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Daily Report: Risks Jump on Spain's EUR 100b Bank Rescue, Dollar PressuredRisk markets opened the week strongly on news that Spain finally surrendered and called for regional help for its banking sector over the weekend. An agreement was reached which would provide Spain as much as EUR 100b of funds to help its troubled banks. That's more than double of IMF's estimation of EUR 37b as provided earlier this month. Fitch estimated last week that a total of EUR 60b is needed and EUR 100b in severe stress scenario. Indeed, Spanish Economy Minister de Guindos noted that the amount includes "safety margin". So the agreed EUR 100b is also seen as enough in the worst cases. Asian equities are broadly higher on the news with Nikkei up nearly 2% while Hong Kong HSI is also up 2%. Dollar is broadly pressured with EUR/USD trading above last week's high of 1.2624. Also, EUR/GBP took out last week's high of 0.8139 too. |
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| Featured Technical Report | |
EUR/JPY Daily OutlookDaily Pivots: (S1) 98.58; (P) 99.42; (R1) 100.31; More The break of 100.62 minor resistance indicate that rebound from 95.64 has resumed. Intraday bias is back to the upside for 61.8% retracement of 108.00 to 95.64 at 103.27 first. Break will put focus on key near term resistance level at 104.61. Note that while the rebound from 95.64 is so far stronger there expected, there is no clear sign of reversal yet. And, such rebound might still be a correction only. Below 98.53 minor support will flip bias back to the downside for 95.64 low and below. |
| Special Reports |
Spain To Be The Fourth Country To Ask For BailoutOver the weekend, the Spanish Finance Minister Luis de Guindos announced that the country would request financial assistance from the EU for recapitalization of the Spanish banking system. While the final amount would be released after the results of 2 independent audits due June 21, the sum is estimated to be 100B euro, covering estimated capital requirements and additional safety margin. Both the EU and the IMF welcomed the request. For investors, the move is expected to lift market sentiment in the near-term. However, it does not resolve the long-term problem in the peripheral European economies that is the lack of growth prospect without which the 17-nation bloc would find it impossible to get out of the crisis. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: The single currency opened sharply higher this morning in reaction to EU rescue plan, surged to an high of 1.2672, stops above 1.2630 and 1.2650 were triggered, however, offers are reported from 1.2670 all the way up to 1.2700 with bigger stops placed above latter level. On the downside, much improved risk appetite should continue to support euro and bids from various parties are lined up at 1.2620, 1.2600 and also at 1.2550-60 with some stops building up below 1.2530 and also 1.2490. | |||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||
Trade Idea: USD/JPY – Buy at 78.75Although the greenback has rebounded after finding support at 79.12 last Friday, break of indicated resistance at 79.80-83 is needed to retain bullishness and extend the rise from 77.65 for a stronger retracement of recent decline to psychological resistance at 80.00 but still reckon price would falter below previous chart point at 80.15. Trade Idea: USD/CHF – Stand asideFailure to extend Friday’s rally and the subsequent selloff from 0.9657 together with this morning’s breach of 0.9515 signal recent upmove has formed a temporary top at 0.9771 and near term downside bias is seen for a deeper correction of early upmove to 0.9480-85, however, oversold condition should prevent sharp fall below 0.9450 and risk from there is seen for a strong rebound later. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||
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Fundamental Highlights
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