Daily FX & Market Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD

The Euro holds bearish momentum, as yesterday’s rally to 1.2880 barrier was short-lived. Disappointing fundamentals, released yesterday, out additional pressure on the pair, along with weak near-term technicals. Brief break below 1.2735 platform and Fib 38.2% of 1.2042/1.3170, tests channel support at 1.2720, with figure support at 1.2700, coming in focus. Further extensions lower to face support at 1.2644, daily Ichimoku cloud base / 90 day MA. Any corrective action sees 1.2800 as initial resistance, while break above 1.2865/75, channel resistance / yesterday’s high, is required to ease bear-pressure.

Res: 1.2740, 1.2775, 1.2800, 1.2825
Sup: 1.2720, 1.2700, 1.2642, 1.2606 

GBP/USD

The negative near-term sentiment drives the pair lower, with initial support at 1.5950 being cracked. Yesterday’s bull- rally through 1.6000 and quick reversal to the initial levels, confirmed near-term bullish stance. Overall negative tone in the near-term studies, keeps the downside under pressure, with descending 20 day EMA limiting the upside at 1.6000 for now. Clear break below.5950 to focus 1.5900 base and range floor initially, with bearish continuation seen towards 200 day MA at 1.5847. Conversely, bounce through 1.6000, would ease immediate bear-pressure, however, only lift above 1.6040 would prevent fresh weakness in favor of stronger recovery.

Res: 1.5968, 1.6000, 1.6040, 1.6066
Sup: 1.5939, 1.5911, 1.5900, 1.5888


USD/JPY

The near-term base and Fibonacci / Ichimoku support at 79.80 zone remains under pressure, as double-failure at 80.40 and subsequent slide below 80.00 support, turn near-term tone more negative. With 4h indicators sliding into negative territory and descending EMA’s capping the upside, immediate risk is seen on a break below 79.80/75 that would trigger stronger corrective action towards 78.63, Fib 38.2% of 77.94/80.67 rally and key near-term level at 79.27, 30 Oct low / 50% retracement. Only lift above 80.40 would shift focus higher again.

Res: 80.00, 80.43, 80.55, 80.67
Sup: 79.80, 79.75, 79.63, 79.27


USD/CHF

The pair maintains near-term positive tone, resuming near-term bulls after brief consolidation, as the price breaks above yesterday’s high at 0.9470. Overall bullish structure keeps the initial upside target at 0.9500, round figure / Fib 38.2% of 0.9970/0.9213 descend in focus, with break here to open way for stronger correction through 0.9534, 90 day MA, towards 50% retracement at 0.9591. Any dips should be contained at/above 0.9400/0.9380, to keeps bulls in play. Increased downside risk would be seen on a loss of 0.9380 breakpoint, also 200 day MA.

Res: 0.9475, 0.9500, 0.9538, 0.9578
Sup: 0.9462, 0.9454, 0.9436, 0.9430

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks drop on concerns over Greece

Market Movers
techMARK 2,084.22 -0.19%
FTSE 100 5,776.05 -0.27%
FTSE 250 11,895.66 -0.55%

After solid gains in the morning session, equity markets in London swung into the red in afternoon trade, after dreary comments from Mario Draghi and concerns about a bailout delay in Greece weighed on sentiment.

The FTSE 100 started the day firmer, rebounding after a 1.6% drop after ‘fiscal cliff’ worries in the US and gloomy growth forecasts in the Eurozone sparked a sell-off on Wednesday.

As expected, the Bank of England’s Monetary Policy Committee (MPC) at noon voted in favour of keeping the key interest rate and level of asset purchases unchanged for November, as expected. The Bank Rate was left at the record-low level of 0.5% for the 44th straight month in a row, while its asset purchase programme was maintained at £375bn.

Analyst Simon Hayes from Barclays Research said today: “Although this was in line with expectations, it is only a few weeks since there was a widespread view that QE would be increased, and it is likely that the committee gave active consideration to an expansion.”

The European Central Bank (ECB) also decided to keeps its key interest rates unchanged today, in line with predictions, but the following press conference with President Mario Draghi spooked markets in afternoon trade.

He said: “Economic activity in the euro area is expected to remain weak It is essential for governments to support confidence by forcefully implementing the necessary steps to reduce both fiscal and structural imbalances and to proceed with financial sector restructuring.”

In Greece, policy-makers last night voted in favour of the country’s proposed austerity measures, albeit by a narrow margin, leaving the parliamentary vote on next year’s budget on Sunday to unlock the next round of financial aid.

However, stocks went into reverse late on after Bloomberg reported that the next tranche of the Greek bailout won’t come next week. The agency cited an EU official as saying that ministers will not make a decision on aid until late November as they wait for a final report from the Troika on how Greece is complying with the terms of its bailout.

"This headline prompted a huge bout of risk aversion which saw investors dump risk assets and instead favour core government bonds with German bunds getting a nice little lift," said market strategist Ishaq Siddiq from ETX Capital.

"Typical flight to safety move as fears that EU ministers will leave Greece virtually broke in their delay to unlock funds."

Europe Market Report 

European Markets Finished Mixed After Greek Vote

The European markets finished with mixed results on Thursday. The European Central Bank and the Bank of England both decided to leave interest rates unchanged today. The Spanish bond auction showed weak demand for 5-year government bonds, while debt yields increased. There was some also confusion in late trading regarding the Greek bailout. The markets initially sold-off, but later recovered following an announcement that Greece may not receive its new aid as quickly as they had hoped.

Greek lawmakers have backed a crucial austerity bill by a thin majority in the 300-member Parliament, clearing the way for the country to secure the next bailout tranche worth EUR 31.5 billion. Reports said a total of 153 members backed the new austerity package, while 128 voted against it. Meanwhile, 18 members voted "present", which is in effect a blank vote.

"Greece today has taken a big step, decisive and optimistic," Prime Minister Antonis Samaras said Thursday after the passage of the bill. This is the first step towards recovery, he said.

The European Central Bank left its key interest rates unchanged for the fourth consecutive month on Thursday amid signs of an increasingly deteriorating euro area economy with record high unemployment.

The central bank of 17 nations held the refinancing rate unchanged at 0.75 percent for a fourth consecutive month following the Governing Council meeting in Frankfurt. The deposit rate, which is already at zero, was left unchanged and the marginal lending facility was held at 1.50 percent.

European Central Bank President Mario Draghi said on Thursday that the bank is ready to undertake the newly announced bond purchase programme that may help to calm market concerns.

"We are ready to undertake OMTs, which will help to avoid extreme scenarios, thereby clearly reducing concerns about the materialization of destructive forces," he said in the press conference in Frankfurt following the announcement of the interest rate decision.

The Bank of England decided not to provide another cash injection, as the economy exited a double-dip recession and the positive impact of the Funding for Lending Scheme is yet to fully filter into the economy.

The nine-member Monetary Policy Committee governed by Mervyn King maintained its quantitative easing at GBP 375 billion. The previous GBP 50 billion-increase was announced in July and has been fully utilized, bringing the programme to a temporary halt.

The nine-member committee also left the interest rates unchanged at 0.50 percent, the lowest level since the bank was established in 1694. The rate has not been changed since early 2009.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.18 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.11 percent.

The DAX of Germany dropped by 0.39 percent and the FTSE 100 of the U.K. fell by 0.27 percent. The CAC 40 of France dipped by 0.06 percent, but the SMI of Switzerland gained 0.24 percent.

US Market Report

Stocks Adding To Yesterday's Steep Losses - U.S. Commentary

Stocks have turned lower over the course of the trading day on Tuesday, extending the substantial downward move that was seen in the previous session. The downturn comes as continued worries about Europe have overshadowed some upbeat U.S. economic data.

The major averages currently remain stuck in negative territory, posting modest losses. The Dow is down 17.66 points or 0.1 percent at 12,915.07, the Nasdaq is down 7.27 points or 0.3 percent at 2,930.02 and the S&P 500 is down 2.55 points or 0.2 percent at 1,391.98.

The initial strength on Wall Street was partly due to bargain hunting, with traders picking up stocks at reduced levels after Wednesday's sell-off pulled the major averages down to three-month closing lows.

Buying interest was also generated by some relatively upbeat U.S. economic data, including a report from the Labor Department showing an unexpected drop by initial jobless claims.

The report said jobless claims fell to 355,000 in the week ended November 3rd, a decrease of 8,000 from the previous week's unrevised figure of 363,000. The drop surprised economists, who had expected jobless claims to climb to 370,000.

However, the data was likely skewed as a result of Hurricane Sandy, which wreaked havoc along the East Coast and likely prevented some people from filing claims.

A separate report from the Commerce Department showed that the U.S. trade deficit unexpectedly narrowed in the month of September, as the value of exports rose at a faster rate than the value of imports.

Buying interest waned not long after the start of trading, however, with concerns about the looming fiscal cliff and the outlook for the global economy limiting the upside for the markets.

Stocks subsequently moved back to the downside on the heels of a report from Bloomberg News indicting that the European finance ministers have delayed a decision on unlocking Greek bailout funds.

Citing an anonymous European Union official, Bloomberg said the finance chiefs won't make the call to release the aid when they meet next Monday, with the decision potentially delayed until November 26th.


Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index fell by 1.5 percent, while Hong Kong's Hang Seng Index tumbled by 2.4 percent.

In the bond market, treasuries are giving back some ground after ending the previous session sharply higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.1 basis points at 1.673 percent.