Strategy ReportsUpdated on: 08-02-2010 DAILY MARKET REVIEW
Asia-Pacific stocks had a rough start to the week on Monday, except in Australia, where equities managed to rise by 0.2% month the day.
Elsewhere, declines were led by a 1.1% pullback in the Nikkei 225, followed by a 0.6% slide in the Hang Seng and a 0.1% contraction in the Shanghai Composite.
The moves come after Bank of Japan Deputy Governor Hirohide Yamaguchi told Parliament that Japanese “growth may stall” temporarily beginning in April, but will pick up mid-year. He also added that emerging economies are growing more quickly than expected.
Meanwhile, Chinese Vice-Commerce Minister Zhong told an audience in Birmingham, UK, that trade tensions between China and the U.S. are “escalating”. He added that although the yuan faces “great pressure” to appreciate, a stable Chinese currency is good for the international community.
Over in Europe, the picture also looked downbeat despite a barrage of commentary from European officials over this weekend’s G7 meetings, expressing ongoing optimism over Greece’s ability to repair its balance sheet.
Meanwhile, in an interview with Wiener Zeitung on Monday, European Central Banker Ewald Nowotny said that European bonds are experiencing a “speculative exaggeration” of risks.
European equity futures are under pressure on Monday, ahead of a light day for economic data, and after U.S. Treasury Secretary Timothy Geithner told ABC News that the U.S. will “never” lose its AAA-rating.
Dow futures are down 12.0 points to 9929.0 and S&P 500 futures down 1.25 points to 1058.50.
The U.S. dollar remains broadly stronger on Monday on the back of the continuing risk aversion. Euro/USD is down 0.25 cents to 1.3653, USD/CAD down 0.11 cents to 1.0705, USD/Yen down 0.06 points to 89.19, GBP/USD down 0.86 cents to 1.5555, and AUD/USD down 0.23 cents to 0.8661.
Commodities are surprisingly stronger despite the strength in the USD with WTI crude up $0.06 to $71.25 per barrel and spot gold up $0.13 to $1066.43.
DAILY MARKET MORNING REVIEW
CURRENCIES
USD/JPY: On Friday, USD/JPY traded in a daily range of 88.83 to 89.88. So far today, the pair traded in a range of 89.15 to 89.57. Short term support lies at 88.97 followed by 88.58. Resistance lies at 90.55 followed by 90.12 and 91.08.
EUR/USD: On Friday, EUR/USD traded in a range of 1.3586 to 1.3746, and has traded in a range of 1.3622 to 1.3717 so far today. Support lies at 1.3619 followed by 1.3586. Resistance comes in at 1.3739 followed by 1.3755 and 1.40.
GBP/USD: Friday, GBP/USD was the main outperformer after trading between 1.5559 and 1.5776. Today it has trade the pair has traded in a range of 1.5536 to 1.5659 today. Support lies at 1.5517 and 1.5450. There is resistance at 1.5621, and 1.5659.
EUR/GBP: On Friday, the pair traded in a range of 0.8687 to 0.8753, and the pair has traded in a range of 0.87336 to 0.87988 today. Short term support is at 0.8710 and 0.8687 followed by 0.8603. Resistance is at 0.8797.
AUD/USD: On Friday, AUD/USD fared poorly early but rebounded in the final hours of trading, trading in a range of 0.8579 to 0.8718. The pair has traded in a range of 0.8643 to 0.8724 today. Short term support is at 0.8635; the 200-day moving average at 0.8585 today is critical. Resistance is found at 0.8727, 0.8811, and 0.8919.
NZD/USD: On Friday, NZD/USD came under pressure before rebounding; the pair traded in a range of 0.6808 to 0.6933. The pair has it has traded in a range o f0.6858 to 0.6922 today. Support lies at 0.6908 with resistance at 0.7170 and then nothing until 0.7223.
USD/CAD: USD/CAD touched at three-month high on Friday as it traded in a range of 1.0645 to 1.0781. The pair has traded in a range of 1.0657 to 1.0730 today. Support lies at 1.0645 and 1.0613. Resistance is at 1.0750 and 1.0781.
EUR/CHF: On Friday as the pair traded in a huge range of 1.4558 to 1.4831 as the Swiss National Bank intervened in the market to defend the roughly 1.46 level. So far today the pair has ranged between 1.4658 and 1.4693. Support lies at 1.4558 with resistance at 1.4830.
COMMODITIES
Gold: On Friday, gold traded in a range of $1044 to $1068 and traced out a bullish hammer reversal pattern. Since markets opened in Asia on Monday EST, the commodity has traded in a range of $1065 to $1074. There is support at $1058 and $1044 followed by $1023. Resistance located at $1082.
Silver: On Friday, silver traded in the $14.64 to $15.37 range, and today has traded from $15.025 to $15.3112. Support rests at $15.03 and $14.64. Resistance lies at $15.37, $15.47, and $15.66.
Crude: On Friday, Nymex crude oil futures traded in a range of $69.50 to $73.94, and today they have traded in a range of $71.05 to $72.39 so far today. Short term support lies at $70.72 and $69.50 with resistance at $73.94.
HEADLINE Monday's economic data docket starts off light with Canadian housing starts the only data point of the day.
At 8:15 a.m. EST, markets will receive Canadian housing starts for January, which are projected to rise to 179.0k from the prior 174.5k level.
As usual, a better than expected result should in theory put upward pressure on the Canadian dollar (and vice-versa), however as a lower tier indicator, any reaction is likely to be relatively muted.
INTEREST RATES
ADDITIONAL RESOURCES
• To learn more about upcoming events go to Financial Calendar
European session 8 am - 5 pm GMT
Have a great trading day!
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