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| Action Insight Weekly Report | Markets Snapshot |
Mid-Day Report: Risk Appetite Continues as French Rating Assured... for 2012Risk appetite continued in European sessions as major indices are broadly higher, led by mining stocks following yesterday's earnings announcement from Alcoa. Also, Fitch said today that there is no plan to downgrade France's AAA credit rating this year. Fitch lowered the rating outlook from stable to negative back in mid-December due to "intensification of the eurozone crisis" but there would be any change before 2013 in the " absence of important shocks that could be linked to a strong worsening of the situation in the eurozone". Also, markets were assured by French prime minister Fillon that France will be its deficit target for 2011 and would "most probably" be lower than the target of 5.7% of GDP. IMF managing director Lagarde and German Chancellor Merkel will meet in Berlin later today and French President Sarkozy in Paris tomorrow. According to ECB data, banks are parking EUR 481.93b in its overnight deposits, making another record high. |
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| Featured Technical Report | |
GBP/USD Mid-Day OutlookDaily Pivots: (S1) 1.5414; (P) 1.5441; (R1) 1.5488; More. Intraday bias in GBP/USD remains neutral for some consolidations. But after all, another fall is expected with 1.5525 minor resistance intact. Break of 1.5361 support will confirm resumption of whole fall from 1.6165 and should target 1.5271 next. On the upside, though, break of 1.5525 minor resistance will dampen this immediate bearish case and bring more consolidations between 1.52361/5773 before decline resumption. |
| Special Report |
2012 Forecast: Sterling Has Potential to Weaken Against EuroSimilar 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. 2012 Forecast: USDJPY To Move SidewaysWe expect the movement of Japanese yen this year will be directed by factors including BOJ’s intervention, risk appetite and Fed’s QE3. Optimism of FOMC policymakers and the fiscal situation in the US will exert downward pressure on USD/JPY in the first half of the year but the BOJ will likely defend the level of 75 via intervention. Upside of the currency pair will also be capped by sluggish US economic growth and probable implementation of Fed’s QE3 later in the year. In this case, USD/JPY will likely be range-bounded this year. |
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| 2012 Elliott Wave Forecast | |||||||||||||||||||||||||||||||||||||||||||||||||
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| Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||
US Session: Orders and Options WatchEUR: The single currency has continued to move higher since European morning as Fitch indicated it has no plan to downgrade French rating this year, however, offers from real money accounts and corporate names are reported at 1.2815-20 (stops above) and also further out at 1.2850-60 with mixture of offers and stops seen at 1.2890-00. On the downside, bids from various parties (including European names and Asian CBs) are lined up at 1.2740-50 and although some stops are placed below there, more buying interest is located from 1.2720 down to 1.2700 with mixture of bids and stops remains at 1.2650-60. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea Update: GBP/USD – Sell at 1.5560Cable’s intra-day rebound to 1.5500 has retained our view that near term upside risk remains for the rebound from 1.5376 (last week’s low) to bring a stronger retracement of the decline from 1.5672 to 1.5524-26 (50% Fibonacci retracement of 1.5672-1.5376 and previous resistance), however, reckon 1.5555-60 (61.8% Fibonacci retracement) would limit upside and bring another decline later. Trade Idea: AUD/USD – Hold long entered at 1.0175As aussie found decent demand yesterday and staged the anticipated rebound from 1.0145 (yesterday’s low), retaining our bullishness and the breach of Friday’s high of 1.0280 adds credence to our view that the retreat from 1.0387 (last week’s high) has possibly ended and consolidation with upside bias remains for another test of this level. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||
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2012 Outlook
Fundamental Highlights
Technical Highlights
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