Daily FX & Market Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD

The single currency surged through important 1.3000 barrier that kept the upside capped in a past week. Break through tentative bear-trendline, connecting 1.3170/1.3070 peaks at 1.3020, confirms bullish stance, as the price approaches the upper range limit and 05 Oct high at 1.3070. Break here is required to open way towards key resistance at 1.3170, 14/17 Sep double top and confirm double bottom at 1.2800/20 zone. Positive near-term studies remain supportive, however, hourly indicators at their extremes suggest corrective action would precede fresh strength. Previous strong barriers at 1.3000/1.2990, now offer initial support and should ideally contain any dips.

Res: 1.3059, 1.3070, 1.3100, 1.3114
Sup: 1.3000, 1.2990, 1.2977, 1.2952

GBP/USD

Cable extends its near-term corrective phase off 1.5975, by breaking above psychological 1.6100 barrier, also previous high of 12 Oct and 50% of 1.6216/1.5975 and 1.6124, Fib 61.8% / 4h Ichimoku cloud top, to shift near-term focus higher. With near-term studies in the positive territory, scope exists for possible test of pivotal 1.6180/1.6216 zone, bear-trendline off 1.6308 and Fib 61.8% of 1.6308/1.5275 / psychological resistance / previous top of 05 Oct. Hourly RSI in overbought zone, however, do not rule out corrective easing, with good supports at 1.6100/1.6080.

Res: 1.6130, 1.6141, 1.6180, 1.6200
Sup: 1.6108, 1.6100, 1.6080, 1.6066

USD/JPY

Near-term price action gets congested under psychological 79.00 barrier, with extended hourly studies seeing potential for stronger correction towards 78.65 and 78.50, where dips should be contained, to keep near-term bulls intact for fresh attempt higher. With daily studies gaining bullish momentum, more focus is seen towards the upside, with break above a cluster of barriers at 79.00; 79.21, previous high of 19 Sep and 79.37, 200 day MA, required to confirm break above 77.00/79.00 range.

Res: 78.93, 79.00, 79.21, 79.37
Sup: 78.72, 78.62, 78.50, 78.30

USD/CHF

Near-term bears remain fully in play, as the pair extends losses below 0.9300 and 0.9273, to test minor support at 0.9260 zone, ahead of key level at 0.9237, 14 Sep low. Overextended hourly studies may signal a brief interruption in current downtrend, with 0.9273 and 0.9300, now acting as resistances. Full retracement of 0.9237/0.9436 corrective phase and break below 0.9237, to confirm double-top and open way towards psychological 0.9200 support and 0.9118, Fib 161.8% expansion of 0.9237/0.9436 ascend.

Res: 0.9273, 0.9300, 0.9314, 0.9342
Sup: 0.9257, 0.9237, 0.9200, 0.9180

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Daily Market Commentary: (Evening Report)

London Market Report

London close: US earnings spark surge in UK stocks
Market Movers

• techMARK 2,113.19 +0.97%
• FTSE 100 5,870.54 +1.12%
• FTSE 250 11,985.30 +1.09%

- US earnings lift sentiment
- Spain nearing a bailout request
- German ZEW index beats forecasts

Better-than-expected earnings from Goldman and Johnson & Johnson and signs of progress in the Eurozone saw the FTSE 100 surge 1.2 per cent on Tuesday afternoon.

"Global markets roared with optimism today as investors adopted a risk-on attitude thanks to strong US corporate results," said financial trade Shavaz Dhalla from Spreadex. According to Thomson Reuters Starmine data, over two-thirds of US companies that have reported earnings so far have either met or beaten expectations.

Dhalla said: "Thus, in the context of tightening regulations, banking scandals and countries nearing the end of their financial tether, investors can at least take comfort in the fact that many US companies are still managing to ride the current slowdown in global growth surprisingly well."

Bonds in Spain advanced today after the Treasury saw solid demand at a short-term bond auction this morning admits expectations that the country is ready to request a bailout. The Treasury raised €4.86bn, topping the high-end of its €3.5-4.5bn target. Demand totalled €13.654bn overall, while yields edged lower.

The German ZEW survey which measures economic sentiment improved to -11.5 in October, from -18.2 the month before and better than the -14.9 estimate.

UK CPI inflation fell from 2.5% to 2.2% in September, in line with market expectations, taking the rate to its lowest level since November 2009 and close to the 2% target set by the Bank of England. Bank of America Merrill Lynch strategist John Wraith told Reuters: "Inflation numbers were in line with expectations, which on one level doesn't mean very much but on another level probably hardened more expectations of more QE being announced in November."

Europe Market Report 

Europe midday: Germany may be open to a precautionary credit line for Spain
-Germany may be open to granting Spain a precautionary credit line -Reports
-Contradictory reports on whether Spain will ask for a bail-out
-Some Euro zone banks regaining access to unsecured funding-Barclays
-Spanish 10 year bond yields down 5bp to 5.77 per cent

FTSE-100: 0.99%
Dax-30: 1.29%
Cac-40: 1.02%
FTSE-Mibtel 30: 1.24%
Ibex 35: 2.34%
Stoxx 600: 0.83%

The major European equity benchmarks are now registering large gains. That following reports that Germany may be open to granting Spain a precautionary credit line.
Also adding to the favourable sentiment, The Financial Times wrote this morning that Spain may be close to asking for a bail-out. However, it added that it is being delayed by considerations put forth by Germany and by worries over what the repercussions of that could be for Italy.

Bloomberg is also casting a spotlight on Spain today. However, it was earlier reporting that Spain's PM believes that holding out for longer will win the country better terms, similar to what other reports seem to be pointing to yesterday.

Meantime, S&P has further cuts its long term credit ratings on 11 Spanish banks and short - term rates on four. This is normal as financial institutions' credit ratings are usually linked to the sovereign's by means of the so-called zero coupon curve.

The Spanish Treasury has sold 4.86bn euros in 12 and 18 month bills this morning, more than the 4.5bn which had been expected and at lower rates than the last time around.

Car sales off
Luxury group LVMH has today unveiled a further slowdown in comparable sales growth in the third quarter, to 6%.

Roche Holdings gained 0.5% after reporting third- quarter sales that exceeded analyst estimates.

Registrations plummeted 11% to 1.13m vehicles last month from 1.27m a year earlier, according to data out from the Brussels-based European Automobile Manufacturers' Association (ACEA). It was the 12th consecutive monthly drop and the biggest decline since October 2010.

As an aside, The Telegraph was reporting this morning that French business leaders are in a state of near panic over the seriousness of the current financial crisis.

From a sector stand-point the best performance is now to be seen in shares of the following industrial groups: Banks (2.05%), Technology (1.93%) and Insurance (1.69%).
Better than forecast economic numbers


Eurozone consumer prices for the month of September have come in at a 2.6% year-on-year rate of change (Consensus: 2.7%).

The German ZEW Institute's investor sentiment index for the month of September increased to -11.5 points, after -18.2 points in the month before (Consensus: -14.9). Slight gains in other asset classes


The euro/dollar is now up by 0.84% to the 1.3056 dollar mark.

Front month Brent crude futures are falling by 0.294 dollars to the 115.46 dollar mark on the ICE.

US Market Report

US mid-morning: Stocks at day's best levels -Citi board ousts Pandit over poor execution-Bbg -Two German lawmakers support precautionary credit line for Spain Dow Jones Industrial: 0.87% Nasdaq Comp.: 0.97% S&P 500: 0.89% The main US equity benchmarks are trading comfortably higher, apparently benefitting from reports and hopes that Spanish authorities may be making progress towards asking for a full rescue programme from their European partners. Also helping stocks, undoubtedly, is the release of several better than expected quarterly earnings reports today from the likes of Johnson&Johnson, United Health, and Goldman Sachs as well as generally better than expected macroeconomic data. As regards Goldman Sachs, the Wall Street giant has announced third-quarter net income of $1.51bn, or $2.85 per share (Consensus: $2.28), compared with a loss of $393m, or 84 cents, versus a year earlier. Results from Coca Cola and State Street, on the other hand, came in 'mixed.' HCA and Murphy Oil have both announced special dividend payments today. The latter has also unveiled a $1bn share buy-back programme. Not to be lost sight of, IBM and Intel will publish their latest quarterly results after tonight's close. Citigroup has turned around and is now moving higher despite the surprise resignation of its Chief Executive, Vikram Pandit. Worth pointing out in this regard, Bloomberg is now reporting that he was in fact ousted over his performance. Slightly better than expected data-points US core consumer prices rose at a 2.0% year-on-year clip in September, as expected. Meantime, US industrial production rose by 0.4% month-on-month in September (Consensus: 0.2%). Compensating the above, in part, previous months' data for manufacturing sector output was revised down. Long-term capital inflows increased to $90b in August (Consensus: $45.3bn), after $67.2bn. The NAHB home-builder sentiment index gained 1 point, to 41 points, in September, its highest level since June 2006. Front month West Texas crude futures are now up by 0.02% to the 91.86 dollar mark on the NYMEX. 10 year US Treasuries are also moving lower, by 14/32 dollars, with yields at 1.71%.