Daily FX Commentary: (Morning Report)
EUR/USD
The Euro continues to travel higher, as bullish technicals were additionally underpinned by Euro-supportive fundamentals that resulted in a rally to psychological 1.3100 barrier so far. Key resistances at 1.3125/38/70, 05 Dec / 17 Oct / 17 Sep peaks, are in near-term focus, with bullish structure being supported by three white soldiers reversal pattern, formed from 1.2900 base. Corrective actions on overbought hourlies were so far contained by ascending 20 day EMA at 1.3055, with any stronger dips, expected to find ground above 1.3020/00 support zone.
Res: 1.3013, 1.3030, 1.3041, 1.3066
Sup: 1.2995, 1.2970, 1.2950, 1.2927
GBP/USD
Cable maintains positive structure, as yesterday’s break and close above strong 1.6127/29 barrier, keeps near-term bulls firmly in play. Immediate upside targets at 1.6175 and 1.6200 come under pressure, as the pair reached 1.6170 so far. With technical correction finding footstep at previous strong barrier, and near-term studies holding in the positive territory, fresh attack towards 1.6200 barriers is seen likely. Initial supports lie at 1.6125 and 1.6112, while violation of 1.6100, yesterday’s low, would delay bulls andsignal stronger corrective action.
Res: 1.6150, 1.6175, 1.6200, 1.6216
Sup: 1.6124, 1.6112, 1.6100, 1.6060
USD/JPY
The dollar/yen, as top yesterday’s performer, eventually broke above range top and psychological barrier at 82.83/83.00, resuming larger uptrend from 77.12, 13 Sep low. With fresh gains reaching 83.66 high so far, keep the positive structure for attempt at our target and key barriers at 84.08/17, yearly highs. However, stronger corrective action could be anticipated, as both 1 and 4h studies are deeply in overbought zone, with hourly indicators starting to descend. Previous strong barrier at 82.80, now acts as initial support, with deeper reversal, expected to find ground at/above 81.90/70, Fib 38.2% of 79.06/83.66 / previous range floor.
Res: 83.66, 84.00, 84.08, 84.17
Sup: 83.46, 83.30, 83.10, 83.00
USD/CHF
Near-term bears took control, following recovery failure on approach to 0.9400 barrier and subsequent slide through psychological 0.9300 support that resulted in re-test of 0.9239, 03 Dec low. Completion of near-term corrective action, bring focus to the downside, as a part of larger downtrend from 0.9970, with immediate focus at 0.9213, 17 Oct low. Violation of the latter to resume the downtrend and expose 0.9150/00 zone next. With negative tone dominating on lower timeframes studies and brief corrective action being capped by 10 day EMA at 0.9270, the upside remains protected for now. Only lift above previous strong support zone at 0.9300/20, would provide temporary relief.
Res: 0.9270, 0.9292, 0.9300, 0.9320
Sup: 0.9255, 0.9239, 0.9213, 0.9200
Daily Market Commentary: (Evening Report)
'Fiscal cliff' concerns keep markets under pressure
Market Movers
techMARK 2,123.48 -0.40%
FTSE 100 5,929.61 -0.27%
FTSE 250 12,211.57 -0.10%
Market Movers
techMARK 2,123.48 -0.40%
FTSE 100 5,929.61 -0.27%
FTSE 250 12,211.57 -0.10%
Stocks markets across Europe took a
breather on Thursday, following a strong performance over the last
month, as investors digested stimulus plans by the Federal Reserve and
ongoing developments in the Eurozone.
The Footsie finished the day slightly lower, pulling back after setting a new nine-month high at 5,946 the day on Wednesday (the last time the index closed higher was on March 19th at 5,961).
Market analyst Michael Hewson from CMC Markets said today that a “trifecta of positive factors” managed to underwhelm the market this afternoon:
“Three news items that ordinarily would have given markets a significant boost appear to have done anything but today, despite the Fed acting as expected by announcing a new round of asset purchases to the tune of $45bn, and EU leaders agreeing a framework towards a banking union inside their self-imposed deadline of year end, while Greece finally had its long awaited aid tranche finally approved by EU leaders,” Hewson said.
The Footsie staged a slight rally in afternoon trade following some better-than-expected jobless claims data Stateside.
However, as he often has done in the past few weeks, House Speaker John Boehner dampened market sentiment before the close after attacking the Obama administration, saying that the White House is not serious about cutting spending to avert the ‘fiscal cliff’.
“Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow-walk our economy right up to - and over - the fiscal cliff,” Boehner said in a press conference this afternoon.
The Footsie finished the day slightly lower, pulling back after setting a new nine-month high at 5,946 the day on Wednesday (the last time the index closed higher was on March 19th at 5,961).
Market analyst Michael Hewson from CMC Markets said today that a “trifecta of positive factors” managed to underwhelm the market this afternoon:
“Three news items that ordinarily would have given markets a significant boost appear to have done anything but today, despite the Fed acting as expected by announcing a new round of asset purchases to the tune of $45bn, and EU leaders agreeing a framework towards a banking union inside their self-imposed deadline of year end, while Greece finally had its long awaited aid tranche finally approved by EU leaders,” Hewson said.
The Footsie staged a slight rally in afternoon trade following some better-than-expected jobless claims data Stateside.
However, as he often has done in the past few weeks, House Speaker John Boehner dampened market sentiment before the close after attacking the Obama administration, saying that the White House is not serious about cutting spending to avert the ‘fiscal cliff’.
“Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow-walk our economy right up to - and over - the fiscal cliff,” Boehner said in a press conference this afternoon.
Europe Market Report
European Markets Pulled Back On Fiscal Cliff Concerns
The European markets finished in the red on Thursday, as concerns over the looming fiscal cliff in the United States dominated trade. Comments made by Fed Chairman Ben Bernanke at the conclusion of the FOMC's 2-day meeting yesterday raised concerns regarding the potential damage that the stalemate over the issue is causing.
The U.S. Federal Reserve, at the end of the two-day meeting on Wednesday, said it would replace its "Operation Twist" program, which expires at the end of the year, with the purchase of longer-term Treasury securities at a pace of $45 billion per month. The central bank also said it would continue to purchase additional agency mortgage-backed securities at a pace of $40 billion per month.
In a departure from its earlier pledge to keep interest rates at historically low levels until mid-2015, the Fed will hold off on rate hikes until the unemployment rate falls to 6.5 percent. Policy makers do not see the unemployment rate falling to 6.5 percent until 2015.
Fed Chairman Ben Bernanke warned that Fed support cannot fully offset the downside risks presented by the so-called fiscal cliff. Bernanke expects Congress to reach a deal, but noted that inaction has already resulted in a troubling drop in business confidence.
Finance ministers from the 27 European Union states on Thursday finalized an agreement, giving the European Central Bank more powers to oversee the functioning of banks in the crisis-hit region. The decision came ahead of the two-day EU summit in Brussels starting today.
The ministers plan to make the supervisory system fully operational by March 2014 or 12 months after the entry into force of the legislation, whichever is later, according to statement issued after the meeting.
The Single Supervisory Mechanism (SSM) will be composed of the ECB and national competent authorities. As the chief watchdog, the ECB will be responsible for the overall functioning of the SSM and will have direct oversight of Eurozone banks, but "in a differentiated way and in close cooperation with national supervisory authorities," the ministers said in the statement.
Eurozone finance ministers, collectively known as the Eurogroup, finally approved the release of a second disbursement of bailout funds to Greece on the completion of the government's debt buyback operation.
At its meeting in Brussels on Thursday, Eurogroup authorized the bailout fund, the European Financial Stability Facility (EFSF), to release the next installment for a total amount of EUR 49.1 billion. The disbursement will be made in several tranches.
Greece will receive EUR 34.3 billion in the following days. The remaining amount will be disbursed in the first quarter of 2013.
Ernst & Young on Thursday said the euro area will enter 2013 with a brighter outlook than twelve months ago. The region is painfully progressing to stability, E&Y commented.
According to E&Y Eurozone Forecast, or EEF, the region will shrink 0.2 percent next year, but there will be a modest pickup from 2014 to 2016 of 1.3 percent a year. Similar growth rates are expected for the remainder of the decade.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.27 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.44 percent.
The DAX of Germany fell by 0.43 percent and the CAC 40 of France decreased by 0.10 percent. The FTSE 100 of the U.K. dropped by 0.27 percent and the SMI of Switzerland finished lower by 0.57 percent
The European markets finished in the red on Thursday, as concerns over the looming fiscal cliff in the United States dominated trade. Comments made by Fed Chairman Ben Bernanke at the conclusion of the FOMC's 2-day meeting yesterday raised concerns regarding the potential damage that the stalemate over the issue is causing.
The U.S. Federal Reserve, at the end of the two-day meeting on Wednesday, said it would replace its "Operation Twist" program, which expires at the end of the year, with the purchase of longer-term Treasury securities at a pace of $45 billion per month. The central bank also said it would continue to purchase additional agency mortgage-backed securities at a pace of $40 billion per month.
In a departure from its earlier pledge to keep interest rates at historically low levels until mid-2015, the Fed will hold off on rate hikes until the unemployment rate falls to 6.5 percent. Policy makers do not see the unemployment rate falling to 6.5 percent until 2015.
Fed Chairman Ben Bernanke warned that Fed support cannot fully offset the downside risks presented by the so-called fiscal cliff. Bernanke expects Congress to reach a deal, but noted that inaction has already resulted in a troubling drop in business confidence.
Finance ministers from the 27 European Union states on Thursday finalized an agreement, giving the European Central Bank more powers to oversee the functioning of banks in the crisis-hit region. The decision came ahead of the two-day EU summit in Brussels starting today.
The ministers plan to make the supervisory system fully operational by March 2014 or 12 months after the entry into force of the legislation, whichever is later, according to statement issued after the meeting.
The Single Supervisory Mechanism (SSM) will be composed of the ECB and national competent authorities. As the chief watchdog, the ECB will be responsible for the overall functioning of the SSM and will have direct oversight of Eurozone banks, but "in a differentiated way and in close cooperation with national supervisory authorities," the ministers said in the statement.
Eurozone finance ministers, collectively known as the Eurogroup, finally approved the release of a second disbursement of bailout funds to Greece on the completion of the government's debt buyback operation.
At its meeting in Brussels on Thursday, Eurogroup authorized the bailout fund, the European Financial Stability Facility (EFSF), to release the next installment for a total amount of EUR 49.1 billion. The disbursement will be made in several tranches.
Greece will receive EUR 34.3 billion in the following days. The remaining amount will be disbursed in the first quarter of 2013.
Ernst & Young on Thursday said the euro area will enter 2013 with a brighter outlook than twelve months ago. The region is painfully progressing to stability, E&Y commented.
According to E&Y Eurozone Forecast, or EEF, the region will shrink 0.2 percent next year, but there will be a modest pickup from 2014 to 2016 of 1.3 percent a year. Similar growth rates are expected for the remainder of the decade.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.27 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.44 percent.
The DAX of Germany fell by 0.43 percent and the CAC 40 of France decreased by 0.10 percent. The FTSE 100 of the U.K. dropped by 0.27 percent and the SMI of Switzerland finished lower by 0.57 percent
US Market Report
Stocks Seeing Modest Weakness Amid Fiscal Cliff Worries
Stocks have moved modestly lower over the course of the trading day on Thursday after initially showing a lack of direction. Lingering concerns about the looming fiscal cliff are weighing on the markets despite a batch of largely upbeat economic data.
The major averages moved roughly sideways in recent trading, stuck modestly below the unchanged line. The Dow is down 24.96 points or 0.2 percent at 13,220.49, the Nasdaq is down 7.85 points or 0.3 percent at 3,005.96 and the S&P 500 is down 3.49 points or 0.2 percent at 1,424.99.
The modest weakness on Wall Street comes as lawmakers in Washington continue to struggle to reach an agreement to avoid the fiscal cliff.
House Speaker John Boehner, R-Ohio, once again accused President Barack Obama of failing to provide a serious offer, claiming that the White House is not offering enough in spending cuts.
Boehner has made similar remarks for several days, while Democrats continue to attack the GOP for being unwilling to accept higher tax rates on wealthy Americans.
The worries about the fiscal cliff have overshadowed some upbeat economic data, including a report from the Labor Department showing that weekly jobless claims pulled back near a four-year low.
The report showed that jobless claims fell to 343,000 in the week ended December 8th, a decrease of 29,000 from the previous week's revised figure of 372,000. Economists had expected jobless claims to come in unchanged compared to the 370,000 originally reported for the previous week.
With the unexpected decrease, jobless claims fell to their lowest level since dropping to a four-year low of 342,000 in the week ended October 6th.
A separate report from the Commerce Department showed weaker than expected retail sales growth in the month of November, although a sharp drop in sales by gas stations offset strength in other sectors.
The report showed that retail sales increased by 0.3 percent in November following a 0.3 percent decrease in October. Economists had been expecting retail sales to increase by about 0.6 percent.
Excluding a 4.0 percent drop in sales by gas stations, retail sales rose by 0.8 percent in November compared to a 0.5 percent drop in October.
Traders also continue to digest yesterday's news that the Federal Reserve plans to replace its "Operation Twist" program, which expires at the end of the year, with the purchase of longer-term Treasury securities at a pace of $45 billion per month.
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