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| Action Insight Weekly Report | Markets Snapshot |
Mid-Day Report: European Comeback Following Successful Bond Auctions, Weak US DataEuropean majors staged a strong comeback today following successful bond auctions in Spain and Italy. ECB's meeting felt like a non-event, same as BoE. European equities were initially boosted by the auctions but was then dragged down by poor US economic data. Retail sales disappointed by growing 0.1% in December with ex-auto sales even dropping -0.2%. Initial jobless claims also rose back to 399k in the first week of 2012, hitting a six week high. DOW opened lower following the disappointment which in turn dragged down commodity currencies. Strong rebound in EUR/AUD from new record low also pressured Aussie a bit. |
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| Featured Technical Report | |
EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.2648; (P) 1.2719 (R1) 1.2776; More. Today's strong recovery suggests that consolidation from 1.2666 is still in progress and intraday bias is neutral for the moment. More consolidative trading could be seen above 1.2661/6 but after all strong resistance should be seen below 1.3076 resistance to limit upside. Recent decline is still expected to resume sooner or later. Below 1.2661 will target 100% projection of 1.4939 to 1.3145 from 1.4246 at 1.2452. |
| Special Report |
Both ECB and BOE Stayed on the SidelineAt 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. 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. |
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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 rebounded in European morning in part due to the good result from Spanish bond auction, euro ran into offers from Eastern European names and has retreated from 1.2778, more selling interest from same parties are reported further out at 1.2800-10 with stops building up above 1.820 and 1.2850. On the downside, mixture of bids and stops is located at 1.2690-00 and decent demand from Asian CBs are still noted at 1.2650-*60 with stops building up below there and more bids are expected ahead of option barrier at 1.2600 with bigger stops placed below. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea Wrap-up: USD/JPY – Buy at 76.15Current breach of indicated minor support at 76.77 confirms our view that correction from 76.60 has ended at 77.34 and test of indicated strong support at 76.58-60 is likely, however, break there is needed to confirm recent decline has resumed and extend weakness towards 76.10/15 but still reckon psychological support at 76.00 would hold from here and bring another rebound later. Trade Idea: EUR/GBP – Sell at 0.8415Current rebound signals a temporary low has been formed at 0.8222 and consolidation with mild upside bias is seen for retracement to 0.8370-75, however, reckon resistance at 0.8422 would limit upside and attract renewed selling interest, bring another decline later. Only a break of said support would extend recent decline to 0.8200, however, near term oversold condition should limit downside to 0.8170-75, bring a corrective rebound later. 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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