Daily FX Commentary: (Morning Report)
EUR/USD
The euro remains at the back foot after repeated attempts at 1.3400 failed and subsequent easing broke below important 1.3300 support, previous resistance and 4h 20 day EMA. This opens prospect for further correction, as hourly structure is negative and 4h indicators continue to slide. The reversal so far retraced 38.2% of 1.3037/1.3401 upleg, bringing immediate risk at 1.3247 higher platform, reinforced by 4h 55 day EMA, loss of which would prompt extension towards psychological 1.3200 support. Hourly 20/55 EMA’s bearish crossover at 1.3325, pressures the price and offers solid resistance, along with 1.3335, previous range floor.
Res: 1.3300, 1.3325, 1.3335, 1.3356
Sup: 1.3262, 1.3247, 1.3220, 1.3200
GBP/USD
Cable lost ground again, following repeated attempt at 1.6100 barrier failure, to return back to 1.6030 support and risk test of more significant 1.6000/1.5990 near-term base, reinforced by daily Ichimoku cloud base.. Studies on 4h chart turned negative and see potential for further weakness, as the price holds below 20/55 day EMA’s, with break below 1.5990 to expose 1.5960, Fib 76.4% of 1.5826/1.6380 and 1.5900, 200 day MA. Only lift above 1.6100 would provide near-term relief.
Res: 1.6044, 1.6079, 1.6100, 1.6121
Sup: 1.6006, 1.5991, 1.5960, 1.5900
USD/JPY
The pair continues to move lower for the third day, on corrective pullback from 89.66. Loss of strong support at 88.40 is seen as a trigger, as the price dents next one at 88.00, retracing 61.8% of 86.81/89.66 upleg at 87.90. Dominating negative tone on hourly chart and 4h studies breaking into negative territory, keep the downside favored, with daily indicators starting to point lower, of overbought zone that additionally supports near-term bears. Holding below 88.00 handle, would likely open way towards 87.00 and more significant 86.81, 09 Jan low. Any bounce higher is seen capped at 89.00 zone for now.
Res: 88.28, 88.74, 88.90, 89.08
Sup: 87.90, 87.48, 87.00, 86.81
USD/CHF
The pair extends recovery rally, clearing key near-term barrier at 0.9300, 04 Jan high that confirm near-term base at 0.9100 and opens way for stronger gains. With gains reaching 0.9330 so far, immediate focus lies at 0.9345, Fib 61.8% of 0.9511/0.9077 descend and 0.9381, 07 Dec 2012 high, to possibly look for test of psychological 0.9400 barrier. Overbought near-term studies, however, see pause in recent gains, with corrective easing facing support at 0.9272 and dips expected to hold at/above 0.9250, Fib 38.2% / 55 day EMA, to keep the bullish bias.
Res: 0.9330, 0.9345, 0.9381, 0.9400
Sup: 0.9293, 0.9372, 0.9246, 0.9220
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Daily Market Commentary: (Evening Report)
Markets finish lower, but TUI Travel surges late on
The FTSE 100 ended moderately lower on Wednesday as markets trimmed losses by the close, though the mood was still cautious after both the World Bank and Germany government downgraded growth forecasts.
Concerns about ongoing conflicts in North Africa were also likely to be on investors’ minds today. As the French military intervention in Mali intensifies, there was news of an Islamist militant attack at a BPgas field in neighbouring Algeria which has resulted in a number of deaths and a hostage situation.
Markets are becoming increasingly concerned about the wider implications that these conflicts could have, as a number of neighbouring countries are large suppliers of key petrochemicals and minerals.
The World Bank has cut its global growth forecast for 2013 due to the difficult recovery that economies worldwide are currently undergoing despite the improvement in financial markets. It now expects growth of 2.4% this year, down from its prior forecast of 3%.
Meanwhile, Germany expects its economy to grow by a mere 0.4% this year, well below the 1% growth forecast in October and the 0.7% expansion in 2012.
“Given the news flow today it’s hard to fathom why markets aren’t lower than they are, given the continued stream of bad news from the retail sector,” said market analyst Michael Hewson from CMC Markets.
Nevertheless, markets picked up from their intraday lows in afternoon trade after US banking heavyweights JPMorgan Chase and Goldman Sachs beat consensus estimates with fourth-quarter profits. The latter reported earnings per share of $5.60 for the last three months of 2012, smashing the $3.64 consensus estimate. This was Goldman’s most profitable quarter since the first three months of 2010.
"We’re used to seeing Goldman Sachs beating earnings forecasts, but today’s results caught everyone off-guard," said market analyst Craig Erlam from Alpari.
Concerns about ongoing conflicts in North Africa were also likely to be on investors’ minds today. As the French military intervention in Mali intensifies, there was news of an Islamist militant attack at a BPgas field in neighbouring Algeria which has resulted in a number of deaths and a hostage situation.
Markets are becoming increasingly concerned about the wider implications that these conflicts could have, as a number of neighbouring countries are large suppliers of key petrochemicals and minerals.
The World Bank has cut its global growth forecast for 2013 due to the difficult recovery that economies worldwide are currently undergoing despite the improvement in financial markets. It now expects growth of 2.4% this year, down from its prior forecast of 3%.
Meanwhile, Germany expects its economy to grow by a mere 0.4% this year, well below the 1% growth forecast in October and the 0.7% expansion in 2012.
“Given the news flow today it’s hard to fathom why markets aren’t lower than they are, given the continued stream of bad news from the retail sector,” said market analyst Michael Hewson from CMC Markets.
Nevertheless, markets picked up from their intraday lows in afternoon trade after US banking heavyweights JPMorgan Chase and Goldman Sachs beat consensus estimates with fourth-quarter profits. The latter reported earnings per share of $5.60 for the last three months of 2012, smashing the $3.64 consensus estimate. This was Goldman’s most profitable quarter since the first three months of 2010.
"We’re used to seeing Goldman Sachs beating earnings forecasts, but today’s results caught everyone off-guard," said market analyst Craig Erlam from Alpari.
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European Markets Finished Mostly Higher On Positive U.S. Earnings
The majority of the European markets ended Wednesday's trading session in positive territory. Several better than expected earnings reports from U.S. banks provided a boost to investor sentiment. Economic data from the U.S. was mixed and investors are awaiting a slew of Chinese economic reports. Automakers were weak after the decline in new auto sales and banks also turned in a negative performance.
The euro's exchange rate is "alarmingly high" and is likely to affect the Eurozone economy which is showing signs of stability, Eurogroup President Jean-Claude Juncker said Tuesday.
While speaking at the annual gathering of business leaders in Luxemberg, Junker warned that an overvalued euro is likely to threaten the economy that is reemerging from financial crisis.
Junker's comments came just few days after European Central Bank President Mario Draghi'sstatement that the euro area may see a gradual recovery later in the year as there are some modest signs of stabilization.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.05 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.01 percent.
The DAX of Germany climbed by 0.20 percent and the CAC 40 of France advanced by 0.30 percent. The SMI of Switzerland gained 0.45 percent, but the FTSE 100 of the U.K. fell by 0.22 percent.
In Frankfurt, Metro dipped by 0.17 percent. The department store operator reported a marginal rise in fourth-quarter sales despite challenging market conditions, especially in Southern Europe. The company also reaffirmed its full-year profit forecast.
Deutsche Wohnen increased by 0.15 percent, after it resolved on a capital increase against cash contributions and under exclusion of shareholders' subscription rights.
Automakers were weak after data released by the European Automobile Manufacturers' Association showed Europe's new car sales declined sharply in December, continuing a downward trend started fifteen months ago. Sales plunged 16.3 percent from a year ago, while demand for new cars reached the lowest level recorded since 1995. Daimler declined by 0.16 percent and Porsche decreased by 0.68 percent. BMW finished up by 0.80 percent and Volkswagen gained 0.80 percent.
The number of people worked in local manufacturing units in Germany rose by about 79,000 or 1.5 percent in November from a year ago, Destatis reported Wednesday. Around 5.2 million people were employed in manufacturing.
Germany's general government debt increased from last year in the third quarter, data released by the Federal Statistical Office showed Wednesday. Total federal debt, including those of governments, states, and municipalities/associations, increased 1.6 percent from last year to EUR 2064.1 billion at the end to the third quarter.
Consumer prices in the U.S. came in unchanged in the month of December, according to a report released by the Labor Department on Wednesday, with a sharp drop in gasoline prices offsetting higher prices for food and shelter.
The Labor Department said its consumer price index was unchanged in December after falling by 0.3 percent in November. The unchanged reading matched economist estimates.
Industrial production in the U.S. increased by slightly more than expected in the month of December, the Federal Reserve revealed in a report on Wednesday, with increased manufacturing and mining output more than offsetting a sharp drop in utilities output.
The report showed that industrial production increased by 0.3 percent in December following a revised 1.0 percent jump in November. Economists had expected production to edge up by 0.2 percent compared to the 1.1 percent growth originally reported for the previous month.
Following eight consecutive monthly gains, homebuilder confidence in the U.S. held steady in January, according to a report released by the National Association of Home Builders on Wednesday. The report showed that the NAHB/Wells Fargo Housing Market Index came in at 47 in January, unchanged from December. Economist had expected the index to inch up to 48.
US Market Report
After moving mostly lower in early trading on Wednesday, stocks have turned mixed over the course of the trading day as traders digest a slew of economic data as well as the release of earnings news from some big-name companies.
The major averages are currently turning in a mixed performance, with the Nasdaq posting a modest gain. While the Nasdaq is up 6.50 points or 0.2 percent at 3,117.28, the Dow is down 26.24 points or 0.2 percent at 13,508.65 and the S&P 500 is down 0.47 points or less than a tenth of a percent at 1,471.87.
The early weakness on Wall Street was partly due to renewed concerns about the outlook for the global economy after the World Bank cut its forecast for global economic growth in 2013.
The World Bank said it now expects the global economy to expand by 2.4 percent in 2013 compared to its June forecast for 3 percent growth. Estimates suggest the global economy grew 2.3 in 2012.
However, selling pressure was somewhat subdued following the release of a report from the Federal Reserve showing a slightly bigger than expected increase in U.S. industrial production in the month of December.
The report showed that industrial production increased by 0.3 percent in December following a revised 1.0 percent jump in November. Economists had expected production to edge up by 0.2 percent.
The increase in production came as increased manufacturing and mining output more than offset a sharp drop in utilities output.
A separate report from the National Association of Home Builders showed that homebuilder confidence held steady at a six-year high in January, while the Labor Department said consumer prices were unchanged in December.
Meanwhile, traders are also digesting quarterly results from JP Morgan (JPM) and Goldman Sachs (GS), with both financial giants reporting better than expected earnings.
Shares of Goldman Sachs have risen by 2.8 percent on the news, reaching their best intraday level in well over a year. JP Morgan initially moved lower but has climbed back near the unchanged line since then.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2.6 percent, while China's Shanghai Composite Index fell by 0.7 percent.
In the bond market, treasuries have pulled back near the unchanged line after moving modestly higher in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.825 percent.
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