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| Action Insight Weekly Report | Markets Snapshot |
Daily Report: Risk Aversion Continues as JPMorgan Chase Loss Pressures StocksRisk aversion continues to dominate markets as equity markets were hit by surprise $2b loss off JPMorgan Chase, the biggest US bank by assets. Asian indices are broadly lower with Nikkei down -0.44%, HSI down -1.18% at the time of writing. Gold is back under pressure after failing to sustain above 1600 level on recovery. Crude oil is also soft at around 96 level. Dollar index is trying to move away from 80 level for the moment even though momentum is not too convincing yet. EUR/USD extends recent decline and is heading to 1.29 level but other pairs are staying steady in range, with firm tone in dollar and yen. |
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| Featured Technical Report | |
EUR/GBP Daily OutlookDaily Pivots: (S1) 0.7992; (P) 0.8019; (R1) 0.8037; More. EUR/GBP losses some downside momentum again as it's struggling around 0.8 psychological level. But there is no sign of bottoming yet. Deeper decline is still expected and sustained trading below 0.8 will target 100% projection of 0.8330 to 0.8221 from 0.8505 at 0.7896. On the upside, above 0.8102 will indicate that a temporary low is formed and bring consolidations first. But we'll stay bearish as long as 0.8221 support turned resistance holds and expect further fall ahead. |
| Special Reports |
Greece's Exit Less Likely Than Market SpeculationsThe Greek election result has dramatically raised market speculations of the country to exit the Eurozone. However, given that over 70% of voters in Greece prefer the country to retain in the 17-nation bloc and a default on Greek sovereign debts would be disastrous for the official sectors including the IMF, the ECB and the EU. We expect the Syriza party will fail to form a coalition government and trigger another election in June. Whether the Syriza will become the biggest party is uncertain. However, we expect the IMF and the EU will make more concessions with the new government, hoping to resolve the deadlock and alleviating the negative impacts of the current foggy situation. Yet, whether the compromise would resolve the sovereign problems in Greece is not guaranteed. PBOC May Cut RRR After More Rounds Of Reverse ReposChina's 7-day repo rate dropped almost -30bps to settle at 3.34% yesterday amid expectations that the government will inject more liquidity to the market. Although speculations of a RRR reduction before the Labor holiday in early May was in vain, the PBOC did injected RMB 65B in cash through 7-day reverse repo on May 3. Judging from past experience, it is likely that the government will follow up with RRR cut in coming weeks, though increasing the liquidity in the market. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: The single currency has remained under pressure after meeting renewed selling interests at 1.2979 yesterday and option barrier at 1.2900 is now in focus (related to 1.29-1.34 DNT), stops are reported below 1.2900 but fresh demand from Asian sovereign names should emerge around 1.2860-70 with next barrier seen at 1.2850. On the upside, offers from European and U.S. names are lowered to 1.2950 and more selling interests are tipped at 1.2970 as well as 1.3000 with stops building up above latter level. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: EUR/USD – Sell at 1.3060Although euro has remained under pressure and recent decline may extend weakness to 1.2900, loss of downward momentum should prevent sharp fall below 1.2870 and reckon 1.2850 would hold from here, risk from there is seen for a strong rebound later. Above the Ichimoku cloud bottom (now at 1.2948) would bring test of yesterday’s high of 1.2979, then 1.3000, however, renewed selling interest should emerge around 1.3060-65 and bring another selloff. Trade Idea: USD/JPY – Buy at 79.65Although dollar has retreated after faltering below indicated resistance at 80.08, still reckon this week’s low at 79.43 would contain downside and bring further consolidation, a firm breach of said resistance would signal a temporary low is formed and bring retracement of recent decline to 80.40, however, only breach of resistance at 80.61 would retain bullishness. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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