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 

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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.

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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

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

Daily FX Commentary: (Morning Report)

EUR/USD

The single currency extends gains to post fresh daily high at 1.3073, also high of 23 Oct. Positive near-term studies, with 20 day EMA protecting the downside, keep bulls in play. The last hurdle on the way to 1.3100 lies at 1.3082, 22 Oct high / tentative bear-trendline, connecting 1.3170 and 1.3138 peaks, with clearance of 1.3100, expected to open key near-term barriers at 1.3138/70, 17 Oct / 17 Sep peaks. Today’s lows and higher base at 1.3020, offer initial support, ahead of 1.3000, Fib 38.2% / 55 day EMA.

Res: 1.3046, 1.3050, 1.3082, 1.3100
Sup: 1.3032, 1.3020, 1.3000, 1.2981


GBP/USD

Eventual break above one-week congestion top at 1.6050 zone, to emerge out of daily Ichimoku cloud and post fresh one-month high, just under our initial target at 1.6100. Bullish resumption is seen on break through 1.6100, as near-term studies remain positive, with initial barriers at 1.6133/42, 02 Nov/25 Oct highs, seen en-route to key barriers and double-top at 1.6178/74, 17 Oct / 01 Nov highs. Fresh momentum building-up on a larger picture, supports the notion. Previous strong barrier at 1.6050 zone, now reverts to initial support, ahead of Fibonacci levels at 1.6038 and 1.6023. Only slide below 1.6000 would put near-term bulls on hold.

Res: 1.6086, 1.6092, 1.6100, 1.6133
Sup: 1.6065, 1.6050, 1.6038, 1.6023 

USD/JPY

The pair regained ground after reversal from 82.74 found support at 82.00, 55 day EMA and subsequent bounce reached 82.36, double-Fibonacci barrier, 50% of 82.74/81.98 and 76.4% of today’s slide from 82.49, daily high. Studies on 4h chart keep momentum for possible fresh extension higher and test of upper range boundaries at 82.74/83, while still weak hourly studies require push through the next barrier at 82.50 zone, to avert risk of lower top and fresh slide towards range floor. Violation of 82.00 would increase bear-pressure and re-focus pivotal 81.68, 28 Nov low.

Res: 82.36, 82.50, 82.74, 82.83
Sup: 82.20, 82.00, 81.90, 81.68


USD/CHF

Succession of fresh lows and brief corrective action, define the near-term downtrend, with the latest downleg from 0.9339, 28 Nov high, approaching key support at 0.9213, 17 Oct low. This also mark the floor of consolidative phase from mid-September, loss of which to signal fresh extension of larger downtrend from 0.9970, 24 July yearly high. Descending 20 day EMA on 4h chart, maintains bears while more significant barrier at 0.9300, 55 day EMA / daily Ichimoku cloud base, is seen capping for now.

Res: 0.9269, 0.9279, 0.9290, 0.9300
Sup: 0.9246, 0.9239, 0.9213, 0.9200 

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks pare gains after US ISM data
Market Movers

• techMARK 2,110.01 +0.15%
• FTSE 100 5,871.24 +0.08%
• FTSE 250 12,027.44 -0.06%

- US manufacturing sector in contraction
- Chinese and India data lifts markets early on
- Banking fall after BoE FLS details

The FTSE 100 index was set to finish Monday's session with decent gains until a worse-than-expected reading of US manufacturing caused markets across Europe to trim gains by the close.

"Europe's markets have once again struggled near their recent range highs with the FTSE 100 in particular underperforming, as investors try to dissect a raft of fairly mixed economic data from across Asia, Europe and the US," said market analyst Michael Hewson from CMC Markets.
 
Markets opened strongly this morning after the HSBC China purchasing managers' index (PMI) increased from 49.5 to 50.5 in November, in line with the preliminary estimates. Meanwhile, the official PMI from National Bureau of Statistics rose to a seven-month high of 50.6, up from 50.2 in October. Elsewhere, India's manufacturing PMI recorded its fastest growth in five months, coming in at 53.7.

The Markit UK manufacturing PMI rose to 49.1 in November, up from a three-month low of 47.3 in October and above the consensus prediction of 48. However the sector still remains in contraction with figures staying below 50.

Markets gave a muted reaction to the details of Greece's bond buy-back offer today with the Footsie holding on to gains after Athens said this morning that it will be repurchasing up to €10bn of its own debt.

However, sentiment was dampened after the US Institute for Supply Management (ISM) PMI fell from 51.7 to 49.5 in November, well below the 51.4 forecast.

"Though construction spending in the US and vehicle sales from major auto giants rose sharply, the damage by the ISM number was enough to push the bulls to run for cover," said market strategist Ishaq Siddiqi from ETX Capital. 

Europe Market Report 

Europe midday: Greek long-term bond yields slide

-Merkel said Greek debt hair-cut a possibility in the medium term
-Equity strategists waxed optimistic on 2013 outlook
-Noyer said inflation expectations well anchored
-Greek 10 year bond yields below 15 per cent, down 129 basis points
-Greece announced the details of its debt buy-back

FTSE-100: 0.52%
Dax-30: 0.94%
Cac-40: 0.99%
FTSE-Mibtel 30: 1.52%
Ibex 35: 0.08%
Stoxx 600: 0.59%

By midday European equities were trading moderately higher for both the day and the month. That after Greece unveiled the details of its bond buy-back offer - due to take place this next Friday – setting off a sharp decline in the country's long-term borrowing costs.

Yet as incredible as that may seem it was perhaps not what most caught investors' attention. Those were the remarks out from Germany's Chancellor, Angela Merkel, this past weekend, to the effect that euro-area leaders might consider writing off Greek debt once the country has a budget surplus. That marks an abrupt about-face for Germany.

Acting as a backdrop however, it remained to be seen whether investors might not react poorly to the less-than-constructive remarks out over the weekend from politicians on both sides of the aisle on Capitol Hill as regards the fiscal cliff.

Likewise, whether or not there would be a sufficient degree of take-up for Greece's exchange offer remained in doubt.

Despite the above, early Monday morning saw a torrent of positive remarks out from equity strategists on the positive outlook for equities in 2013, particularly in Europe. Amongst some of those brokers were names like Credit Suisse, Goldman Sachs, Morgan Stanley and JP Morgan. 

In-line economic data
The Markit purchasing managers index for the Eurozone's manufacturing sector came in at 46.2 for

November (Consensus: 46.2), after a reading of 45.4 in October.

Slight gains in the single currency
The euro/dollar rose modestly, by 0.53% to the 1.3056 dollar mark.

Front month Brent crude futures were gaining by 0.135 dollars to the 111.39 dollar mark on the ICE.

US Market Report

US mid-morning: Weak ISM data brakes stocks
-Fitch: US fiscal ratings stable for 2013
-ISM quite a bit weaker than expected
-Hurricane Sandy did not affect ISM data

Dow Jones Industrials: -0.06%
Nasdaq Comp.: 0.16%
S&P 500: 0.06%

The main US equity benchmarks were trading mixed on Monday afternoon.

That following the release of apparently positive final Chinese manufacturing data for the month of November over the weekend and after Greece unveiled the details of its bond buy-back plan, this morning.

Nevertheless, and acting as a backdrop, even under the best scenario it is hard to describe the sound bites coming out from Washington as anything better than not-too-constructive.

Thus, US Treasury Secretary Timothy F. Geithner warned that it would be Republicans' fault if they refused to raise tax rates on the highest-income earners and in turn damaged the economy. The speaker of the House, Republican John Boehner, retorted that the White House is wasting time; which has left him "flabbergasted."

As well, some economic figures out this afternoon – such as the latest ISM report - were quite weak. 

ISM goes into reverse, shows contraction
The US Institute for Supply Management's (ISM) purchasing managers' index for the month of November has come in at 49.5 versus 51.7 for the month before (Consensus: 51.4). The new orders sub-index dropped to 50.3 after 54.2 and the employment gauge fell back to 48.4 after 52.1. Only one sector - primary metals - cited the impact from Sandy as a factor behind the slowdown. On the other hand, respondents cited the fiscal cliff as a major source of concern and in general expected the slowdown in demand seen so far during the second half of 2012 to persist.

This is what Barclays Research has to say on the possible impact of hurricane Sandy on today's ISM data: "Some respondents mentioned that storms along the East Coast delayed shipments, and we expect that the lingering hurricane effects provided a slight drag. That said, even without the Sandy effect, the print would likely have remained close to the break-even level of 50."

Construction spending grew by 1.4% month-on-month in October (Consensus: 0.5%).
Crude and Treasuries more or less flat

Front month West Texas crude futures are now rising by 0.32% to the $89.23/barrel level on the NYMEX.

10 year US Treasury yields are now higher by 1 basis point, to the 1.63% level.

Weekly Market Analysis

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

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Weekly Market analysis

There will be relief that a deal has been reached on Greece, but there will still be unease over the underlying situation, especially with tensions over the debt buyback plans. There will also be wider doubts surrounding the Euro-zone outlook, especially with peripheral economies still trapped in recession. The banking sector will also be an important focus with continuing fears surrounding the threat of de-leveraging. Key events for the forthcoming week Date Time (GMT) Data release/event Tuesday December 4th 03.30 Reserve Bank Australia interest rate decision Wednesday December 5th 09.30 UK PMI index services Thursday December 6th 12.00 Bank of England interest rate decision Thursday December 6th 12.45 ECB interest rate decision Friday December 7th 13.30 US employment report Dollar: Expectations of solid US growth in the short-term will be offset to some extent by unease that there could be a significant slowdown within the next few months. The US economy should still be able to out-perform the Euro-zone which will provide underlying US dollar support.  Yield support will still be limited given expectations that the Fed will maintain a highly expansionary monetary policy, especially with speculation that there could be additional quantitative easing at the December FOMC meeting. Underlying global growth and risk appetite considerations should still provide a solid backdrop for the US currency.   The dollar edged weaker for the week as a whole as gains continued to attract selling interest. The US economic data was generally stronger than expected with consumer confidence rising to a fresh four-year high of 73.7 for November from a revised 73.1 previously.  Although headline durable goods orders were unchanged for October, there was an increase in underlying orders. The Fed Beige Book reported that the economy expanded at a measured pace compared with moderate last time around with weakening in New York attributed to the impact of Hurricane Sandy. There was dovish commentary from regional Fed Governor Evans which tended to undermine dollar demand. There were cautious remarks surrounding the US budget talks from Senate majority leader Reid which had some negative impact on risk appetite as he warned that there had been little progress made so far. The third-quarter US GDP increase was revised to an annual 2.7% from 2.0% which was slightly lower than expected. Jobless claims were close to expectations at 393,000 in the latest week from 416,000 previously while there was a stronger than expected gain of 5.2% for pending home sales. The latest data helped maintain expectations of US out-performance, but was overshadowed by continuing negotiations surrounding the US budget. After a period of greater optimism surrounding a deal, there were much more cautious remarks surrounding a deal with Democrat Senator Van Hollen stating that Congress was not close to a deal while there were also very cautious comments from Republican House Leader Boehner.

Euro

There will be initial relief that the Euro-group and IMF have negotiated a revised austerity package for Greece and immediate tensions have eased. There will also be relief that there has been a decline in benchmark peripheral bond yields. The underlying Greek situation remains extremely weak and the recent deal does very little to address continuing recession within Greece and peripheral economies as a whole.  The German government appears committed to maintaining Greece within the Euro area given the potential banking-sector vulnerability if there is an exit, but the lack of growth and need for expansionary monetary policy will tend to trigger underlying Euro losses.  Even with important fundamental concerns, the Euro was able to maintain a positive tone with firm buying support on dips as it challenged resistance above 1.30. The Eurogroup did eventually secure a deal on Greece early in the Asian session on Tuesday. As expected, there was agreement with the IMF to amend the debt/GDP target to 124% of GDP for 2020 from the previous 120%. There was also a raft of measures designed to provide immediate relief for the Greek debt ratio. There will be a reduction of 100 basis points on the original EUR110bn loan package and a deferment of interest payments. The German government remained firm and there will be no official debt write-downs, but with a hint that the issue could be revisited in 2016. Greece will also have to meet tougher conditions on oversight with total loan tranche payments of EUR43.7bn. Although there was relief that a Eurogroup package on Greece had been concluded, a deal had been expected which limited the scope for any further Euro support. There were still fears surrounding the underlying Greek economic outlook with particular fears surrounding growth. There will continue to be the threat of labour protests and social unrest as unemployment rises further.  Parliamentary approval in countries such as Germany and Finland will also be needed. The latest Euro-zone money supply data was stronger than expected with a 3.9% increase in the year to October, but there was a decline in lending for the sixth consecutive month which maintained fears surrounding the growth outlook. The Spanish retail sales data remained grim with a 9.7% annual decline while the Bank of Spain forecast a further GDP contraction for the fourth quarter. There was some relief surrounding the latest Euro-zone data with a smaller than expected 5,000 increase in German unemployment for November following a revised 19,000 increase the previous month. There was also a larger than expected increase in the latest Euro-zone business confidence index. There was also speculation that Spanish regions would require additional support from central government. There were also further concerns surrounding potential difficulties with the Greek debt buyback programme with some reports that the IMF would consider pulling out of the arrangement. Yen:  There will be further concerns surrounding the Japanese economy with a further deterioration in conditions.  The LDP, which is holding an opinion-poll lead ahead of the December 16th General Election is continuing to pledge a more aggressive monetary policy and higher inflation target which would inevitably weaken the yen.  There will be the threat of substantial tensions with the Bank of Japan and policy may not be implemented. The yen can still gain support when risk appetite deteriorates and there will be increased exporter dollar selling. There was interest in selling the yen on any gains with the US currency find support below 82 with the yen crosses also regaining ground later in the week.. Underlying sentiment towards the economy remained weak with a generally downbeat assessment from key officials. LDP leader Abe announced a slight shift in tone with an insistence that the Bank of Japan has independence in setting goals, backtracking on reported comments earlier in the month. There were continuing expectations that any new government following the December general election would push for a more aggressive easing of Bank of Japan monetary policy. The latest speculative positioning data recorded an increase in yen shorts which will lessen the potential for further aggressive yen selling. The latest industrial production data was stronger than expected with a 1.8% monthly increase, but the PMI index remained weak at 46.5 from 46.9 previously. Core consumer prices were unchanged over the year which will maintain pressure for more aggressive Bank of Japan policies to beat deflation.

Sterling

There will be further doubts surrounding the UK economic outlook with speculation that the economy will contract again in the fourth quarter. The Bank of England certainly remains very cautious over further quantitative easing, especially with bond-purchases coupons allocated to the Treasury, but will consider further action if the economy deteriorates again. There will be further concerns surrounding the fiscal outlook and fears that any further deterioration will prompt a credit-rating downgrade. The appointment of Carney as next Bank of England Governor should provide some degree of Sterling support. Sterling proved resilient against the dollar as dips to below 1.6000 attracted support. There was surprise surrounding the Treasury announcement that Bank of Canada Governor Carney had been appointed to be the next Bank of England Governor from July 2013.  Given Carney’s strong reputation, the announcement provided Sterling support. There will, however, be the risk of friction with existing MPC members. The second estimate of third-quarter GDP growth was unchanged at 1.0%, although there was a downward revision for the year-on-year figure to -0.1%. There was a rise in third-quarter investment which will have some positive impact on sentiment. There was a stronger than expected CBI retail sales reading of 33 for November from 30 previously and retailers were generally optimistic surrounding the crucial month of December. There was also a stronger than expected consumer confidence reading with the index pushing to an 18-month high of -22. The current Bank of England Governor  was generally downbeat over the outlook with particular reservations surrounding Euro-zone prospects which had deteriorated further and King also stated that further quantitative easing was a possibility. Swiss franc: The National Bank will remain strongly committed to maintaining the 1.20 minimum Euro level in the short-term, especially with competitiveness still a very important issue. There was, however, a stronger than expected GDP reading for the third quarter and there will be reservations over maintaining the peg if capital inflows intensify again. Nevertheless, the dollar should be able to find solid support around current levels. The dollar was generally on the defensive against the franc during the week with a test of support near 0.9250 while the Euro generally drifted weaker. The third-quarter GDP report was stronger than expected at 0.6%. There was an improvement in the latest Swiss UBS consumption report which, allied with broadly stable unemployment numbers, will maintain optimism that domestic demand can support the economy as a whole. There will still be pressure for competitiveness to be sustained given vulnerability in the export sector. Bank Chairman Jordan reiterated that the Euro minimum level would be needed for the foreseeable future which had some impact in curbing franc demand.

Australian dollar

The Australian dollar tested resistance levels towards 1.05 against the US currency with some support from a improvement in risk appetite, but was unable to break higher and drifted slightly weaker with a sharp dip when gold prices fell. There was speculation that the Reserve Bank of Australia could cut interest rates at the December meeting which currency demand to some extent. The Australian currency will recover ground if the Reserve Bank does not cut interest rates next week, but it be very difficult to sustain gains given the fundamentals. Canadian dollar: The Canadian dollar was able to resist a further test of support beyond parity against the US currency and pushed towards the 0.99 level where US support was robust. The Canadian currency retreated briefly following the announcement that Bank of Canada Governor had been appointed as the next Bank of England Governor. Oil prices also had a generally soft tone during the week. Even with near-term resilience, the Canadian dollar is likely to weaken gradually, especially with growing unease surrounding the global growth outlook.

Daily FX & Market Commentary

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

Daily FX Commentary: 

EUR/USD

The Euro briefly broke above important 1.3000 resistance zone, previous high and daily Ichimoku cloud top, following steady recovery off yesterday’s low at 1.2880, but lost traction, failing to sustain gains. Positive hourly studies have been dented by recent fall to 1.2960 zone, where temporary support was found, while bearish divergence, appearing on 4h chart, warns of possible failure at 1.3000 and fresh slide that would be confirmed on today’s close below the latter and break below day’s low at 1.2938. Otherwise, retest of 1.3000 would stay in play, as break here is seen as a trigger for resumption of near-term recovery from 1.2660, 13 Nov low and open 1.3020/25, then 1.3070, next upside targets.

Res: 1.3012, 1.3020, 1.3025, 1.3070
Sup: 1.2964, 1.2950, 1.2938, 1.2900


GBP/USD

Cable’s near-term bulls are back in play, as dip from 1.6050 double-top to 1.5960, has been fully retraced. However, lack of momentum on near-term studies warn of possible further hesitation at 1.6050, as 20 day upper Bollinger caps the upside for now. Immediate supports lie at 1.6010/00, 20 day EMA / round figure, while more downside risk would be seen on loss of today’s low at 1.5960, also Fib 38.2% of 1.5826/1.6055 rally that also marks near-term range floor. Break above 1.6050 barrier to open 1.6067, 50% of 1.6308/1.5826 descend, ahead of 1.6100, psychological barrier.

Res: 1.6047, 1.6055, 1.6067, 1.6090
Sup: 1.6010, 1.6000, 1.5960, 1.5926 


USD/JPY

The pair eased below 82.00, following failure to break above 82.20 congestion and trendline resistance. As hourly studies lost momentum and prevailing negative tone on 4h chart, the downside remains vulnerable. Sustained break below 82.00 to confirm bearish continuation of larger descend from 82.83 and re-focus yesterday’s correction low at 81.68. On the upside, clearance of 82.20/30 is required to signal near-term basing attempt and open way for further retracement of 82.83/81.68 downleg.

Res: 82.20, 82.31, 82.56, 82.83
Sup: 82.00, 81.90, 81.84, 81.68


USD/CHF

Near-term bears are interrupted by jump higher, after the pair posted fresh marginally lower low at 0.9251. However, overall negative tone would not be affected, as long as significant barriers at 0.9300, 50% of 0.9339/0.9251 / daily Ichimoku cloud and 0.9339, yesterday’s high, 4h 55 day EMA and near 38.2% of 0.9511/0.9251, stay intact. Current bounce, signaled by MACD / RSI bullish divergence, needs to clear those barriers to avert immediate risk of testing key support at 0.9213.

Res: 0.9285, 0.9300, 0.9318, 0.9339
Sup: 0.9251, 0.9213, 0.9200, 0.9193 

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Daily Market Commentary: (Evening Report)

London Market Report

Miners surge on US hopes

Market Movers
techMARK 2,106.84 +1.21%
FTSE 100 5,870.30 +1.15%
FTSE 250 12,026.57 +1.14%

Hopes about the US economy were driving gains on Thursday as investors reacted positively to comments from politicians about the 'fiscal cliff' and decent economic data Stateside.

US Republican Speaker of the House John Boehner said that he was “optimistic that we can continue to work together to avert this crisis sooner rather than later.” He said that Republicans were willing to put “revenue on the table” as long as it is accompanied by spending cuts.

Meanwhile, President Barack Obama told the public in a press conference today to pressure Congress to act to avert the automatic tax increases, saying: “When the American people speak loudly enough, lo and behold, Congress listens." He said he expects a deal by Christmas.

Nevertheless, market strategist Ishaq Siddiqi from ETX Capital said that "markets remain extremely sensitive over the fiscal cliff issue – it could take just one negative headline suggesting the talks are stalling to send the bulls running back to the exit so today’s move to the upside is unlikely to sustainable in the sessions ahead.

"For now however, Eurozone debt worries are in the back seat and improved US macro data is driving the afternoon cheer," he said.

US gross domestic product (GDP) growth in the third quarter was revised higher from the initial flash estimate of 2% to 2.7%. Meanwhile, jobless claims declined last week and pending home sales surged in October.

Market analyst Craig Erlam from Alpari said: "The housing market is naturally a good barometer of economic conditions as it highlights not only the consumer’s confidence in the economy but also the banks’ willingness to lend. The improvement we’ve seen in recent months suggests that the US economy could be performing better than the Federal Reserve are suggesting and is likely to be reflected in the fourth-quarter data."

Economic news

German unemployment rose for the eighth consecutive month in November, up a seasonally adjusted 5,000 to 2.94m, according to the Federal Labor Agency. However, this was much less than the 16,000 increase predicted.

The Confederation of British Industry's (CBI) distributive trades survey index for the month of November rose to 33 points, after 30 in the previous month (Consensus: 18).

The latest Bloomberg poll has the world economy in its ‘best shape’ for 18 months, as the US is expected to avoid the fiscal cliff, albeit with political manoeuvres expected before hand, and as China’s prospects improve.

Europe Market Report 

European Markets Rallied On Fiscal Cliff Optimism

The European markets finished solidly to the upside Thursday on investor optimism that a deal can be reached on the looming fiscal cliff in the United States. Statements made yesterday by both President Barack Obama and Speaker of the House John Boehner suggested that a deal to avoid a budget crisis could be reached before the end of the year. A strong upward revision to U.S. GDP and a surge in pending home sales also provided a boost to investor sentiment.

Bank of England Governor Mervyn King on Thursday warned that British banks are understating their capital requirements.

Releasing the Financial Stability Report, King said banks currently report substantial buffers over the minimum level allowed.

"But, in judging whether banks are adequately capitalised, we need to ensure that reported capital ratios do in fact provide an accurate picture of banks' health," he said. "At present there are good reasons to think that they do not."

The U.S. Federal Reserve revealed in its Beige Book release yesterday that factory activity in the U.S. has tailed off in recent weeks. Seven of the twelve Districts reported either slowing or outright contraction in manufacturing, and two others gave mixed reports.

A number of respondents blamed uncertainty about the 'fiscal cliff' for the slowdown. Analysts say the impact of Hurricane Sandy also contributed to the dim view of conditions in the New York and other parts of the Northeast.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.30 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.98 percent.

The DAX of Germany advanced by 0.78 percent and the CAC 40 of France rose by 1.53 percent. The FTSE 100 of the U.K. gained 1.15 percent and the SMI of Switzerland climbed by 1.07 percent.

Despite the 17-nation economy moving into a deep recession, Eurozone economic confidence strengthened in November, marking the first improvement since February, survey results from the European Commission showed Thursday.

The corresponding index rose to 85.7 from 84.3 in October and was above the consensus forecast of 84.5. Confidence strengthened in industry and retail trade, which was partly offset by decreases among consumers and construction.

Eurozone leading economic index dropped for the second consecutive month in October, suggesting weak outlook for the currency bloc, the Conference Board said Thursday. The leading index dropped 0.2 percent in October, after decreasing 0.3 percent in September and rising 0.5 percent in August.

Germany's unemployment rate for October declined from the same month last year, data released by the Federal Statistical Office showed Thursday. The adjusted jobless rate, which is based on the calculation concept of the International Labour Organization (ILO), fell to 5.4 percent from 5.7 percent last year. Meanwhile, the figure held steady from September.

The number of people out of work in Germany rose for an eighth month in November, as subdued economic growth forced firms to shed jobs to contain costs, data from the Federal Labor Agency revealed Thursday.

The unemployment total rose by 5,000 from a month earlier in November to 2.939 million. That was weaker than the expected increase of 16,000. In October, the number of unemployed increased by 19,000. The jobless rate for November was 6.9 percent, unchanged from October. The figure was in line with economists' forecast.

The Swiss economy expanded more than expected in the third quarter fueled by strong consumption and goods trade, the latest figures from the State Secretariat for Economic Affairs (SECO) showed Thursday.

Gross domestic product expanded 0.6 percent sequentially in the third quarter, strongly recovering from a 0.1 percent contraction in the previous three months. Economists had expected just 0.2 percent growth.

U.K. house prices dropped for a ninth month in a row in November, according to the results of a house price survey released on Thursday. Prices are expected to remain subdued in the months ahead as downward pressure on wage growth will weigh on prospects of house price growth.

House prices were down 1.2 percent from a year ago following a 0.9 percent drop in October, the Nationwide Building Society said. The rate of decline exceeded the 1 percent drop forecast by economists.

US Market Report

Stocks Come Under Pressure On Disappointing Boehner Comments

Stocks have shown a notable move to the downside in recent trading on the heels of comments by House Speaker John Boehner. The pullback by the markets reflects the recent focus on any headlines regarding the looming fiscal cliff.

The major averages are currently turning in a mixed performance, as the Dow has turned negative. While the Dow is down 4.69 points or less than a tenth of a percent at 12,980.42, the Nasdaq is up 10.92 points or 0.4 percent at 3,002.70 and the S&P 500 is up 1.96 points or 0.1 percent at 1,411.89.

After seeing early strength on the heels of a batch of largely upbeat U.S. economic data, stocks came under pressure after Boehner told reporters that "no substantive progress" has been made in fiscal cliff talks with the White House.

Boehner went on to say that he was disappointed with the lack of progress and argued that Democrats in Washington need to get "serious about spending cuts."

The pullback by the markets reflects a notable reversal from the performance seen in the previous session, when stocks rallied after Boehner expressed optimism about reaching an agreement.

Earlier in the session, traders reacted positively to some key economic data, including a report from the National Association of Realtors showing a much bigger than expected jump in October pending home sales.

The Labor Department also reported a drop in weekly jobless claims, while the Commerce Department said GDP increased by more than previously estimated in the third quarter.

Positive sentiment was also generated by a report from the European Commission showing that Eurozone economic confidence strengthened in November, marking the first improvement since February.

Other Markets In overseas trading, stock markets across the Asia-Pacific region saw notable strength during trading on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both ended the day up by 1 percent, while Australia's All Ordinaries Index advanced by 0.6 percent. In the bond market, treasuries have climbed back near the unchanged line following the comments from Boehner. The yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.62 percent after reaching a high 1.644 percent.

Daily FX & Market Commentary

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

Daily FX Commentary: (Morning Report)

EUR/USD

Euro’s break below 1.2900 handle, Fib 38.2% of 1.2735/1.3007, tested 4h 55 day EMA and previous high of 07 Nov at 1.2880 so far. As indicators on 4h chart are in steep descend and price slides below 20 day EMA, further weakness is seen as likely near-term scenario. Overextended hourlies, however, could signal consolidation, yet no signal being generated on hourly chart. Break below 1.2880 and 50% retracement at 1.2870 to trigger fresh extension towards 1.2840/30, Fib 61.8% / previous high, next. Former supports at 1.2900/15, now act as initial resistance, while only bounce through 1.2950 would provide relief.

Res: 1.2900, 1.2915, 1.2944, 1.2967
Sup: 1.2881, 1.2870, 1.2858, 1.2839


GBP/USD

Bears took control on near-term outlook, as the price dips below psychological / Fibonacci support at 1.6000, to retrace near76.4% of 1.5926/1.6050 upleg at 1.5960, session’s fresh low and daily Ichimoku cloud base. With price sliding below 20/55 day EMA’s on 4h chart and hourly indicators holding below midlines, risk of further weakness is increasing, as hourly double-top pattern has been completed on a break below 1.6000. Near-term focus now shifts towards next supports at 1.5920/00. Initial resistance lies at 1.6000, while regain of 1.6020/30 zone, would avert immediate downside risk.

Res: 1.5975, 1.6000, 1.6015, 1.6032
Sup: 1.5960, 1.5926, 1.5917, 1.2900


USD/JPY

Near-term downleg from 82.83, 22 Nov peak, found temporary footstep at 81.70, 55 day EMA, with sideways, narrow-range trading sees during the European and early US session. This could be described as consolidative, as initial barrier at 82.00, reinforced by descending 20 day EMA, stays intact and near-term studies maintain negative tone. Further easing sees Fib 38.2% of 79.06/82.83 at 81.40, as the next target, with more significant 81.00, expected to come in near-term focus. The notion is supported by daily indicators reversing from overbought zone. On the upside, above 82.00 barrier, trendline resistance and yesterday’s high at 82.30, are seen as pivotal point for possible reversal.

Res: 82.00, 82.20, 82.31, 82.45
Sup: 81.70, 81.58, 81.39, 81.00


USD/CHF

The pair regains important barrier at 0.9330, previous low / Fib 38.2% of 0.9456/0.9253, on a break above initial 0.9300 resistance. This brings more positive tone into near-term outlook and averts immediate risk of slide towards key support at 0.9213. However, as 4h chart studies are still in the negative territory, extension through 0.9350, double Fibonacci barrier and 55 day EMA, is required to confirm recovery and possibly open way towards key 0.9400 barrier and breakpoint.

Res: 0.9339, 0.9350, 0.9378, 0.9400
Sup: 0.9300, 0.9282, 0.9268, 0.9253

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


Daily Market Commentary: (Evening Report)

London Market Report

Losses erased after 'optimistic' fiscal cliff comments

Comments from US Republican Speaker of the House John Boehner about the 'fiscal cliff' saw the FTSE 100 rally in afternoon trading to finish broadly flat.

Markets got off to a poor start this morning after Nevada Democrat Harry Reid said that “little progress” has been made so far on avoiding the fiscal cliff by year-end.

However, stocks pared losses after Boehner said that he was “optimistic that we can continue to work together to avert this crisis sooner rather than later.” He said that Republicans were willing to put “revenue on the table” as long as it is accompanied by spending cuts.

Market analyst Craig Erlam from Alpari said: “In the grand scheme of things this comment makes very little difference to people’s perceptions, but on a day when so little has happened in the markets, it has helped trim earlier losses.”

Erskine Bowles, co-Chairman of Obama’s 2010 fiscal commission, had said earlier in the day that it would be unlikely that the government will reach an agreement on the ‘cliff’ by the end of the year.

Europe Market Report 

European Markets Finished Mixed On Fiscal Cliff Concerns

The European markets have ended Wednesday's trading session with mixed results. The looming fiscal cliff debate in the United States was a source of weakness in early trade. Statements made yesterday by Harry Reid led many to worry that the U.S. could potentially go over the fiscal cliff, which could push the U.S. economy back into recession. However, the markets came off their early lows after statements made today by John Boehner, which helped to reassure investors that a deal can be reached.

Senate Majority Leader Harry Reid, D-Nev., said Tuesday that lawmakers have made "little progress" on addressing the fiscal cliff, while his Republican counterpart Mitch McConnell, R-Ken., accused Democrats of remaining in campaign mode. However, U.S. House Speaker John Boehner stated today that he is optimistic that a deal on the fiscal cliff can be reached. Boehner reiterated that Republicans are willing to put revenues on the table, as long as Democrats agree to spending cuts.

The European Commission on Wednesday approved restructuring plans of four nationalized Spanish banks namely Bankia, NCG Banco, Catalunya Banc and Banco de Valencia and paved the way for more aid from Eurozone.

The approval of the restructuring plans is a milestone in the implementation of the Memorandum of Understanding between euro area countries and Spain, EU Competition Commissioner Joaquin Almunia said.

Today's EU approval allows Spanish banks to receive aid from the European Stability Mechanism (ESM) in the context of the financial assistance programme to recapitalize the banking sector. The nation was earlier given consent to access up to EUR 100 billion from euro area's permanent bailout fund.

The European Central Bank is ready to buy government bonds of Eurozone countries that agree to fiscal adjustment, Executive Board member Benoit Coeure said Wednesday.

The debt deal struck by Eurozone finance ministers and the International Monetary Fund earlier this week to stabilize the situation in Greece was the best of all other alternatives, European Central Bank Governing Council Member Ewald Nowotny reportedly said Wednesday.

"I believe in such a difficult situation as we see in Greece, there are no ideal solutions, but it is probably a solution that is better than all alternatives," reports said citing his interview with Austrian radio station OE1.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.22 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.21 percent.

The DAX of Germany rose by 0.15 percent and the FTSE 100 of the U.K. advanced by 0.06 percent. The CAC 40 of France climbed by 0.37 percent and the SMI of Switzerland gained 0.67 percent.

Eurozone broad monetary aggregate M3 grew at a faster pace of 3.9 percent in October from a year ago, the European Central Bank said Wednesday. The increase follows a 2.6 percent rise in September. The annual rate was forecast to accelerate to 2.8 percent.

Germany's EU measure of inflation slowed in November, in line with economists' expectations, preliminary data from Destatis showed Wednesday.

The harmonized index of consumer prices rose 2 percent annually, following October's 2.1 percent increase. The index, however, declined 0.1 percent from the previous month, which also matched expectations.

New home sales in the U.S. unexpectedly showed a modest decrease in the month of October, according to a report released by the Commerce Department on Wednesday, with the report also showing a substantial downward revision to the data for September.

The report said new home sales edged down 0.3 percent to a seasonally adjusted annual rate of 368,000 in October from the revised September rate of 369,000. The annual rate of new home sales in September was downwardly revised from the previously reported 389,000, which had represented a two-year high.

Economists had been expecting new home sales to inch up to 390,000 from the 389,000 originally reported for the previous month.

US Market Report

Stocks Nearly Flat Amid Focus On Washington

Reflecting the focus on developments in Washington due to the looming fiscal cliff, stocks bounced well off their early lows following optimistic comments by House Speaker House John Boehner. Buying interest has waned since then, however, and the markets are nearly flat.

The major averages have moved roughly sideways in recent trading, lingering near the unchanged line. While the Dow is up 13.63 points or 0.1 percent at 12,891.76, the Nasdaq is down 2.09 points or 0.1 percent at 2,965.70 and the S&P 500 is down 0.92 points or 0.1 percent at 1,398.02.

The early weakness on Wall Street reflected lingering concerns about the fiscal cliff amid indications that lawmakers are encountering familiar disagreements over taxes on the wealthy and entitlement reform.

Senate Majority Leader Harry Reid, D-Nev., said Tuesday that lawmakers have made "little progress" on addressing the fiscal cliff, while his Republican counterpart Mitch McConnell, R-Ken., accused Democrats of remaining in campaign mode.

However, stocks staged a notable recovery following remarks by Speaker Boehner, who said he was "optimistic" that a deal could be reached to avert the crisis.

Boehner continued to express opposition to higher U.S. income tax rates but once again expressed a willingness to consider increasing revenues if accompanied by spending cuts.

"You're not going to grow the economy if you raise tax rates on the top two rates," Boehner said. "We're willing to put revenue on the table, as long as we're not raising rates."

As a result of the focus on the negotiations in Washington, traders have largely shrugged off a report from the Commerce Department that unexpectedly showed a modest drop by new home sales in the month of October.

The report said new home sales edged down 0.3 percent to a seasonally adjusted annual rate of 368,000 in October from the revised September rate of 369,000. The annual rate of new home sales in September was downwardly revised from the previously reported 389,000, which had represented a two-year high.

Economists had been expecting new home sales to inch up to 390,000 from the 389,000 originally reported for the previous month.

Other Markets n overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.2 percent, while Hong Kong's Hang Seng Index fell by 0.6 percent. In the bond market, treasuries continue to see modest strength but have pulled back well off their highs for the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.2 basis points at 1.623 percent after hitting a low of 1.601 percent.

Daily FX & Market Commentary

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

Daily FX Commentary: (Morning Report)

AUD/USD

The upside remains in near-term focus, as the pair breaks above 1.0440, bear-trendline, connecting 1.0623 and 1.0479 peaks / Fib 61.8% of 1.0623/1.0148 descend and dents near-term congestion top at 1.0479. Immediate target lies at 1.0500/11, round figure / Fib 76.4% retracement, break of which to open way towards the upper boundaries of 4-month 1.0148/1.0623 range. Gains, however, may be delayed, due to overbought 4h conditions and hourly RSI/MACD bearish divergence that suggests corrective/consolidative action. Initial support lies at 1.0467, 23 Nov high / today’s low, reinforced by 20 day EMS, while more significant 1.0438/23 zone, yesterday’s low / Fib 38.2% of 1.0337/1.0488 / 20 Nov high, is expected to contain any stronger reversal.

Res : 1.0488, 1.0500, 1.0511, 1.0518
Sup : 1.0467, 1.0438, 1.0430, 1.0423


USD/CAD

Bears are regaining control of the near-term outlook, following stall of two month recovery rally from 0.9631 at 1.0055 and false break above 200 day MA. Return below parity level, now focuses initial target at 0.9913, 23 Nov low, break of which to complete hourly head and shoulders like shape and open 0.9900, round figure support / near Fib 38.2% of 0.9631/1.0055 ascend and breakpoint at 0.9880 zone, 07 Nov low / 03 Oct high, below which to trigger deeper reversal. Prevailing negative tone on lower timeframes studies could be minimized by regain of initial barrier at 0.9958, yesterday’s spike high, while only clear break above parity, would shift focus higher.

Res: 0.9930, 0.9958, 0.9980, 1.0000
Sup: 0.9913, 0.9900, 0.9883, 0.9873

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

Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets pare gains as investors digest Greek deal
Market Movers

• techMARK 2,075.70 +0.54%
• FTSE 100 5,799.71 +0.22%
• FTSE 250 11,867.18 +0.20%

- Europe grants Greece more aid
- OECD cuts growth estimates
- Footsie comes off day's highs by the close

After a solid start for the Footsie following last night's Greek bailout deal, gains were pared by the close of trade on Tuesday with some saying that the agreement just kicks the can down the road for the heavily indebted nation.

The FTSE 100 index finished the session at 5,800, up 13 points on the day (+0.22%) but under the intraday high of 5,822 reached this morning.

Eurozone finance ministers yesterday finally inked out an agreement on Greece, giving the green light to the disbursement of the next €43.7bn bailout tranche (€34.4bn will be issued next month and the remaining monies will be disbursed in the first quarter of 2013).

Market strategist Ishaq Siddiqi from ETX Capital said that the deal was widely priced in to markets given the subdued reaction. "Traders feel all EU leaders have done here is kick the can way down the road with the measures perhaps still not as affective to solve Greece's problems."

Similarly, the agreement was labelled a "new can-kicking world record" by Societe Generale chief currencies strategist Kit Juckes. "The key issue for Greece, as for the rest of the Eurozone, is the lack of growth. Today's optimistic mood will in due course be reversed unless someone comes along with a magic growth potion."


Meanwhile, a barrage of broadly better-than-expected economic data Stateside failed to give equities a boost this afternoon, with markets shrugging off decent readings of consumer confidence, durable goods orders, retail sales and home prices. Benchmarks on Wall Street opened more or less flat.


Europe Market Report 

Europe midday: Cool reaction from analysts to Greek agreement

-Cool reaction from analysts to Eurogroup agreement on Greece
-Greek 10 year bond yields fall 18bp to 16.45 per cent
-ECB's Hansson says worth examining a negative deposit rate
-Euro/dollar rebuffed at 1.30

FTSE-100: 0.41%
Dax-30: 0.50%
Cac-40: 0.29%
FTSE-Mibtel 30: 0.26%
Ibex 35: 0.27%
Stoxx 600: 0.39%

The main Eurozone equity benchmarks are now trading slightly higher following the cool reaction from economists to the 'breakthrough' achieved at last night's meeting of Eurozone finance ministers, the so-called Eurogroup.

The 'deal' appears quite ambitious but still faces various hurdles. The assembled ministers agreed to lower the country's stock of debt to below 124% of gross domestic product (GDP) by 2020. Furthermore, they agreed to bring Athens's mountain of liabilities down to "substantially lower" than 110% of GDP in 2022.

Amongst the measures agreed on to achieve the above were: reductions on the interest-rate paid on loans to Athens, the European Central Bank (ECB) returning the profits earned on its holdings of Greek debt and a buyback of Greek debt at sharply discounted prices.

It is the success of the latter which seems to worry observers the most (although it is not the only source of preoccupation), as the entire package - and the International Monetary Fund's (IMF) involvement - seems to hinge on it. Furthermore, without the IMF's backing Brussels could be left scrambling to find how to plug another significant gap in the Mediterranean nation's financing needs.

In that regard, Kathleen Brooks, Director of Research at Forex.com had this to say: "As usual when it comes to meetings with European Union (EU) officials, they tend to under-deliver. They didn't actually reduce Greece's debt burden and no official holders of Greek debt like the ECB or European governments have had to take haircuts on their debt holdings. Thus, Greece's debt reduction is still reliant on its economic performance, which remains dismal and is likely to continue to be enveloped in recession for many more years."

In a similar vein, Fabio Fois from Barclays Research remarked that: "some of the measures are steps in the right direction; however, we think that, as they were announced last night, they will be not sufficient to reduce public debt substantially and so to restore debt solvency by 2020. We also found surprising the fact that no fresh funds were committed, not even for the debt relief. On this specific point, we think it is worth noting the comment made by Christine Lagarde: "Once progress has been made on specifying and delivering on the commitments made today, in particular implementation of the debt buybacks, I would be in a position to recommend to the IMF Executive Board the completion of the first review of Greece's program." 

French consumers hold up

INSEE's French consumer confidence gauge for the month of November has come in at 84, the same as last month (Consensus: 83).

Italian hourly wages rose by 0.2% month-on-month in October, following a gain of 0.1% in the previous month.

Slight gains in single currency


The euro/dollar is now falling by 0.27% to the 1.2964 dollar mark.

Front month Brent crude futures are now rising by 0.090 dollars to the 111.02 dollar mark on the ICE.

 

US Market Report

US open: Stocks lower despite upbeat data

-Better than expected economic data

Dow Jones Industrials: -0.13%
Nasdaq Composite: -0.19%
S&P 500: -0.09%

The main US equity benchmarks are now trading slightly lower.

That despite the release of better than expected durable goods orders data out this morning and last night's announcement out of Greece.

Corning is moving sharply higher after raising its outlook for the LCD glass supply chain.

Discount retailer Dollar General will replace health care product maker Cooper Industries in the S&P 500.

Packaged food manufacturer ConAgra announced it is to acquire Ralcorp for $5bn.

Industrial conglomerate United Technologies reaffirmed its earnings per share forecast for the year.

Goldman Sachs is moving lower despite positive comments on it out from analysts at Citi.

Shares of McMoRan Exploration are plummeting by another 23%, following on from yesterday's crash. 

Barrage of generally better than expected economic data
Total durable goods orders remained flat in October (Consensus: -0.6% month-on-month), but bookings for non-defence capital goods, excluding aircraft, a widely followed leading indicator for the economy, rose by 1.7% on the month, the most since May.

The Conference Board institute's gauge of consumer confidence rose to 73.7 in November, after a reading of 73.1 in the previous month (Consensus: 73).

The Federal Housing Finance Agency's (FHFA) house price index for the month of September registered an increase of 0.2% month-on-month and of 4.4% versus a year ago.

Weekly retails sales grew at a 3.3% pace in the week ending last August, according to the latest ICSC survey data, and by 4% versus a year ago, the best reading since last May on the back of Thanksgiving Day shopping.

The Federal Reserve bank of Richmond's manufacturing gauge for the month of November rose to 9 points, from -7 a year ago (Consensus: -10).

The S&P Case-Shiller index of home prices for the twenty largest cities in the country increased by 0.39% month-on-month in September (Consensus: 0.40%).

Slight gains in crude futures

Front month West Texas crude futures are now rising by 0.07% to the $87.80/barrel mark on the NYMEX.

10 year US Treasury yields are now flat at 1.66%.

Daily FX & Market Commentary

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

Daily FX Commentary: (Morning Report)

EUR/USD

The Euro maintains near-term bulls, following last Friday’s rally to the levels near psychological 1.3000 barrier, where daily Ichimoku cloud top limited gains and weekly close above 1.2955, Fib 61.8% of 1.3138/1.2660 descend. Corrective easing, seen overnight, was contained at 1.2942, for now, however, loss of initial bullish momentum, seen on hourly chart, may signal further consolidation, before fresh attempt higher. Clearance of 1.2989, last Friday’s peak and more important 1.3000 barrier, to open way for fresh bullish extension towards the next targets at 1.3020, 25/31 Oct double-top and 1.3070, 05 Oct peak, 1.3084, tentative bear-trendline, connecting 1.3170/38 peaks. Any stronger dips need to be contained at/above 1.2900, psychological support, reinforced by ascending 20 day EMA, to keep bullish structure intact.

Res: 1.2989, 1.3000, 1.3020, 1.3070
Sup: 1.2942, 1.2913, 1.2900, 1.2874


GBP/USD

Last Friday’s strong rally through 1.6000 barrier and weekly close above here, keeps the near-term bulls off 1.5826, 15 Nov low, in play. Fresh strength so far retraced over 61.8% of 1.6174/1.5826 decline on a break below 1.6041, Fib 61.8% and 07 Nov high. Technical pullback has so far been contained by ascending 20 day EMA, above 1.6000, with fresh bulls gaining pace, as break above last Friday’s fresh peak at 1.6048, to open 1.6100 zone, round figure / Fib 76.4%. Positive structure on 4h chart, supports the notion, with any deeper dips, to be contained at 1.6000 zone, previous barrier and broken main bear-trendline.

Res: 1.6048, 1.6060, 1.6092, 1.6100
Sup: 1.6014, 1.6000, 1.5977, 1.5946


USD/JPY

The pair remains in a corrective phase, as repeated attempt at 82.00 support / 50% of 81.12/82.83 upleg, keeps near-term focus at the downside. Hourly indicators are in the negative territory, with 10 day EMA bearish crossover below 20/55 day ones and 4h indicators descending towards the midlines, see the downside favored in the near-term. Loss of 82.00 to confirm failure swing and open way towards next support at 81.58, 19 Nov high / 4h 55 day EMA, also near Fib 38.2% of 79.06/82.83 ascend. Only break above last Friday’s high at 82.61, would avert immediate downside risk.


Res: 82.37, 82.50, 82.61, 82.83
Sup: 82.05, 81.77, 81.58, 81.28


USD/CHF

Fresh bearish extension through psychological 0.9300 support and weekly close below here, keep bears in play for full retracement of 0.9213/0.9511 rally. Loss of the last support at 0.9275, confirms bearish stance. However, corrective action, preceding fresh slide, cannot be ruled out, as hourly indicators are emerging from oversold zone and more indicative for the near-term outlook, 4h studies, are overextended. Initial resistance lies at 0.9300, also overnight high, with more significant 0.9335, 22 Nov low / Fib 38.2% of 0.9456/0.9263, expected to cap any stronger bounce.

Res: 0.9300, 0.9335, 0.9355, 0.9366
Sup: 0.9275, 0.9263, 0.9237, 0.9213

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks dragged into the red by Barclays

Market Movers
techMARK 2,064.58 -0.51%
FTSE 100 5,786.72 -0.56%
FTSE 250 11,843.60 -0.38%

- Osborne names Canadian as new Bank of England chief
- Agreement on Greece a real possibility tonight
- Barclays leads bank stocks lower

UK equities ended the day firmly lower, with banks weighing heavily on the Footsie after Deutsche Bank AG and Goldman Sachs agreed to sell as many as 303.3m shares in the group at 244p a time - at the lower end of the range they expected to sell at.

Today's big news was of course the appointment of Canada's Mark Carney as the next Governor of the Bank of England.

The appointment of Carney, who is currently Governor of the Bank of Canada, shocked pundits, not least because he ruled himself out of the role in August. Mr. Carney also happens to be the current Chair of the Financial Stability Board (FSB).

Chancellor George Osborne said Carney was, "the outstanding candidate to be Governor of the Bank of England and help steer Britain through these difficult economic times. He is quite simply the best, most experienced and most qualified person in the world to do the job".

Acting as a backdrop, the Institute of Fiscal Studies (IFS) said the Treasury could have to raise valued added tax (VAT) to 25% as tax revenues falter and the economy continues to struggle. Osborne may also have to abandon one of his fiscal targets – that overall UK debt should be falling in 2015–16, as well as pushing austerity measures into 2018, the IFS report added.

"Since the budget, the outlook for the UK economy has deteriorated and government receipts have disappointed by even more than this year's weak growth would normally suggest," said IFS deputy director Carl Emmerson. "The planned era of austerity could run for eight years - from 2010-11 to 2017-18," he added.

In other news, it was reported today that the public's inflation expectations for the next 12 months fell to 2.8% in November from 3.0% in the previous month, according to a survey by polling company YouGov.

Tonight's Eurogroup meeting

There can be little doubt that what was forefront and centre on market's minds was tonight's meeting of Eurozone finance ministers (the so-called Eurogroup), with an agreement that would allow for the disbursement of the next tranche of aid to Greece thought to be a real possibility.


Europe Market Report 

Europe midday: Weak economic data weighs on stocks

-Olli Rehn (EU) says Spanish deficit will rise to 6.4 per cent in 2014 after 6 per cent in 2013
-ECB and EU Comission say Spanish banks qualify for EFSF and ESM
-Banks deposit 233.6bn euros overnight at ECB

FTSE-100: -0.64%
Dax-30: -0.38%
Cac-40: -0.87%
FTSE Mibtel 30: -0.63%
Ibex 35: -0.72%
Stoxx 600: -0.61%

The main European equity benchmarks were registering moderate losses by the midday mark. That ahead of tonight's meeting of Eurozone finance ministers, with an agreement that would allow for the disbursement of the next tranche of aid to Greece thought to be a possibility.

In fact, the European Union's Economic Affairs Commissioner, Olli Rehn, has this morning indicated that an agreement on Greece is "fully possible."

In what would apparently amount to a worst case scenario, Finland indicated that an agreement may not be reached until a meeting on December 3rd.

Acting as a backdrop, and in the United States, retail spending in stores and online rose by 13% to $59.1bn in the four days starting November 22nd, trade group National Retail Federation announced yesterday. A year ago sales advanced by 16% over the holiday weekend.

As regards regional elections in Catalonia over the weekend; these seem to have been somewhat inconclusive, with barely any change in the balance of power between pro-independence and non-independence parties. But two trends seemed clear: a shift towards left-wing and anti-austerity political formations and a greater polarisation in the distribution of votes towards each extreme. 

Retail stocks lead losses
Shares of German steel maker Thyssen Krupp are now registering some of the largest falls after analysts at Credit Suisse lowered their rating on the company's stock to neutral from outperform.

The world's largest cement maker, Lafarge, is retreating on the back of the recent instability in Egypt.

From a sector stand-point the worst performance is now to be seen in the following sectors: Banks (-1.07%), Construction (-1.04%) and Oil&Gas (-0.82%).

Weak Italian consumer confidence


Italy's consumer confidence index for the month of November has come in at 84.8 (Consensus: 86.3), versus 86.2 for the previous month.

The GfK consumer confidence survey for Germany has come in at 5.9 points for December, versus expectations for a rise to 6.2 after a reading of 6.1 for November.

Spanish mortgages for house purchase dropped by 32% year-on-year in September, following a reading of 28.5% in the month before.

Slight fall in the single currency

The euro/dollar is now dropping by 0.13% to t e1.2967 dollar mark.

Front month Brent crude futures are now retreating by 0.279 dollars to the 111.07 dollars level on the ICE.

US Market Report

US open: Stocks off slightly following last week's rise
-Mc.Graw Hill to sell education unit for $2.5bn
-Goldman Sachs adds Yahoo to Conviction Buy list
-Citi starts Apple at buy

Dow Jones Industrial: -0.55%
Nasdaq Composite: -0.16%
S&P 500: -0.51%

The main US equity market averages are now registering modest falls.

The above came on the heels of the large bounce-back seen in share prices last week and with investors fixated on the resumption of negotiations between Democrats and Republicans over the impending "fiscal cliff". In this regard, prominent figures from both sides of the aisle could be heard over the weekend arguing in favour and against raising taxes, despite which equity strategists continue to expect an agreement to be forthcoming before Christmas. 

Economic data slips a little
The Federal Reserve Bank of Chicago's national activity index for the month of October fell to -0.56 from -0.00 in the month before.

The Federal Reserve Bank of Dallas's manufacturing activity index for the month of November has come in at -2.8 (Consensus: 2.5), versus 1.8 for the previous month.
Moderate fall in crude quotes

10-year US Treasury yields were falling by four basis points, to the 1.65% mark.

Front month West Texas crude futures were down by 0.80% to the $87.56 per barrel mark on the NYMEX.

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