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| Action Insight Weekly Report | Markets Snapshot |
Mid-Day Report: Euro Dives as Fitch Urged ECB Action, Germany Recession RiskEuropean majors and stock indices fell sharply today as Fitch warned of a "cataclysmic" collapse of Euro, unless ECB scale up its bond purchase. David Riley, head of the sovereign-debt unit at Fitch, said ECB has much scope to expand the balance strength and ECB could pledge to cap interest rates, keep bond yields below 7% or turn EFSF into a bank. Riley warned yesterday that Italy is the "front line" of Europe's debt crisis and "the future of euro will be decided at the gates of Rome". He further said that Euro could not survive if "Italy does not make it through. |
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| Featured Technical Report | |
EUR/AUD Mid-Day OutlookDaily Pivots: (S1) 1.2338; (P) 1.2406; (R1) 1.2451; More. EUR/AUD drops to new record low of 1.2347 so far today and intraday bias remains on the downside for 100% projection of 1.3808 to 1.2962 from 1.3150 at 1.2304. Break will target 1.2 psychological level. Meanwhile, near term outlook will stay bearish as long as 1.2504 resistance holds even in case of recovery. Though, break of 1.2504 minor resistance will indicates short term bottoming and bring rebound back to 4 hours 55 EMA (now at 1.2555) and possibly above. |
| 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: Although the single currency recovered to an intra-day high of 1.2790 amid speculation that PBOC may lower the RRR, euro ran into heavy offers from hedge funds (for protection of stops above 1.2800 and 1.2820) and slipped in European session on stop-loss hunting activities, bids at 1.2730 and stops below 1.2720 were cleared, however, bids from Asian sovereign names are still noted from 1.2680 down to 1.2650 (option barrier) with stops building up below latter level. On the upside, offers from same parties are lined up from 1.2750 up to 1.2800. | ||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | ||||||||||||||||||||||||||||||||||||||
Trade Idea Update: USD/CHF – Hold long entered at 0.9480Dollar’s intra-day rebound to 0.8560 suggests the correction from 0.9595 (this week’s high) has possibly ended at 0.9466 and consolidation with upside bias is seen for further gain to said resistance, however, break there is needed to confirm recent upmove from record low of 0.7068 has resumed and extend gain towards 0.9630, however, loss of upward momentum should prevent sharp rise beyond 0.9650 Trade Idea: AUD/USD – Hold long entered at 1.0175Although aussie retreated after rising to 1.0352 yesterday, as price has rebounded again after finding renewed buying interest at 1.0270 today, retaining our view that retreat from 1.0387 has ended at 1.0145 and bullishness remains for this rebound from 1.0145 (this week’s low) to bring another test of this level. Looking ahead, only above said resistance at 1.0387 would extend the move from 0.9664 for gain towards 1.0450/55 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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