Daily FX & Market Commentary

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Daily FX Commentary: 

EUR/USD

The Euro briefly broke above important 1.3000 resistance zone, previous high and daily Ichimoku cloud top, following steady recovery off yesterday’s low at 1.2880, but lost traction, failing to sustain gains. Positive hourly studies have been dented by recent fall to 1.2960 zone, where temporary support was found, while bearish divergence, appearing on 4h chart, warns of possible failure at 1.3000 and fresh slide that would be confirmed on today’s close below the latter and break below day’s low at 1.2938. Otherwise, retest of 1.3000 would stay in play, as break here is seen as a trigger for resumption of near-term recovery from 1.2660, 13 Nov low and open 1.3020/25, then 1.3070, next upside targets.

Res: 1.3012, 1.3020, 1.3025, 1.3070
Sup: 1.2964, 1.2950, 1.2938, 1.2900


GBP/USD

Cable’s near-term bulls are back in play, as dip from 1.6050 double-top to 1.5960, has been fully retraced. However, lack of momentum on near-term studies warn of possible further hesitation at 1.6050, as 20 day upper Bollinger caps the upside for now. Immediate supports lie at 1.6010/00, 20 day EMA / round figure, while more downside risk would be seen on loss of today’s low at 1.5960, also Fib 38.2% of 1.5826/1.6055 rally that also marks near-term range floor. Break above 1.6050 barrier to open 1.6067, 50% of 1.6308/1.5826 descend, ahead of 1.6100, psychological barrier.

Res: 1.6047, 1.6055, 1.6067, 1.6090
Sup: 1.6010, 1.6000, 1.5960, 1.5926 


USD/JPY

The pair eased below 82.00, following failure to break above 82.20 congestion and trendline resistance. As hourly studies lost momentum and prevailing negative tone on 4h chart, the downside remains vulnerable. Sustained break below 82.00 to confirm bearish continuation of larger descend from 82.83 and re-focus yesterday’s correction low at 81.68. On the upside, clearance of 82.20/30 is required to signal near-term basing attempt and open way for further retracement of 82.83/81.68 downleg.

Res: 82.20, 82.31, 82.56, 82.83
Sup: 82.00, 81.90, 81.84, 81.68


USD/CHF

Near-term bears are interrupted by jump higher, after the pair posted fresh marginally lower low at 0.9251. However, overall negative tone would not be affected, as long as significant barriers at 0.9300, 50% of 0.9339/0.9251 / daily Ichimoku cloud and 0.9339, yesterday’s high, 4h 55 day EMA and near 38.2% of 0.9511/0.9251, stay intact. Current bounce, signaled by MACD / RSI bullish divergence, needs to clear those barriers to avert immediate risk of testing key support at 0.9213.

Res: 0.9285, 0.9300, 0.9318, 0.9339
Sup: 0.9251, 0.9213, 0.9200, 0.9193 

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Daily Market Commentary: (Evening Report)

London Market Report

Miners surge on US hopes

Market Movers
techMARK 2,106.84 +1.21%
FTSE 100 5,870.30 +1.15%
FTSE 250 12,026.57 +1.14%

Hopes about the US economy were driving gains on Thursday as investors reacted positively to comments from politicians about the 'fiscal cliff' and decent economic data Stateside.

US Republican Speaker of the House John Boehner said that he was “optimistic that we can continue to work together to avert this crisis sooner rather than later.” He said that Republicans were willing to put “revenue on the table” as long as it is accompanied by spending cuts.

Meanwhile, President Barack Obama told the public in a press conference today to pressure Congress to act to avert the automatic tax increases, saying: “When the American people speak loudly enough, lo and behold, Congress listens." He said he expects a deal by Christmas.

Nevertheless, market strategist Ishaq Siddiqi from ETX Capital said that "markets remain extremely sensitive over the fiscal cliff issue – it could take just one negative headline suggesting the talks are stalling to send the bulls running back to the exit so today’s move to the upside is unlikely to sustainable in the sessions ahead.

"For now however, Eurozone debt worries are in the back seat and improved US macro data is driving the afternoon cheer," he said.

US gross domestic product (GDP) growth in the third quarter was revised higher from the initial flash estimate of 2% to 2.7%. Meanwhile, jobless claims declined last week and pending home sales surged in October.

Market analyst Craig Erlam from Alpari said: "The housing market is naturally a good barometer of economic conditions as it highlights not only the consumer’s confidence in the economy but also the banks’ willingness to lend. The improvement we’ve seen in recent months suggests that the US economy could be performing better than the Federal Reserve are suggesting and is likely to be reflected in the fourth-quarter data."

Economic news

German unemployment rose for the eighth consecutive month in November, up a seasonally adjusted 5,000 to 2.94m, according to the Federal Labor Agency. However, this was much less than the 16,000 increase predicted.

The Confederation of British Industry's (CBI) distributive trades survey index for the month of November rose to 33 points, after 30 in the previous month (Consensus: 18).

The latest Bloomberg poll has the world economy in its ‘best shape’ for 18 months, as the US is expected to avoid the fiscal cliff, albeit with political manoeuvres expected before hand, and as China’s prospects improve.

Europe Market Report 

European Markets Rallied On Fiscal Cliff Optimism

The European markets finished solidly to the upside Thursday on investor optimism that a deal can be reached on the looming fiscal cliff in the United States. Statements made yesterday by both President Barack Obama and Speaker of the House John Boehner suggested that a deal to avoid a budget crisis could be reached before the end of the year. A strong upward revision to U.S. GDP and a surge in pending home sales also provided a boost to investor sentiment.

Bank of England Governor Mervyn King on Thursday warned that British banks are understating their capital requirements.

Releasing the Financial Stability Report, King said banks currently report substantial buffers over the minimum level allowed.

"But, in judging whether banks are adequately capitalised, we need to ensure that reported capital ratios do in fact provide an accurate picture of banks' health," he said. "At present there are good reasons to think that they do not."

The U.S. Federal Reserve revealed in its Beige Book release yesterday that factory activity in the U.S. has tailed off in recent weeks. Seven of the twelve Districts reported either slowing or outright contraction in manufacturing, and two others gave mixed reports.

A number of respondents blamed uncertainty about the 'fiscal cliff' for the slowdown. Analysts say the impact of Hurricane Sandy also contributed to the dim view of conditions in the New York and other parts of the Northeast.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.30 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.98 percent.

The DAX of Germany advanced by 0.78 percent and the CAC 40 of France rose by 1.53 percent. The FTSE 100 of the U.K. gained 1.15 percent and the SMI of Switzerland climbed by 1.07 percent.

Despite the 17-nation economy moving into a deep recession, Eurozone economic confidence strengthened in November, marking the first improvement since February, survey results from the European Commission showed Thursday.

The corresponding index rose to 85.7 from 84.3 in October and was above the consensus forecast of 84.5. Confidence strengthened in industry and retail trade, which was partly offset by decreases among consumers and construction.

Eurozone leading economic index dropped for the second consecutive month in October, suggesting weak outlook for the currency bloc, the Conference Board said Thursday. The leading index dropped 0.2 percent in October, after decreasing 0.3 percent in September and rising 0.5 percent in August.

Germany's unemployment rate for October declined from the same month last year, data released by the Federal Statistical Office showed Thursday. The adjusted jobless rate, which is based on the calculation concept of the International Labour Organization (ILO), fell to 5.4 percent from 5.7 percent last year. Meanwhile, the figure held steady from September.

The number of people out of work in Germany rose for an eighth month in November, as subdued economic growth forced firms to shed jobs to contain costs, data from the Federal Labor Agency revealed Thursday.

The unemployment total rose by 5,000 from a month earlier in November to 2.939 million. That was weaker than the expected increase of 16,000. In October, the number of unemployed increased by 19,000. The jobless rate for November was 6.9 percent, unchanged from October. The figure was in line with economists' forecast.

The Swiss economy expanded more than expected in the third quarter fueled by strong consumption and goods trade, the latest figures from the State Secretariat for Economic Affairs (SECO) showed Thursday.

Gross domestic product expanded 0.6 percent sequentially in the third quarter, strongly recovering from a 0.1 percent contraction in the previous three months. Economists had expected just 0.2 percent growth.

U.K. house prices dropped for a ninth month in a row in November, according to the results of a house price survey released on Thursday. Prices are expected to remain subdued in the months ahead as downward pressure on wage growth will weigh on prospects of house price growth.

House prices were down 1.2 percent from a year ago following a 0.9 percent drop in October, the Nationwide Building Society said. The rate of decline exceeded the 1 percent drop forecast by economists.

US Market Report

Stocks Come Under Pressure On Disappointing Boehner Comments

Stocks have shown a notable move to the downside in recent trading on the heels of comments by House Speaker John Boehner. The pullback by the markets reflects the recent focus on any headlines regarding the looming fiscal cliff.

The major averages are currently turning in a mixed performance, as the Dow has turned negative. While the Dow is down 4.69 points or less than a tenth of a percent at 12,980.42, the Nasdaq is up 10.92 points or 0.4 percent at 3,002.70 and the S&P 500 is up 1.96 points or 0.1 percent at 1,411.89.

After seeing early strength on the heels of a batch of largely upbeat U.S. economic data, stocks came under pressure after Boehner told reporters that "no substantive progress" has been made in fiscal cliff talks with the White House.

Boehner went on to say that he was disappointed with the lack of progress and argued that Democrats in Washington need to get "serious about spending cuts."

The pullback by the markets reflects a notable reversal from the performance seen in the previous session, when stocks rallied after Boehner expressed optimism about reaching an agreement.

Earlier in the session, traders reacted positively to some key economic data, including a report from the National Association of Realtors showing a much bigger than expected jump in October pending home sales.

The Labor Department also reported a drop in weekly jobless claims, while the Commerce Department said GDP increased by more than previously estimated in the third quarter.

Positive sentiment was also generated by a report from the European Commission showing that Eurozone economic confidence strengthened in November, marking the first improvement since February.

Other Markets In overseas trading, stock markets across the Asia-Pacific region saw notable strength during trading on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both ended the day up by 1 percent, while Australia's All Ordinaries Index advanced by 0.6 percent. In the bond market, treasuries have climbed back near the unchanged line following the comments from Boehner. The yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.62 percent after reaching a high 1.644 percent.