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Daily Report: Markets Stay in Consolidation with Focus on Spain BudgetMarkets continue to stay in consolidative price actions. While we're seeing downside bias in risk markets and upside bias in dollar and yen, there was no strong sustainable momentum so far. The selloff in US equities in the past two days triggered some worries but that wasn't followed by Asian equities today. At the time of writing, Nikkei is up 43 pts while HK HSI is up over 250 pts on prospect of Chinese stimulus as it's reported that China could inject as much as CNY 180b into the money markets. EUR/USD and EUR/JPY continue to hold on to 1.2816 and 99.52 support level. AUD/USD also staged a recovery and is back above 1.04 after dipping to 1.0328 earlier this week. Spanish 10 year yield does stay above 6% for the moment but that could just be markets testing Spain's nerve as the country is still hesitating to seek a sovereign bailout. Main focus will remain on Eurozone in near term, but we still don't expect the pull back in Euro to be much deeper. |
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| Featured Technical Report | |
GBP/JPY Daily OutlookDaily Pivots: (S1) 125.28; (P) 125.69; (R1) 126.03; More... Intraday bias in GBP/JPY is mildly on the downside and pull back from 128.82 could extend lower. But still, such decline is viewed as a correction only and downside should be contained by 124.41 support and bring rebound. Above 126.69 minor resistance will flip bias back to the upside. Break of 128.82 will extend the whole rally from 118.82 to 133.48 resistance next. Though, break of 124.41 will dampen our bullish view and turn focus back to 120.82 support instead. |
| Special Reports |
Tensions Between China And Japan This Time May Hurt Trades More Seriously Than 2005Tensions between China and Japan over the inhabited Diaoyu/Senkaku Islands intensified after the Japanese government announced on September 11 that it would nationalize three of the island chain by purchasing them from the Kurihara family for 2.05B yen. The Chinese government was furious about the issue and declared that the islands have been under Chinese territory since ancient times and China would do anything to protect it sovereignty. Reports also showed that nationalists protested on streets and destroyed shops owned by Japanese in China. Last week, China's Vice President Xi Jinping spoke after weeks' of disappearance about the latest Sino-Japanese conflict. He said that Japan's 'purchase' of the islands was a farce and 'Japan should rein in its behavior and stop any words and acts that undermine China's sovereignty and territorial integrity'. Despite heightened tensions, we believe that military conflicts are unlikely. Yet, deterioration of relationship between the world's second and third largest economies in the period of global economic turmoil would inevitably have impacts on the economic developments in the East Asian region, and the world as a whole. |
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Orders and Options Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: Although the single currency recovered from yesterday's low of 1.2835 on short-covering, offers from various names are still noted at 1.2900-15 (some stops above 1.2920) and also in the region of 1.2950-70, more selling interests should emerge around 1.2980-00 area, followed by mixture of offers and stops at 1.3040-50. On the downside, bids from Middle East names are still noted around 1.2825-35 with sell stops placed below 1.2820 but more buy orders are located at 1.2800-10, some stops building up below 1.2800 but fresh demand should emerge around 1.2780-90. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: EUR/USD – Buy at 1.2815Although the single currency has recovered after falling to 1.2835 as suggested yesterday, reckon upside would be limited to 1.2913 (yesterday’s high) and near term downside risk remains for the decline from 1.3172 to extend weakness to 1.2812-17, however, near term oversold condition should prevent sharp fall below 1.2800 and risk from there is seen for a strong rebound to take place later. Above said resistance would signal low is possibly formed Trade Idea: USD/JPY – Buy at 77.45As the greenback has remained under pressure after yesterday’s brief bounce to 77.91, suggesting near term downside risk remains for the fall from 79.23 to bring a deeper correction of the rise from 77.14 low, however, dollar should stay above 77.40 and bring another rebound later. A firm breach above 77.95-05 would suggest low is possibly formed and bring test of resistance at 78.38 but break there is needed to confirm Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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