Risk Rally Halted after Italy Auction


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Risk Rally Halted after Italy Auction, JPMorgan Chase

Risk rally takes a halt in early US session as earning results from JPMorgan Chase dragged US stock futures down. While the report was basically inline with analyst estimates, it did show trading and corporate deal-making business depressed by European debt crisis. Investors are also cautious ahead of the earning reports next week, which include Wells Fargo, American Express, IBM and Intel. Dollar is given a mild lift by risk aversion with dollar index back above 81 level.
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Featured Technical Report

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9388; (P) 0.9467; (R1) 0.9523; More...
USD/CHF recovers mildly after hitting near term trendline support but recovery is so far weak. Pullback from 0.9594 could extend lower. Though, downside is expected to be contained well above 0.9304 support and bring another rise. Recent rally from 0.7065 is still expected to continue and above 0.9594 will target 0.9916 key resistance next.
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Special Report

Both ECB and BOE Stayed on the Sideline

At two consecutive months of rate reduction, the ECB decided to leave the main refinancing rate at 1% at the January meeting. Policymakers would like gauge the impacts of previous rate cuts and liquidity provisions on the economy. Meanwhile, President Draghi indicated the 3-year LTRO has benefited banks and supported confidence. This is by no means an end of the easing cycle. Indeed, the ECB will like lower interest rates further should economic conditions deteriorate.
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2012 Forecast: Sterling Has Potential to Weaken Against Euro

Similar to the euro, the British pound will likely weaken against the US dollar amid risk aversion in the first half of the year. Against the euro, the pound had gained for 3 consecutive years since 2009 although the magnitude has been declining. In 2011, EURGBP has been on a down trend since the EU summit as pessimism that EU finance leaders would not be able to derive effective measures to resolve the sovereign debt crisis has made sterling a safe-haven asset in the short-term. We do not expect this to continue this year as the UK has its own fiscal and economic problems to struggle. The disaster these might cause is not less than the debt problems in the17-nation region. An option to alleviate the economic problems would be monetary easing. Without the need of majority vote, the BOE may deliver more dovish stance on the monetary outlook than the ECB in 2012. This would then weaken the British pound.
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Economic Indicators Update
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GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Money Stock M2+CD Y/Y Dec 3.10% 3.00% 3.00%
09:30 GBP PPI Input M/M Dec -0.60% -0.10% 0.10% 0.30%
09:30 GBP PPI Input Y/Y Dec 8.70% 9.10% 13.40% 13.60%
09:30 GBP PPI Output M/M Dec -0.20% 0.10% 0.20%
09:30 GBP PPI Output Y/Y dec 4.80% 5.00% 5.40%
10:00 EUR Eurozone Trade Balance (EUR) Nov 6.1B 0.7B 0.3B
13:30 CAD International Merchandise Trade (CAD) Nov 1.1B -0.35B -0.89B
13:30 USD Import Price Index M/M Dec -0.10% -0.10% 0.70%
13:30 USD Trade Balance Nov -47.8B -44.6B -43.5B
14:55 USD U. of Michigan Confidence Jan P
70.5 69.9
2012 Elliott Wave Forecast

USD index 2012 Elliott Wave Forecast

Despite falling to as low as 72.70 in H1 2011, dollar index found good support there and staged a rebound from there back to the opening level of 2011, suggesting the major downtrend is not ready to resume yet and wave IV correction is still unfolding as a complex correction. We are keeping our preferred count that a major (A)-(B)-(C) wave has commenced since 1980s with (A) wave ended at 78.19 in 1992, followed by a 3-legged wave (B) ended at 121.02 in 2001 and 5-waver wave (C) is unfolding with wave III ended at 70.70 in 2008.
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Orders and Options Watch

US Session: Orders and Options Watch

EUR: The single currency ran into heavy offers from Asian CBs at 1.2879 and dropped quite sharply in European session in part due to disappointing Italian debt auction (not too bad but not as good as Spanish auction), buy orders at 1.2820 were filled and some stops at 1.2800 were also triggered, however, mixtures of bids and stops are still noted at 1.2740-50 and further out at 1.2690-00 with sizeable stops placed below 1.2650 option barrier. On the upside, offers are now noted at 1.2820 and 1.2850 with stops building above 1.2880 and also 1.2900 (with offers ahead of both levels).
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Forex Trade Ideas

Trade Idea Update: EUR/USD – Sell at 1.2940

Although the single currency has retreated after intra-day rise to 1.2879 and the breach of the Kijun-Sen signals top is formed there, a drop below the lower Kumo (now at 1.2729) is needed to suggest the rebound from 1.2662 has ended, bring further fall to 1.2695-00 but reckon this week’s low at 1.2662 would remain intact, bring rebound later.
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Trade Idea: AUD/USD – Target met and stand aside

Although yesterday’s anticipated rise to 1.0378 (our long position entered at 1.0175 met target at 1.0375 with 200 points profit) has justified our bullishness and near term upside bias remains for test of resistance at 1.0387, a sustained breach above this level is needed to signal the rise from 0.9664 to 1.0450-55 but reckon 1.0500 would hold from here, bring retreat later.
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Candlesticks Intraday Trade Ideas Update Schedule (GMT):
1st Update: 0630 - 0700; 2nd Update: 0930 - 1000; 3rd Update: 1230 - 1300; 4th Update: 1500 - 1530
Pairs Covered: EUR/USD, USD/JPY, GBP/USD, USD/CHF
Elliott Wave Daily Trade Ideas Update Schedule (GMT):
AUD/USD, EUR/JPY: 0800 - 0830; EUR/GBP, USD/CAD: 1430 - 1500
Suggested Readings
2012 Outlook
Fundamental Highlights
Technical Highlights

Eurozone Nov nsa Trade balance +Eur 6.9bln (exp -1.5bln) vs Eur 2.3bln in 2010



Link to ForexLive

Posted:
PARIS (MNI) – The French Treasury said Friday it will tap its 3.0% July 2014 BTAN, its 2.0% July 2015 line and its 2.5% July 2016 line for a total of E6.5 billion to E8.0 billion at its regular monthly auction next Thursday at 10:00 GMT. The Treasury will also offer E1.0 billion to E1.5 [...]
Posted:
Seasonally adjusted results: November: +E6.1 billion October: +E0.5 bln (revised from +E0.3 bln) September: +E2.5 bln (revised from +E2.2 bln) August: -E1.2 bln (revised from -E1.0 bln) July: -E3.6 bln (revised from -E3.1 bln) June: -E2.7 bln (revised from -E2.3 bln) Non-seasonally adjusted results: November: +E6.9 billion October +E1.0 bln (revised from +E1.1 bln) September: [...]
Posted:
EMU DATA: November sa trade balance +E6.1bn vs October rev +E0.5bn (+E0.3) – EMU October+November avg trade balance +E3.3bn vs 3q avg -E0.8bn – EMU November nsa trade balance +E6.9bn vs November10 -E2.3bn – EMU November exports: sa +3.9% m/m, nsa +10.0% y/y – EMU November imports: sa unch m/m, nsa +4.0% y/y – EMU [...]
Posted:
October balance revised to Eur 1 bln  from  Eur 1.1 bln
Posted:
We popped up to 1.2421 yesterday afternoon as a strong bout of profit taking took the cross off earlier all time lows of 1.2300. Seems the  sellers are back in the groove this morning after the Asian market extended the rally to 1.2447,  as the pair slips back under 1.2400 again to  1.2379. There is [...]
Posted:
Ex OPEC President Chakib Khelil speaking in a Bloomberg TV  earlier this morning: A closure of the Straits of Hormuz could send oil prices to $150/200, “battering” countries like Greece Conversely a worsening global economy could push prices as low as $50 OPEC could however replace Iranian oil supplies to  Europe and Japan WTI Feb [...]
Posted:
UK DATA: Nov NSA Construction Output Rises On Month ———————————————————————— Non-seasonally adjusted construction output rose slightly on the month in November but calculations by Maket News suggest it is likely to impact negatively on GDP in Q4. Construction output rose 0.2% on the month in Nov following a non-seasonally adjusted drop of 1% in October.
Posted:
LONDON (MNI) — Non-seasonally adjusted construction output rose slightly on the month in November but calculations by Maket News suggest it is likely to impact negatively on GDP in Q4. Construction output rose 0.2% on the month in November following a non-seasonally adjusted drop of 1% in October. As the monthly data are non-seasonally adjusted [...]
Posted:
–Dec Producer Output Prices -0.2% m/m; +4.8% y/y –Dec Core Output Prices -0.1% m/m; +3.0% y/y –Dec Producer Input Prices -0.6% m/m; +8.7% y/y LONDON (MNI) – Output price inflation eased to its lowest level for a year in December as the price of petroleum, chemicals and transport eased during the month, figures from National [...]
Posted:
UK DATA: Dec Producer Output Prices -0.2% m/m; +4.8% y/y –Dec Core Output Prices -0.1% m/m; +3.0% y/y –Dec Producer Input Prices -0.6% m/m; +8.7% y/y ———————————————————————— Headline output prices fell by 0.2% on the month and were up 4.8% on the year, down from 5.4% in the previous month. This was below the median [...]
Posted:
Weaker than  median forecasts of +0.1%, +5.0% respectively. Lowest y/y rate since December 2010. Core output prices -0.1%, +3.0% respectively.  Weaker than median forecasts flat and +3.2%.
Posted:
…So i’m being told from a major UK bank.  Apparently Japanese car  companies and some other manufacturers have moved their offers in the EUR/JPY up towards 100.00, expecting a near term bounce to the level. May well account for the earlier shove up to 98.80 a few hours ago., when the  previous resistance at 98.50/60 was [...]
Posted:
We’re down near the day’s lows  of 1.2095 , and there’s been a lot of rumblings about the peg this morning apparently eminating from the bond markets. Talk that SNB is set to raise the peg again to 1.3000 from one corner, with the other rumour that it’s going to be withdrawn!. Either way there [...]
Posted:
Up sharply from 106.3 bln in November. Only just below the 140 bln record high hit back in July last year
Posted:
Some optimism there then Spread down to 464 bps from the 479 I jotted down first thing.
Posted:
FRANKFURT (MNI) – There are no signs of an excessive reduction in bank lending in Germany, but German banks could be affected via their operations and commitments in southern and eastern Europe, where risks of a credit crunch are much higher, according to Bundesbank board member Andreas Dombret. “In peripheral countries like Italy and Spain, [...]
Posted:
Italy taps its on-the-run 6.00% November 2014 BTP for 2-3 bln euros and off-the-run 4.25% July 2014 BTP  and 4.50% August 2018  BTP issues for between 1-1.75 bln. Results due around 10:10 GMT.
Posted:
Above 1.2870. We’ve been as high as 1.2878, presently at 1.2863. Best they get out of the road, we’ve got a ForexLive poll to get right here
Posted:
EUR/USD sits at 1.2862, effectively unchanged from when I parked my bum. So, what’ll we see first in EUR/USD 1.2750 or 1.2950?
Posted:
Gas production could rise this year, oil to be stable North Sea oil, gas boom could add 5.5 bln in UK tax revenues New UK engineers will be needed in next 3-6 months for oil, gas projects Reuters reporting.