.3% from prior -0.2%

y/y -0.3% from prior -0.4%

No reaction in EUR/CHF

Euro sliding towards 1.3350 level

Posted: 12 Feb 2013 12:12 AM PST

Having not managed to make any meaningful recovery from last weeks Draghi drop the euro is sliding towards strong bids and support at 1.3350. If it holds again then we could be kept tin this tight 1.3350-1.3430 range.

Low so far 1.3364

ECB’s Constancio: may need public money in bank failures

Posted: 12 Feb 2013 12:04 AM PST

Banks should pay for winding down their failing peers but sometimes taxpayer money may also be needed in this process, European Central Bank Vice President Vitor Constancio said on Tuesday.

may be a need for “temporary use of public money when, for example, a bridge bank needs to be created

public money should be in the form “of credit lines that need to be repaid later on

banks should be the first line of funding for any bank resolution schemes.

banking union project did not necessarily need to involve a joint deposit guarantee agency from the beginning

From Reuters

France Current Account: E-3.6B in Dec from E-2.8B in Nov

Posted: 11 Feb 2013 11:56 PM PST

May have caused the 20 pip drop in the euro.

Also ECB’s Constancio on the wires saying that they may need public money for bank failures.

Barclays announces 3700 job cuts

Posted: 11 Feb 2013 11:32 PM PST

Barclays has said it will cut 3,700 jobs this year following a strategic review.

That includes 1,800 jobs at its investment bank and 1,900 in European retail and business banking.

It said the job cuts would result in a restructuring charge of close to £500m in the first quarter of 2013.

Barclays currently employs 140,000 staff.

From the BBC

Numbers wise it may not seem a lot but that’s no consolation to those losing their jobs. I still firmly believe that we’re a long way from the end of cutbacks and job losses in the UK.

North Korea confirms Nuclear test

Posted: 11 Feb 2013 11:25 PM PST

Official state media said the test was conducted in a safe manner and is aimed at coping with “outrageous” US hostility that “violently” undermines the North’s peaceful, sovereign rights to launch satellites.

Defying UN Security Council orders they may now face further sanctions.

From The ET

It will be interesting to hear the Chinese response. According to a previous article in the Global Times North Korea must “pay a heavy price” if it proceeds with the test.

AUD/USD Orderboard

Posted: 11 Feb 2013 11:22 PM PST

Not a lot of volatility in AUD/USD today. Still good-sized selling weighing on bounces, with exporter interest bidding below.

Offers 1.0285/95
Initial offers 1.0265/75 (nibbled at today in the Asian timezone)
Bids at 1.0240 and trail lower, better around 1.0220.

EUR/USD Orderboard

Posted: 11 Feb 2013 11:17 PM PST

Topside

Stops above 1.3440
Initial offers at 1.3420/30

On the downside:

Some stops below 1.3375
Bids 1.3360/70
More stops (not large) sub-1.3350
Bids 1.3320/30

USD/JPY Orderboard

Posted: 11 Feb 2013 11:03 PM PST

Good Morning to everyone (except to those experiencing afternoon and evening, in which case Good Afternoon and Good Evening).

USD/JPY is up on late New York comments from US Treasury's Brainard of the US supporting Japan's efforts to reinvigorate its economy and beat deflation.

USD/JPY traded to a high of 94.39, EUR/JPY just shy of 126.60. Asian trade was then range-bound, until the past hour when some trader stops triggered below 94.00.

There are bids trailing down from 93.85.

More trading stops below 93.50.

On the topside, offers ahead of barriers at 94.50, some offers around 94.75 and offers ahead of barriers at 95.00. For the USD/JPY, when is someone going to rename barrier options “speed bumps”?

World Bank chief economist calls on G20 to coordinate policies

Posted: 11 Feb 2013 10:56 PM PST

In an interview with Reuters, Kaushik Basu said G20 finance ministers, meeting in Moscow on February 15 and 16, should act on a solution before escalating tensions spark another global economic crisis.

risk of a sudden plummeting of the global economy had diminished
We are not in a currency war but could be inching towards one
Global leaders need to coordinate policy to prevent either (one) from happening or markets believing it is happening

I do believe there is a shifting of global gear that is going on – and you won’t see it just now – but if you do prospecting for three to four years, a couple of emerging economies will come out as the growth drivers of the world

From Reuters