Thursday, 31 January 2013

Daily FX & Market Commentary: Focus turns to Friday's US jobs report

Daily FX Commentary: (Morning Report)


The pair continues to trend higher and approaches the next target at 1.3600, following break above very strong 1.3500 resistance zone. Positive technical were supported by fundamentals that gave the single currency an additional boost. Corrective easing on overbought hourly / 4h conditions faces support at 1.3520, Fib 38.2% of 1.3413/1.3587, reinforced by hourly 55 day EMA and strong one at 1.3500 zone, previous resistance. Yesterday’s close above 1.3500 and 1.3526, 200 day MA is seen supportive, with clearance of psychological 1.3600, seeing no significant barriers until 1.3700, round figure and 1.3726, Fib 76.4% of 1.4246/1.2042 descend. 

Res: 1.3547, 1.3567, 1.3600, 1.3650 
Sup: 1.3532, 1.3520, 1.3500, 1.3477 


Cable holds positive near-term sentiment, extending recovery from 1.5700 support zone. Regain of initial 1.5800 barrier and test of more significant 1.5825 breakpoint, sees scope for fresh extension higher and possible full retracement of 1.5891/1.5673 downleg, above which to open way for stronger recovery. Break above 4h 55 day EMA and 4h indicators entering positive territory, supports the notion. Previous barriers at 1.5800/ 1.5780 zone, now act as initial supports. 

Res: 1.5840, 1.5850, 1.5891, 1.5925 
Sup: 1.5800, 1.5780, 1.5764, 1.5724 


Near-term price action moves in a consolidative mode, following yesterday’s stretch to a fresh high at 91.40. While immediate support higher platform base at 90.40 zone stays intact, near-term structure will remain aligned towards the upside. Extension of broader uptrend through 91.40, to focus next barrier at 92.00. Hourly studies hold neutral tone, however, reversing 4h chart indicators do not rule out further easing that would harm immediate bulls if psychological / Fibonacci support at 90.00 contains any stronger dips. 

Res: 91.00, 91.25, 91.40, 92.00 
Sup: 90.73, 90.55, 90.31, 90.23 


The pair accelerated losses after repeated attempt lower finally broke below 0.9200 support and fresh slide dipped through 0.9100, to test very strong support and near-term base at 0.9080. Dominating negative tone on lower and larger timeframes studies, keeps bears firmly in play, however, corrective action on oversold conditions and attempt at strong support, is seen preceding fresh leg lower. Minor resistance lies at 0.9120 zone, with more significant barrier seen at 0.9165, Fib 38.2% of 0.9291/0.9086 downleg, reinforced by descending hourly 55 day EMA, while 0.9200 zone is seen capping for now. On the downside, break below 0.9080 to open psychological 0.9000, also March 2012 low, next. 

Res: 0.9125, 0.9140, 0.9165, 0.9188 
Sup: 0.9086, 0.9080, 0.9050, 0.9000 


Daily Market Commentary: (Evening Report)

London Market Report

Stocks fall as focus turns to Friday's US jobs report
Equities were extending losses on Thursday after yesterday’s shock contraction in the States, as markets braced for another busy day on the economic calendar tomorrow.

“Traders were unwinding positions earlier on January's phenomenal rally which sees major share markets at multi-year highs,” said market strategist Ishaq Siddiqi from ETX Capital.

Market analyst Craig Erlam from Alpari said this afternoon that markets were nervous ahead of the crucial jobs report in the US due out tomorrow afternoon. He said: “The jobs report tomorrow is always one of the most keenly watched items on the economic calendar, with the potential to cause significant movements in a number of markets. The figures over the last couple of months have been pretty uninspiring, as the private sector held off on hiring due to the uncertainty surrounding the fiscal cliff.

“All of the political infighting did little to ease these concerns, but now a lot of this has been dealt with, especially in respect to taxes, I expect to see the numbers pick up in the first few months of the year. We could even see the first quarter numbers come in much higher than expected, with a backlog of new hires over the past few months being carried out at the start of 2013.”

Stocks fell yesterday after the US Commerce Department revealed that the world's largest economy shrank by 0.1% in the last three months of last year, a stark contrast to the 3.1% growth seen in the third quarter. Forecasts were for a 1.1% expansion.

Meanwhile, economic data from the US today came in mixed: initial jobless claims rose by more than expected last week; personal incomes surpassed forecasts; while the Chicago NAPM purchasing managers’ index came in well ahead of estimates.

Europe Market Report 

European Markets Declined On Mixed Economic Data & Earnings

The European markets finished in negative territory on Thursday, after some mixed earnings results and some mixed European economic reports. However, the markets pared their losses in the afternoon, following the release of some positive economic data from the United States. Thursday was the first opportunity Europe had to react to Wednesday's FOMC announcement. Investors will now turn their attention to the U.S. jobs report for January, which will be released on Friday.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.81 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.21 percent.

The DAX of Germany dropped by 0.24 percent and the CAC 40 of France fell by 0.87 percent. The FTSE 100 of the U.K. decreased by 0.55 percent, but the SMI of Switzerland gained 0.38 percent.

Euro area house prices decreased at a faster pace in the third quarter, European Union statistical office Eurostat said Thursday.

The House Price Index dropped 0.7 percent from the second quarter, when prices fell 0.1 percent, Eurostat said in its first ever publication on the evolution of house prices in the 17-nation currency bloc. In the first quarter of 2012, prices fell 0.7 percent.

Germany's unemployment fell unexpectedly in January as the labor market turned healthier in the face of rising prospects of moderate economic growth.

Unemployment declined sharply by a seasonally adjusted 16,000 in January, following December's revised decrease of 2,000, figures from the Federal Labor Agency revealed Thursday. The latest decline contrasted with an expected increase of 8,000.

Germany's retail sales decreased more than expected in December reflecting weak domestic demand. Sales declined 1.7 percent in December from a month ago, when it was up 0.6 percent, Destatis reported Thursday. Sales were forecast to fall just 0.1 percent.

Germany's inflation unexpectedly slowed in January, preliminary data from the Federal Statistical Office showed on Thursday.

The harmonized index of consumer prices (HICP), which is meant for EU comparison purposes, rose 1.9 percent annually, which was a tad slower than the 2 percent increase in December. Economists had forecast the figure to hold steady at 2 percent.

France's producer price inflation slowed unexpectedly in December, data released by the statistical office INSEE showed Thursday. Producer prices on the French market rose 1.6 percent year-on-year, following a 1.9 percent gain in November. Economists had forecast the figure to climb to 2 percent.

French household spending remained flat in December, following a 0.2 percent increase in November, the statistical office Insee showed Thursday. Economists had forecast spending to grow 0.2 percent.

Confidence among British consumers improved more than expected in January as they turned optimistic about the economy's prospects, a survey by GfK NOP revealed Thursday. Also, consumers were upbeat on making major purchases at present.

The headline consumer confidence index rose to -26 in January from -29 in December. Economists expected only a modest increase to -28.

House prices in the UK increased in January after recording no change in the past two months, as recent employment gains and easier access to bank loans, thanks to central bank's credit program, lifted housing market activity.

House prices increased 0.5 percent month-on-month in January, a report from the Nationwide Building Society showed Thursday. The rate of increase was faster than the 0.2 percent increase expected by economists.

US Market Report

Mixed Batch Of Data Leads To Choppy Trading On Wall Stree

With traders digesting a mixed batch of economic data, stocks are turning in a lackluster performance during trading on Thursday. Uncertainty ahead of tomorrow's monthly jobs report is also contributing to the lack of conviction among traders.

The major averages are currently posting modest losses, although the Nasdaq is down only 0.83 points or less than a tenth of a percent at 3,141.48. The Dow is down 31.59 points or 0.2 percent at 13,878.83 and the S&P 500 is down 3.63 points or 0.2 percent at 1,498.33.

The choppy trading on Wall Street comes as traders express uncertainty about whether the recent batch of economic data supports any further upside for the markets.

Following yesterday's disappointing fourth quarter GDP report, the Labor Department released a report before the start of trading showing a bigger than expected rebound by weekly jobless claims.

The Labor Department said initial jobless claims rose to 368,000 in the week ended January 26th, an increase of 38,000 from the previous week's unrevised figure of 330,000. Economists had been expecting jobless claims to climb to 350,000 after hitting a five-year low in the previous week.

While bigger than expected, Jennifer Lee, senior economist at BMO Capital, said the rebound was not too shocking, adding, "And it was encouraging that the bounceback did not completely erase the two weekly improvements."

Helping to offset the negative sentiment generated by the report was a separate report from the Institute for Supply Management - Chicago showing a notable improvement in business activity in the Chicago-area in the month of January.

The ISM Chicago said its Chicago business barometer climbed to 55.6 in January from a revised 50.0 in December, with a reading above 50 indicating growth.

The Commerce Department also released a report showed a substantial increase in personal income in December, although the jump was due in large part to accelerated dividend and bonus payments ahead of the year-end tax increases.

On the other hand, gold stocks have come under pressure, with a notable decrease by the price of gold weighing on the sector. With gold for April delivery sliding $21.40 to $1,660.20 an ounce, the NYSE Arca Gold Bugs Index is down by 1.3 percent.

Housing stocks have also shown a notable move to the downside, dragging the Philadelphia Housing Sector Index down by 1 percent. M/I Homes (MHO) is leading the housing sector lower after reporting its fourth quarter results.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang SengIndex fell by 0.4 percent.

In the bond market, treasuries are seeing modest strength after coming under pressure in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.8 basis points at 1.988 percent.


Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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