Daily FX Commentary: (Morning Report)
EUR/USD
The Euro continues to trend higher, extending the latest upleg from 1.2876, 07 Dec low. Break and close above psychological 1.3200 barrier, confirms the fresh bull-phase, following three-month congestion under 1.3170 peak. Larger picture bulls see room for fresh extension higher and test of initial targets at 1.3282, 01 May high and 1.3300, round-figure resistance, with strong resistance zone at 1.3500, yearly high / Fib 50% of 1.4938/1.2042, expected to come in near-term focus. Consolidative / corrective action on extremely overbought hourly studies, may precede fresh bulls, with initial static supports standing at 1.3220/00, reinforced by 20 day EMA and previous high at 1.3186. Any stronger reversal should be contained by 1.3100 zone, Fib 38.2% of 1.2876/1.3253 / 55 day EMA.
Res: 1.3253, 1.3282, 1.3300, 1.3350
Sup: 1.3220, 1.3200, 1.3186, 1.3142
GBP/USD
Near-term bulls remain fully in play for possible test of key barrier and multi-month range top at 1.6300, as yesterday’s strong rally reached 1.6286 high, just ahead of 1.6300/08, 30 Apr / 21 Sep yearly peaks. Overextended near-term studies suggest a pause in rally, however, no clear reversal signal seen yet. Overnight’s corrective low at 1.6244 offers immediate support, ahead of more significant higher platform and Fib 38.2% of 1.6084/1.6286 upleg at 1.6200 that is expected to contain any stronger pullback.
Res: 1.6286, 1.6300, 1.6308, 1.6388
Sup: 1.6244, 1.6200, 1.6190, 1.6175
USD/JPY
The pair resumes near-term rally that was interrupted by two-day 84.32/83.60 corrective action. With fresh high posted just under our initial target at 84.50, scope is seen for possible stretch towards psychological barrier at 85.00, also weekly 200 day MA. However, overbought conditions on lower and larger timeframes, require caution, as failure to surpass 84.50, would result in stronger corrective action towards 83.80/60 support zone.
Res: 84.42, 84.50, 85.00, 85.51
Sup: 84.21, 84.00, 83.80, 83.60
USD/CHF
Bears remain unobstructed, as the pair continues to post fresh lows, following loss of important 0.9200 level. As the price approaches psychological 0.9100 support, bearish extension through here would eye 0.9041 and 0.9000, 01 May / 03 Apr lows. Near-term indicators in the oversold territory do not rule out bounce, with previous low at 0.9151, offering initial resistance, ahead of more significant 0.9200, round figure / near Fib 38.2% of 0.9381/0.9112 descend, break of which would provide temporary relief.
Res: 0.9136, 0.9151, 0.9192, 0.9215
Sup: 0.9112, 0.9100, 0.9080, 0.9041
Daily Market Commentary: (Evening Report)
Gains pared after White House comments on 'fiscal cliff'
Market Movers
techMARK 2,129.53 +0.41%
FTSE 100 5,961.59 +0.43%
FTSE 250 12,402.41 +0.89%
Market Movers
techMARK 2,129.53 +0.41%
FTSE 100 5,961.59 +0.43%
FTSE 250 12,402.41 +0.89%
The UK stock market staged a slight ‘Santa
rally’ on Wednesday, with risk appetite increasing before Christmas on
the back of a Greek ratings upgrade and a better-than-expected reading
of German confidence.
“Santa has returned to the markets, bringing some much needed cheer before the Christmas break – traders are feeling risky as such,” said market strategist Ishaq Siddiqi from ETX Capital.
However, gains across Europe were pared by the close after US stocks opened mixed on Wall Street with worries over the ‘fiscal cliff’ resurfacing. The White House Communications Director Dan Pfeiffer said that President Barack Obama would veto any ‘plan B’ from House Speaker John Boehner.
“This is a concern to anyone relying on a deal being done by the end of the year,” said market analyst Craig Erlam from Alpari.
“The fact that Republicans are preparing a plan B suggests they are not willing to meet Obama in the middle on spending and tax issues. Obama’s rejection of the plan therefore suggests going over the fiscal cliff is yet again a possibility. These negotiations are starting to become a bit of a rollercoaster ride and I’m sure there’s going to be many more ups and downs between now and the end of the year.”
Nevertheless, providing a lift to the markets early on was last night’s news that Standard & Poor’s had upgraded its rating for Greece from 'selective default' to 'B-minus' to reflect “our view of the strong determination of Eurozone member states to preserve Greek membership”, the ratings agency said. The yield on a 10-year Greek bond dropped to its lowest level since March 2011 this morning.
Meanwhile, the IFO institute reported that the German business climate index improved to 102.4 in December, above the 101.4 reading the month before and ahead of the 102.0 forecasts. Meanwhile, while the current assessment survey missed estimates, the expectations survey provided a beat.
In other news, the Bank of England's Monetary Policy Committee (MPC) voted eight-to-one in favour to keep its asset purchase programme at £375bn in this month's meeting. The MPC voted unanimously to keep the Bank Rate at 0.5%.
“Santa has returned to the markets, bringing some much needed cheer before the Christmas break – traders are feeling risky as such,” said market strategist Ishaq Siddiqi from ETX Capital.
However, gains across Europe were pared by the close after US stocks opened mixed on Wall Street with worries over the ‘fiscal cliff’ resurfacing. The White House Communications Director Dan Pfeiffer said that President Barack Obama would veto any ‘plan B’ from House Speaker John Boehner.
“This is a concern to anyone relying on a deal being done by the end of the year,” said market analyst Craig Erlam from Alpari.
“The fact that Republicans are preparing a plan B suggests they are not willing to meet Obama in the middle on spending and tax issues. Obama’s rejection of the plan therefore suggests going over the fiscal cliff is yet again a possibility. These negotiations are starting to become a bit of a rollercoaster ride and I’m sure there’s going to be many more ups and downs between now and the end of the year.”
Nevertheless, providing a lift to the markets early on was last night’s news that Standard & Poor’s had upgraded its rating for Greece from 'selective default' to 'B-minus' to reflect “our view of the strong determination of Eurozone member states to preserve Greek membership”, the ratings agency said. The yield on a 10-year Greek bond dropped to its lowest level since March 2011 this morning.
Meanwhile, the IFO institute reported that the German business climate index improved to 102.4 in December, above the 101.4 reading the month before and ahead of the 102.0 forecasts. Meanwhile, while the current assessment survey missed estimates, the expectations survey provided a beat.
In other news, the Bank of England's Monetary Policy Committee (MPC) voted eight-to-one in favour to keep its asset purchase programme at £375bn in this month's meeting. The MPC voted unanimously to keep the Bank Rate at 0.5%.
Europe Market Report
European Markets Climbed After Greek Upgrade
The European markets ended Wednesday's trading session in the green, following an upgrade of Greece's credit rating by S&P. Investor sentiment also received a boost from the stronger than expected German Ifo business confidence result. Shares of banks turned in a solid performance, after Credit Suisse upgraded its rating on the European banking sector.
The continuing fiscal cliff negotiations between Democrats and Republicans has made investors optimistic that a deal can be reached before the end of the year. The White House threatened to veto the 'Plan B' presented by House Speaker John Boehner. Senate Majority Leader Harry Reid had already said that Boehner's plan could not pass the Senate. Plan B would extend tax cuts for people making up to $1 million.
Standard and Poor's on Tuesday upgraded Greece's credit rating from 'selective default' (SD), citing the successful completion of the country's debt buyback program and the subsequent decision by European leaders to disburse loan installment.
Greece's long and short-term foreign as well as local currency sovereign credit ratings were lifted to 'B-' from 'SD'. Further, the ratings on all the outstanding issues, including those guaranteed by Greece, were upgraded to 'B-/B'. The outlook is 'stable'.
Bank of England policymakers voted 8-1 to leave the stimulus programme unchanged at GBP 375 billion as seen in November, the minutes of the latest monetary policy meeting showed Wednesday.
David Miles was the only member to call for more quantitative easing. According to minutes, the Monetary Policy Committee members said the current size of the asset purchase programme seemed appropriate for the present.
Further, the nine-member MPC unanimously decided to hold the key interest rate at a record low 0.50 percent. The meeting was held on December 5 and 6.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.41 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.23 percent.
The DAX of Germany climbed by 0.25 percent and the CAC 40 of France gained 0.44 percent. The FTSE 100 of the U.K. rose by 0.43 percent and the SMI of Switzerland advanced by 0.71 percent.
Eurozone's current account surplus increased in October, but was lower than expected by economists, a report from the European Central Bank showed Wednesday. The seasonally adjusted current account surplus rose to EUR 3.9 billion in October from EUR 2.4 billion in September. Economists expected the surplus to rise to EUR 6.5 billion.
Euro area construction output in October declined at a faster annual rate again, data released by Eurostat, the statistical office of the European Union, revealed on Wednesday.
Construction output fell further by a seasonally adjusted 4.1 percent year-on-year in October, after recording a decline of 3.8 percent in September, which was revised from 2.6 percent reported earlier. In August, output decreased 1.5 percent.
German business confidence improved for the second straight month in December as expectations for next six months counteracted the deterioration in current assessment, survey results from the Ifo Institute showed Friday.
Surpassing economists' expectations, the headline business climate index rose to a five-month high of 102.4 from 101.4 in November. The reading was forecast to climb to 102.
Germany's leading economic indicator remained unchanged in October, ending the downward trend started in March, data from a survey by the Conference Board showed Wednesday. The leading economic index remained unchanged at 101.6 in October after dropping 0.6 percent in the previous month..
US Market Report
With traders taking a breather following the recent rally, stocks continue to show a lack of direction in mid-day trading on Wednesday. The major averages have spent the session bouncing back and forth across the unchanged line.
Currently, the major averages continue to turn in a mixed performance, with the tech-heavy Nasdaq posting a modest gain. While the Nasdaq is up 2.05 points or 0.1 percent at 3,056.58, the Dow is down 11.40 points or 0.1 percent at 13,339.56 and the S&P 500 is down 2.20 points or 0.2 percent at 1,444.59.
The choppy trading on Wall Street comes as traders seem reluctant to make any significant moves after the gains seen over the two previous sessions lifted the major averages to their best closing levels in about two months.
Traders are keeping a close eye on developments in Washington, as President Barack Obama and House Speaker John Boehner continue to work toward an agreement to avoid the looming fiscal cliff.
While signs of progress toward a compromise helped to drive stocks higher earlier in the week, traders may be waiting for more concrete signs of an agreement.
Earlier in the day, a statement from White House Communications Director Dan Pfeiffer indicated that Obama would veto Boehner's proposed "Plan B" legislation, which would extend tax cuts for people making up to $1 million.
Boehner unveiled the "Plan B" proposal on Tuesday as an alternative if lawmakers are unable to reach a broader budget agreement.
Pfeiffer claimed the legislation continues large tax cuts for the very wealthiest individuals while eliminating tax cuts that 25 million students and families struggling to make ends meet depend on and ending critical incentives for the nation's businesses.
On the economic front, the Commerce Department released a report before the start of trading showing that U.S. housing starts came in below economist estimates in November.
The report said housing starts fell 3.0 percent to an annual rate of 861,000 in November from the revised October estimate of 888,000. Economists had expected housing starts to fall to 865,000 from the 894,000 originally reported for the previous month.
At the same time, the Commerce Department said building permits rose 3.6 percent to an annual rate of 899,000 in November from the revised October rate of 868,000.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 2.4 percent, while Hong Kong's Hang Seng Index rose by 0.6 percent.
In the bond market, treasuries are regaining ground following recent weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.8 basis points at 1.789 percent after ending the previous session at its highest closing level in well over a month
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