The headline GDP figure yesterday was quite good (and better than expected), but the consumer is still only spending when given cash by the government. And no wonder, disposable income fell in Q3.
Calendar
CA
| 12:30
| GDP MoM (AUG)
| 0.1%
| 0.0%
|
|
US
| 12:30
| Personal Income/Spending MoM (SEP)
| 0.0% / -0.5%
| 0.2% / 1.3%
|
|
US
| 14:00
| U. of Michigan Confidence (OCT)
| 70.0
| 69.4
|
|
What's going on?
· The GDP report should provide further appetite for risk. We are positive on risky assets.
· The headline GDP was better than expected at 3.5% vs. 3.2% expected (Saxo: 3.6%), but underneath the polished headline figure things were not as rosy. Unsurprisingly the auto tax rebate Cash for Clunkers provided some relief to personal consumption as consumers cut back on savings. The problem is still income, however. Third quarter GDP is driven by consumption not supported by income; indeed consumption grew 3.4% while (disposable) income fell 3.4%.
· Initial Jobless Claims fell again (a “whopping” 1K) but are still at a very high level so far into the crisis.
· Also watch out for Eurozone CPI and Unemployment Rate at 10:00 GMT.
FX
EURUSD
| 0/+
| Grind higher, look for resistance around 1.4865. Medium term ‘weakening USD trend’ still intact.
|
EURJPY
| 0/-
| Range 1.3600 – 135.50. Risk is on further JPY downside, so sell on rallies.
|
USDJPY
| 0/+
| Relentlessly bid throughout asia and fixing today, looks like a test of 91.00 on the cards.
|
AUDUSD
| 0/+
| Buy on dips, v-bounce looking to put 0.9250 or even 0.9300 area in focus.
|
GBPUSD
| 0/+
| Perhaps only suprising is that cable holding so well, 1.6525 support, buy here for upside to 1.6600.
|
Equities
DAX
| 0/+
| Buy on dips towards 5512 and target 5565. Stop below 5495.
|
FTSE100
| 0/+
| Buy on dips towards 5075 and target 5119. Stop below 5060.
|
S&P500
| 0/+
| Buy on dips towards 1063 and target 1073. Stop below 1059.
|
Nasdaq100
| 0/+
|
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DJIA
| 0/+
|
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FX-Options
EURUSD
| Frontend vols sold off after US GDP with 1m down 0.7 vol. RR remained unchanged at 0.8
|
| EUR puts for the curve. Looking to see EURUSD trading towards 1.50 in the short run.
|
EURGBP
| RR were very bid yesterday throughout the curve.
|
| Vols turned bid as well and we expect EURGBP to be back in the 0.90’s again soon.
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Futures
Gold
| 0/+
| USD weakness also seeing rebound in gold, buy dips down to 1,040 area for upside.
|
Silver
|
|
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Crude Oil
| 0/+
| $80.00 providing some resistance during asia hours, buy dips as uptrend to $85.00 likely to persist.
|
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