Daily FX Commentary: (Morning Report)
EUR/USD
The Euro slipped below 1.3100 handle, on a corrective pullback from fresh daily high at 1.3125 and just ahead of initial target 1.3138. The pullback has been signaled by RSI / MACD divergence and overbought hourly conditions. Initial support zone at 1.3060/70, also 20 day EMA, has been tested so far, with loss of momentum on hourly chart and descending 4h indicators, suggesting that further correction cannot be ruled out. Next support lies at 1.3050/40 area, ahead of more significant 1.3000 level, 50% of 1.2879/1.3125, loss of which would be a signal for stronger correction of larger 1.2660/1.3115 ascend. However, early downside rejection and regain of 1.3100 barrier, would shift focus back to the upside targets.
Res: 1.3100, 1.3125, 1.3138, 1.3170
Sup: 1.3059, 1.3046, 1.3020, 1.3000
GBP/USD
Cable’s near-term action remains congested at 1.6100 zone, lacking momentum for retest of 1.6129, yesterday’s high, but losses so far being contained at range floor and 20 day EMA at 1.6085. This is still seen as consolidation of the recent rally from 1.5826, with gains being limited by at 61.8% of 1.6308/1.5826 descend. Indicators on 4h chart are losing traction and starting to point lower that keeps the downside at risk. Loss of 1.6085 base and 1.6075, Fib 38.2% of 1.5987/1.6129 upleg, would be a signal of further correction and test of strong 1.6050 support, previous congestion tops, daily Ichimoku cloud top and near 50% retracement, with daily close below 1.6100, required to confirm. Conversely, break and close above 1.6100 handle, would keep upside favored.
Res: 1.6100, 1.6119, 1.6129, 1.6174
Sup: 1.6085, 1.6075, 1.6060, 1.6041
USD/JPY
The pair returns to the range after bouncing from 81.70 base, with 82.00 holding dips for now and keeping immediate target at 82.33, today’s high in focus. Hourly structure holds positive tone that supports the notion, however, still fragile situation on 4h chart requires caution and keeps the downside vulnerable. Lift above 82.33 is needed to improve the structure and re-focus recent highs at 82.74/83, while loss of 82.00 handle would increase risk of retesting range floor and possible stronger correction that would open next supports at 82.39 and 82.00, Fib 38.2% / 50% retracement of 79.06/82.83 rally.
Res: 82.33, 82.50, 82.60, 82.74
Sup: 82.00, 81.68, 81.58, 81.39
USD/CHF
Repeated recovery attempt off levels close to 0.9239 low, has again been capped at 0.9300, where 55 day EMA / Fib 61.8% of 0.9339/0.9239 downleg and daily Ichimoku cloud base have built strong barrier. Hourly studies regained some strength, however, situation on 4h chart required break above 0.9300 and regain 0.9340, 28 Nov high / Fib 38.2% of 0.9511/0.9239 downleg, to confirm recovery and avert immediate downside risk. Otherwise, today’s close below 0.9300 would confirm lack of strength for stronger corrective action and keep near-term focus at key 0.9213 support.
Res: 0.9297, 0.9300, 0.9315, 0.9339
Sup: 0.9265, 0.9248, 0.9239, 0.9213
Daily Market Commentary: (Evening Report)
Markets unfazed by Osborne's budget
Market Movers
techMARK 2,113.95 +0.28%
FTSE 100 5,892.08 +0.39%
FTSE 250 12,103.11 +0.41%
Market Movers
techMARK 2,113.95 +0.28%
FTSE 100 5,892.08 +0.39%
FTSE 250 12,103.11 +0.41%
The Footsie finished the day with decent
gains on Wednesday as investors mostly shrugged off Chancellor George
Osborne’s budget statement, with the upbeat mood helped by economic
data from the US and increasing optimism about China.
“UK financial markets were largely unruffled by the Chancellor’s Autumn Statement,” said analyst Julian Jessop from Capital Economics.
“It’s taking time but the British economy is healing,” Osborne told MPs today, as revised figures from the Office for Budget Responsibility (OBR) mean that the government looks unlikely to achieve its target of reducing public sector net debt (PSND) as a share of GDP in 2015-16
The OBR now forecasts gross domestic product (GDP) to fall by 0.1% in 2012 and then to grow by 1.2% in 2013, revised down from March estimates of 0.8% growth in 2012 and 2.0% in 2013.
“The GDP growth projections were a bit worse than expected and austerity was extended another year, to 2017/18, although Mr Osborne seemed sanguine about the possibility of missing his target of getting debt as a share of GDP falling by 2015/16,” Jessop said.
Wall Street opened higher this afternoon after the US ISM service-sector purchasing managers’ index rose to 54.7 in November, from 54.2 the month before. The figure came in better than the 53.5 consensus estimate.
Concerns over the ‘fiscal cliff’ continue to weigh on investors’ minds, however as market strategist Ishaq Siddiqi from ETX Capita explained: “for today, markets are putting that to aside, perhaps comfortable with the fact political posturing from both Democrats and Republicans alike is to be expected until its crunch time and they have no choice but to whack out an agreement.”
Meanwhile, hopes for the Chinese economy improved today after regulators in the country dropped a rule that limited insurers’ investments in banks. Furthermore, the think-tank, Chinese Academy of Social Sciences, predicted that Chinese economic growth would quicken to 8.2% in 2013, from an estimate expansion of 7.7% this year.
“UK financial markets were largely unruffled by the Chancellor’s Autumn Statement,” said analyst Julian Jessop from Capital Economics.
“It’s taking time but the British economy is healing,” Osborne told MPs today, as revised figures from the Office for Budget Responsibility (OBR) mean that the government looks unlikely to achieve its target of reducing public sector net debt (PSND) as a share of GDP in 2015-16
The OBR now forecasts gross domestic product (GDP) to fall by 0.1% in 2012 and then to grow by 1.2% in 2013, revised down from March estimates of 0.8% growth in 2012 and 2.0% in 2013.
“The GDP growth projections were a bit worse than expected and austerity was extended another year, to 2017/18, although Mr Osborne seemed sanguine about the possibility of missing his target of getting debt as a share of GDP falling by 2015/16,” Jessop said.
Wall Street opened higher this afternoon after the US ISM service-sector purchasing managers’ index rose to 54.7 in November, from 54.2 the month before. The figure came in better than the 53.5 consensus estimate.
Concerns over the ‘fiscal cliff’ continue to weigh on investors’ minds, however as market strategist Ishaq Siddiqi from ETX Capita explained: “for today, markets are putting that to aside, perhaps comfortable with the fact political posturing from both Democrats and Republicans alike is to be expected until its crunch time and they have no choice but to whack out an agreement.”
Meanwhile, hopes for the Chinese economy improved today after regulators in the country dropped a rule that limited insurers’ investments in banks. Furthermore, the think-tank, Chinese Academy of Social Sciences, predicted that Chinese economic growth would quicken to 8.2% in 2013, from an estimate expansion of 7.7% this year.
Europe Market Report
European Markets Pared Early Gains On Weak Economic Data
The majority of the European markets managed to hold onto some modest gains at the end of Wednesday's trading session. The markets got off to a good start thanks to optimism over China. The country's new party chief made comments which suggested that its supportive economic policy will remain in place. Some weaker than expected economic results from Europe and the United States had a negative impact on the market and concerns over the fiscal cliff in the U.S. persist.
EU finance ministers' attempt to strike a deal on a common supervisor for euro area banks hit a roadblock on Tuesday as nations remained split on the terms of the proposed "single supervisory mechanism."
The ministers have agreed to meet again next week, ahead of the EU leaders' summit scheduled for December 13-14. The meeting is expected to resolve the disagreements over the single supervisor, which could enable Europe to contain the banking woes of the single-currency region.
The United Kingdom is facing an extra year of austerity after missing deficit reduction targets due to an economic recovery that has been slower than expected. Presenting his Autumn Statement to the House of Commons, Chancellor George Osborne said," It's taking time, but the British economy is healing."
Austerity will extend into 2017-18, he added. Earlier, the consolidation was projected to end in 2016-17. The U.K. economy is expected to grow 1.2 percent next year and 2 percent in 2014.
China's new Communist Party chief Xi Jinping set his economic agenda ahead of the party's central economic planning meeting this month. Urbanization is indicated to remain the engine for China's economic growth. Meanwhile, the China Insurance Regulatory Commission abolished a rule that limited the investments insurers can make in commercial banks.
Chinese service sector growth moderated in November as new order inflow eased to its lowest level in three months, a survey by Markit Economics revealed Wednesday. The HSBC business activity index that measures the service sector performance fell to 52.1 in November from 53.5 in October.
The Euro Stoxx 50 index of eurozone bluechip stocks fell by 0.08 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.20 percent.
The DAX of Germany climbed by 0.26 percent and the CAC 40 of France rose by 0.28 percent. The FTSE 100 of the U.K. gained 0.39 percent, but the SMI of Switzerland declined by 0.02 percent.
Eurozone shoppers scaled down their spending for the third consecutive month in October, resulting in the biggest decline in retail sales in six months.
Sales fell 1.2 percent in October from a month ago, when it dropped 0.6 percent, EU's statistics office Eurostat said Wednesday. Sales were forecast to fall just 0.2 percent. October's decrease was the biggest since April when it was down 1.5 percent.
The euro area private sector contracted less than estimated in November, according to a survey released by Markit Economics.
The composite output index, which measures the combined output of the manufacturing and service sectors, rose to 46.5 in November from 45.7 in October, final data showed Wednesday. The flash reading was 45.8.
German service sector contracted at a slower pace in November, detailed results of a survey by Markit Economics revealed Wednesday. The outcome was in contrast to the preliminary finding that activity declined at a sharper pace than in October.
The headline business activity index for the service sector rose to 49.7 in November from 48.4 in October. The flash report showed a lower reading of 48.
French service sector contracted at a faster rate than initially estimated in November, data from a survey by Markit Economics and CDAF showed Wednesday. The seasonally adjusted purchasing managers' index (PMI) for the service sector increased to 45.8 in November from 44.6 in October. Preliminary estimates had shown a reading of 46.1.
UK's services sector expanded at the slowest pace in twenty-three months in November, data from a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) showed Wednesday.
The seasonally adjusted purchasing managers' index for the service sector dropped to 50.2 in November from 50.6 in October. Economists were looking for a reading of 51.
US Market Report
Focus On Fiscal Cliff Leads To Volatility On Wall Street
After showing a lack of direction throughout the previous session, stocks have seen considerable volatility over the course of the trading day on Wednesday. The big swings by the markets come as traders focus on the latest developments in Washington.
The major averages have shown a strong move to the upside in recent trading, although the Nasdaq remains stuck in the red. While the Nasdaq is down 10.88 points or 0.4 percent at 2,985.81, the Dow is up 110.11 points or 0.9 percent at 13,061.89 and the S&P 500 is up 5.42 points or 0.4 percent at 1,412.47.
The volatility on Wall Street comes as traders react to comments regarding the negotiations over an agreement to avoid the looming fiscal cliff.
While stocks moved to the downside following remarks by Republican leaders suggesting that lawmakers remain far apart on a potential deal, the markets rallied as President Barack Obama spoke to members of the Business Roundtable.
House Speaker John Boehner, R-Ohio, called on Obama to respond to an offer put forth by House Republicans while criticizing a White House plan he said "couldn't pass either house of the Congress."
The GOP unveiled a plan Monday that they claim will reduce the deficit by $2.2 trillion over ten years, but the proposal was rejected by the White House.
While the Republican plan includes $800 billion in new revenues, the higher revenues are achieved by closing loopholes rather than raising tax rates on wealthy Americans.
Meanwhile, Obama continued to call for the expiration of the Bush-era tax cuts for the wealthy as part of an agreement on the fiscal cliff.
"We're not insisting on rates out of spite, but rather we need to raise a certain amount of revenue," Obama told the Business Roundtable.
He added, "Among some Republicans over the last several days, I think there's been some recognition they can accept some rate increases as long as it's combined with serious entitlement reform and additional spending cuts."
The comments regarding the fiscal cliff have overshadowed a batch of largely upbeat U.S. economic data, including a report from the Institute for Supply Management showing an unexpected acceleration in the pace of service sector growth.
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