Friday, 8 February 2013


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Monday, 4 February 2013

Daily Market & FX Commentary – Political uncertainty in Europe

Daily FX Commentary: (Morning Report)

The Euro eased further, to nearly fully retrace 1.3540/1.3710 upleg, once 1.3600 handle was lost. Initial signals of basing are seen on hourly chart, as 1.3540/30 area is seen as ideal reversal point, between 50% and 61.8% of larger 1.3413/1.3710 ascend, to keep underlying bull-trend intact. To confirm this scenario and re-focus 1.3700 zone, regain of minimum 1.3650, 61.8% of 1.3710/1.3547 decline is required. Conversely, loss of 1.3540 handle, would risk extension towards 1.3500/1.3477, next support levels.
Res: 1.3585, 1.3617, 1.3648, 1.3674
Sup: 1.3540, 1.3528, 1.3500, 1.3477
Cable enters near-term corrective phase sharp slide from last Friday peak at 1.5877, found footstep at 1.5684, just ahead of more important 1.5673, 28 Jan fresh 5-month low. Current bounce is seen as further consolidation ahead of fresh leg lower, as previous recovery attempt was rejected on approach to psychological / 200 day MA resistance that keeps the upside limited for now. Upside extension through 1.5700, sees strong barrier at 1.5760, Fib 38.2% of 1.5877/1.5684 and hourly 55 day EMA, with potential break higher to prolong the consolidation and allow for possible recovery towards Fibonacci resistances at 1.5780/1.5800, 50% and 61.8% retracement. On the downside, penetration of 1.5684/73, would open fresh bear-phase and expose 1.5600.
Res: 1.5760, 1.5773, 1.5800, 1.5845
Sup: 1.5707, 1.5684, 1.5673, 1.5634
Fresh extension through psychological 93.00 barrier, show bulls firmly in play for possible test of our next upside targets at 93.75, Jan 2010 high and 94.00, round-figure barrier. Daily studies continue to point higher, despite overextended conditions that so far did not generate any reversal signal. On the other side, easing towards initial support and higher base at 92.50, was triggered by overbought 1/4h studies, with further corrective dips towards 92.00 zone, Fib 38.2% of 90.73/93.17 / 4h 20 day EMA, seen not harmful for near-term bulls.
Res: 92.95, 93.17, 93.50, 93.75
Sup: 92.50, 92.28, 92.00, 91.77
Corrective action from last Friday’s fresh low at 0.9020, remains capped under initial barrier at 0.9120, 31 Jan highs / Fib 38.2% of 0.9291/0.9020 descend / 20 day EMA, keeping the downside at risk. As hourly studies are losing traction and 4h indicators remain in the negative territory, not much of recovery could be expected in the near-term, as long as market stays below psychological / 50% retracement barrier at 0.9200. This keeps the downside favored for now, as loss of 0.9020/00 support are would open 0.8930, Feb 2012 low and 0.8900, psychological support, next.
Res: 0.9120, 0.9156, 0.9187, 0.9200
Sup: 0.9074, 0.9020, 0.9000, 0.8930

Daily Market Commentary: (Evening Report)

London Markets Report

London close: Footsie drops 100 points on political uncertainty in Europe
Market Movers
  • techMARK 2,273.92 -0.73%
  • FTSE 100 6,246.84 -1.58%
  • FTSE 250 13,177.02 -0.74%
Increased political risk in the Eurozone presented a good opportunity for traders to take profits on Monday, as investors made the most of the recent surge on stock markets worldwide.
The FTSE 100 dropped 100 points today, a fall of around 1.6%. This follows the impressive 6.4% gain seen last month, the index's best January performance since 1989.
"Last night's power failure at the US Super Bowl appears to have manifested itself into European equity markets today as the sentiment that had fed the strong rally of recent weeks appears to have come to a shuddering halt," said senior market analyst Michael Hewson from CMC Markets.
"Investors are once again being spooked by political uncertainty from both Spain and Italy as both countries deal with local political difficulties that could derail ongoing and future reform programmes."
Peripheral bond yields rise on political risk
Spanish 10-year bond yields were at their highest levels of 2013 today, up 22 basis points at 5.43%, as markets digest rumours over corruption scandals at Prime Minister (PM) Mariano Rajoy's governing People's Party.
"The fear for investors is that these allegations, though denied by PM Rajoy, will prompt bouts of civil unrest and the removal of the current government which would pave the way for general elections," explained Joe Rundle, head of trading at ETX Capital.
Over in Italy, the borrowing rate on the Italian benchmark note rose 14 basis points to 4.47% as the support gains for former PM Silvio Berlusconi in the public opinion polls. With just a few weeks to go before parliamentary elections, markets are fearing a political deadlock post-election.
Meanwhile, back in London, economic data was doing its bit to dampen sentiment. Markit's UK construction purchasing managers' index (PMI) was unchanged at a six-month low of 48.7 in January. Consensus forecasts were for a small up-tick to 49.

Europe Market Report

Europe midday: Spanish debt falls on higher political risk
- Periphery debt and equities seeing some selling pressure
- LCH Clearnet lowers margin requirements on Spanish and French debt
- Spanish 10 year bond yields rise on political risks
FTSE-100: -0.65%
Dax-30: -0.46%
Cac-40: -0.78%
FTSE Mibtel 30: -1.89%
Ibex 35: -1.45%
Stoxx 600: -0.31%
European equities are now all moving clearly lower, with periphery markets clearly under the most pressure.
The reason for the latter has to do with the somewhat increased election uncertainty in Italy, where the most recent polls show Mario Monti losing support against his political rivals, particularly former Premier Silvio Berlusconi.
In Spain, the centre-right People's Party has come under increasing pressure after the left-leaning El Pais newspaper accused at least a dozen government officials of receiving illicit payments, sometimes from the construction industry. The country´s Prime Minister has denied those allegations, saying that the evidence provided by the newspaper – purportedly from the party´s own Treasurer, Jose Luis Barcenas, who himself was already being investigated - had been tampered with.
The above comes against the backdrop of an increasing sense of weariness over the slow pace of the economic recovery in Spain.
Somewhat ironically, according to EPFR global equity funds attracted another $18.7bn during the final week of January, with flows into Italy reaching their best level since the financial crisis.
Similarly, just this morning LCH Clearnet has cut its margin requirements for trading in Spanish and French public debt.
Investor confidence recovers less than expected
Eurozone producer prices fell by 0.2% month-on-month in December, as expected.
The Sentix index of Eurozone investor confidence improved to -3.9 points for February (Consensus: -1.7) after a reading of -7.0 for the previous month.
Slight losses in other asset classes
The euro/dollar is now sitting at 1.3563, off by 0.57%.
Front month Brent crude futures are now down by 0.725 dollars to the 115.92 dollar level on the ICE.

US Market Report

US open: Inflows into equities surged in January
The main US equity averages have begun the day lower by roughly 0.7 per cent on average. That following some negative news-flow on the political front in the Eurozone periphery and Friday´s large move higher on Wall Street.
Likewise, speculation regarding the possibility that Chinese authorities may soon decide to move towards a more neutral stance may also be a factor weighing on investor sentiment.
That comes at a time when some strategists are critical of the very large (5%) gain seen in US equities during the month of January, as they believe they have outpacing growth by too large a margin.
Time will tell, in any case this past Saturday the President of the Federal Reserve of St.Louis, James Bullard, told Bloomberg that if data remained strong then he would favour moderating the pace of quantitative easing.
In a similar vein, it was today revealed that investors poured a record $77.4bn into US-listed mutual funds and exchange traded funds during January, smashing the previous record of $53.7bn in February 2000, which was just before the technology stock bubble burst. TrimTabs CEO David Santschi says the inflow should make 'contrarians' very nervous because inflows into funds have historically coincided with market tops.
10 year US Treasury yields are now down by 2 basis points, to 2.05%. That is a technical resistance levels which is being watched closely by some analysts.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Saturday, 2 February 2013

Weekly Market analysis - The Euro has continued to gain support from an easing structural risks

Weekly Market analysis

The Euro has continued to gain support from an easing structural risks and an improvement in yield considerations with some return of capital. There has also been further speculation that the Euro would gain be default given the aggressive monetary policies in the US and Japan. There will still be important vulnerability surrounding the Euro-zone, especially given the political considerations and risk conditions are liable to deteriorate again over the next few weeks with Asian unease also likely to increase.

Key events for the forthcoming week
DateTime (GMT)Data release/event
Tuesday February 5th03.30Australia interest rate decision
Tuesday February 5th09.30UK PMI index services
Thursday February 7th12.00Bank of England interest rate decision
Thursday February 7th12.45ECB interest rate decision


The US GDP data has unsettled confidence given the unexpected contraction, but the economy overall is still likely to make solid progress.  The PMI data has been generally favourable and there will be relief surrounding investment and housing trends. There will be some unease surrounding consumer spending trends. The Federal Reserve remains committed to aggressive quantitative easing in the short-term through monthly bond purchases, but there will be some pressure for the Fed to moderate policies later in the year.  The Fed will also be subjected to international pressures given underlying currency tensions. The dollar will gain some defensive support if fears surrounding Asian growth increase again.

The dollar remained on the defensive against the Euro with losses to beyond 1.36, although the US currency was more resilient on a trade-weighted basis.

The headline US durable goods order data was stronger than expected with a 4.6% increase from 0.8% previously while there was a core 1.3% increase for underlying orders which triggered some boost in confidence surrounding investment levels despite the uncertainties surrounding future Boeing orders.

In contrast, the latest GDP data was weaker than expected with a contraction of 0.1% for the first quarter compared with expectations of around 1%. There was an increase in final demand and the data was undermined in part by a sharp drop in defence spending which suggested that the underlying data was stronger.

The Federal Reserve announced that it would continue its programme of bond purchases at US$85bn per month in the short-term. The Fed was slightly more confident surrounding the growth outlook with a modest labour-market improvement and the Fed also suggested that financial risks had declined. Kansas City President George dissented from the decision due to concerns that policy accommodation would increase longer-term inflation risks

The latest US ADP employment report was stronger than expected with a headline private-employment estimate of 192,000 from a downwardly revised 185,000 the previous month.  There was an increase in US jobless claims to 368,000 in the latest week from 330,000 previously. Looking at the moving average, there were expectations of solid, but unspectacular employment growth in Friday’s payroll report. The Chicago PMI index was stronger than expected at 55.6 from 51.6.


Structural fears surrounding the Euro-zone will remain lower in the short-term and there has been a continuing decline in peripheral bond yields. The growth outlook in Germany has certainly improved, but conditions within the Euro-zone as a whole are still very difficult with peripheral recession continuing while the French economic conditions are continuing to deteriorate. There is also the threat of increasing political tensions within Spain and Italy. Overall confidence in the Euro could still falter quickly given the underlying growth vulnerability and there will be pressure for the ECB to relax policy conditions.

The Euro moved to 14-mnth highs against the dollar and advanced strongly for the week as a whole with a further shift in underlying positioning.

The latest Euro-zone money supply data recorded a slowdown in M3 growth to 3.3% from 3.8% the previous month while lending contracted for the eight successive month with a 0.7% annual decline. The data will reinforce unease surrounding monetary growth and the sharp drop in lending to non-financial institutions will be particularly alarming. There will be continuing fears that real economic damage be damaged and there will also be concerns over any further tightening of Euro-zone monetary policy through a stronger exchange rate or early LTRO loans repayments. The ECB data did not suggest that there had been a switch to shorter-term lending to replace the LTRO funds.

The troika will examine the Spanish banks to assess the burden of bad loans and there will be further unease surrounding the housing sector as transactions remain extremely low and prices continue to decline. There was also a very sharp decline in Spanish retail sales.

Following a much weaker than expected German retail sales report, underlying sentiment was boosted by the stronger than expected unemployment data with a seasonally-adjusted decline of 16,000 for December.

There were some fresh concerns surrounding the banking sector following weaker than expected Deutsche Bank earnings. There were also further concerns surrounding the Monte dei Paschi situation, especially given the potential impact on the Italian general election. There were also concerns that plans for monetary union, already facing hostility from within Germany, would suffer a further loss of support. There were also some concerns surrounding allegations of illegal payments surrounding Spain’s governing party, but financial flows still provided important net Euro support.


The Bank of Japan will maintain an aggressive monetary policy in the short-term with a 2% inflation target. The open-ended commitment to bond purchases is not due to come into effect until 2014 and there will be further concerns whether the central bank will actually deliver on the more aggressive policies. The appointment of new Bank of Japan governor will be watched extremely closely over the next few weeks and a dovish appointment would fuel expectations of a substantially weaker yen, although internal tensions would increase. The yen could still gain some support if global risk appetite deteriorates.

The US currency continued to gain significant underlying support from rising US Treasury bond yields with benchmark yields testing the 2%  area. Underlying yen sentiment remained weak with solid interest in selling any significant rallies. Asian currency policies will also remain an important focus with countries such as South Korea likely to be increasingly uneasy over the implications of yen weakness.

There was underlying speculation over a dovish Bank of Japan Governor to replace Shirakawa in April which reinforced negative underlying  yen sentiment. Current Deputy Governor Yamaguchi stated that it was not directly aiming to weaken the yen

The yen continued to be undermined by expectations of fresh easing by the Bank of Japan and a government commitment to drive the yen down in order to combat deflation even if a weaker exchange rate is not an official policy. There were major concerns surrounding the appointment of the next Bank of Japan governor. Extremely negative sentiment and a flow of funds back into the Euro pushed the yen sharply weaker again late in US trading with the dollar moving to fresh 30-month highs above 92.20 as the Euro rose above 125.50. The yen also failed to gain any respite following the weaker than expected Chinese PMI data.


There will be further concerns surrounding the UK growth outlook which will reinforce fears surrounding government finances.  The PMI data will be watched very closely and another set of weak readings would reinforce growth-related fears.  Markets will remain on alert for signs of further quantitative easing and will also be monitoring any possible switch to nominal GDP targeting as this could trigger an even more aggressive monetary policy.  Defensive capital inflows are liable to weaken in the short-term which will maintain underlying Sterling vulnerability and the currency is liable to lose ground.

Underlying Sterling sentiment remained negative following Friday’s weaker than expected GDP report with fears over a triple-dip recession. The currency was also undermined further by comments from incoming Bank of England Governor Carney who hinted that monetary policy would remain extremely accommodative.

There were rumours of an imminent downgrading of the AAA credit rating and widespread expectations that it was only a matter of time before a downgrade was delivered which maintained the potential for further net capital outflows. There was also be further speculation that the Bank of England andgovernment might consider a change in mandate to nominal GDP targeting.

The latest consumer lending data was stronger than expected with overall lending rising to GBP1.7bn from GBP0.1bn previously. There was also a stronger reading for mortgage approvals and money supply growth which triggered some relief over underlying consumer spending trends. There was also a small improvement in the latest consumer confidence data.

Swiss franc: 

There will be unease surrounding the growth outlook, especially in view of the KOF index deterioration. Given that the Swiss franc was a key beneficiary of defensive inflows during the Euro-zone crisis, there will be further speculation of a reversal in flows now that tensions have eased. There will be further debate over the merit of lifting the Euro minimum level, although the National Bank will continue to be very reluctant to engage in a policy of fine tuning through a small move in the minimum level.

The franc found support near 1.25 against the Euro as volatility remained higher. The dollar remained on the defensive and dipped to lows below the 0.91 level.

The latest KOF business confidence index was weaker than expected at 1.05 from a revised 1.29 previously which will tend to increase concerns surrounding the growth outlook and maintain pressure for franc gains to be resisted.

There was further speculation that the National Bank would covertly aim to push the currency weaker. There was no significant change in the latest central bank reserves data and there will be some expectations that the bank will look to lower the Euro proportion from close to 50%.

Australian dollar

The Australian dollar was confined to relatively narrow ranges during the week with resistance on any move to the 1.05 area and it retreated to below1.04. There was evidence of selling against the Eurowhich tended to undermine the currency and there were some longer-term doubts surrounding the Australian and Asian economy.

The domestic economic data provided some support with gains in business confidence and housing sales which provided some degree of relief following a string of weak releases, but the manufacturing PMI data was weak.

The Australian dollar is likely to remain generally vulnerable on cross-related selling together with concerns surrounding the regional and domestic growth outlook.

Canadian dollar: 

The US dollar was unable to break above the 1.01 level against the Canadian dollar during the week and moved back to lows below the parity level late in the week with some degree of month-end Canadian dollar support.

The latest GDP data was stronger than expected with a 0.3% increase while there was a decline in producer prices.

The US currency should be broadly resilient on valuation grounds, especially with some increase in concerns surrounding the underlying Canadian fundamentals. 


Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Thursday, 31 January 2013

Daily FX & Market Commentary: Focus turns to Friday's US jobs report

Daily FX Commentary: (Morning Report)


The pair continues to trend higher and approaches the next target at 1.3600, following break above very strong 1.3500 resistance zone. Positive technical were supported by fundamentals that gave the single currency an additional boost. Corrective easing on overbought hourly / 4h conditions faces support at 1.3520, Fib 38.2% of 1.3413/1.3587, reinforced by hourly 55 day EMA and strong one at 1.3500 zone, previous resistance. Yesterday’s close above 1.3500 and 1.3526, 200 day MA is seen supportive, with clearance of psychological 1.3600, seeing no significant barriers until 1.3700, round figure and 1.3726, Fib 76.4% of 1.4246/1.2042 descend. 

Res: 1.3547, 1.3567, 1.3600, 1.3650 
Sup: 1.3532, 1.3520, 1.3500, 1.3477 


Cable holds positive near-term sentiment, extending recovery from 1.5700 support zone. Regain of initial 1.5800 barrier and test of more significant 1.5825 breakpoint, sees scope for fresh extension higher and possible full retracement of 1.5891/1.5673 downleg, above which to open way for stronger recovery. Break above 4h 55 day EMA and 4h indicators entering positive territory, supports the notion. Previous barriers at 1.5800/ 1.5780 zone, now act as initial supports. 

Res: 1.5840, 1.5850, 1.5891, 1.5925 
Sup: 1.5800, 1.5780, 1.5764, 1.5724 


Near-term price action moves in a consolidative mode, following yesterday’s stretch to a fresh high at 91.40. While immediate support higher platform base at 90.40 zone stays intact, near-term structure will remain aligned towards the upside. Extension of broader uptrend through 91.40, to focus next barrier at 92.00. Hourly studies hold neutral tone, however, reversing 4h chart indicators do not rule out further easing that would harm immediate bulls if psychological / Fibonacci support at 90.00 contains any stronger dips. 

Res: 91.00, 91.25, 91.40, 92.00 
Sup: 90.73, 90.55, 90.31, 90.23 


The pair accelerated losses after repeated attempt lower finally broke below 0.9200 support and fresh slide dipped through 0.9100, to test very strong support and near-term base at 0.9080. Dominating negative tone on lower and larger timeframes studies, keeps bears firmly in play, however, corrective action on oversold conditions and attempt at strong support, is seen preceding fresh leg lower. Minor resistance lies at 0.9120 zone, with more significant barrier seen at 0.9165, Fib 38.2% of 0.9291/0.9086 downleg, reinforced by descending hourly 55 day EMA, while 0.9200 zone is seen capping for now. On the downside, break below 0.9080 to open psychological 0.9000, also March 2012 low, next. 

Res: 0.9125, 0.9140, 0.9165, 0.9188 
Sup: 0.9086, 0.9080, 0.9050, 0.9000 


Daily Market Commentary: (Evening Report)

London Market Report

Stocks fall as focus turns to Friday's US jobs report
Equities were extending losses on Thursday after yesterday’s shock contraction in the States, as markets braced for another busy day on the economic calendar tomorrow.

“Traders were unwinding positions earlier on January's phenomenal rally which sees major share markets at multi-year highs,” said market strategist Ishaq Siddiqi from ETX Capital.

Market analyst Craig Erlam from Alpari said this afternoon that markets were nervous ahead of the crucial jobs report in the US due out tomorrow afternoon. He said: “The jobs report tomorrow is always one of the most keenly watched items on the economic calendar, with the potential to cause significant movements in a number of markets. The figures over the last couple of months have been pretty uninspiring, as the private sector held off on hiring due to the uncertainty surrounding the fiscal cliff.

“All of the political infighting did little to ease these concerns, but now a lot of this has been dealt with, especially in respect to taxes, I expect to see the numbers pick up in the first few months of the year. We could even see the first quarter numbers come in much higher than expected, with a backlog of new hires over the past few months being carried out at the start of 2013.”

Stocks fell yesterday after the US Commerce Department revealed that the world's largest economy shrank by 0.1% in the last three months of last year, a stark contrast to the 3.1% growth seen in the third quarter. Forecasts were for a 1.1% expansion.

Meanwhile, economic data from the US today came in mixed: initial jobless claims rose by more than expected last week; personal incomes surpassed forecasts; while the Chicago NAPM purchasing managers’ index came in well ahead of estimates.

Europe Market Report 

European Markets Declined On Mixed Economic Data & Earnings

The European markets finished in negative territory on Thursday, after some mixed earnings results and some mixed European economic reports. However, the markets pared their losses in the afternoon, following the release of some positive economic data from the United States. Thursday was the first opportunity Europe had to react to Wednesday's FOMC announcement. Investors will now turn their attention to the U.S. jobs report for January, which will be released on Friday.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.81 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.21 percent.

The DAX of Germany dropped by 0.24 percent and the CAC 40 of France fell by 0.87 percent. The FTSE 100 of the U.K. decreased by 0.55 percent, but the SMI of Switzerland gained 0.38 percent.

Euro area house prices decreased at a faster pace in the third quarter, European Union statistical office Eurostat said Thursday.

The House Price Index dropped 0.7 percent from the second quarter, when prices fell 0.1 percent, Eurostat said in its first ever publication on the evolution of house prices in the 17-nation currency bloc. In the first quarter of 2012, prices fell 0.7 percent.

Germany's unemployment fell unexpectedly in January as the labor market turned healthier in the face of rising prospects of moderate economic growth.

Unemployment declined sharply by a seasonally adjusted 16,000 in January, following December's revised decrease of 2,000, figures from the Federal Labor Agency revealed Thursday. The latest decline contrasted with an expected increase of 8,000.

Germany's retail sales decreased more than expected in December reflecting weak domestic demand. Sales declined 1.7 percent in December from a month ago, when it was up 0.6 percent, Destatis reported Thursday. Sales were forecast to fall just 0.1 percent.

Germany's inflation unexpectedly slowed in January, preliminary data from the Federal Statistical Office showed on Thursday.

The harmonized index of consumer prices (HICP), which is meant for EU comparison purposes, rose 1.9 percent annually, which was a tad slower than the 2 percent increase in December. Economists had forecast the figure to hold steady at 2 percent.

France's producer price inflation slowed unexpectedly in December, data released by the statistical office INSEE showed Thursday. Producer prices on the French market rose 1.6 percent year-on-year, following a 1.9 percent gain in November. Economists had forecast the figure to climb to 2 percent.

French household spending remained flat in December, following a 0.2 percent increase in November, the statistical office Insee showed Thursday. Economists had forecast spending to grow 0.2 percent.

Confidence among British consumers improved more than expected in January as they turned optimistic about the economy's prospects, a survey by GfK NOP revealed Thursday. Also, consumers were upbeat on making major purchases at present.

The headline consumer confidence index rose to -26 in January from -29 in December. Economists expected only a modest increase to -28.

House prices in the UK increased in January after recording no change in the past two months, as recent employment gains and easier access to bank loans, thanks to central bank's credit program, lifted housing market activity.

House prices increased 0.5 percent month-on-month in January, a report from the Nationwide Building Society showed Thursday. The rate of increase was faster than the 0.2 percent increase expected by economists.

US Market Report

Mixed Batch Of Data Leads To Choppy Trading On Wall Stree

With traders digesting a mixed batch of economic data, stocks are turning in a lackluster performance during trading on Thursday. Uncertainty ahead of tomorrow's monthly jobs report is also contributing to the lack of conviction among traders.

The major averages are currently posting modest losses, although the Nasdaq is down only 0.83 points or less than a tenth of a percent at 3,141.48. The Dow is down 31.59 points or 0.2 percent at 13,878.83 and the S&P 500 is down 3.63 points or 0.2 percent at 1,498.33.

The choppy trading on Wall Street comes as traders express uncertainty about whether the recent batch of economic data supports any further upside for the markets.

Following yesterday's disappointing fourth quarter GDP report, the Labor Department released a report before the start of trading showing a bigger than expected rebound by weekly jobless claims.

The Labor Department said initial jobless claims rose to 368,000 in the week ended January 26th, an increase of 38,000 from the previous week's unrevised figure of 330,000. Economists had been expecting jobless claims to climb to 350,000 after hitting a five-year low in the previous week.

While bigger than expected, Jennifer Lee, senior economist at BMO Capital, said the rebound was not too shocking, adding, "And it was encouraging that the bounceback did not completely erase the two weekly improvements."

Helping to offset the negative sentiment generated by the report was a separate report from the Institute for Supply Management - Chicago showing a notable improvement in business activity in the Chicago-area in the month of January.

The ISM Chicago said its Chicago business barometer climbed to 55.6 in January from a revised 50.0 in December, with a reading above 50 indicating growth.

The Commerce Department also released a report showed a substantial increase in personal income in December, although the jump was due in large part to accelerated dividend and bonus payments ahead of the year-end tax increases.

On the other hand, gold stocks have come under pressure, with a notable decrease by the price of gold weighing on the sector. With gold for April delivery sliding $21.40 to $1,660.20 an ounce, the NYSE Arca Gold Bugs Index is down by 1.3 percent.

Housing stocks have also shown a notable move to the downside, dragging the Philadelphia Housing Sector Index down by 1 percent. M/I Homes (MHO) is leading the housing sector lower after reporting its fourth quarter results.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang SengIndex fell by 0.4 percent.

In the bond market, treasuries are seeing modest strength after coming under pressure in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.8 basis points at 1.988 percent.


Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Wednesday, 30 January 2013

Daily FX & Market Commentary US contracts in the fourth quarter

Daily FX Commentary: (Morning Report)


The Euro eventually attacks strong 1.3500 barrier, after yesterday’s break and close above previous high at 1.3477. Positive sentiment that drives the pair is supported by positive technicals and strong bullish momentum for clear break above 1.3500, 50% retracement of 1.4938/1.2042 and weekly inverted H&S neckline that is seen as a trigger for extension of broader uptrend from July 2012 annual low at 1.2042. Immediate targets lie at 1.3547/67, 02 Dec / 18 Nov 2011 highs, ahead of psychological 1.3600 barrier. On the downside, previous peaks at 1.3477 offer initial support, while any stronger retracement is expected to hold above 1.3420/00, 28/29 Jan range floor / previous highs. 

Res: 1.3547, 1.3567, 1.3600, 1.3650 
Sup: 1.3495, 1.3477, 1.3460, 1.3420 


Near-term structure remains positive, as the pair recovers from the recent lows under 1.5700 handle, where temporary support was found. With over 61.8% of 1.5825/1.5673 being retraced so far, focus remains at 1.5800/20 breakpoint, reinforced by descending 55 day EMA, clearance of which is required to confirm near-term base and allow for stronger recovery. However, studies on 4h chart are still below their midlines and unless 1.5820 is cleared, risk of lower top and fresh weakness, as a part of larger downmove from 1.6380, still exists. 

Res: 1.57721.5784, 1.5800, 1.5823 
Sup: 1.5740, 1.5708, 1.5694, 1.5673 


The pair regains strength, as corrective easing from 91.24 peak was contained by 20 day EMA at 90.31, just above strong 90.23/00 support zone. With 91.00 handle being regained and hourly studies turning positive, attack at 91.24 and fresh extension towards 92.00, is seen as likely near-term scenario. Any retracement should not exceed 90.00, in order to keep immediate bulls intact. 

Res: 91.08, 91.24, 91.50, 92.00 
Sup: 90.83, 90.31, 90.23, 90.00 


Near-term bears remain in play, as the price consolidates above 0.9200 handle, following break below that spiked to 0.9191, Fib 138.2% extension of 0.9220/0.9291 upleg. With negative structure dominating on the lower timeframes studies, the downside remains favored, with sustained break below 0.9200, expected to open 0.9100/0.9080 base. The upside is seen protected at 0.9240/50 zone, Fib 50% / 61.8% of 0.9291/0.9191 / 55 day EMA, where rallies should be capped.


Daily Market Commentary: (Evening Report)

London Market Report

Market Movers 
  • techMARK 2,266.83 +0.30%
  • FTSE 100 6,323.11 -0.25%
  • FTSE 250 13,046.54 -0.47%
After a decent start, London's FTSE 100 index slipped into the red in the afternoon session, as disappointing gross domestic product (GDP) figures from the US dampened risk appetite.

Mining stocks bore the brunt of the selling today, pulling the resource-heavy Footsie down from the four-and-a-half-year high reached the day before.

US contracts in the fourth quarter

The world's largest economy saw GDP shrink 0.1% in the fourth quarter of 2012, surprising analysts who had expected 1.1% growth. This was a sharp contrast to the 3.1% expansion seen in the third quarter.

While the headline figure does not look good, analyst Peter Newland from Barclays Research gave reasons why it's "not all doom and gloom". He said that the downside surprise was mainly due to two components – inventory accumulation and government defence spending – so when excluding these, "the tone of the report was positive".

He said that the relative strength of consumption and business investment "suggests that household and corporate sector demand was resilient in the face of uncertainty over the outcome of the fiscal cliff and in a solid position heading into the new year."

That would probably suggest why the negative market reaction (on the FTSE 100 at least) to the report was only modest, especially when you consider the recent rally seen in stock markets worldwide since the start of the month.

All eyes now on the FOMC

The focus now turns to tonight's announcement (at 19:15) by the Federal Open Market Committee after its two-day meeting in Washington.

"There was some unrest at the last meeting according to the minutes that were released, with some members suggesting that the programme be wrapped up either in June or at the end of the year," said market analyst Craig Erlam from Alpari.

"That is unlikely to happen now, with unemployment remaining stubbornly high and growth far from the levels needed to bring it down," he said.

Europe Market Report 

Europe midday: Stocks edge lower
- Investors eye US monetary policy decision
- Italy's benchmark falls on confidence index
- Europe's economic confidence improves
- Spain reveals worse-than-expected contraction

FTSE-100: 0.03%
Dax-30: -0.13%
Cac-40: -0.12%
FTSE Mibtel 30: -2.04%
Ibex 35: -0.20%
Stoxx 600: -0.34%

European equities were trading lower at the midday mark Wednesday as investors awaited a monetary policy decision from the US.

The Federal Open Market Committee is due to reveal its plans at 19:15 after a two-day meeting in Washington. While the decision will be closely watched, analysts have labelled it as the most anticipated "non-event" of the week.

Meawhile, Italy's FSE MIB benchmark plunged as the Italian Statistics office ISTAT's business confidence index for the month of January fell to 88.2 (consensus: 89.5) after a reading of 88.9 in the previous month.

Elsewhere in the country a shock profit warning came from oil services firm Saipem. Shares were suspended as the Italian group forecast an 80% fall in earnings.

The announcement hit the oil services sector which was expected to grow 35.3% year-on-year in the coming quarter, according to Thomas Reuters data.

More promising news for the Eurozone came from data revealing a rise in economic confidence.

An index of executive and consumer sentiment climbed to 89.2 from a revised 87.8 in December, the European Commission in Brussels said Wednesday.

The results pointed to signs the 17-nation currency bloc may be emerging from a recession.

Spain reveals worse-than-expected contraction

Spain reported worse-than-expected contraction of its economy during the fourth quarter of 2012.

According to the preliminary data from the INE (government statistics office), Spain's economy fell 0.7% during the quarter, compared to the prior drop of 0.3%. Consensus had expected a contraction of 0.6%.

It comes as the Spanish government grapples with the implementation of austerity measures required as part of its Eurozone bailout.

In a separate report, the country's autonomous community Catalonia has asked for more bailout funds from the central government.

The Catalan regional government requested €9.1bn for 2013, compared with the €5.37bn it asked for last year.

Euro strengthens

The euro topped $1.35 for the first time since December 2011, while the Eurozone single currency reached its highest level since April 2010.

Brent crude features ascended 0.453 dollars to the 114.880 dollar mark on the ICE following a flat start.

US Market Report

US open: Equity investors keep the faith

US markets shook off a disappointing fourth quarter GDP figure to open just slightly down on Wednesday.

The Standard & Poor's 500 Index fell just 0.1% to 1,507 in New York, while the Dow Jones Industrial Average was also down 0.1 percent, to 13,942.

Amazon, the world's biggest online retailer, rose 4.5% after it reported a rise in both sales and North American operating margin.

One person probably not happy about Chesapeake Energy's 7.2% rise was Chief Executive Officer Aubrey McClendon, coming, as it did, on the back of the announcement of his retirement.

Economists had predicted GDP growth to the tune of around 1.1% but the number came in at -0.1% as huge defence cuts began to bite.

It was the first fall in US GDP in three-and-a-half years - the last drop was in the second quarter of 2009 when the country was in recession.

The latest figures showed government spending fell 6.6% in the fourth quarter, while companies cut back on inventories to the tune of 1.3%.

Trade also held the economy back, as exports fell 5.7% during the quarter.

One market commentator remarked that "the bulls are immortal".

However, another said the headline figure was misleading and the US economy was in better shape than it suggested.

In fact, Peter Newland at Barclays pointed out the tone of the report was positive when inventories and defence were excluded.

Private consumption growth picked up to 2.2% in Q4 from 1.6% in Q3.

Fixed investment saw growth jump from 0.9% to to 9.7% , reflecting gains in equipment and software (12.4%) and residential (15.3%), which more than offset a small decline in structures (-1.1%).

The ongoing bullish tone was supported by separate figures which showed a healthy rise in employment in the US.

Private-sector jobs in the country increased by 192,000 in January, according to a national employment report calculated by payroll processor Automatic Data Processing.


Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Tuesday, 29 January 2013

Daily FX & Market Commentary: Weaker than forecast consumer confidence number

Daily FX Commentary: (Morning Report)


The single currency remains in a near-term consolidative mode, following repeated failure at 1.3477 that keeps key 1.3500 zone intact for now. With the lower boundary of near-term range and 55 day EMA, coming under pressure, further easing is seen likely, as hourly studies are negatively aligned. From the other side, positive tone on 4h chart, keeps the upside in focus, with possible extension into 1.3400/1.3370, Fib 38.2% / 50% of 1.3264/1.3477, seen preceding fresh rally. Only slide below 1.3300, psychological support at Fib 38.2% of larger 1.2996/1.3477, would be harmful for near-term bulls. 

Res: 1.3459, 1.3477, 1.3485, 1.3490 
Sup: 1.3425, 1.3400, 1.3370, 1.3345 


Cable maintains negative near-term tone, with steady descent from 02 Jan’s peak at 1.6380, losing another support at 1.5700. Yesterday’s close below the latter, suggests further easing towards next targets at 1.5634 and 1.5600. Corrective bounce on oversold hourly conditions faces good resistance at 1.5745, previous low and 50% of 1.5825/1.5673 downleg, with 1.5800 zone expected to cap recovery attempts, as 4h studies remain in red. However, appearance of bullish divergence on 4h chart RSI and MACD, cannot rule out stronger rally that requires break above 1.5800/25 to confirm near-term base and put immediate bears on hold. 

Res: 1.5745, 1.5784, 1.5800, 1.5823 
Sup: 1.5673, 1.5660, 1.5634, 1.5600 


Hourly structure is neutral, as the pair moves within 90.40/91.00 range, following repeated failure at 91.00 yesterday. More downside risk is seen on 4h chart studies that are in descending mode, from overbought zone, with immediate risk seen on a break below 90.40/23, overnight’s low / 20 day EMA / previous high, as well as psychological 90.00 level, loss of which would trigger stronger corrective action. Conversely, regain of 91.00 would open 91.24 and possible resumption of larger uptrend. 

Res: 91.00, 91.08, 91.24, 91.50 
Sup: 90.58, 90.40, 90.23, 90.00 


Near-term bears remain in play, as the price slides after yesterday’s recovery failure on approach to psychological 0.9300 barrier, on recovery attempt from 0.9220, last Friday’s fresh low. With 61.8% of 0.9220/91 rally being retraced so far, immediate focus comes at 0.9220/00 support zone, loss of which to signal further retracement of the larger 0.9109/0.9387 rally that so far reversed 61.8%. Negative 1 and 4h chart studies support the notion and only sustained break above 0.9300 barrier, reinforced by daily Ichimoku cloud top, would ease immediate bear-pressure. 

Res: 0.9266, 0.9291, 0.9300, 0.9323 
Sup: 0.9245, 0.9220, 0.9200, 0.9175 


Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets at five-year high after US earnings
Market Movers
  • techMARK 2,259.98 +0.13%
  • FTSE 100 6,339.19 +0.71%
  • FTSE 250 13,107.56 -0.19%
After a subdued morning session, the FTSE 100 rallied in afternoon trade to finish at its highest level since early 2008, helped by upbeat earnings from corporate heavyweights in the US.

The Dow Jones Industrial Average in New York was also trading at a five-year high today after pharmaceutical group Pfizer, refiner Valero Energy and home-builder DR Horton all topped analysts' estimates.

The FTSE 100 has extended gains seen since the start of 2013 and has now risen around 7.5% in January alone.

According to technical analyst Bill McNamara from Charles Stanley this afternoon: "the UK index isoverbought (its 14-day relative strength index is now above 80%) but that in itself does not represent a sell signal in a strong bull phase and it now looks pretty likely that we will see a test of the May 2008 peak, at 6,376, before this move reaches any kind of conclusion."

However, he warned that a correction – "when it comes" – will probably be "fairly sharp" after the Footsie's recent strong run.

The markets' focus is now starting to turn to tomorrow's economic growth data and a policy rate decision in the US. The world's biggest economy is expected to have grown at an annualised rate of 1.1% in the fourth quarter of 2012, according to preliminary estimates, well below the 3.1% growth in the third quarter.

Meanwhile, while the Federal Open Market Committee (FOMC) meeting is expected to be a "complete non-event", according to Jefferies, traders will keep an eye on any comments regarding the length of the current asset purchase programme.

Europe Market Report 

Europe midday: Spain must continue consolidation efforts, Minister says
- Spain´s tax revenues rose by 4 per cent in 2012
- Southern European countries have yet to regain competitiveness -IFO
- EU could soften Spain´s budget consolidation timeline

FTSE-100: 0.11%
Dax-30: -0.18%
Cac-40: -0.21%
FTSE Mibtel 30: -0.66%
Ibex 35: -0.56%
Stoxx 600: 0.00%

European equities are trading 'mixed' ahead of tomorrow´s US Federal Reserve policy meeting and a barrage of economic data due out in the rest of the week. Not least is the US monthly employment, which is scheduled for release this next Friday.

Of great interest, the European Union´s Economic Affairs Commissioner Olli Rehn yesterday signaled that the possibility exists that the EU might tolerate modifying the timeline for Spain to consolidate its budget.

Speaking today in Madrid however Spain´s Finance Minister, Cristobal Montoro, indicated that for now the above remains to be seen and efforts must be maintained to meet Brussels´s targets. In that same vein, Montoro added that Spanish tax revenues actually grew by 4.2% in 2012, reaching €168.67bn thanks to the new Budget consolidation measures put in place.

Also worth pointing out are the remarks to be heard this morning out of the German IFO Institute´s Chief Economist, Hans Werner Sinn, according to whom most southern European nations hit by the crisis have not yet undertaken sufficient measures so as to regain lost competitiveness.

Swedish tool and equipment maker Sandvik has reported fourth quarter profit of 728m kronor, missing the market's average forecast.

Software AG has reported fourth-quarter profit of €50.7m, missing analysts' estimates moderately. Revenue in the fourth quarter, however, came in at €276m, well below forecasts.

Spain's Telefonica has asked its banks to extend the maturity of €1.25bn ($1.7bn) of an existing €2bn loan that expires in July 2016, according to Reuters.

Still on the equity front, but from a sector stand-point, the best performing industrial groups are: Basic resources (0.89%), Oil (0.48%) and Telecommunications (0.43%).

Eurozone money supply below forecasts
The Gfk survey of German consumer sentiment improved slightly in February, to 5.8 after 5.7 in the month before.

Spanish retail sales fell by 10.7% year-on-year in December.

INSEE´s French consumer confidence index remained on an even keel in January, unchanged at 86 points, as expected.

Other asset clases steady

The euro/dollar is now falling by 0.01% to the 1.3450 dollar mark. 

Front month Brent crude futures are now lower by 0.071 dollars to the 113.40 dollar mark on the ICE.

US Market Report

Weaker than forecast consumer confidence numbers 
- Ford leads fallers on prediction of losses in Europe
- Oil stocks lead gains

Dow Jones Industrials: 0.43%
Nasdaq Comp.: -0.01%
S&P 500: 0.32%

The main US equity averages are trading in a mixed fashion following a similarly mixed string of corporate quarterly results.

Amongst the heavyweights whose earnings pleased investors were those from ValeroPeabody and US Steel.

Drugmaker Pfizer was also moving higher after forecasting a 2013 profit of up to $2.30 a share, higher than analyst estimates.

Poor guidance from the likes of International Paper and Lexmark, on the other hand, were weighing on stocks.

Ford plummeted after saying that it expects to lose about $2bn in Europe in 2013 as due to the recession afflicting the region.

From a sector stand-point the worst performers were: Automobiles (-3.72%), Recreational products (-2.63%) and Electronic Office Equipment (-2.06%).

House prices rose by 5.5% year-on-year in November according to the latest Case Shiller 20 city price index (Consensus: 5.6%).

The US Conference Board´s consumer confidence index for the month of January came in at 58.6 points, after an upwardly revised reading of 66.7 for the month before (Consensus: 64).

Front month West Texas crude futures rose by 1.18% to the 97.58 dollar per barrel mark on NYMEX.

10 year US Treasury yields gained 1 basis point, with yields at 1.97%. 


Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.