Daily FX & Market Commentary: Weaker than forecast consumer confidence number

Daily FX Commentary: (Morning Report)

EUR/USD 

The single currency remains in a near-term consolidative mode, following repeated failure at 1.3477 that keeps key 1.3500 zone intact for now. With the lower boundary of near-term range and 55 day EMA, coming under pressure, further easing is seen likely, as hourly studies are negatively aligned. From the other side, positive tone on 4h chart, keeps the upside in focus, with possible extension into 1.3400/1.3370, Fib 38.2% / 50% of 1.3264/1.3477, seen preceding fresh rally. Only slide below 1.3300, psychological support at Fib 38.2% of larger 1.2996/1.3477, would be harmful for near-term bulls. 

Res: 1.3459, 1.3477, 1.3485, 1.3490 
Sup: 1.3425, 1.3400, 1.3370, 1.3345 

GBP/USD 

Cable maintains negative near-term tone, with steady descent from 02 Jan’s peak at 1.6380, losing another support at 1.5700. Yesterday’s close below the latter, suggests further easing towards next targets at 1.5634 and 1.5600. Corrective bounce on oversold hourly conditions faces good resistance at 1.5745, previous low and 50% of 1.5825/1.5673 downleg, with 1.5800 zone expected to cap recovery attempts, as 4h studies remain in red. However, appearance of bullish divergence on 4h chart RSI and MACD, cannot rule out stronger rally that requires break above 1.5800/25 to confirm near-term base and put immediate bears on hold. 

Res: 1.5745, 1.5784, 1.5800, 1.5823 
Sup: 1.5673, 1.5660, 1.5634, 1.5600 

USD/JPY 

Hourly structure is neutral, as the pair moves within 90.40/91.00 range, following repeated failure at 91.00 yesterday. More downside risk is seen on 4h chart studies that are in descending mode, from overbought zone, with immediate risk seen on a break below 90.40/23, overnight’s low / 20 day EMA / previous high, as well as psychological 90.00 level, loss of which would trigger stronger corrective action. Conversely, regain of 91.00 would open 91.24 and possible resumption of larger uptrend. 

Res: 91.00, 91.08, 91.24, 91.50 
Sup: 90.58, 90.40, 90.23, 90.00 

USD/CHF 

Near-term bears remain in play, as the price slides after yesterday’s recovery failure on approach to psychological 0.9300 barrier, on recovery attempt from 0.9220, last Friday’s fresh low. With 61.8% of 0.9220/91 rally being retraced so far, immediate focus comes at 0.9220/00 support zone, loss of which to signal further retracement of the larger 0.9109/0.9387 rally that so far reversed 61.8%. Negative 1 and 4h chart studies support the notion and only sustained break above 0.9300 barrier, reinforced by daily Ichimoku cloud top, would ease immediate bear-pressure. 

Res: 0.9266, 0.9291, 0.9300, 0.9323 
Sup: 0.9245, 0.9220, 0.9200, 0.9175 



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

Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets at five-year high after US earnings

Market Movers

• techMARK 2,259.98 +0.13%
• FTSE 100 6,339.19 +0.71%
• FTSE 250 13,107.56 -0.19%

After a subdued morning session, the FTSE 100 rallied in afternoon trade to finish at its highest level since early 2008, helped by upbeat earnings from corporate heavyweights in the US.

The Dow Jones Industrial Average in New York was also trading at a five-year high today after pharmaceutical group Pfizer, refiner Valero Energy and home-builder DR Horton all topped analysts' estimates.

The FTSE 100 has extended gains seen since the start of 2013 and has now risen around 7.5% in January alone.

According to technical analyst Bill McNamara from Charles Stanley this afternoon: "the UK index isoverbought (its 14-day relative strength index is now above 80%) but that in itself does not represent a sell signal in a strong bull phase and it now looks pretty likely that we will see a test of the May 2008 peak, at 6,376, before this move reaches any kind of conclusion."

However, he warned that a correction – "when it comes" – will probably be "fairly sharp" after the Footsie's recent strong run.

The markets' focus is now starting to turn to tomorrow's economic growth data and a policy rate decision in the US. The world's biggest economy is expected to have grown at an annualised rate of 1.1% in the fourth quarter of 2012, according to preliminary estimates, well below the 3.1% growth in the third quarter.

Meanwhile, while the Federal Open Market Committee (FOMC) meeting is expected to be a "complete non-event", according to Jefferies, traders will keep an eye on any comments regarding the length of the current asset purchase programme.

Europe Market Report 

Europe midday: Spain must continue consolidation efforts, Minister says

- Spain´s tax revenues rose by 4 per cent in 2012
- Southern European countries have yet to regain competitiveness -IFO
- EU could soften Spain´s budget consolidation timeline

FTSE-100: 0.11%
Dax-30: -0.18%
Cac-40: -0.21%
FTSE Mibtel 30: -0.66%
Ibex 35: -0.56%
Stoxx 600: 0.00%

European equities are trading 'mixed' ahead of tomorrow´s US Federal Reserve policy meeting and a barrage of economic data due out in the rest of the week. Not least is the US monthly employment, which is scheduled for release this next Friday.

Of great interest, the European Union´s Economic Affairs Commissioner Olli Rehn yesterday signaled that the possibility exists that the EU might tolerate modifying the timeline for Spain to consolidate its budget.

Speaking today in Madrid however Spain´s Finance Minister, Cristobal Montoro, indicated that for now the above remains to be seen and efforts must be maintained to meet Brussels´s targets. In that same vein, Montoro added that Spanish tax revenues actually grew by 4.2% in 2012, reaching €168.67bn thanks to the new Budget consolidation measures put in place.

Also worth pointing out are the remarks to be heard this morning out of the German IFO Institute´s Chief Economist, Hans Werner Sinn, according to whom most southern European nations hit by the crisis have not yet undertaken sufficient measures so as to regain lost competitiveness.

Swedish tool and equipment maker Sandvik has reported fourth quarter profit of 728m kronor, missing the market's average forecast.

Software AG has reported fourth-quarter profit of €50.7m, missing analysts' estimates moderately. Revenue in the fourth quarter, however, came in at €276m, well below forecasts.

Spain's Telefonica has asked its banks to extend the maturity of €1.25bn ($1.7bn) of an existing €2bn loan that expires in July 2016, according to Reuters.

Still on the equity front, but from a sector stand-point, the best performing industrial groups are: Basic resources (0.89%), Oil (0.48%) and Telecommunications (0.43%).

Eurozone money supply below forecasts

The Gfk survey of German consumer sentiment improved slightly in February, to 5.8 after 5.7 in the month before.

Spanish retail sales fell by 10.7% year-on-year in December.

INSEE´s French consumer confidence index remained on an even keel in January, unchanged at 86 points, as expected.

Other asset clases steady

The euro/dollar is now falling by 0.01% to the 1.3450 dollar mark. 

Front month Brent crude futures are now lower by 0.071 dollars to the 113.40 dollar mark on the ICE.

US Market Report

Weaker than forecast consumer confidence numbers 
- Ford leads fallers on prediction of losses in Europe
- Oil stocks lead gains

Dow Jones Industrials: 0.43%
Nasdaq Comp.: -0.01%
S&P 500: 0.32%

The main US equity averages are trading in a mixed fashion following a similarly mixed string of corporate quarterly results.

Amongst the heavyweights whose earnings pleased investors were those from Valero, Peabody and US Steel.

Drugmaker Pfizer was also moving higher after forecasting a 2013 profit of up to $2.30 a share, higher than analyst estimates.

Poor guidance from the likes of International Paper and Lexmark, on the other hand, were weighing on stocks.

Ford plummeted after saying that it expects to lose about $2bn in Europe in 2013 as due to the recession afflicting the region.

From a sector stand-point the worst performers were: Automobiles (-3.72%), Recreational products (-2.63%) and Electronic Office Equipment (-2.06%).

House prices rose by 5.5% year-on-year in November according to the latest Case Shiller 20 city price index (Consensus: 5.6%).

The US Conference Board´s consumer confidence index for the month of January came in at 58.6 points, after an upwardly revised reading of 66.7 for the month before (Consensus: 64).

Front month West Texas crude futures rose by 1.18% to the 97.58 dollar per barrel mark on NYMEX.

10 year US Treasury yields gained 1 basis point, with yields at 1.97%. 

==================================================================== 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: Strength On Wall Street Lifts S&P 500 Above 1,500

Daily FX Commentary: (Morning Report)

EUR/USD 

No changes in the near-term price action seen in past couple of sessions, as the pair remains in a sideways mode, entrenched within narrowed 1.3264/1.3370 range. Studies on 1 and 4h charts hold neutral mode, with break of either side to signal fresh direction, however, clearance of the wider range boundaries at 1.3255 and 1.3400, is required to confirm. 

Res: 1.3350, 1.3370, 1.3386, 1.3400 
Sup: 1.3300, 1.3280, 1.3264, 1.3255 

GBP/USD 

Cable holds 1.5800/1.5900 in past three-days, after finding temporary ground at psychological 1.5800 level. However, near-term tone remains aligned to the downside, as recovery attempts were capped under initial 1.5900 resistance, by descending hourly 20 day EMA and Fib 38.2% of 1.6038/1.5801 descend. Improvement of the near-term structure required break above minimum 1.5950, Fib 61.8% and 55 day EMA, to avert immediate downside risk of losing 1.5800 handle that may accelerate bears towards 1.5750 and 1.5700. 

Res: 1.5851, 1.5882, 1.5891, 1.5900 
Sup: 1.5811, 1.5801, 1.5753, 1.5700 

USD/JPY 

Bounce from 88.00, where the price find support, reduces downside pressure, as gains through psychological 89.00 barrier, retraced over 61.8% of 90.23/88.05 fall at 89.44. Improved hourly structure sees potential for stronger recovery, however, still weak studies on 4h chart, require regain of 90.00, to confirm recovery and re-focus 90.23 peak. Psychological 89.00 level now offers support and is reinforced by 4h Ichimoku cloud top and 20/55 day EMA’s bullish crossover, with break here to weaken the structure. 

Res: 89.44, 89.72, 90.00, 90.10 
Sup: 89.00, 88.87, 88.63, 88.40 

USD/CHF 

Recovery attempt off 0.9270 zone, where the pair found support, cracks 0.9300 barrier and 0.9317, Fib 38.2% of 0.9387/0.9274 decline, signaling possible further extension higher, as hourly studies turned positive. With 4h structure gaining momentum,. Scope is seen for attempt towards 0.9350 breakpoint, previous highs and Fib 61.8%, to confirm base at 0.9280/70 zone and re-focus 0.9387 and 0.9400. 

Res: 0.9319, 0.9330, 0.9350, 0.9387 
Sup: 0.9300, 0.9283, 0.9273, 0.9248 

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

Daily Market Commentary: (Evening Report)

London Market Report

Footsie jumps one per cent as economic data impresses

    Market Movers
    techMARK 2,246.01 +0.71%
    FTSE 100 6,264.91 +1.09%
    FTSE 250 13,066.44 +1.02%

Better-than-expected economic data lifted the FTSE 100 over one per cent higher on Thursday afternoon, as markets shrugged off disappointing results from the world’s largest technology company,Apple.

American jobless claims and a US manufacturing survey from Markit came in better than forecasts today, sending London’s benchmark index surge in afternoon trade. Meanwhile, the Conference Board’s composite index of leading indicators increased by 0.5% in December, better than the +0.4% expected.

“All three releases have fuelled hopes for a strong recovery in the US allied with growing optimism that US lawmakers do have the will to agree on spending cuts and raise the debt ceiling without playing the same game of brinkmanship they participated in before the end of 2012,” said market strategist Ishaq Siddiqi from ETX Capital.

The S&P 500 in New York topped 1,500 following the news, the first time it has reached that level since 2007. The Dow also rose strongly, though the tech-heavy Nasdaq was being weighed down by a 10% drop from iPhone maker Apple after both revenues and profits missed forecasts.

Better-than-expected economic figures from Europe and China also lifted the mood today: the Chinese HSBC flash manufacturing purchasing managers' index (PMI) rose from 51.5 to a two-year high of 51.9 in January (consensus: 51.7); meanwhile, the Eurozone composite PMI increased from 47.2 to 48.2 in December (consensus: 47.5).

ETX Capital’s Siddiqi highlighted this afternoon that the FTSE 100 was outperforming other European indices today. He said: “Traders are citing rumours around tomorrow's Q4 GDP figures but it must be noted that the FTSE100 did underperform its European peers in 2012 so technically, there is plenty of room for upside. We are likely to see the index catch up with European peers through this year, especially if we continue to see more encouraging signs from China, the world's biggest consumer of commodities.”

Consensus forecasts are for a 0.1% quarter-on-quarter contraction in the UK economy in the fourth quarter of 2012, compared with the 0.9% growth seen in the third.

Europe Market Report 

European Markets Climbed On Economic Data 

The European markets finished Thursday's session in positive territory. Positive Chinese manufacturing data helped to overshadow some of the weakness caused by the disappointing earnings report from Apple in the United States. The Euro area private sector activity result also lifted hopes for a modest recovery in the region.

China's manufacturing sector activity rose to its highest level in two years in January as factory production picked up momentum, preliminary results of a survey by Markit Economics showed Thursday. The headline HSBC/Markit purchasing managers' index rose to 51.9 in January from 51.5 in December.

The marked improvement in Eurozone consumer confidence, as latest data showed, adds to hopes that the region's economy could at least stabilize in the first quarter, following an almost certain third successive quarter of contraction in the fourth quarter, IHS Global Insight Chief European and UK Economist Howard Archer said Thursday.

IHS Global Insight noted that the appreciable improvement in sentiment shows that Eurozone consumers are starting to become more upbeat about the economic outlook, although they still clearly have serious concerns over jobs.

The upturn adds to the evidence that the economic environment in the single-currency bloc has improved, and growth prospects are brightening following recent policy initiatives that have resulted in a substantial easing in sovereign debt tensions, the firm noted.

Bank of Canada Governor Mark Carney, next chief of the Bank of England said the governor should not overshadow the decisions of the central bank. At a press conference, Carney said he aims to ensure that the policy decisions do not rely too much on any particular individual.

"Part of my responsibility when I am there is that as the Bank of England gets additional responsibilities on the micro and macro prudential side, to ensure that the committee structure, the new governance structure, the other aspects, work to their full effect," he said.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.49 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.17 percent.

The DAX of Germany climbed by 0.53 percent and the CAC 40 of France advanced by 0.70 percent. TheFTSE 100 of the U.K. rose by 1.09 percent and the SMI of Switzerland gained 0.89 percent.

In Frankfurt, Commerzbank rose by 1.41 percent. The lender said it plans to slash 4000 to 6000 jobs at the Group level until 2016, with the exact amount of the reduction to be known after talks with the employee representatives.

US Market Report

Strength On Wall Street Lifts S&P 500 Above 1,500

Stocks are extending a recent upward move during trading on Thursday, with the S&P 500 climbing above 1,500 for the first time in over five years. However, a sharp drop by shares of Apple (AAPL) has helped to keep the tech-heavy Nasdaq in the red.

The major averages currently continue to turn in a mixed performance, with the Nasdaq posting a modest loss. While the Nasdaq is down 2.69 points or 0.1 percent at 3,150.98, the Dow is up 85.43 points or 0.6 percent at 13,864.76 and the S&P 500 is up 5.68 points or 0.4 percent at 1,500.49.

The modest loss being posted by the Nasdaq is due in large part to the steep loss being posted by Apple, with the iPad and iPhone maker down by 10.4 percent after reporting disappointing quarterly results.

After the close of trading on Wednesday, Apple reported better than expected first quarter earnings but on weaker than expected sales. The company also reported iPhone sales that missed expectations and provided disappointing second quarter revenue guidance.

Meanwhile, most stocks have moved to the upside on the heels of the release of a report from the Labor Department showing that initial jobless claims unexpectedly fell to a new five-year low in the week ended January 19th.

The report showed that initial jobless claims dipped to 330,000, a decrease of 5,000 from the previous week's unrevised figure of 335,000. The drop surprised economists, who had expected jobless claims to climb to 355,000.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 318,000 in the week ended January 19, 2008.

While the Labor Department said seasonal distortions are likely still in effect, Jennifer Lee, senior economist at BMO Capital, said the news on the job front is encouraging "even when you remove all of the noise."

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance during trading on Thursday. While Japan's Nikkei 225 Index surged up by 1.3 percent, China's Shanghai Composite Index fell by 0.8 percent.

In the bond market, treasuries have slid firmly into the red on the heels of the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.8 basis points at 1.861 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 - Markets very choppy

Daily FX Commentary: (Morning Report)

EUR/USD 

Overall range-trading picture remains intact, despite today’s hectic trading and spikes to 1.3370 on the upside and 1.3265 on the downside. The price is back to the opening levels, with 1.3300 again acting as initial support. Studies on 4h chart are still in neutral mode, however, more negative tone is seen on hourly chart, as indicators are at the midlines, with 1.3300 being under pressure. Negative scenario requires break of initial 1.3300 support, while trigger for stronger pullback is seen on a break below 1.3255, range floor. Initial resistance lies at 1.3330, while any bounce above here requires clearance of today’s high at 1.3370, to possibly re-attract 1.3400 barrier. 

Res: 1.3370, 1.3400, 1.3418, 1.3485 
Sup: 1.3350, 1.3330, 1.3300, 1.3280 

GBP/USD 

Cable trades in near-term consolidative mode, following repeated failure at 1.5800 support. Recovery is so far limited under initial 1.5900 barrier and 200 day MA, however, bullish hourly RSI and MACD divergence and 4h indicators turning higher, indicates that possible stronger recovery cannot be ruled out. This requires break and close above minimum 1.5900, to open way towards more significant 1.6000 barrier, near 50% of 1.6177/1.5802, to confirm near-term base. Otherwise, risk of lower top and fresh weakness below 1.5800, would be likely, as the price already cracked previous range low at 1.5826. 

Res: 1.5879, 1.5900, 1.5947, 1.6000 
Sup: 1.5852, 1.5826, 1.5805, 1.5753 

USD/JPY 

The pair remains under pressure, as reversal from 90.23, fresh 2 ½ year high, extends to our next target at 88.36 that marks 76.4% of 87.78/90.23 rally. Dominating negative on hourly and indicators attempting at midlines on 4h chart, signal that further weakness may extend to 88.12, 17 Jan low / Fib 61.8% of 86.81/90.23 upleg, possibly to key near-term support and 16 Jan higher low at 87.78, loss of which is seen as a trigger for stronger corrective action. Today’s upside rejection a initial 89.00 barrier, keeps negative tone intact, as barrier is reinforced by 38.2% 90.10/88.35 / 20 day EMA. Only break here would avert immediate downside pressure, however, extension through 89.50, would shift near-term focus higher. 

Res: 89.00, 89.32, 89.50, 89.70 
Sup: 88.53, 88.36, 88.12, 87.78 

USD/CHF 

Near-term structure weakened further, as the price broke below psychological support and platform at 0.9300/9280, cracking also sideways moving 4h 55 day EMA. Hourly studies are negative, while 4h indicators are about to break into negative territory. This requires close below 0.9280 that would prompt further reversal and open initial targets at 0.9250 and 0.9200. Alternative scenario sees break and close above 0.9300 that would keep downside protected on the near-term, however, regain of minimum 0.9350 is required to revive bulls. 

Res: 0.9327, 0.9350, 0.9387, 0.9400 
Sup: 0.9300, 0.9273, 0.9248, 0.9215 


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

Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets flat after choppy session

Market Movers

• techMARK 2,223.18 +0.01%
• FTSE 100 6,179.17 -0.03%
• FTSE 250 12,958.14 -0.28%

Stock markets finished more or less flat on Tuesday afternoon after a volatile session, in which investors digested policy announcements in Japan and mixed newsflow in Germany.

"A rather choppy morning session in Europe gave way to a rather more sedate afternoon session as US traders returned to their desks after their long weekend break," said Michael Hewson, a senior market analyst at CMC Markets.

After a two-day meeting, the Bank of Japan set a 2.0% inflation target and pledged to embark on a Fed-style unlimited asset purchase programme. Meanwhile, the central bank left its benchmark rate unchanged at the prior range of zero to 0.1%.

However, the promised increase in asset repurchases will not come into place until January 2014, later than at least some had hoped. This disappointment prompted a tentative start on the FTSE 100.

German newsflow shakes markets

By mid-morning though, rumours that Bundesbank President Jens Weidmann had resigned swept through the markets, sending London's benchmark index firmly into the red. This speculation was later denied by the German central bank.

Meanwhile, there were reports that the German regulator Bafin had asked lenders (including Deutsche Bank) to estimate what the cost of a hypothetical break-up of their different business segments would be.

CMC's Hewson said: "The nature of this morning's move can also be attributed to the multi-year lows in the VIX [a volatility index] which suggests that investors are under protected against sharp market falls, trading at its lowest levels since 2006, and pre crisis. These lows suggest some complacency amongst market participants about the likelihood of further stock market gains."

Nevertheless, stocks quickly recovered after a better-than-expected reading from the German ZEW survey. The economic sentiment index (which canvasses financial market experts) increased by 24.6 points in January to 31.5 points, thereby reaching its highest level since May 2010. This beat the consensus estimate, which had forecast only a 5.1 point increase to 12.

Europe Market Report 

Europe midday: Strong data props up stocks

- German economic confidence rises to May 2010 highs
- German financials hit by report on possible regulatory moves
- Spanish bond yields drop

FTSE-100: -0.09%
Dax-30: -0.74%
Cac-40: -0.48%
FTSE Mibtel 30: 0.35%
Ibex 35: -0.38%
Stoxx 600: -0.17%

The main European equity benchmarks are now trading mixed on what has turned out to be a rather volatile day. Perhaps worth taking note of, a handful of strategists seem to have cooled slightly about the market.

Also worth pointing out, the Bundesbank this morning saw the need to deny rumours regarding the impending exit of its President, Jens Weidmann.

In turn, those reports came on the back of a rather lacklustre reaction to the Bank of Japan's latest decision, overnight. Some traders nevertheless described the selling which ensued as simply some 'profit taking,' following the last few months' advances in equity markets.

Also weighing on stocks early on, particularly in Germany, was a report on BorsenZeitung that the country's financial market regulator, BaFin, has asked lenders to run simulations on what the cost of a hypothetical break-up of their different business segments would be.

Compensating for the above was the release of a much better than expected reading on German economic confidence, courtesy of the ZEW Institute.

Very strong reading on German economic sentiment

The ZEW Institute's economic sentiment index for the month of January has come in at 31.5 points, up by 24.6, to its highest level since May 2010.

Single currency flat

The euro/dollar is now trading 0.02% lower at 1.3310.

Front month Brent crude futures are rising by 0.357 dollars, to the 111.60 dollar per barrel mark on the NYMEX.

US Market Report

US mid-morning: Weak housing data weighs on stocks

- Headline existing home sales miss expectations
- Mixed results from corporate heavyweights

Dow Jones Industrials: -0.01%
Nasdaq Comp.: -0.31%
S&P 500: -0.27%

The main Wall Street indices have begun the day on a slightly mixed footing following the release of similarly contradictory quarterly results from a batch of corporate heavyweights.

Thus, Johnson&Johnson and Verizon Communications are falling following the release of their latest financials.

Caterpillar is off after the world's largest maker of construction and mining equipment said it will take a $580m write-down in relation to accounting "misconduct" at Zhengzhou Siwei Mechanical & Electrical Manufacturing Co., a Chinese subsidiary acquired last year.

Travelers and chemical maker Dupont, on the other hand, are moving up. The latter has guided higher than expected on its 2013 revenues.

Results out from Regions Financial handily beat expectations.

Shares of Morgan Stanley were downgraded by analysts at Susquehanna.

UBS has cut its target on Apple to 650 dollars from 700 dollars before.

Important data ahead

The Federal Reserve's national activity index for the month of December has moderated to 0.02 from 02.7 in the previous month.

Existing home sales fell by 1% in December to an annualised rate of 4.94m (Consensus: 5.1m).

Crude futures edge up

West Texas crude futures have begun the day rising by 0.36% to the $95.83 per barrel mark on NYMEX.

10 year US Treasury yields are now rising by 1 basis point to the 1.85%.

==================================================================== 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 - Debt ceiling fears resurface

Daily FX Commentary: (Morning Report)

EUR/USD 

The Euro remains steady, trading in consolidative sideways mode, off fresh 11-month high at 1.3400, posted yesterday. Close above 1.3360, yesterday’s opening price, keeps the upside in near-term focus, however, further consolidation cannot be ruled out, as 4h studies are extended. Range floor at 1.3335 so far holds the downside, with further easing towards strong support at 1.3300, reinforced by ascending 20 day EMA, seen not harmful for near-term bulls, while only slide below 1.3247 higher platform and Fib 38.2% of 1.2996/1.3401 would delay. On the upside, clear break above 1.3400 is required to resume near-term bulls off 1.3000 base and open way towards 1.3485/1.3500, next targets. 

Res: 1.3395, 1.3402, 1.3450, 1.3485 
Sup: 1.3335, 1.3300, 1.3280, 1.3247 

GBP/USD 

Cable remains under pressure despite recovery from yesterday’s low at 1.6030, as gains failed to regain important 1.6200 barrier, where 55 day EMA caps for now. Negative hourly studies and 4h indicators sliding below the midlines, keep the downside vulnerable, with immediate support at 1.6030, ahead of very strong support zone at 1.6000/1.5991, loss of which would trigger fresh leg lower and expose 1.5960 and 1.5900. Conversely, bounce above 1.6200, would avert immediate downside risk. 

Res: 1.6093, 1.6103, 1.6121, 1.6154 
Sup: 1.6063, 1.6030, 1.6006, 1.5991 

USD/JPY 

The pair extends near-term corrective pullback off fresh high at 89.66, posted yesterday, following failure on renewed attempt higher and subsequent fall through initial support at 89.00. Dips so far retraced nearly 38.2% of 86.81/89.66 ascend at 88.62, with prevailing negative tone on hourly chart and 4h indicators descending from overbought zone that suggest further corrective action. Penetration through previous high at 88.40 would risk an extension towards 88.00, Fib 61.8% and 4h 55 day EMA, loss of which would put near-term bulls on hold in favor of stronger reversal of rally from September 2012. 

Res: 89.08, 89.66, 90.00, 90.39 
Sup: 88.62, 88.40, 88.00, 87.90 

USD/CHF 

Yesterday’s extension of recovery rally from 0.9100 support zone, eases bear-pressure, as gains retraced 76.4% of 0.9302/0.9109 decline at 0.9260. Improved near-term studies now shift focus higher, however regain of 0.9272 and 0.9300, is required to confirm base at 0.9100/0.9080 zone and allow for stronger correction. Pullback on overbought hourlies should be ideally contained at/above 0.9200, to keep bulls intact. 

Res: 0.9260, 0.9272, 0.9300, 0.9345 
Sup: 0.9220, 0.9200, 0.9191, 0.9165 

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

Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets cautious as US debt fears resurface

Market Movers

• techMARK 2,181.78 -0.42%
• FTSE 100 6,117.31 +0.15%
• FTSE 250 12,774.79 +0.12%

- Anglo sinks into the red by the close
- Burberry jumps after Q3 update
- Debt ceiling concerns resurface, Obama takes hard-line approach

The FTSE 100 finished with only slight gains on Tuesday afternoon as markets continued to be range-bound with concerns over the US debt ceiling weighing on the mood.

"Today saw investors pause for breath and a degree of selling took place halfway through the session only for the losses to be reversed and the FTSE 100 has ended up back in positive territory," according to Angus Campbell, the head of market analysis at Capital Spreads.

"This degree of indecision has still yet to force the hands of those sellers in putting more downward pressure on stocks to create a more convincing retracement, whilst at the same time there is little impetus to send the markets higher for the next leg upwards."

He said that investors "seem to be sitting on their hands waiting for the next big event", reflected in the FTSE 100 trading within a narrow range of around 40-50 points over the last few days.

Debt ceiling fears resurface

President Barack Obama said last night that he would not negotiate with Republicans over raising the debt ceiling, declining to trade cuts in government spending in exchange for increasing the borrowing limit.

"If the goal is to make sure that we are being responsible about our debt and our deficit - if that's the conversation we're having, I'm happy to have that conversation," Obama told a news conference. "What I will not do is to have that negotiation with a gun at the head of the American people."

The ceiling will be reached within the next month or two, according to Treasury Secretary Tim Geithner.

"While this is at least a month away, there's already a sense of anxiety in the markets due to the inability in the past of US lawmakers to come to an agreement until the 11th hour," said market analyst Craig Erlam from Alpari.

Mixed newsflow elsewhere ensured that stocks lacked direction today, as traders reacted to disappointing growth figures in Germany, a solid bond auction in Spain and hints about further stimulus measures in Japan by the central bank governor.

Meanwhile, the Centre for Economics and Business Research warned that Britain may be stripped of its AAA credit rating as national debt continues to soar through the roof.

Europe Market Report 

Europe midday: Unlikely Spain will ask for a bail-out this year, Fitch says

- Fitch: Unlikely Spain will ask for a rescue in 2013
- Slight falls in most benchmarks
- German GDP contracted towards end of year
- Spanish long-term bond yields reverse course and fall

FTSE 100: 0.03%
Dax-30: -0.49%
Cac-40: -0.21%
FTSE Mibtel 30: 0.05%
Ibex 35: -1.05%
Stoxx 600: -0.07%

The main European equity benchmarks were trading slightly lower by midday for the most part.

This following a warning by ratings agency Fitch that a delay in increasing the US federal debt limit could put the country's triple A rating at risk. As well, Fitch has indicated that it does not expect Spain to petition the European Stability Mechanism (ESM) for a rescue this year.

That last observation seems to have been what weighed on Spanish bonds in the early going, despite what looked to have been a fairly successful auction of €5.7bn of bills.

Of interest as well, Bank of England Governor Sir Mervyn King was cited as insisting that a banking union is not the solution to the Eurozone's problems.
All of the above came after slight losses last night on Wall Street and the reappearance of tensions on Capitol Hill over the federal government debt limit and the need for fiscal consolidation.

Of interest, however, yesterday evening ratings agency Standard&Poor's (S&P) raised its outlook on the sovereign debt ratings for Finland and Luxembourg.

Weaker than expected German GDP

Germany's gross domestic product (GDP) grew at an 0.7% year-on-year pace in 2012, below the 0.8% pace expected and the previous year's rate of 3%.

Economic activity contracted at a 0.5% pace in the last three months of 2012 the country's Statistics Office added.

Italian consumer prices increased at a 2.3% year-on-year clip in December, versus a rise of 2.4% in November.

The Eurozone trade surplus for the month of November rose to €11bn, after a reading of €7.4bn for the previous month (Consensus: €8bn).

The Netherlands' trade surplus rose to €4.3bn in November, after a reading of €3.6bn for the month before.

Single currency nudges higher

The euro/dollar is now falling by 0.45% to the 1.3318 dollar mark. Deutsche Bank expects the single currency to reach 1.40 in its cross versus the US unit this year.

Front month Brent crude futures are down slightly, by 0,116 dollars, to the 112.17 dollar mark on the ICE.

US Market Report

Stocks Seeing Modest Weakness After Early Downward Move

After moving to the downside in early trading, stocks have seen continued weakness over the course of morning trading on Tuesday. The major averages remain stuck in negative territory after ending the previous session mixed.

The weakness on Wall Street comes as worries about continued gridlock in Washington regarding the debt ceiling has overshadowed a Commerce Department report showing stronger than expected retail sales growth.

Selling pressure has remained somewhat subdued, however, as traders continue to wait for earnings season to pick up steam before making any significant moves.

Nonetheless, computer hardware stocks are seeing notable weakness, with the NYSE Arca Computer Hardware Index down by 1 percent. Logitech is posting a steep loss after being downgraded to underperform by Credit Suisse.

Semiconductor and bio stocks have also moved to the downside on the day, while some strength is visible among gold stocks.

The major averages have moved to the upside in recent trading but remain in the red. The Dow is down 19.52 points or 0.1 percent at 13,487.80, the Nasdaq is down 16.24 points or 0.5 percent at 3,101.26 and the S&P 500 is down 3.07 points or 0.2 percent at 1,467.61.

==================================================================== 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 - Markets nervous ahead of Bernanke

Daily FX Commentary: (Morning Report)

EUR/USD 

The single currency holds positive sentiment for now, as corrective dips from day’s fresh high at 1.3400, so far being held at initial 1.3330 support. However, further easing towards strong support zone at 1.3300/1.3280, cannot be ruled out, as the price cracks dynamic 20 day EMA support at 1.3350 and hourly indicators still in descending mode and 4h ones reversing from overbought zone. Overall bulls, however, remain intact, with upside targets standing at 1.3485/1.3500. 

Res: 1.3389, 1.3402, 1.3450, 1.3485 
Sup: 1.3335, 1.3300, 1.3280, 1.3247 

GBP/USD 

The pair lost ground after break below 1.6100 support accelerated losses, retracing 76.4% of 1.5991/1.6177 rally so far at 1.6031. Weakened near-term structure sees immediate risk of retesting 1.6015, daily Ichimoku cloud base and strong 1.6000/1.5991 support zone, below which to open 1.5960, Fib 76.4% of 1.5826/1.6380, possibly 1.5900, round figure / 200 day MA, on a break. Holding above 1.6000, would signal further sideways movements, as long as 1.6177 stay intact, but prevailing negative tone sees increased downside risk. 

Res: 1.6088, 1.6104, 1.6121, 1.6154 
Sup: 1.6031, 1.6006, 1.5991, 1.5960 

USD/JPY 

Near-term price action moves in corrective mode, reversing from today’s fresh 2 ½ years high at 89.66. Loss of bullish momentum on hourly and 4h chart indicators emerging out of overbought territory, see potential for further retracement, before bulls re-assert, as larger picture bullish structure remains intact despite overbought readings. Further easing below 89.00 handle, also hourly 55 day EMA, would focus more significant 88.40, previous top, possibly 88.00, near 61.8% of 86.81/89.66, reinforced by ascending 4h 55 day EMA that maintains bulls since mid-November, where any stronger dips should be contained. 

Res: 89.34, 89.66, 90.00, 90.39 
Sup: 89.00, 88.73, 88.40, 88.00 

USD/CHF 

The pair emerges from dangerous zone, as bounce from lows near 0.9100 support, clears initial 0.9177 resistance and approaches psychological 0.9200 barrier. Improved hourly studies reduce the downside risk, however, break and close above 0.9200 is seen as supportive element for possible further recovery towards 0.9230, Fibonacci resistance and 09 Jan low, ahead of more significant 0.9270/0.9300, key near-term resistance zone. However, failure under 0.9200, would keep the downside vulnerable, as 4h chart studies are still in the negative territory. 

Res: 0.9200, 0.9210, 0.9234, 0.9272 
Sup: 0.9165, 0.9142, 0.9110, 0.9100 

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

Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets nervous ahead of Bernanke Q&A

Market Movers

• techMARK 2,190.95 -0.77%
• FTSE 100 6,107.86 -0.22%
• FTSE 250 12,759.14 -0.30%

- Bernanke could spark market volatility
- Traders cautious ahead of US earnings season
- Eurozone industrial production disappoints

Dovish comments from a member of the Federal Reserve weren't enough to lift stocks on Monday, as markets remained cautious ahead of a speech by Ben Bernanke this evening and earnings reports from Wall Street heavyweights later this week.

Markets across Europe were supported early on by remarks from Federal Reserve Bank of Chicago President Charles Evans who said that the government should put "in place policies that slowly but surely bring the prospects of future revenues into balance with future spending".

He said that "monetary policy has an important contribution to make" and that the central bank will maintain its expansionary policies until its main goals are met.

However, as analyst Craig Erlam from Alpari explained this afternoon: "There's been an element of caution in the markets today, ahead of Bernanke's speech later at the University of Michigan. We tend to see a lot more volatility in the markets when Bernanke speaks and with the markets being caught off-guard by the apparent three-way split at the last meeting, over when to end the current asset purchases, Bernanke is likely to be bombarded with questions."

Meanwhile, following on from Wells Fargo's results on Friday, traders are now awaiting results from other banking giants this week, including Goldman Sachs, Morgan Stanley, JPMorgan and Bank of America.

Erlam said: "Expectations are extremely low around fourth-quarter earnings, despite stock indices trading at multi-year highs, which suggests there's plenty of room for the rally to continue in the short - term."

Weighing on market sentiment today was worse-than-expected industrial production data from the Eurozone. Output fell at an annual rate of 3.7% in November, the largest contraction since November 2009.

Europe Market Report 

Europe midday: Eurozone industrial production drops by most since 2009

- OECD leading indicators show growth stabilising
- Praet (ECB): Too early to talk about exit
- Spanish 10 year bond yields 8bp higher ahead of Thursday auction
- Yen at 20-month low versus the single currency

FTSE-100: 0.15%
Dax-30: 0.58%
Cac-40: 0.42%
FTSE Mibtel 30: 0.43%
Ibex 35: 0.16%
Stoxx 600: 0.03%

European equities are continuing to trade slightly higher despite the release of weaker than expected Eurozone and Italian industrial production figures earlier on and ahead of several policy speeches from different members of the US Federal Reserve, including the President Ben Bernanke himself, tonight.

That comes after two members of the US Fed expressed unease with the current policy settings last week.

Acting as a backdrop, most market commentary is calling attention to remarks out from the chief of the Chicago Federal Reserve, Charles Evans, overnight, to the effect that markets can rest assured that the central bank will maintain its expansionary policies until its main goals are met.

Worth mentioning, industrial production in the Eurozone contracted by 3.7% year-on-year in November, the largest contraction since November 2009, with widespread weakness by sectors but while at the same time being concentrated in periphery countries. Production from the capital goods sector rose by 0.7% versus the prior month, albeit after the previous two months' sharp drops.

The Organisation for Economic Cooperation and Development's (OECD) composite leading indicator for the Eurozone, during the month of November, rose to 99.5 points from 99.4 in the previous month, and points to growth stabilising.

Acting as a backdrop, the Yen hit a 20 month low versus the single currency today.

Spanish house transactions fall

The German wholesale price index for the month of December remained flat versus the previous month (Consensus: 0.1%). 

Eurozone industrial production decreased by 0.3% month-on-month in November (Consensus: 0.2%), weighed down by very large falls in the periphery countries, such as Ireland, Italy and Spain. 

Italy's industrial production dropped by an unexpected 1.0% month-on-month in November (Consensus: 0%). 

Spanish house transactions fell at a 6.1% year-on-year pace in November, versus a rise of 12.8% in the previous month.

Euro/dollar still trading higher

The euro/dollar is now up by 0.20% to the 1.3369 dollar level. 

Front month Brent crude futures are now rising by 0,557 dollars to the 111.26 mark on the ICE.

US Market Report

US open: Apple weighs on Wall Street

- Apple down 3 per cent on reports of lower component orders
- Gartner says global PC shipments fell 4.9 per cent in Q4
- Obama to speak at 16:30

Dow Jones Industrials: 0.02%
Nasdaq Comp.: -0.40%
S&P 500: -0.21%

The major US equity benchmarks are now trading mixed following a lower open and on a day bereft of economic data or first tier company earnings announcements.

Filling the vacuum is Apple. Its shares dropped by almost 5% after the Nikkei newswire reported that the company is reducing its production plans following lower than expected sales of its iPhones.

For its part The Wall Street Journal cited two unnamed sources according to which the company has lowered its first quarter orders for iPhone screens by almost half.

Some market commentary is also calling attention to the potential impact which new open source operating systems could end up having on incumbents such as Apple.

Billionaire investor Charles Icahn has acquired a stake in offshore rig contractor Transocean.

Hewlett Packard is higher after JP Morgan upgraded its views on the company's shares to neutral from underperform.

IBM has been downgraded by JP Morgan to neutral from overweight.

Ten-year US Treasury yields are now falling by 2 basis points, to the 1.84% mark.

Front month West Texas crude futures are now down by 0.12% to the 93.75 dollar 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.