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Mid-Day Report: Euro Soft as Spain Worries WeighEuro remains generally soft today and could end the week lower against dollar. There are speculations the Spain is preparing to seek European bailout this weekend, for the country's troubled banks even though Madrid continued to deny it. ECB governing council member Nowotny said today that it's sensible for Spain to see eurozone assistance. Meanwhile a European Commission also said today that the instruments to help Spain "already exist: and the "procedures are well known. It's reported that one of the solutions is for EFSF, the temporary bailout fund, to issue bonds to Spain's FROB, Fund for Orderly Bank Restructuring, which would in turn be injected into troubled banks. Those banks could then sell the bonds to raise capital. Though, again, Spain has denied they're seeking assistance and denied there will be a conference call among EU officials on the bailout request. |
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| Featured Technical Report | |
EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.2524; (P) 1.2575 (R1) 1.2610; More..... Intraday bias in EUR/USD remains neutral for the moment with focus on 1.2409 minor support. Break will indicate that rebound from 1.2287 is already finished at 1.2624. In that case, bias will be flipped back to the downside to send the pair through 1.2287 to 100% projection of 1.4246 to 1.2625 from 1.3486 at 1.1865 which is close to 1.1875 low. Meanwhile, in case of another rise, we'd continue to expect upside to be limited by 1.2641 resistance, which is close to 38.2% retracement of 1.3283 to 1.2287 at 1.2667, and bring fall resumption eventually. |
| Special Reports |
China Cut Interest Rates, The First Time In Over Three YearsThe People's Bank of China (PBOC) lowered the 1-year lending and deposit rates by -25 bps, effective June 8. This first rate cut since December 2008 came in with great surprise as the government adopted 'asymmetric' rate change. Slowdown in Chinese economic growth and deterioration in the global environment in recent months have triggered speculations of a reduction in lending rate for some time. However, a cut also in the deposit rate was rather unexpected. Moreover, the PBOC's raise of the ceiling on the deposit rate to 110% from 100% and the lowering of the floor of the lending rate to 80% from 90% have actually reduced the lending rate by more than it announced and increased the deposit rate. We believe the rate cut is generally a positive to the market and marks a small step to interest rate liberalization in China. ECB Left Interest Rates Unchanged, Draghi Questioned the Effectiveness of Monetary Policies on CrisisAs expected, the ECB left the main refinancing rate unchanged at 1% although sovereign debt crisis in the Eurozone intensified. At the press conference, President Draghi unveiled that the decision was made by consensus and indicated "a few members" favored further rate cut. Yet, Draghi also downplayed the effectiveness of additional easing to the economic and financial environment. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Session: Orders and Options WatchEUR: The single currency has remained under pressure after Fitch's downgrade of Spain and bids at 1.2460-65 were filled, stops at 1.2435-40 are now in focus, however, mixture of bids and stops remains at 1.2400-10 with larger stops tipped below 1.2380. On the upside, offers from European and U.S. names are lowered to 1.2490-00 and further out at 1.2520-30 as well as 1.2550 with stops building up above 1.2555-60. Option expires today include 1.2530 and 1.2550. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea Update: USD/CHF – Buy at 0.9580Dollar’s firmness after staging a strong rebound from yesterday’s low of 0.9515 suggests recent decline from 0.9771 top has formed a temporary low there and consolidation with upside bias is seen for at least a strong retracement of this decline to previous resistance at 0.9676, however, near term overbought condition should limit upside and reckon price would falter below 0.9700-10. Trade Idea: EUR/GBP – Hold short entered at 0.8100Despite yesterday’s rebound to 0.8131, as the single currency has retreated after faltering below resistance at 0.8140, retaining our near term bearishness for another fall to 0.8050, break there would suggest top is possibly formed and bring weakness to 0.8000 but only below support at 0.7971 would retain bearishness and signal the correction from 0.7951 has ended Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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