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Daily Report: Risk Aversion Pressured Asian Equities, But Forex Markets SteadyAsian equities are deep in red today, in reaction to the -274pts fall in DOW on Friday after dismal employment data from US. Crude oil also extends recent decline on weaker economic outlook. Nonetheless, the currency markets and gold are relatively steady. We'd like to point out again that dollar pulled back after the NFP release on Friday and weakened against other major currencies, rather than rode on risk aversion. Revival of QE3 talk was seen as a major factor. Other than European debt crisis, the development of this QE3 story will be a major focus this week, as Fed chairman Bernanke will testify before congress on Thursday. Cleveland Fed Pianalto said over the weekend that the poor NFP report didn't lead to a "substantial" change in her outlook, not a change in her position on policy. Minneapolis Fed Kocherlakota didn't comment on policy or economy but noted that "policy makers can achieve better outcomes by basing their outlooks on risk-neutral probabilities derived from the prices of financial derivatives". |
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| Featured Technical Report | |
AUD/USD Daily OutlookDaily Pivots: (S1) 0.9606; (P) 0.9669; (R1) 0.9757; More Intraday bias in AUD/USD remains on the downside for the moment. Current decline from 1.8520 is still in progress for 161.8% projection of 1.0852 to 1.0225 from 1.0473 at 0.9459 next. We're expecting strong support above medium term level at 0.9387 to continue downside, at least on first attempt. Hence, focus will be on reversal signal on next fall. Meanwhile break of 0.9897 resistance will indicate short term bottoming and should bring rebound back to 1.0225 support turned resistance. |
| Special Reports |
BOC To Pause In June With Less Hawkish StatementThe Bank of Canada will likely deliver a much less hawkish statement after the meeting next Tuesday. The rapid deterioration in the global environment, especially the sovereign debt crisis in the Eurozone, is expected to affect he recovery outlook in Canada. Moreover, the slowdown in China should have negative impact on the export sector of Canada. We expect the central bank to maintain the policy rate at 1% as the urgency of tightening has greatly reduced. RBA To Cut Policy Rate By -50 Bps In JuneWe expected the RBA to cut the cash rate by another -25 bps in June, following a surprising reduction of -50 bps to 3.75% in May. Moderation in economic growth in China, Australia's major trading partner, and growing uncertainty in the Eurozone are expected to weaken confidence and economic developments in Australia. Governor Glenn Stevens' comments that “the obligation of the official sector to provide proper oversight to ensure' resilience has raised indicated further rate cut is increasingly likely. |
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European Session: Orders and Options WatchEUR: Fresh negative news out of eurozone (especially Merkel rejecting German to back Eurobonds) put fresh pressure on the single currency and euro slipped back below 1.2400 level, however, bids from Asian names are still noted from 1.2370 down to 1.2350, there are still rumors of ECB buying sovereign bonds (which sparked the Friday's late rise) and more buying interests are tipped at 1.2300-10 and also at 1.2275-80 with stops placed below latter level and 1.2250 barrier. On the upside, offers are tipped at 1.2420 and also at 1.2440-50 with bigger sell orders expected around 1.2475-80, then further out at 1.2500. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: EUR/USD – Buy at 1.2330Despite Friday’s brief fall to 1.2288, the subsequent strong rebound after the release of weaker-than-expected U.S. job reports suggests a minor low is formed and consolidation with mild upside bias is seen, above Friday’s high of 1.2473 would bring retracement of recent decline to 1.2493-96 (38.2% Fibonacci retracement of 1.2824-1.2288, previous support and 61.8% Fibonacci retracement of 1.2625-1.2288) Trade Idea: USD/CHF – Sell at 0.9735Despite Friday’s brief rise to 0.9767, as dollar has retreated sharply after the release of weaker-than-expected U.S. NFP data, a black candlestick with a long upper shadow has been formed on the hourly chart, adding credence to our view that a temporary top is possibly formed there and consolidation with mild downside bias is seen, break of support at 0.9640 (Friday’s low) would bring retracement of recent upmove towards previous resistance at 0.9612 later. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||
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