Daily FX Commentary: (Morning Report)
EUR/USD
Corrective easing off fresh high at 1.3477, found support at 1.3425 today, also Fib 23.6% of 1.3264/1.3477 upleg, Ahead of fresh strength that retested 1.3477 barrier. Lack of momentum is keeps 1.3500, 50% of 1.4938/1.2042 intact for now, However, overall positive tone keeps the upside favored. Break higher to face 1.3525/32, weekly 200 day MA / Fib 76.4% expansion of the wave c that commenced from 1.2660, 11 Nov 2012 low. However, 4h RSI at 70 and Stochastic reversing see risk of further congestion under 1.3500 barrier. The downside is for now protected at 1.3425/00, with any dip below here, to delay bulls and extend corrective / consolidative phase.
Res: 1.3477, 1.3485, 1.3490, 1.3525
Sup: 1.3450, 1.3425, 1.3400, 1.3370
GBP/USD
The pair extended weakness to our initial target at 1.5700, as overall negative structure and day’s gap-lower opening, keep the downside in focus. Today’s steady descend, interrupted by brief corrective bounces, sees risk of penetration through 1.5700, also Fib 61.8% of 1.5267/1.6380, to trigger fresh extension towards 1.5634 and 1.5600. Initial resistance lies at 1.5745, last Friday’s low and keeps the upside capped for now, while any rally above here, would required clearance of 1.5800/23, to ease immediate bear-pressure.
Res: 1.5745, 1.5784, 1.5800, 1.5823
Sup: 1.5700, 1.5660, 1.5634, 1.5600
USD/JPY
Near-term price action moves in a consolidative mode, holding between 91.24, today’s fresh high and 90.50, 55 day EMA, for now. With hourly studies attempting at centrelines and 4h indicators emerging from overbought territory, further corrective action is not ruled out. Further easing would face 90.23/00, previous high / 20 day EMA and Fib 38.2% of 88.05/91.24 upleg, ahead of 89.65, 50% retracement / ascending 55 day EMA, where any stronger pullbacks should find footstep. Overall bulls remain in play despite extended daily conditions, however, RSI / MACD bearish divergence, would be initial signal for stronger corrective action that requires confirmation on a break below 88.00 base.
Res: 91.08, 91.24, 91.50, 92.00
Sup: 90.55, 90.23, 90.00, 89.65
USD/CHF
Positive tone off 0.9220, last Friday’s fresh low is fading, as the price action remains capped under psychological / daily Ichimoku cloud top 0.9300 barrier, where 20/55 day EMA’s limit near-term recovery. With 4h indicators still in the negative territory and hourlies hovering around the midlines, risk of stall becomes more evident. Failure to clear 0.9300/23 resistance zone that is required to signal basing attempt and shift near-term focus higher, would risk return to 0.9220 and possible further retracement of 0.9109/0.9387 rally.
Res: 0.9291, 0.9300, 0.9323, 0.9345
Sup: 0.9255, 0.9220, 0.9200, 0.9175
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Daily Market Commentary: (Evening Report)
London close: FTSE 100 edges closer to 6,300 after recent strong run
Market Movers
FTSE 100 6,294.41 +0.16%
FTSE 250 13,132.49 -0.03%
Improving newsflow in China and some better-than-expected economic data from the US helped the FTSE 100 come close to the 6,300 barrier on Monday, a level not seen since mid-2008.
"What seems to be an unrelenting grind higher has continued today, with fund manager's chatter of the big rotation being matched by positive data points and the market's appetite for risk," said David White, a financial trader from Spreadex.
The impressive 6.8% rise for the Footsie so far this month puts it on course to record its best January in 13 years, according to the Financial Times. However, there are some concerns that this rally may be short-lived, with the index's relative strength indicator already at technically 'overbought' levels.
Nevertheless, markets were able to hold on to recent gains with confidence about China's industrial profit potential providing some support. Stephen Green, the head of research for Greater China at Standard Chartered, said that Chinese industrial profits should rise by 30% in 2013 on average as a result of investment in infrastructure and real estate, improvements in export demand and looser monetary conditions. Meanwhile, economist Lu Ting from Bank of America Merrill Lynch expects profits to grow by 25% in the first half of this year.
Meanwhile, US durable goods orders increased by 4.6% in December, above the 0.7% gain the month before and well ahead of the 2.0% consensus forecast.
Markets rallied on the back of the release, as traders shrugged off disappointing US pending home sales figures this afternoon. Earnings figures from Wall Street heavyweight Caterpillar also came in below estimates, though a bullish outlook for the second half saw the shares edge higher after the US opening bell.
"What seems to be an unrelenting grind higher has continued today, with fund manager's chatter of the big rotation being matched by positive data points and the market's appetite for risk," said David White, a financial trader from Spreadex.
The impressive 6.8% rise for the Footsie so far this month puts it on course to record its best January in 13 years, according to the Financial Times. However, there are some concerns that this rally may be short-lived, with the index's relative strength indicator already at technically 'overbought' levels.
Nevertheless, markets were able to hold on to recent gains with confidence about China's industrial profit potential providing some support. Stephen Green, the head of research for Greater China at Standard Chartered, said that Chinese industrial profits should rise by 30% in 2013 on average as a result of investment in infrastructure and real estate, improvements in export demand and looser monetary conditions. Meanwhile, economist Lu Ting from Bank of America Merrill Lynch expects profits to grow by 25% in the first half of this year.
Meanwhile, US durable goods orders increased by 4.6% in December, above the 0.7% gain the month before and well ahead of the 2.0% consensus forecast.
Markets rallied on the back of the release, as traders shrugged off disappointing US pending home sales figures this afternoon. Earnings figures from Wall Street heavyweight Caterpillar also came in below estimates, though a bullish outlook for the second half saw the shares edge higher after the US opening bell.
Europe Market Report
Europe midday: Nomura goes neutral on equities, although still bullish
- Nomura goes tactical neutral on equities
- Eurozone money supply data distorted by Spanish figures
- Italian long-term bonds slightly lower after debt auctions
- Deposits at Greek Banks rose by 4 per cent in December
FTSE-100: 0.01%
Dax-30: -0.11%
Cac-40: 0.02%
FTSE Mibtel 30: 0.45%
Ibex 35: -0.13%
Stoxx 600: -0.07%
The main European equity indices were still trading slightly lower at the midday point of the session despite the latest gains seen in equities on Wall Street and in Asia. That ahead of this afternoon´s economic data releases Stateside.
Of interest, inflows into equity funds – mostly into emerging markets, admittedly - sustained a seventh consecutive rise ahead of bond oriented ones last week although the rate of flows moderated, according to the latest data from EPFR.
The currently high levels of 'bullishness' reached by equity investors has prompted Nomura´s Global Quantitative Strategy Team to issue a short-term tactical neutral position on the market, although they remain fundamentally bullish on equities.
Just released Eurozone money supply data revealed an unexpected contraction, but they appear to have been distorted by the financial system restructuring in Spain.
- Eurozone money supply data distorted by Spanish figures
- Italian long-term bonds slightly lower after debt auctions
- Deposits at Greek Banks rose by 4 per cent in December
FTSE-100: 0.01%
Dax-30: -0.11%
Cac-40: 0.02%
FTSE Mibtel 30: 0.45%
Ibex 35: -0.13%
Stoxx 600: -0.07%
The main European equity indices were still trading slightly lower at the midday point of the session despite the latest gains seen in equities on Wall Street and in Asia. That ahead of this afternoon´s economic data releases Stateside.
Of interest, inflows into equity funds – mostly into emerging markets, admittedly - sustained a seventh consecutive rise ahead of bond oriented ones last week although the rate of flows moderated, according to the latest data from EPFR.
The currently high levels of 'bullishness' reached by equity investors has prompted Nomura´s Global Quantitative Strategy Team to issue a short-term tactical neutral position on the market, although they remain fundamentally bullish on equities.
Just released Eurozone money supply data revealed an unexpected contraction, but they appear to have been distorted by the financial system restructuring in Spain.
The growth rate of Eurozone money supply, as measured by its three month moving average, accelerated to 3.7% from 3.4% a year ago (Consensus: 3.8%). However, the monthly data for December actually slowed notably, falling to a 3.3% year-on-year pace after 3.8% in the previous month.
However, the ECB notes that the December 2012 figures were partly affected by the Spanish banking sector restructuring that that had a sizeable downward impact even on loan flows corrected for sales and securitisation, Barclays Research points out.
ISAE´s Italian business confidence index for the month of January slipped to 84.6 from 85.7 a month before (Consensus: 86.1).
Other asset classes lower
The euro/dollar is now falling by 0.12% to the 1.3440 dollar mark.
Front month Brent crude futures are now lower by 0.053% to the 113.22 dollar mark on the ICE.
US Market Report
US open: Yield curve steepening continues
- Durable Goods Orders Ahead of forecasts
- Pending home sales figures misleading, NAR says
- Interest rate curve continues steepening, 10 year above 2 per cent
Dow Jones Industrials: -0.02%
Nasdaq Comp.: 0.33%
S&P 500: -0.16%
US equity benchmarks are now trading in a 'mixed' fashion. That follows the release of what at first glance might be taken – erroneously apparently – for similarly mixed economic indicators.
Also worth highlighting are the positive comments from ratings agency Fitch as regards the very short-term outlook for the United States´ AAA credit rating. The temporary suspension of the US federal government's debt limit removes the near-term risk to the AAA rating, Fitch said.
Of interest as well, the Financial Times reported today on how shale 'boom' is firing up opposition from environmental groups, but also investors, with US gas flaring nowadays clearly visible from outer space and with a luminosity rivalling that of cities such as Chicago.
Earth moving machinery giant Caterpillar said Monday it expects 2013 earnings per share of between $7 to $9, compared to the consensus estimate of $8.54 a share.
Goldman Sachs has lowered its recommendation on AK Steel to 'sell' from `neutral'.
Goldman Sachs is expected to raise $1bn from the sale of a stake in Chinese lender ICBC.
- Pending home sales figures misleading, NAR says
- Interest rate curve continues steepening, 10 year above 2 per cent
Dow Jones Industrials: -0.02%
Nasdaq Comp.: 0.33%
S&P 500: -0.16%
US equity benchmarks are now trading in a 'mixed' fashion. That follows the release of what at first glance might be taken – erroneously apparently – for similarly mixed economic indicators.
Also worth highlighting are the positive comments from ratings agency Fitch as regards the very short-term outlook for the United States´ AAA credit rating. The temporary suspension of the US federal government's debt limit removes the near-term risk to the AAA rating, Fitch said.
Of interest as well, the Financial Times reported today on how shale 'boom' is firing up opposition from environmental groups, but also investors, with US gas flaring nowadays clearly visible from outer space and with a luminosity rivalling that of cities such as Chicago.
Earth moving machinery giant Caterpillar said Monday it expects 2013 earnings per share of between $7 to $9, compared to the consensus estimate of $8.54 a share.
Goldman Sachs has lowered its recommendation on AK Steel to 'sell' from `neutral'.
Goldman Sachs is expected to raise $1bn from the sale of a stake in Chinese lender ICBC.
Durable Goods Orders ahead of expectations
US durable goods orders spiked higher in December, rising at a 4.6% month-on-month clip, versus the 2.0% increase which was forecast.
The critical 'core' series for durable goods, which excludes both Defense and civil aircraft, came in comfortably ahead of economists´ expectations, when revisions to November´s data are taken into account (although they are weak when compared with levels from a year ago).
US pending home sales fell by 4.3 per cent month-on-month in December, coming in far below the 0.0 per cent reading expected.
Lawrence Yun, the National Association of Realtors´s (NAR) Chief Economist, said there is an uneven uptrend. "The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis," he said. "Buyer interest remains solid, as evidenced by a separate survey which shows that buyer foot traffic is easily outpacing seller traffic," Yun added.
"The broad trend in pending home sales mirrors that of the broader housing market and does not alter our view that the recovery in US housing has sustained momentum," commented analysts at Barclays Research chipped in.
The critical 'core' series for durable goods, which excludes both Defense and civil aircraft, came in comfortably ahead of economists´ expectations, when revisions to November´s data are taken into account (although they are weak when compared with levels from a year ago).
US pending home sales fell by 4.3 per cent month-on-month in December, coming in far below the 0.0 per cent reading expected.
Lawrence Yun, the National Association of Realtors´s (NAR) Chief Economist, said there is an uneven uptrend. "The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis," he said. "Buyer interest remains solid, as evidenced by a separate survey which shows that buyer foot traffic is easily outpacing seller traffic," Yun added.
"The broad trend in pending home sales mirrors that of the broader housing market and does not alter our view that the recovery in US housing has sustained momentum," commented analysts at Barclays Research chipped in.
Yield curve continues 'bull steepening'
10 year US Treasury yields are now rising by 4 basis points, to the 1.97% mark.
Front month West Texas crude futures were moving higher by 0.27% to the 96,14 dollar per barrel mark on the NYMEX.
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