Daily FX & Market Commentary

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.

Daily FX Commentary: (Morning Report)

EUR/USD

Bears took control of the near-term outlook, as the pair failed to sustain gains above 1.2800, 200 day MA and fell sharply to 1.2735, Monday’s opening levels. The reversal, signaled by Doji candle, retraced over 50% of 1.2660/1.2828 recovery rally. Hourly indicators are deeply in the negative territory and 4h chart studies building bearish momentum that keeps near-term focus at the downside. Strong support zone lies at 1.2720/00, Fib 61.8% / tentative bull trendline off 1.2660 and daily Ichimoku cloud base, seen as next downside target. Immediate resistance stands at 1.2764, yesterday’s low, ahead of 20/55 day EMA’s at 1.2785 and key near-term barriers at 1.2800/28.

Res: 1.2764, 1.2785, 1.2800, 1.2821
Sup: 1.2734, 1.2724, 1.2713, 1.2705


GBP/USD

Corrective rally off 1.5826, 15 Nov low, was capped by daily Ichimoku cloud base at 1.5935, with subsequent dip to 1.5882, retracing 505 of initial 1.5826/1.5935 rally. This could be seen as corrective, as 4h studies still hold in the positive territory and hourly indicators start to point higher, after breaking below their midlines. However, regain of 1.5935 is required to confirm higher low and resume near-term recovery, towards 1.5959, Fib 38.2% and 1.6000, round figure / trendline resistance. On the downside, violation of 1.5868, Fib 61.8%, would put near-term bulls on hold.

Res: 1.5919, 1.5927, 1.5935, 1.5959
Sup: 1.5882, 1.5868, 1.5857, 1.5826


USD/JPY

Near-term bulls remain fully in play, as the pair resumes rally that was interrupted by 81.00/58 consolidation and breaks above our initial target at 82.00. Immediate upside target lies at 82.20, May highs and 83.32, weekly 150 day MA, to possibly open way towards psychological 83.00 barrier. However, overextended conditions on both, 1 and 4h chart, with appearance of 4h RSI /MACD bearish divergence, could limit gains in the near-term. Previous high at 81.58, offers initial support, ahead of 81.00, consolidative range floor that should contain any stronger reversal.

Res: 82.20, 82.32, 82.50, 83.00
Sup: 81.70, 81.58, 81.42, 81.09


USD/CHF

Bounce on failed attempt to break below important 0.9400 support, also 200 day MA, provides temporary relief, as the price jumps to 0.9456 so far. Retracement of over 61.8% of 0.9489/0.9390 fall, turns hourly structure positive, however, failure to regain previous high at 0.9489, would risk lower top and fresh weakness, as 4h indicators still hold in the negative territory. Break above 0.9489 to re-focus key near-term barriers at 0.9500/11, otherwise, near-term focus would shift back towards 0.9400.

Res: 0.9456, 0.9489, 0.9500, 0.9511
Sup: 0.9433, 0.9427, 0.9400, 0.9390

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Daily Market Commentary: (Evening Report)

London Market Report

Footsie rallies in afternoon trade

Market Movers
techMARK 2,054.64 -0.07%
FTSE 100 5,752.03 +0.07%
FTSE 250 11,783.32 -0.32%

The FTSE 100 opened on the back foot on Wednesday morning after the initial disappointment regarding a delay in funds to Greece; however comments by Eurozone officials throughout the day lifted the mood in the afternoon, pushing the index back into positive territory by the close.

Equity markets Stateside started the session with moderate gains ahead of the Thanksgiving holiday on Thursday. Volumes on European markets are expected to be very light in the absence of US trading tomorrow.

The Eurogroup on Tuesday night was unable to thrash out an agreement on how to finance a two-year extension in Greece’s commitments. "I don’t know when [the aid disbursements] will happen," said Eurogroup head Jean-Claude Juncker after the meeting in Brussels. "Greece has delivered, now it is up to us."

Market analyst Michael Hewson from CMC Markets said: “Disappointment appears to have been tempered somewhat by expectations that EU leaders will, in the final analysis, agree something next week on November 26th, and ultimately unlock the extra money that Greece needs to keep funding itself.”

German Chancellor Angela Merkel has said she is confident the issue will be closed at Monday's Eurogroup meeting. Meanwhile, German Finance Minister Wolfgang Schauble said that Eurozone governments and the International Monetary Fund (IMF) have agreed on a Greek debt buy-back programme in order to fill a financing gap, according to Reuters.

MPC voted 8-to-1 in favour of keeping QE unchanged

The minutes of the latest Monetary Policy Committee (MPC) meeting came out this morning, showing that eight of the nine members voted to maintain the size of its asset purchases at £375bn.

Barclays Research analyst Chris Crowe said that the minutes were supportive of the current stance: "standing back from further stimulus for the time being, but ready to do more if the economy continues to disappoint."

In other domestic news, UK public sector net borrowing came in at £8.6bn last month, up from £5.9bn in October 2011, according to the Office for National Statistics. The consensus estimate was for net borrowing to the tune of £6bn.

Europe Market Report 

European Markets Finished Up Despite Greece Concerns

The European markets recovered from early weakness on Wednesday and ended the session with modest gains. The early losses were caused by the failure of the Eurozone finance ministers to come to an agreement on Greece at their meeting in Brussels on Tuesday. The meeting was expected to produce a final decision on the next Greek aid tranche.

Eurozone finance ministers on Tuesday failed to strike a deal on Greece, delaying further the approval of the much-awaited EUR 31.5 billion-loan installment despite fears that the country will run out of cash this month.

The Eurogroup will meet again on November 26 to complete "further technical work on some elements of this package," Eurogroup President Jean-Claude Juncker said in a statement issued after the ministers' meeting in Brussels on Tuesday.

However, Juncker said the Eurogroup has made progress in identifying "a consistent package of credible initiatives aimed at making a further substantial contribution to the sustainability of Greek government debt."

Bank of England policymakers decided to retain quantitative easing at GBP 375 billion through a split vote early November, as David Miles sought an increase of GBP 25 billion citing the slackness in the economy, while all other eight members assessed the current size as appropriate.

Though members differed over the exact impact of the asset purchases, they said that demand and output would have been significantly weaker in their absence, minutes of November 7 and 8 meeting showed Wednesday. They also discussed the likely effectiveness of additional stimulus.

Regarding interest rates, the nine-member Monetary Policy Committee voted unanimously to maintain it at a record low 0.50 percent. Nonetheless, the Committee discussed the likely effectiveness of reducing the bank rate to below 0.5 percent. Members judged that it was unlikely to wish to reduce bank rate in the foreseeable future.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.43 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.23 percent.

The DAX of Germany climbed by 0.16 percent and the CAC 40 of France gained 0.44 percent. The FTSE 100 of the U.K. advanced by 0.05 percent and the SMI of Switzerland rose by 0.37 percent.

A leading indicator for Germany's economic activity increased 0.1 percent month-on-month to 102.6 in September, marking its first gain since February this year, the Conference Board said in a report on Wednesday.

The U.K.'s public sector net borrowing (PSNB), excluding the temporary effects of financial interventions, rose to GBP 8.6 billion in October from GBP 5.9 billion a year ago, reports said citing data published by the Office for National Statistics on Wednesday.

Economists had forecast the budget deficit to widen to GBP 6 billion. Public sector net cash requirement (PSNCR) showed a shortfall of GBP 14.7 billion during the month.

US Market Report

Stocks Experiencing Choppy Trading Ahead Of Holiday

With traders getting a head start on tomorrow's holiday, stocks are turning in a lackluster performance during trading on Wednesday. A mixed batch of U.S. economic data may also be contributing to the choppy trading on Wall Street.

The major averages are currently posting modest gains but are off their early highs. The Dow is up 31.13 points or 0.2 percent at 12,819.64, the Nasdaq is up 3.23 points or 0.1 percent at 2,919.91 and the S&P 500 is up 0.22 points or less than a tenth of a percent at 1,388.03.

The lack of direction being shown by stocks comes as trading activity remains light ahead of the Thanksgiving Day holiday on Thursday.

Traders are also digesting a mixed batch of economic data, including reports showing a drop in jobless claims and a substantial downward revision to consumer sentiment.

Before the start of trading, the Labor Department released a report showing a notable decrease in initial jobless claims in the week ended November 17th, although the data continued to reflect distortions due to Hurricane Sandy.

The report showed that jobless claims fell to 410,000 from the previous week's revised figure of 451,000, with claims coming in line with analyst estimates.

Meanwhile, a separate report from Thomson Reuters and the University of Michigan showed that consumer sentiment improved by substantially less than initially estimated in the month of November.

The report said the consumer sentiment index for November came in at 82.7, down sharply from the preliminary reading of 84.9. With the downward revision, the index is now only just above the final October reading of 82.6.

The latest news out of Europe has also helped to keep buying interest subdued, as finance ministers failed to strike a deal on Greece, further delaying the approval of another round of financing for the debt-plagued nation.

The Eurogroup will meet again on November 26th to complete "further technical work on some elements of this package," Eurogroup President Jean-Claude Juncker said in a statement issued after the ministers' meeting in Brussels.

Traders are also keeping an eye on developments in the Middle East, with Secretary of State Hillary Clinton in the region to try to help broker a cease fire between Israel and Palestinian militants in Gaza.

Other Markets In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Wednesday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Australia's All Ordinaries Index fell by 0.4 percent. Meanwhile, the major European markets all saw modest strength on the day. While the French CAC 40 Index rose by 0.4 percent, the German DAX Index and the U.K.'s FTSE 100 Index edged up by 0.2 percent and 0.1 percent, respectively. In the bond market, treasuries are moving moderately lower, pulling back further off last week's highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.1 basis points at 1.687 percent.

Daily FX & Market Commentary

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.

Daily FX Commentary: (Morning Report)

EUR/USD

The near-term upward momentum sees potential for further gains, as the pair cracked important 1.2800 resistance yesterday. The price action stabilizes at 1.2800 zone, following sharp sell-off from 1.2818 fresh high, to 1.2763, where 55 day EMA contained dips. With 4h chart studies indicating further recovery, sustained break above 1.2800 to open next strong resistance zone at 1.2880/1.2900, with interim barrier at 1.2843, Fib 38.2% of 1.3138/1.2660 descend. Higher platform at 1.2760 zone, also Fib 38.2% of 1.2660/1.2818 upleg, offers good support and should ideally contain pullbacks, while potential slide below here would signal a failure swing and trigger deeper reversal.

Res: 1.2810, 1.2818, 1.2843, 1.2880
Sup: 1.2781, 1.2760, 1.2740, 1.2720


GBP/USD

The pair maintains positive tone, following yesterday’s close slightly above 1.5900 mark. Near-term price action is still limited by yesterday’s fresh high and 50% of 1.6174/1.5826, at 1.5922, hovering around 55 day EMA. Fresh momentum, emerging on 4h chart, indicates further extension higher. Lift above 1.5922 to focus Fibonacci 38.2% barrier at 1.5959, ahead of more significant 1.6000 level, psychological resistance and main bear-trendline off 1.6308. Consolidation range floor at 1.5885, also Fib 38.2% of 1.5826/1.5922 rally, is expected to contain, otherwise, further corrective easing towards 1.5874/63, Fibonacci supports, would soften near-term structure.

Res: 1.5922, 1.5959, 1.5978, 1.6000
Sup: 1.5892, 1.5885, 1.5874, 1.5863


USD/JPY

The pair continues to move sideways, consolidating the latest gains that peaked at 81.58. Appearance of Doji candle, along with weakening hourly studies and overbought 4h conditions, would suggest further hesitation on approach to the next target at 82.00. Initial support lies at 81.00, Fib 23.6% / 20 day EMA, ahead of 80.67, previous high / Fib 38.2% that should ideally contain any dips.

Res: 81.42, 81.58, 82.00, 82.20
Sup: 81.09, 81.00, 80.89, 80.67


USD/CHF

Near-term structure weakens further, as the price retests important 0.9400 support, on a slide from last Friday’s upside rejection at 0.9489. Brief dip and daily close below 0.9400, 200 day MA, could be a signal for fresh weakness, as near-term indicators are in the negative territory and see the downside favored for now. Slide below 0.9385 breakpoint is seen as a trigger, with bearish EMA’s crossover at 0.9436, offering initial barrier. Only lift above 0.9450, would ease immediate bear pressure.

Res: 0.9436, 0.9452, 0.9489, 0.9500
Sup: 0.9400, 0.9393, 0.9385, 0.9365 

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks rebound as 'Glenstrata' deal pushed through
Market Movers

• techMARK 2,056.18 +0.29%
• FTSE 100 5,748.10 +0.18%
• FTSE 250 11,820.83 +0.65%

- Xstrata shareholders approve merger with Glencore
- Hamas official says ceasefire has been agreed
- Eurogroup meeting on Greece kicks off in Brussels

After a poor start on Tuesday, UK stocks rallied in afternoon trade to finish broadly flat after shareholders approved the merger between FTSE 100 constituents Xstrata and Glencore; meanwhile, reports of easing tensions in the Middle East could have helped to lift sentiment late on.

Hamas official Ayman Taha said this afternoon that Israel and Gaza militants have agreed on a ceasefire. He said: "An agreement for calm has been reached. It will be declared at nine o'clock (19:00 GMT) and go into effect at midnight (22:00 GMT)." However, Israeli government spokesman Mark Regev told CNN this afternoon that the "ball is still in play" and a deal has not been finalised.

The FTSE 100 closed only slightly higher this afternoon though, following an impressive 2.36% surge the day before on the back of increased hopes that US politicians will be able to deal with the 'fiscal cliff' before automatic spending cuts and tax increases come into effect at the start of 2103.

Markets started on the back foot this morning as investors reacted to the news that Moody's last night stripped France of its prized 'AAA' rating. The US rating agency said that the move was due to "the risk to economic growth, and therefore to the government's finances, posed by the country's persistent structural economic challenges."

Analyst Michael Hewson from CMC Markets said this afternoon: "Markets have pretty much taken this in their stride given that Moody's isn't telling the markets anything they don't already know, however markets have drifted off their highs, as yesterday's blind optimism gives way to some more pragmatic caution, ahead of this evening's Eurogroup meeting on Greece."

Eurozone finance ministers are meeting in Brussels to discuss whether or not to release the next tranche of aid for Greece. However, minutes before the start of the meeting, Eurogroup President Jean-Claude Juncker claimed not to be entirely sure that a deal would take place tonight.

"We must still reach an understanding on several details and I would expect that the chances are good that we will come to a final and joint solution this evening. But I'm not entirely certain about the matter," he said. 

Europe Market Report 

Europe midday: Eurogroup still undecided on Greece

-Moody's downgrades France's debt rating
-French 10 year bond yields rise by 5 basis points
-EFSF could delay 3 year bond issue after Moody's action

FTSE 100: -0.20%
Dax-30: 0.19%
Cac-40: -0.27%
FTSE-Mibtel 30: -0.71%
Ibex 35: -0.59%
Stoxx 600: -0.13%

For the most part European equities are now giving back a little bit of yesterday's enormous gains, as might have been expected.

That ahead of this evening's meeting of Eurozone Finance Ministers and after rating agency Moody's decision to downgrade France's debt to AA1 from AAA. Of particular importance, the rating agency's decision may have negative implications for the EFSF rescue fund, although not for the European Stability Mechanism (ESM) it is thought.

Regarding the former, so-called Eurogroup finance ministers are thought to be near a political agreement to disburse the next loan tranche to Greece early in December, although divisions remain over how exactly to place the country's debt stock on a sustainable downwards trajectory.

Greece's European partners are willing to give the country more time to meet its obligations -but not more money- whereas the International Monetary Fund believes that Greece's debt load should not increase any further.

The Eurogroup gathers today at 16:00 London time.

According to Greek daily Ekathimerini, sources close to Greece's Prime Minister, Antonis Samaras, expect a tranche of €31.5bn in aid by December 5th and another €13bn in January. Finland's Finance Minister, Jutta Urpilainen, however, has stated today that his country is ready to give Greece more time to achieve its financing programme targets, but not to give it more money.

As for France, Moody's last night said that: "France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short - term due to subdued domestic and external demand" and "structural rigidities" in the longer term.

Somewhat ironically, the above comes soon after the country unveiled a set of structural reform measures.

The initial reaction in French debt markets was quite muted, with yields on French long-term debt little changed. They are now up by 5 basis points to 2.12%.

Spain's Treasury has placed €4.9bn in 12 and 18 month bills, well ahead of the €4.5bn expected, even if the bid-to-cover ratio for the 1 year debt on offer fell to 2.1 from 2.71. 

Sharp drop in Dutch consumer confidence

French car orders rose by 6% in May.

German producer prices were flat versus the previous month in October (Consensus: 0.1%).

Dutch consumer confidence dropped to -37 points in November, after -32 in the previous month (Consensus: -35).

Switzerland's trade surplus rose to 2.8bn Swiss francs in October, versus 1.9bn francs in September.

Crude futures back off a little

The euro/dollar is now at 1.2812, up by 0.25% on the day.

Front month Brent crude futures are now down by 0.125 dollars to the 111.56 dollar mark on the ICE.

US Market Report

Stocks Nearly Flat On The Heels Of Mixed Catalysts
Stocks have turned in a lackluster performance over the course of the trading day on Tuesday after ending the previous session substantially higher. A mixed batch of news has contributed to the choppy trading on Wall Street.

After seeing initial weakness, the major averages have climbed back near the unchanged line. While the Dow remains down 5.18 points or less than a tenth of a percent at 12,790.78, the Nasdaq is up 2.61 points or 0.1 percent at 2,918.68 and the S&P 500 is up 1.87 points or 0.1 percent at 1,388.76.

The early weakness on Wall Street was partly due to news that Moody's Investors Service downgraded France's government bond rating by one notch to Aa1 from Aaa. The ratings agency added that the outlook remains negative.

Moody's said France's long-term economic growth outlook is negatively affected by multiple structural challenges and said the fiscal outlook is uncertain as a result of the deteriorating economic prospects.

Nonetheless, selling pressure remained subdued following the release of a report from the Commerce Department showing an unexpected increase in U.S. housing starts.

The report said housing starts climbed 3.6 percent to a seasonally adjusted annual rate of 894,000 in October, reaching their highest level in over four years.

While the markets have subsequently recovered from the initial downward move, lingering uncertainty about the looming fiscal cliff has limited the upside for the markets.