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| Action Insight Market Overview | Markets Snapshot |
Mid-Day Report: Euro Recovered as Spain Auction Met Solid Demand, Even Yields SoaredEuro recovered mildly as Spain met it's maximum target in today's bill auctions even though borrowing costs soared. Spanish Treasury sold EUR 3.39b in 12- and 18-month bills today, exceeding its target of EUR 2-3b. Demand was robust with bid-to-cover ratio of the 12- and 18-month bills at 2.16 and 4.42 respectively, both better than prior auction. However, yield on the 12-month bills jumped sharply to 5.07%, up from 2.98% in May auction. Yield18-month bills also jumped sharply to 5.1%, up from prior 3.3%. In the secondary markets, the benchmark 10 year yield retreated mildly but stayed above 7% unsustainable level. Spanish economy minister de Guindos said yesterday that the "punishment" Spain's suffering in the market " doesn't correspond with the efforts, or the potential, of the Spanish economy". Meanwhile, Italian 10 year yield also dips back below 6%. Euro is back above 1.26 level against dollar. European indices are mildly higher at the time of writing while US futures point to positive open. |
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| Featured Technical Report | |
EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.2504; (P) 1.2625 (R1) 1.2695; More..... EUR/USD recovers mildly after drawing support from 4 hours 55 EMA. At this point, intraday bias remains neutral. Rebound from 1.2287 is viewed as a correction. As long as 1.2435 minor support holds, further rally could still be seen. Above 1.2747 will target 61.8% retracement of 1.3282 to 1.2287 at 1.2902. Though, break of 1.2435 will indicate that such corrective rise is already completed and will flip bias back to the downside for 1.2287 and below. |
| Special Reports |
RBA Cut Cash Rate Amid Concerns On Global Economic OutlookThe RBA released minutes for the June meeting explaining the decision of reducing the policy rate by -25 bps to 3.5%. The minutes suggested that the decision was made after 'finely balanced' arguments among members. Policymakers remained optimistic on the domestic economic outlook and it was mainly the global economic slowdown, particularly the sovereign debt crisis in the Eurozone, that triggered the rate cut. The central bank viewed the current monetary stance as stimulatory and thus another rate cut in July appears less likely. Yet, if the global economic environment continues to deteriorate, the RBA would still lower interest rates further later in the year. Pro-Bailout Parties Win Greek Election. Real Problems RemainThe latest general election in Greece alleviated market concerns that the debt-ridden country would abandon the fiscal tightening measures and leave the Eurozone as, according to exit polls and official projections, New Democracy came first and the pro-bailout parties are likely to secure enough seats to control the parliament. The single currency and risk assets buoyed as the situation in Greece is temporarily stabilized. However, uncertainty indeed remains. How would the new government negotiate with the EU/IMF regarding the austerity measures? How would the country catch up with its fiscal tightening, as Greece is far off track from the targets agreed previously? Would other EU members still want Greece to stay in the Eurozone if it consistently fails to achieve its targets? There are no immediate answers to these questions and are expected to threaten the outlook the Eurozone economic as well as the euro in the medium to long term. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Session: Orders and Options WatchEUR: Although the single currency slipped shortly after the release of much weaker-than-expected ZEW data, Middle East names buying lifted the pair sharply higher and the pair has continued to move higher in New York morning partly due to the release of soft U.S. data, offers at 1.2645-50 were filled and more selling interests should emerge around 1.2675-80 and 1.2710-20. On the downside, bids are raised to 1.2600-10 and also at 1.2565-70 and more buying interests are reported at 1.2540-50 with sizeable stops building up below there. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea Update: GBP/USD – Buy at 1.5590Although the British pound has rebounded after intra-day brief retreat to 1.5615, above intra-day resistance at 1.5692 is needed to signal the correction from 1.5742 has ended and bring further gain to 1.5715-20 but only break of this later level would signal the correction from 1.5742 has ended and bring a retest of this level. Looking ahead, a break of this resistance would signal the rise from 1.5269 low has resumed, bring further gain to 1.5770 Trade Idea: EUR/JPY – Buy at 99.00Despite yesterday’s anticipated rebound to 100.85, as the single currency has retreated again after faltering below indicated resistance at 100.90 (last week’s high), retaining our view that further consolidation below this level would be seen and weakness to 99.09 cannot be ruled out but reckon support at 98.55 should hold, bring another rise later. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fundamental Highlights
Technical Highlights
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