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
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Daily Market Commentary: (Evening 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.
"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.
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 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.
- 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.
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.
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.
- 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).
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%.
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