Daily FX & Market Commentary - 'fiscal cliff' optimism

Daily FX Commentary: (Morning Report)

EUR/USD

The Euro moves in a sideways consolidative mode, holding within 30-pips range, following yesterday’s failure on approach to 1.3200 barrier and Doji candle. As the latter proves to be tough barrier and the pair lacks momentum for push higher, stronger correction cannot be ruled out. The notion is supported by descending hourly and 4h studies emerging from overbought territory. Range lows at 1.3140 zone, reinforced by hourly Ichimoku cloud, offer initial support, ahead of more significant 1.3100, 13 Dec previous highs, loss of which to possibly expose psychological / Fibonacci 61.8% support at 1.3000.

Res: 1.3178, 1.3186, 1.3200, 1.3250
Sup: 1.3142, 1.3115, 1.3100, 1.3065


GBP/USD

The pair holds steady around 1.6200 handle, following yesterday’s break and close above the latter. Overall bulls remain intact for fresh extension higher that would focus key 1.6300 resistance zone. However, corrective easing may precede rally, as hourly indicators are reversing. Initial support lies at 1.6180/70 zone, previous tops and Fib 38.2% of 1.6084/1.6218 ascend, ahead of 1.6150, 50% retracement, where dips should be contained, otherwise, further delay and downside extension towards 1.6100/1.6085, would be likely.

Res: 1.6218, 1.6250, 1.6271, 1.6300
Sup: 1.6190, 1.6175, 1.6150, 1.6135 


USD/JPY

Near-term bears are running out of steam, after yesterday’s surge to fresh 1/ ½ year high, as the price slides below psychological 84.00 support, following repeated attempt at 84.32, yesterday’s high. With 4h studies starting to point lower, initial signal for corrective action is given, however, confirmation requires filling yesterday’s gap that will be seen on a dip to 83.50 and possible test of strong support at 83.30/20 zone, 13/14 Dec lows , Fib 61.8% of 82.09/84.32 ascend. Conversely, lift above 84.32, to open 84.50 and 85.00, weekly 200 day MA.

Res: 84.07, 84.15, 84.32, 84.50
Sup: 83.82, 83.50, 83.30, 83.20


USD/CHF

The pair consolidates recent losses, moving within narrow range above yesterday’s fresh low at 0.9151, with upside being capped under initial 0.9200 barrier for now. Overall bearish tone keeps the downside favored, with corrective bounce signaled by oversold 4h conditions. However, upside action requires clearance of strong 0.9200/40 resistance zone, previous lows and 20/55 day EMA’s, to avert immediate downside risk and allow for stronger retracement. Otherwise, risk of lower top under 0.9240 and fresh leg lower, would be the likely near-term scenario.

Res: 0.9192, 0.9210, 0.9213, 0.9240
Sup: 0.9165, 0.9151, 0.9100, 0.9080 

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Daily Market Commentary: (Evening Report)

London Market Report


London close: FTSE 100 finishes strongly on 'fiscal cliff' optimism
Market Movers

• techMARK 2,120.84 +0.62%
• FTSE 100 5,935.90 +0.40%
• FTSE 250 12,293.25 +0.61%

- US budget negotiations lift hopes
- G4S up on renewed confidence
- FTSE 250 at all-time high

UK markets finished with strong gains on Tuesday afternoon as 'fiscal cliff' hopes spurred investors' appetites for riskier assets, such as mining stocks.

The second-tier FTSE 250 index was trading at a record high today, while Frankfurt's DAX was close to its best levels since 2008. However, as financial sales trader Toby Morris from CMC Markets pointed out this afternoon, "the FTSE 100 has once again underperformed finding progress above its recent highs somewhat problematic".

Eyes were kept firmly on budget negotiations Stateside today after President Barack Obama last night proposed raising taxes for those that earn over $400,000, a higher threshold than the $250,000 annual salary he had previously targeted.

Meanwhile, House Speaker John Boehner said that he is working on a "plan B" to "protect as many American taxpayers as we can". Under his new plan, tax increases will only be imposed on those earning over $1m a year.

"Markets feel that after days of slow progress, we are finally seeing a step-up in the pace of budget negotiations," said market strategist Ishaq Siddiqi from ETX Capital.

"Much work remains for US lawmakers however, who will have to endorse proposals but the last two days provides the market with a degree of confidence that we are seeing some constructive dialogue in Washington."

Economic news elsewhere was thin on the ground today, with Spanish and Greek bond auctions going smoothly and UK consumer price inflation staying unchanged at 2.7% in November. 

Europe Market Report 


Europe midday: Stocks steady ahead of US data
-Stock rose as US fiscal cliff fears diminished
-Core country bond yields increased slightly as haven demand receded
-Spanish banks´ bad loan ratio rose to 11.23 per cent for October
-Riksbank lowered benchmark policy rate
-Greek and Spanish bill auctions went off without a hitch

FTSE-100: 0.39%
Dax-30: 0.40%
Cac-40: -0.05%
FTSE Mibtel 30: 0.34%
Ibex 35: 0.82%
Stoxx 600: 0.3o%

The largest European equity benchmarks were still registering small gains by the midday mark following news overnight of concessions by US President Barack Obama on the fiscal front.

Worth noting – perhaps – there was some market chatter regarding pressure on core European bond yields, while on the periphery long-term interest rates were down a tad. The former seemed to be a result of diminished haven bids.

Acting as a backdrop, Sweden´s central bank opted on Tuesday to lower its benchmark policy rate by 25 basis points, to 1%, as expected.

Not to be missed, Spanish banks´ bad loan ratio rose to 11.23% in October, after a reading of 10.71% for the previous month.

Both the Greek and Spanish bill auctions went off without a hitch.

News that Chinese officials had again set a 7.5% target for their economy´s rate of expansion (in 2013), at their annual central economic work conference, buoyed mining and basic resource stocks.

Ireland´s economy grew more or less as was expected

Irish third quarter gross domestic product (GDP) expanded at a 0.2% quarter-on-quarter pace (Consensus: 0.7%). That disparity, however, was made up by an upwards revision to the prior month´s reading.

Italy´s current account deficit improved to €245m in October after a reading of €2.6bn for the previous month.

Moderate rise in crude futures

The euro/dollar was edging higher by 0.20% to the 1.3186 dollar mark.

Front month Brent crude futures were rising by 0.536 dollars, to the 108.26 dollar per barrel mark on the ICE.

US Market Report

US open: Homebuilder confidence back at levels from 2006
-Home builder confidence at 2006 levels
-Several M and A transactions in the news
-Single currency moving higher

Dow Jones Industrials: 0.42%
Nasdaq Comp.: 0.84%
S&P 500: 0.60%

The main US equity benchmarks are now registering moderate gains. That following yesterday´s late surge higher and as investors wait for Republicans´ reaction to Obama´s concessions yesterday. 

 

Home builder confidence back at April 2006 levels

The NAHB home builders´ confidence index for the month of December increased to 47 points after a reading of 45 points in the month before (down from a preliminary reading of 46).

The US third quarter current account deficit decreased to 107.5bn dollars, after a reading of 118.1bn dollars for the previous quarter (Consensus: 103bn dollars).

Same store weekly retail chain sales grew by 4.3% according to the latest ICSC survey data.

Month to date same-store retail sales have fallen by 0.2% according to Redbook.

Moderate rise in crude futures

Front month West Texas crude futures rose by 0.60% to the 87.70 dollar per barrel on the NYMEX.

10 year US Treasury yields are now rising by 2 basis points, at 1.78%.

==================================================================== 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 & Market Commentary: Fiscal cliff resolution may be postponed

Daily FX Commentary: (Morning Report)

EUR/USD

The Euro remains well supported, with last Friday’s surge through key barriers at 1.3138/70, resulted in testing levels just under psychological 1.3200 level and 30d Bollinger Band during the Asian session. Corrective easing is seen likely, as hourly indicators are emerging out of overbought zone, while 4h ones started o reverse. However, overall bullish tone remains intact, as clear break above 1.3200 would signal fresh bull phase after three-month congestion under 1.3170/38 peaks. On the upside, immediate target lies at 1.3282, 01 May high and psychological 1.3300 barrier. With dips being contained by 20 day EMA at 1.3140 for now, next strong supports lies at 1.3100 zone, also 55 day EMA and 1.3070, last Friday low / Fib 38.2% of 1.2876/1.3186 ascend.

Res: 1.3170, 1.3186, 1.3200, 1.3250
Sup: 1.3142, 1.3118, 1.3100, 1.3065 

GBP/USD

Cable is poised to break above psychological 1.6200 barrier, also Fib 76.4% of 1.6308/1.5826, the last barrier en-route to strong 1.6300 resistance zone. Near-term studies are positively aligned and keep the upside favored, with psychological support at 1.6100, also 50% of 1.6000/1.6200, expected to contain any stronger reversal.

Res: 1.6200, 1.6216, 1.6250, 1.6271
Sup: 1.6175, 1.6155, 1.6130, 1.6100


USD/JPY

Strong bullish stance has been confirmed by overnight’s gap-higher opening, as the price broke above previous annual high at 84.17. Corrective action off overnight’s fresh high at 84.32, holds for now above last week’s closing price, with any stronger retracement, as 4h studies are overbought and divergence appears on hourly chart, would face good supports at 83.30 and 83.00, levels expected to contain. On the upside, psychological 85.00 barrier comes in the near-term focus.

Res: 84.00, 84.15, 84.32, 84.50
Sup: 83.84, 83.50, 83.30, 83.00 


USD/CHF

Near-term bears remain fully in play, as the pair dips to 0.9150, following loss of 0.9200 base. Brief corrective action on oversold near-term conditions strong barriers at 0.9200/40 area that are expected to cap, with 0.9100 zone seen in the near-term focus, as the pair resumes broader downtrend from 0.9970, 24 July annual high.

Res: 0.9192, 0.9200, 0.9213, 0.9240
Sup: 0.9175, 1.9164, 0.9151, 0.9100

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks falls as 'fiscal cliff' deadline looms
Market Movers

• techMARK 2,107.82 -0.40%
• FTSE 100 5,912.15 -0.16%
• FTSE 250 12,218.58 -0.21%

Increasing optimism surrounding budget talks between US politicians may have helped the FTSE 100 come off its intraday low, but the index was stuck firmly in negative territory with markets remaining nervous ahead of the January 1st deadline.

Without a deal, the $600bn in automatic spending cuts and tax increases which come into effect are expected to pull the US economy back into recession.

House Speaker John Boehner, under increasing pressure to soften his opposition to raising taxes for the wealthy, made an offer over the weekend that proposed increasing taxes on those who earn over $1m. While the Obama administration declined the proposal – it wants higher taxes for those who take in more than $250,000 a year – the White House described the offer as "progress".

"It's like a game of chicken between President Barack Obama and House Speaker John Boehner. Both know they must soften their stance at some point if they are going to come to an agreement, but neither wants to do it first," said market analyst Craig Erlam from Alpari.

"Boehner has now tempted Obama in claiming he may be willing to allow tax breaks expire for millionaires in exchange for cuts to entitlements, however Obama is unlikely to go for it, instead sticking to his original demands of tax hikes on the top 2%. What it may do though is encourage Obama to offer something in return which is desperately needed if these talks are going to progress given that there's only two weeks until the deadline." 

Europe Market Report 

Europe midday: Italy and Spain hold steady

- Peugeot leads gains on the Stoxx 600
- Shares of KPN crater
- Banks deposited 225.06bn euros overnight at ECB

FTSE-100: -0.49%
Dax-30: -0.03%
Cac-40: -0.36%
FTSE Mibtel 30: 0.13%
Ibex 35: 0.07%
Stoxx 600: -0.25%

The main European equity benchmarks were registering slight falls by the midday mark, despite news that the Liberal Democratic Party (LDP) had won in this past weekend´s elections in Japan. The LDP has been a fierce critic of the Bank of Japan, pressuring it to carry out a more aggressive monetary policy.

Market commentary is linking the selling pressure in equities to doubts and worries regarding the outlook for the US fiscal cliff; more specifically, the possibility that any agreement might get pushed out beyond year-end.

In European news, Germany´s central bank – the Bundesbank – has today forecast that the country´s phase of economic weakness could "soon be over," even if it does expect a "noticeable" contraction in fourth quarter gross domestic product. 

Trade surplus contracted in October

Labour costs in the Eurozone rose at a 2.0% year-on-year clip in the third quarter, according to Eurostat.

The Eurozone trade surplus fell to €7.9bn in October, from a revised level of €11bn in the month before (Consensus: €11bn). 

 

Slight drop in the single currency
The euro/dollar was dropping 0.07% to the 1.3160 dollar level.

Front month Brent crude futures were rising by 0,120 dollars to the 108.31 dollar per barrel mark on the ICE.

US Market Report

US open: Fiscal cliff resolution may be postponed until January
-Analysts see 10 per cent rise next year in S&P 500

Dow Jones Industrials: 0.35%
Nasdaq Composite: 0.44%
S&P 500: 0.45%

The major US equity benchmarks began the session moving higher.

While today is rather light in terms of the economic calendar, rather the opposite is true of the rest of the week.

Acting as a backdrop, the news-flow regarding the fiscal cliff is mixed at best. On the one hand, some reports suggest that both Republicans and Democrats are beginning to 'talk' of possibly waiting until January before signing off on anything. That delay seems to have irked some investors.

On the other hand, the Republican speaker of the House, John Boehner, is willing to accept higher taxes on millionaires in exchange for restraint on spending on entitlement programs such as Medicare and Social Security.

Obama, however, has rejected that proposal, possibly due to the fact that he wishes to tax higher incomes starting from $200.000 per individual or $250,000 per family. 

Slight rise in other asset classes
10 year US Treasury yields were higher by 1 basis point, to 1.72%.

Front month West Texas crude futures were rising by 0.3% to the 86.91 dollar per barrel mark on the NYMEX.

==================================================================== 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 & Market Commentary - 'Fiscal cliff' concerns keep markets under pressure

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 

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Daily Market Commentary: (Evening Report)

London Market 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%

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.

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

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.

Other Markets In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index surged up by 1.7 percent, Hong Kong's Hang Seng Index fell by 0.3 percent. In the bond market, treasuries are seeing modest weakness, extending the downward move seen following yesterday's Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.3 basis points at 1.72 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.

Daily FX & Market Commentary - Fed replaces Twist & sets explicit targets

Daily FX Commentary: (Morning Report)

EUR/USD

The single currency sustains break above 1.3000 barrier, as clearance of Fib 61.8% at 1.3030, tested 1.3050 so far. Strong bullish posture of 4h studies, sees bulls in play for test of 1.3085/1.3100 barriers, above which the way will be opened for test of key barriers at 1.3125/38, 05 Dec / 17 Oct peaks. Gains would be delayed by corrective action on overbought hourly studies, with strong support and higher platform at 1.3000, reinforced by ascending 55 day EMA at 1.2990, expected to contain. Daily close above 1.3030 to confirm bullish structure off 1.2900 base and confirm daily three white soldiers reversal pattern.

Res: 1.3013, 1.3030, 1.3041, 1.3066
Sup: 1.2995, 1.2970, 1.2950, 1.2927 

GBP/USD

The pair resumes rally from 1.6000 base, clearing 1.6127/29 double-top and Fib 61.8%, extending gains to 1.6150 zone so far. Subsequent pullback on overbought hourlies, sees good support at 1.6100, near Fib 38.2% of 1.6000/1.6150 / 55 day EMA, however, caution is required, as 4h indicators are reversing that would trigger stronger correction. Below 1.6100, supports lie at 1.6070/50, loss of which would delay bulls. Larger picture outlook remains firmly bullish and favors near-term extension towards 1.6175/1.6200 barriers.

Res: 1.6129, 1.6150, 1.6175, 1.6200
Sup: 1.6100, 1.6090, 1.6060, 1.6050


USD/JPY

The pair cracked three-week barrier and range top at 82.83, to approach psychological 83.00 barrier. Gains were limited by overextended hourly studies, however, strong bullish tone on 4h chart, suggests that extension through 83.00 is likely. Immediate upside target lies at 83.26, 02 Apr high, ahead of yearly highs at 84.08/17, posted in March. Any dips should be contained at 82.50 zone.

Res: 83.00, 83.29, 84.08, 84.17
Sup: 82.79, 82.63, 82.52, 82.32 


USD/CHF

The pair has lost ground, as strong support at 0.9320/00 zone gave way and dips reached levels close to Fib 76.4% retracement of corrective 0.9239/0.9381 rally. Failure to regain important 0.9400 resistance zone, stalling at 50% of 0.9511/0.9239 descend and subsequent reversal that accelerated on a loss of 0.9320/00, revived bears for possible re-visit of 0.9239, 03 Dec low. With hourly studies deep in negative zone and 4h indicators breaking below the midlines, downside remains in near-term focus. Previous strong supports now act as resistance and only clear break and close above 0.9320/30 zone, would avert immediate downside risk.

Res: 0.9300, 0.9320, 0.9335, 0.9367
Sup: 0.9275, 0.9254, 0.9239, 0.9213

====================================================================


Daily Market Commentary: (Evening Report)

London Market Report

Stocks rise as investors await the FOMC

Market Movers
techMARK 2,132.04 +0.18%
FTSE 100 5,945.85 +0.35%
FTSE 250 12,224.31 +0.28%

UK stocks finished Wednesday's session with decent gains, extending its recent winning streak into its sixth day, with investors widely expecting the US Federal Reserve to reveal more stimulus measures in the coming hours.

The Footsie closed at its highest level since March 19th when it finished the session at 5,961.

It is predicted that the Federal Open Market Committee (FOMC) meeting will culminate with the announcement of a new long-term bond purchase programme valued at $45bn per month as 'Operation Twist' comes to an end.

Some 48 out of 49 analysts surveyed by Bloomberg are expecting new stimulus on top of the $40bn monthly mortgage-bond buying programme announced in September, commonly referred to as QE3 (third round of quantitative easing).

While optimism over the 'fiscal cliff' has increased slightly over the last few days, House Speaker John Boehner, who has talked this week with President Barack Obama, said that their two parties still have “serious differences" on resolving the issue.

“His remarks, although not enough to send markets spiral downward, do reinforce the discord between Republicans and the White House. The focus is now on the US Fed’s policy to see if it could provide some joy – due out after the European closing bell,” said market strategist Ishaq Siddiqi from ETX Capital.

Helping provide a lift to sentiment this morning was positive employment data in the UK (jobless claims fell 3,000 in November, better than the 6,000 increase expected), while a bond auction in Italy went relatively ‘smoothly’ in spite of the current political uncertainty.

Europe Market Report 

European Markets Exercised Caution Ahead Of Fed Announcement

The European markets largely ended Wednesday's session with modest gains, as investors played it cautious ahead of the impending announcement from the Federal Reserve in the U.S. European finance ministers are also meeting today to discuss bank supervision and financial reform.

The Federal Open Market Committee will conclude its 2-day meeting after the European close. The Fed is expected to announce further stimulus, as Operation Twist is set to expire after 2012. Investors will be watching what the Fed will say regarding its forecast for economic growth, unemployment, inflation and interest rates.

North Korea successfully launched a satellite carrying rocket early Wednesday, which the West and several other countries believe was aimed at testing a long-range missile. The U.S., Japan and South Korea have called for a meeting of the U.N. Security Council to discuss North Korea's defiance in launching the rocket despite the international community's request to desist from the move.

The stickiness in U.K. inflation may persist for a while, Bank of England Chief Economist Spencer Dale said Wednesday. In a speech in London, he said the stickiness of inflation is a by-product of the real adjustment that economy has been forced to make and there is no easy fixes to such real adjustments.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.23 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.16 percent.

The DAX of Germany climbed by 0.31 percent and the FTSE 100 of the U.K. rose by 0.33 percent. The CAC 40 of France gained 0.01 percent, but the SMI of Switzerland lost 0.21 percent.

Industrial production in Eurozone declined for a second consecutive month in October, but at a slower pace compared to the previous month, data released by Eurostat showed Wednesday. Production dropped 1.4 percent month-on-month in October after a 2.3 percent fall in September. Economists expected no change in production volume.

Germany's harmonized index of consumer prices rose less than estimated in the preliminary report in November, final figures published by the Federal Statistical Office showed Wednesday. The HICP inflation was 1.9 percent in November, a tad below 2 percent reported initially. On a monthly basis, HICP fell 0.2 percent compared with 0.1 percent fall reported earlier.

France's harmonized inflation eased more than expected in November on a renewed drop in petroleum product prices, the statistical office Insee said Wednesday. Inflation fell to 1.6 percent from 2.1 percent in October. The inflation rate was forecast to ease to 1.8 percent.

France's current account deficit narrowed in October, mainly due to increase in surplus on trade in services, data from Bank of France showed Wednesday.

The deficit fell to EUR 2.8 billion in October from EUR 3.4 billion in September. According to the central bank, the improvement is mainly due to an increase in surplus on services trade to EUR 2.8 billion from EUR 2.1 billion.

U.K. claimant count declined unexpectedly in November and employment reached a record through the three months to October, confounding the weakness in economic activity.

Claimant count dropped by 3,000 month-on-month to 1.58 million in November, the Office for National Statistics said Wednesday. Economists had forecast the figure to rise by 7,000. Claims rose by 6,000 in October, instead of the initially reported 10,100.
 

US Market Report

Stocks Turning In Lackluster Performance Ahead Of Fed

With traders reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement, stocks are turning in a lackluster performance in mid-day trading on Wednesday after failing to sustain an initial upward move.

The major averages currently continue to linger near the unchanged line, turning in a mixed performance. While the Nasdaq is down 3.21 points or 0.1 percent at 3,019.09, the Dow is up 4.23 points or less than a tenth of a percent at 13,252.67 and the S&P 500 is up 1.98 points or 0.1 percent at 1,429.82.

The choppy trading on Wall Street comes ahead of the Federal Reserve's latest decision on monetary policy, which is due to be announced at about 12:30 pm ET.

Many analysts expect the Fed to announce a new round of Treasury securities purchases to replace its "Operation Twist" program, which expires at the end of the year.

Following the announcement, traders are likely to keep an eye on Fed Chairman Ben Bernanke's accompanying press conference.

Peter Boockvar, managing director at Miller Tabak, said, "We'll hear again from the 4th branch of government today, the Federal Reserve, to tell us their plan to replace the upcoming expiration of Smother the Yield Curve."

"Between Fed speeches and WSJ articles, it seems likely that we'll get $45 billion per month of unsterilized Treasury purchases, thus bringing the monthly dose of electronically printed money to $85 billion including the ongoing MBS program."

Traders are also keeping an eye on developments in Washington, as lawmakers continue to struggle to reach an agreement to avoid the looming fiscal cliff.

House Speaker John Boehner, R-Ohio, accused President Barack Obama of failing to put forth a "balanced" plan, while Senate Majority Leader Harry Reid, D-Nev., warned that the U.S. will go over the cliff unless Republicans agree to raise tax rates on wealthy Americans.

On the economic front, the Labor Department released a report showing that U.S. import prices fell by much more than anticipated in the month of November, with the decrease largely due to a drop by fuel import prices.

Other Markets In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.6 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent. In the bond market, treasuries are lingering near the unchanged ahead of the Fed announcement. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.657 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.

Daily FX/ Market Commentary - Silvio Berlusconi Makes Trouble For EURUSD Bulls

Daily FX Commentary: (Morning Report)

EUR/USD

The single currency bounces higher off today’s / last Friday’s lows at 1.2885/76, after consolidating at 1.2900 zone. Fresh gains filled the overnight’s gap, however, lacking strength to regain initial barrier and breakpoint at 1.2950, reinforced by 55 day EMA. Break here and 1.2970/80, Fib 38.2% of 1.3125/1.2876 / 20/55 day EMA’s bearish crossover, is needed to confirm recovery and signal near-term base, for possible attack at psychological 1.3000 barrier. However, 4h chart studies are still in the negative territory and would keep the downside favored as long as 1.2970/80 zone stays intact, with risk seen on slide below 1.2900/1.2880 that would open way for further retracement towards initial 1.2839, Fibonacci support.

Res: 1.2940, 1.2950, 1.2971, 1.3000
Sup: 1.2916, 1.2900, 1.2885, 1.2876


GBP/USD

Near-term outlook regains bullish tone, as the pair strongly bounced off today’s higher low at 1.6012 and approached 1.6100 barrier, also Fib 76.4% of 1.6127/1.6000 descend. This averts downside risk and turns near-term focus higher, however, pause in current rally would be seen on overbought hourly studies, with good support seen at 1.6060 zone, previous strong resistance and 4h Ichimoku cloud base that should contain dips in order to keep bullish structure intact. As 4h studies are approaching their midlines, further extension higher gets more credibility, with break through initial 1.6100 hurdle required to confirm and re-open recent double-top at 1.6127/29.

Res: 1.6095, 1.6100, 1.6119, 1.6129
Sup: 1.6060, 1.6042, 1.6012, 1.6000 


USD/JPY

Repeated failure at 82.80 range top, has triggered fresh pullback below 82.50/20 supports that weakened hourly structure. However, initial recovery signal is seen on hourly Stochastics bounce and RSI starting to point higher, along with 4h chart studies holding positive tone that may prevent the pair of testing initial 82.00 support and 81.70 range floor. Clearance of minimum 82.50 is seen as a trigger for possible fresh attack at 82.80/83.00, key near-term barriers.

Res: 82.36, 82.50, 82.63, 82.83
Sup: 82.10, 82.00, 81.68, 81.58


USD/CHF

The pair entered near-term corrective phase, signaled by overbought hourly conditions, retracing so far over 38.2% of 0.9254/0.9381 rally and testing important 0.9320 support. As hourly studies slid into negative territory, the downside remains vulnerable, however, while psychological 0.9300 support and bullish 20/55 day EMA’s crossover stays intact, hopes for fresh rally exist. Ideally, reversal at 0.9320/00 zone, would keep initial bulls off 0.9250 zone in play, with regain of important 0.9400 barrier, required to confirm and resume recovery. Otherwise, slide below 0.9300 would confirm bears are taking control for possible re-visit of 0.9239, 03 Dec low.

Res: 0.9350, 0.9368, 0.9381, 0.9400
Sup: 0.9325, 0.9315, 0.9300, 0.9284 

====================================================================

Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks rally on 'fiscal cliff' optimism
Market Movers

• techMARK 2,124.90 +0.09%
• FTSE 100 5,921.63 +0.12%
• FTSE 250 12,178.15 -0.08%

- Obama-Boehner meeting sparks optimistic mood
- Italian PM steps down
- Economic data from Asia comes in mixed

Optimism that US law-makers can agree over the impending 'fiscal cliff' managed to offset concerns regarding political uncertainty in Italy, with the FTSE 100 rallying to finish with small gains by the close.

Markets started Monday's session in the red after Mario Monti, Italy's current technocrat Prime Minister, announced this weekend that he would step down as soon as parliament passes a budget bill, paving the way for an early generation election in spring next year. Monti explained that he made the decision based on constant criticism from what had been his largest source of support in Parliament: Il Popolo della Libert party (PDL), run by ex-PM Silvio Berlusconi.

Market strategist Ishaq Siddiqi from ETX Capital said this afternoon that Monti's departure has sparked fears about who will lead the country next year - "pro-austerity government or anti-austerity government?"

He said: "The early general election remains a major event risk in 1Q 2013 and one that markets perhaps didn't expect so soon, but for now, the outcome seems supportive of a government that will continue Monti's work."

However, stocks on Wall Street started strongly this afternoon as investors reacted to the news that US President Barack Obama and House Speaker John Boehner had an unscheduled face-to-face meeting yesterday to discuss the 'fiscal cliff'.

"This is the first time that the pair have met at the White House in a couple of month's to discuss the fiscal cliff so naturally investors are a little more optimistic on the matter," said market analyst Craig Erlam from Alpari.

"This does not necessarily mean that any progress has been made however it shows that both are willing to enter serious negotiations on a deal, which can only be positive for the markets," he said.

Though there was little significant economic data out today in the UK and US, there was there was plenty from Asia for investors to sink their teeth into: Japan officially entered recession in the third quarter; while industrial production in China beat forecasts in October, though exports were weak.

Meanwhile, Greece has announced that it will extend its debt repurchase plan by one more day in order to receive additional offers from bond holders. "We have decided to extend the invitation to offer designated securities for exchange to 11 December 2012," Stelios Papadopoulos, the head of the Public Debt Management Agency, said in a statement. 

Europe Market Report 

Europe open: Italian political manouvering dents periphery stocks

-Italian 10 year bond yields up 27 basis points to 4.8 per cent

FTSE-100: -0.14%
Dax-30: -0.38%
Cac-40: -0.49%
FTSE Mibtel 30: -2.33%
Ibex 35: -2.15%
Stoxx 600; -0.36%

For the most part the main European equity benchmarks began the week with small losses, following some mixed economic reports out over the weekend and this morning in China.

On the periphery however it was a whole other matter, following Italian Prime Minister Mario Monti's unexpected announcement that he will hand in his resignation at year's end. That came after Silvio Berlusconi's party's which has lost a large part of its following - decision to withdraw support from the government last week, he said, which means that the next elections will have to be brought forward slightly.

While it may just be a case of political manouvering, even analysts who believe that stability will eventually be restored are warning that: "Overall, Italy should be very careful not to erode the credibility capital accumulated by PM Monti's government so far."

On a more positive note, speaking to The Wall Street Journal the head of the country's largest political formation, Pier Luigi Bersani, indicated that he would honour all of the commitments made by his predecessor, should he win. That may assuage worries of the reform-friendliness of any centre-left government or coalition that might coalesce.

Greece extended the deadline for its debt buy-back offer until tomorrow, so as to allow the country's banks time to make up for a small short-fall in the amount of debt offered. The government however is expected to be successful in its bid to lower the country's debt load by repurchasing the now cheaper debt on the secondary market. In turn, that will open the way for the Mediterranean nation to receive the next tranche of aid from its international lenders.

Meantime, and in Spain, reports indicate that the main business lobby CEOE- shifted its support in favour of the Prime Minister's cautiousness on formally asking the European Central Bank (ECB) for aid in lowering the country's financing costs. It is worried that in exchange for their help European governments may ask for an excessively rapid decline in borrowing. 

Larger than expected decline in French and Italian production

Italian industrial production contracted at a 1.1% month-on-month pace in October (Consensus: -0.3%).

French manufacturing output declined by 0.9% in October (Consensus: 0.2%).

The Eurozone Sentix index of investor confidence dropped to -16.8 in December (Consensus: -16.9), after a reading of -18.8 in the month before.

Germany's trade balance improved to 15.8bn in October (Consensus: 15.5bn). Small drop in single currency

The euro/dollar is now off by 0.15% to the 1.2907 dollar mark.

Front month Brent crude futures are rising by 0.53 dollars to the 107.59 dollar mark on the ICE.

 

US Market Report

US open: Obama and Boehner met over the weekend
- Both parties refuse to comment on weekend contacts
- Gap led falls on S&P 500

Dow Jones Industrials: 0.20%
Nasdaq Composite: 0.60%
S&P 500: 0.21%

The main US equity benchmarks were registering slight gains in the early going, as investors 'brushed off' the bad news out of Italy over the weekend.

Mario Monti's resignation as Italian Prime Minister initially dented market sentiment across the globe on Monday, and Wall Street was no exception at the start of the day, but it has since recovered.

Back in the US, markets were digesting news of an unscheduled face-to-face meeting yesterday between President Barack Obama and House Speaker John Boehner to discuss the 'fiscal cliff'. Yet both sides declined to comment on the result of those contacts.

"Negotiations over the fiscal cliff are going nowhere and with only three weeks now until the deadline, investors are getting jittery. While a deal is expected to be completed, it is entirely understandable that people are slowly but surely taking their money out of stocks," said market analyst Craig Erlam from Alpari. 

Front month West Texas crude futures are now rising by 0.64% to the 86.50 dollar mark on the NYMEX.

10 year US Treasury yields are now falling by 1 basis point to the 1.61% mark.

==================================================================== 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 & Market News: EUR/USD: Draghi smashes optimism in the EU

Daily FX Commentary: (Morning Report)

EUR/USD

Near-term structure turns negative, as the pair loses 1.3100 and cracks1.3050/40 supports, following corrective pullback off yesterday’s fresh high at 1.3125. Immediate focus lies at 1.3031, Fib 38.2% of 1.2879/1.3125, with increased risk of re-visiting psychological 1.3000, reinforced by 55 day EMA and 1.2970, Fib 61.8% / daily Ichimoku cloud top. Negative hourly studies support the notion, with bearish 20/55 day EMA’s crossover at 1.3068, seen capping. Only regain of 1.3090, yesterday’s intraday low, would avert risk of deeper correction.

Res: 1.3062, 1.3076, 1.3089, 1.3100
Sup: 1.3031, 1.3020, 1.3000, 1.2970


GBP/USD

Bears are taking control of near-term outlook, as the price slides below 1.6100, unable to sustain gains for test of 1.6174/78 double top. Strong support at 1.6050, previous barrier / broken bear trendline, comes under pressure, as hourly indicators slide into negative territory and signal possible stronger corrective action that would be triggered on a break below 1.6050, also near 50% of 1.5960/1.6135 ascend and expose another significant support at 1.6000.

Res: 1.6100, 1.6119, 1.6129, 1.6174
Sup: 1.6065, 1.6050, 1.6025, 1.6000 


USD/JPY

Hourly studies remain positive, while 4h structure holds neutral tone as bounce of 81.70, range floor, approaches initial barrier at 82.74. However, larger picture still shows the pair entrenched within 81.70/82.83 range, with near-term tone aligned towards the upside boundary. Break above 82.83 and regain of psychological 83.00, is required to signal resumption of broader uptrend from 79.06.

Res: 82.60, 82.74, 82.83, 83.00
Sup: 82.35, 82.00, 81.68, 81.58


USD/CHF

The pair remains within 0.9239/0.9300 consolidative range as repeated recovery attempt fails at 0.9300, where 55 day EMA / Fib 61.8% of 0.9339/0.9239 downleg and daily Ichimoku cloud base, keep the upside capped for now. Hourly studies are flat, while 4h chart situation shows slight improvement with break above 0.9300 and regain 0.9340, 28 Nov high / Fib 38.2% of 0.9511/0.9239 downleg, required to confirm recovery and avert immediate downside risk. Otherwise, near-term focus will remain at initial 0.9339 and key 0.9213 support.

Res: 0.9277, 0.9300, 0.9315, 0.9339
Sup: 0.9254, 0.9248, 0.9239, 0.9213 

====================================================================

Daily Market Commentary: (Evening Report)

London Market Report

Stocks edge higher as markets look to US jobs report

    Market Movers
    techMARK 2,117.17 +0.15%
    FTSE 100 5,901.42 +0.16%
    FTSE 250 12,149.23 +0.38%

London's blue-chip index finished with slight gains on Thursday after central banks in the UK and Europe announced that they had kept policy on hold, with the market's focus now turning to the key employment report in the US due out tomorrow.

As expected, the Bank of England's Monetary Policy Committee voted to maintain the Bank Rate at 0.5% at today's meeting and left its asset purchase programme unchanged at £375bn, the Bank announced at noon. Meanwhile, the European Central Bank (ECB) held the main refinancing rate at 0.75%, the deposit rate at zero and the marginal lending rate at 1.5%, as anticipated.

The market reaction to the central banks' decisions was pretty subdued but the focus was on the subsequent press conference with ECB President Mario Draghi in which he hinted that the ECB did in fact discuss the possibility of a rate cut at this month's meeting.

"He turned slightly dovish on the rate front, with expectations now building for a cut early next year," said ETX Capital's head of trading Joe Rundle.

Looking ahead to tomorrow's session, all eyes will be on the US employment report with the consensus predicting a 90,000 gain in non-farm payrolls in November, much worse than the 171,000 increase seen in October. The unemployment rate is expected to remain at 7.9%.

However ETX's Rundle said that it is "difficult to put firm guesstimate on the outcome given the mixed data signals out of the US this week [weaker ADP, better non-mfg ISM, poor ISM mfg] – but the reaction should be seen as a litmus test for upside momentum heading into the year-end.

"If markets shrug off a weaker reading and continue their positive bias, a Santa rally may return," he said.

Europe Market Report 

European Markets Held Gains After Central Bank Decisions

The European markets held on to their gains on Thursday, after both the European Central Bank and the Bank of England made no changes with regard to interest rates. Investors continue to watch the negotiations on the looming fiscal cliff with great interest. However, political tension in Italy grabbed the attention of investors today.

The European Central Bank left its benchmark interest unchanged at its final rate-setting session of this year after economic sentiment improved and borrowing costs eased for troubled members of the currency-bloc.

The central bank of 17 nations held the refinancing rate unchanged at 0.75 percent for a fifth successive month in December following the Governing Council meeting in Frankfurt on Thursday. The decision was in line with economists' expectations.

The European Central Bank on Thursday slashed the growth outlook for the 17-nation economy for this year and next, and unveiled its first projection for 2014 that showed a recovery in the currency-bloc.

The latest Eurosystem staff macroeconomic projections show annual real GDP growth in a range between -0.6 percent and -0.4 percent for 2012. This means the mid-point was lowered to -0.5 percent from -0.4 percent seen in September.

GDP growth is seen between -0.9 percent and 0.3 percent for 2013. This compares to -0.4 percent and 1.4 percent predicted three months ago. The economy is expected to recover in 2014 with GDP expansion seen between 0.2% and 2.2% that year.

European nations are unlikely to finalize a bank supervision framework this year, European Central Bank Executive Board member Jorg Asmussen reportedly said Wednesday. His remarks came a day after an attempt by European Union leaders to strike a deal on a single supervisor for euro area banks failed, largely due to rift between France and Germany.

Standard and Poor's on Wednesday lowered the credit rating on Greece to 'selective default' (SD) from 'CCC', days after the country announced a debt buyback plan to rid the country of its mounting debt. S&P said the decision follows the Greek government's invitation to private sector bondholders on December 3 to participate in a series of debt buyback auctions. Under S&P's criteria, this move amounted to a 'selective default.'

The Greek government's ambition is to bring 'spectacular change' to the struggling Eurozone member, Prime Minister Antonis Samaras said in an interview to German daily Bild on Thursday.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.45 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.72 percent.

The DAX of Germany climbed by 1.07 percent and the CAC 40 of France rose by 0.31 percent. The FTSE 100 of the U.K. gained 0.15 percent and the SMI of Switzerland advanced by 0.82 percent.

The euro area economy slid into recession in the third quarter, an updated report from Eurostat confirmed Thursday. The gross domestic product fell 0.1 percent from a quarter ago, when it dropped 0.2 percent. The figures matched the preliminary estimate released on November 15.

US Market Report

Stocks Moving Mostly Higher, Apple Shows Notable Rebound

While buying interest has remained relatively subdued, stocks have moved mostly higher over the course of the trading day on Thursday. Technology stocks have helped to lead the way higher, with Apple (AAPL) rebounding after ending the previous session sharply lower.

The major averages are all in positive territory, although the Nasdaq is outperforming its counterparts. The Nasdaq is up 20.99 points or 0.7 percent at 2,994.69, while the Dow is up 14.31 points or 0.1 percent at 13,048.80 and the S&P 500 is up 3.41 points or 0.2 percent at 1,412.69.

The modest upside for the markets is partly due to strength in the tech sector, as reflected by the more substantial gain by the tech-heavy Nasdaq.

Shares of Apple have shown a notable rebound, with the iPad and iPhone maker rising by 2.4 percent after tumbling by 6.4 percent on Wednesday.

The markets may also be benefiting from the release of a report from the Labor Department showing a bigger than expected drop by initial jobless claims in the week ended December 1st.

The Labor Department said jobless claims fell to 370,000, a decrease of 25,000 from the previous week's revised figure of 395,000. Economists had expected jobless claims to drop to 380,000 from the 393,000 originally reported for the previous week.

With the drop, jobless claims continued to settle down after seeing considerable volatility due to the impact of Superstorm Sandy.

Nonetheless, many traders remain on the sidelines ahead of tomorrow's closely watched monthly employment report.

Economists expect an increase of about 90,000 jobs in November following the addition of 171,000 jobs in October. The unemployment rate is expected to edge up to 8.0 percent from 7.9 percent.

Continued uncertainty about the looming fiscal cliff may also be helping to limit the upside for the markets, with lawmakers in Washington struggling to reach an agreement to avoid the approximately $600 billion in automatic tax increases in spending cuts due to take effect at the end of the year.

Other Markets In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index advanced by 0.8 percent, Hong Kong's Hang Seng Index edged down by 0.1 percent. Meanwhile, the major European markets all moved to the upside on the day. The German DAX Index surged up by 1.1 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index rose by 0.3 percent and 0.2 percent, respectively. In the bond market, treasuries continue to see modest strength, extending the upward move seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, has dipped 1.9 basis points to 1.572 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.

Daily Forex & Market News

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)

London Market 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%

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.

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.

Other Markets In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Wednesday. Japan's Nikkei 225 Index advanced by 0.4 percent, while Hong Kong's Hang Seng Index surged up by 2.2 percent. In the bond market, treasuries have pulled back off their best levels of the day but continue to see modest strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.9 basis points at 1.589 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.

Daily FX & Market Commentary

Daily FX Commentary: (Morning Report)

EUR/USD

The single currency trades in a consolidative mode, after posting fresh high at 1.3074 yesterday. With previous high at 1.3046, protecting the downside along with ascending 20 day EMA and yesterday’s close above the latter, scope exists for attempt at initial 1.3100 target, clearance of which to open way towards key barriers at 1.3138 and 1.3170. However, further consolidative / corrective action cannot be ruled out, as 4h indicators are near overbought zone and moving sideways. Psychological 1.3000 support, also Fib 38.2% of 1.2879/1.3074 upleg and daily Ichimoku cloud top, is expected to contain any stronger pullback.

Res: 1.3074, 1.3082, 1.3100, 1.3138
Sup: 1.3045, 1.3028, 1.3000, 1.2977


GBP/USD

The pair maintains positive sentiment that emerged on yesterday’s break above 1.6050 congestion top and cracked initial target at 1.6100, spiking to 1.6114 so far. Shallow correction that was contained by 20 day EMA at 1.6085, keeps bulls in play for final push towards 1.6174/78 Oct / Now double-top, with interim barriers at 1.6124, Fib 61.8% of 1.6308/1.5826 and 1.6140, 26 Oct high. Overnight’s lows at 1.6085, offer immediate support, ahead of more significant 1.6050, previous resistance, reinforced by ascending 55 day EMA.

Res: 1.6114, 1.6140, 1.6174, 1.6178
Sup: 1.6085, 1.6060, 1.6050, 1.6026


USD/JPY

The pair comes under increased pressure, following upside rejection at 82.36, with fresh weakness attempting below 82.00 handle. Hourly studies remain negative, with 4h ones breaking into the negative territory. This increases risk of further weakness and test key near-term support and range floor at 81.68, 28 Nov low. Break here is seen as a trigger for stronger corrective action towards 81.40/00, Fibonacci support, also as confirmation of near-term double-top formation that would put near-term bulls on hold. Only bounce through yesterday’s intraday high at 82.36, would avert immediate downside risk.

Res: 82.00, 82.15, 82.36, 82.50
Sup: 81.68, 81.58, 81.39, 81.00


USD/CHF

The pair enters near-term consolidative phase, just above fresh low at 0.9239 and key support and near-term target at 0.9213. With hourly studies gaining traction, further sideways movements are likely, however, weak 4h structure and upside being limited by descending 20 day EMA at 0.9260 zone, does not leave much room for any significant corrective action.

Res: 0.9269, 0.9279, 0.9290, 0.9300
Sup: 0.9250, 0.9239, 0.9213, 0.9200 

====================================================================

Daily Market Commentary: (Evening Report)

London Market Report

London close: US and Eurozone uncertainty keeps stocks flat
Market Movers

• techMARK 2,108.13 -0.09%
• FTSE 100 5,869.04 -0.04%
• FTSE 250 12,053.26 +0.21%

- Democrats, Republicans wrangle over 'fiscal cliff'
- Europe talks about bank supervisor
- Defensives gain, resources fall

The FTSE 100 swung between gains and losses for most of Tuesday's session to finish the day broadly flat as ongoing concerns about the US budget and developments in the Eurozone weighed on investors' minds.

"It's been a rather slow day on equity markets today as markets tread water as uncertainty prevails over what's going on in the US with respect to arguments between Democrats and Republicans over spending cuts relative to tax rises, before year end," said market analyst Michael Hewson from CMC Markets.

In a letter to President Barack Obama, House Speaker John Boehner presented a deficit-reduction proposal that included $1.4tn in spending cuts and $800bn in new revenue. However, the plan was rejected by the Obama administration as it didn't include higher tax rates for top earners.

Market analyst Craig Erlam from Alpari said this afternoon: "At this stage there are very few people who are underestimating the potentially devastating effects that the fiscal cliff could have, apart from maybe the people in charge of avoiding it who appear to be very relaxed on the subject. Market volatility is likely to remain low until we start to see some progress here."

Markets were also still digesting weak manufacturing figures Stateside which dampened equities on Monday. The US Institute for Supply Management (ISM) purchasing managers' index fell from 51.7 to 49.5 in November, well below the 51.4 forecast. Any figure below 50 represents a contraction.

Closer to home, the Ecofin met in Brussels today to discuss proposals on bank supervision and take stock of negotiations with the European Parliament on bank capital requirements.

Europe Market Report 

Europe midday: Authorities bicker over bank regulator

-Merkel: Nobody can tell when crisis will be overcome
-Schaeuble: If all banks supervised Parliament may not approve
-Markets waiting on results of ECOFIN meeting
-Baxter acquires Gambro for 4bn dollars

FTSE-100: 0.05%
Dax-30: 0.33%
Cac-40: 0.76%
FTSE Mibtel 30: 1.13%
Ibex 35: 0.50%
Stoxx 600: 0.24%

Markets have turned around to trade higher and are now registering slight gains. That as investors look to the result of tonight's meeting of European Union finance ministers, also known by its acronym ECOFIN.

Ahead of that Germany's Finance Minister, Wolfgang Schaeuble, has been cited as saying that if the new proposed bank supervisor then it will be harder to pass the needed legislation through the German parliament.

Tonight's meeting is supposed to reach a final agreement on the roadmap for the single supervisory mechanism, ahead of next week's European summit, which should endorse this agreement.

Nevertheless, economists at Barclays wrote this morning that, "we think this is probably too ambitious given the disagreements between member states." 

Better than expected economic data

Spain's unemployment worsened by 76,000 in November (Consensus: 90,000).

Eurozone producer prices increased at a 0.1% month-on-month pace in October (Consensus: 0.0%).

Small moves in other asset classes

The euro/dollar is now rising by 0.15% to the 1.3079 dollar mark. As a curiosity, or not, Bloomberg points out how year-to-date the single currency is up by just 0.1%.

Front month Brent crude futures were down by 0.553 dollars to the 110.32 dollar mark on the ICE.

US Market Report

US open: Stocks slightly mixed
-Stocks mixed in absence of data
-White House rejects Republican offer

Dow Jones Industrials: 0.01%
Nasdaq Comp.: -0.67%
S&P 500: -0.25%

The major New York equity benchmarks were still trading in a mixed fashion an hour after the opening bell. This in a light day in terms of economic data.

Despite appearances, investors were somewhat anxious ahead of Friday's monthly employment report and next week's Federal Open Market Committee (FOMC) meeting.

In more immediate matters, the White House has rejected Republican's most recent offer, $2.2trn of spending cuts and new revenue, as the measures do not include higher tax rates for top-earning Americans. 

10 year US Treasury yields were down by 2 basis point to the 1.61% level.

=======================================================================

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.