{"id":16886,"date":"2010-12-15T08:44:07","date_gmt":"2010-12-15T13:44:07","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=16886"},"modified":"2010-12-15T08:44:07","modified_gmt":"2010-12-15T13:44:07","slug":"forex-daily-market-commentary-176","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/12\/15\/forex-daily-market-commentary-176\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

By GCI Forex Research<\/strong><\/p>\n

Fundamental Outlook at \t\t\t0800 GMT (EDT + 0400)<\/strong><\/p>\n

USD<\/span><\/em><\/strong><\/p>\n

Risk traded on a generally soft tone overnight as a combination of \t\t\tregional concerns and higher US yields post-FOMC – the 10y yield hit \t\t\t3.5% for the first time in 7 months – weighed on sentiment. In \t\t\taddition, Moody’s put Spain’s sovereign ratings on review for a \t\t\tpossible downgrade. The FOMC itself did not surprise much, the \t\t\tstatement acknowledged economic recovery is continuing, comparing \t\t\twith the November statement which said “the pace of the recovery in \t\t\toutput and employment continues to be slow.” However, the FOMC \t\t\temphasized the lack of progress toward the dual mandate saying, \t\t\t“Currently the unemployment rate is elevated and measures of \t\t\tunderlying inflation are somewhat low.” Post-the FOMC statement, the \t\t\tdollar was supported by a rise in the US 10y yield, which rose on \t\t\tdisappointment that the FOMC did not accelerate or front-load its \t\t\tTreasury purchases as hoped for by some in the market. There remains \t\t\tplenty of event risk for both European and US markets ahead today, \t\t\tgiven the crowded data and political calendar and we expect some \t\t\tdegree of profit-taking on short-dollar positions in a \t\t\tless-favourable risk environment.
\n EUR<\/span><\/em><\/strong><\/p>\n

Moody’s has put Spain’s Aa1 ratings on review for possible \t\t\tdowngrade. The news added to pressure on the euro, which was already \t\t\ttrading on a softer tone post-FOMC. The agency cited concerns over \t\t\tthe country’s funding needs, debt levels and control over public \t\t\tfinances. The Eurozone will remain the key focus in the short term \t\t\tas Ireland’s parliament will also be voting on the IMF package \t\t\ttoday.
\nThe ZEW survey was mixed with the current situation number lower in \t\t\tGermany and the economic sentiment surveys higher across both \t\t\tGermany and the Eurozone. The German reading was slightly \t\t\tdisappointing but PMIs are still due this week, which should give an \t\t\tindication of where GDP is headed.
\nItalian Premier Berlusconi and his government survived no-confidence \t\t\tvotes in the upper and lower houses. The winning margin in the lower \t\t\thouse was 314 in favor versus 311 opposed. While the victory ensures \t\t\tcontinuity in office for Berlusconi, the thin margin of victory \t\t\tsuggests that there could be further political uncertainty. And this \t\t\tcould raise concerns on his political ability to enforce austerity \t\t\tmeasures, which could weigh on the euro in 2011.
\nS&P revised its outlook on Belgium from stable to negative, citing \t\t\t“prolonged political uncertainty\u201d.
\n JPY<\/span><\/em><\/strong><\/p>\n

The Tankan index was slightly better than expected with the larger \t\t\tmanufacturers’ diffusion index coming in at 5 (cons. 3). \t\t\tNevertheless this was the first quarterly decline in 7 quarters and \t\t\tstill shows Japan’s recovery is fragile. Asian stocks are generally \t\t\tsoft as concerns over regional growth momentum remain in place.
\nThe BoJ will begin buying ETFs and Japanese REITs as soon as today \t\t\tand the bank will post transaction amounts online on the day the \t\t\tpurchases are done. This follows BoJ purchases of government and \t\t\tcorporate debt. But BoJ Governor Shirakawa again raised the \t\t\tpossibility of further JGB purchases if the economy slows down \t\t\tfaster than expected.
\n GBP<\/span><\/em><\/strong><\/p>\n

CPI numbers were higher than consensus at 3.3% y\/y while the RPI \t\t\tnumbers also beat expectations at 4.5%. Our UK economist notes that \t\t\tthe main drivers were food and clothing, which posted the highest \t\t\tinflation rate since 1997. Sterling failed to react positively to \t\t\tthe news because stagflation fears seem to be surpassing the reduced \t\t\tprospects of further QE. But the hawks, such as MPC member Sentance, \t\t\tcontinue to call for monetary policy tightening.<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong>
\nEURUSD 1.3305\/1.3292 support.
\nEURUSD NEUTRAL Pullback from 1.3499 has support at 1.3305\/1.3292.
\nUSDJPY BULLISH Focus is on 84.35\/41 with little resistance above \t\t\tthis till 85.40. Support at 82.84.
\nGBPUSD NEUTRAL Initial resistance at 1.5965, while support lies at \t\t\t1.5720.
\nUSDCHF BEARISH Violation of 0.9548 would expose 0.9463 key low. \t\t\tResistance at 0.9726 previous low.
\nAUDUSD BULLISH Next resistance above 1.0031 lies at 1.0091. Support \t\t\tat 0.9833.
\nUSDCAD BEARISH Focus on 0.9978\/31 support zone; initial resistance \t\t\tdefined at 1.0141.
\nEURCHF BEARISH Momentum is negative; the cross eyes 1.2766. \t\t\tResistance at 1.3004.
\nEURGBP NEUTRAL Recovery eyes 0.8528, with initial support defined at \t\t\t0.8433.
\nEURJPY NEUTRAL 113.67 and 110.49 mark the near-term directional \t\t\ttriggers.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/p>\n

GCI Financial Ltd (\u201dGCI\u201d) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (\u201dForex\u201d) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (\u201dCFDs\u201d) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.<\/p>\n

DISCLAIMER: GCI\u2019s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n","protected":false},"excerpt":{"rendered":"

Risk traded on a generally soft tone overnight as a combination of regional concerns and higher US yields post-FOMC – the 10y yield hit 3.5% for the first time in 7 months – weighed on sentiment. In addition, Moody’s put Spain’s sovereign ratings on review for a possible downgrade.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-16886","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/16886","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=16886"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/16886\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=16886"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=16886"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=16886"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}