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Daily Report: Dollar Weakens as Risk Sentiment Lifted By Spain's BudgetMarkets responded positively to Spain's plan on budget and reforms as S&P 500 snapped a five-day losing streak. Risk appetite carries on in Asian session and sends most Asian indices higher. Spanish benchmark 10 year yield also dipped below 6% level. European majors and commodity currencies strengthened against dollar. A detailed schedule on economic reforms was announced in Spain overnight. The plan featured 8.9% cut in government spending in 2013. Meanwhile, increase in sales tax is expected to raise tax income by EUR 5b to EUR 175b. Also, a new independent budgetary authority would be established to monitor government spending. The overall target on deficit to GDP ratio would be 4.5% comparing to 2012's 6.3%. Deputy prime minister Soraya Sáenz de Santamaría emphasized that "this is a crisis budget aimed at emerging from the crisis". |
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| Featured Technical Report | |
USD/CHF Daily OutlookDaily Pivots: (S1) 0.9349; (P) 0.9383; (R1) 0.9406; More... The fall from 0.9417 dragged 4 hours MACD well below signal line and argues USD/CHF's recovery from 0.9238 is already completed. Intraday bias is cautiously on the downside for 0.9327 minor support. Break will affirm this bearish view and strongly suggests that fall from 0.9971 is resuming for 0.8930 key support next. On the upside, above 0.9417 will delay the bearish case and bring another recovery. But strong resistance is still expected at 0.9502 (38.2% retracement of 0.9971 to 0.9238 at 0.9518) and and bring fall resumption eventually. |
| Special Reports |
Spain Pledges To Reduce Spending Further To Meet Fiscal TargetThe Spanish government confirmed in the 2013 Budget that the deficit targets are 6.3% of GDP this year and 4.5% next year, down from 8.9% in 2011. In order to achieve this goal in the face of economic contraction and sluggish employment condition, the government announced additional fiscal tightening measures which mainly focused on reduction in spending rather than tax increase. While the market remains skeptical over whether the target can be achieved, the plan should ease the process for the Spanish government to request financial assistance from the EFSF/ESM. |
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European Session: Orders and Options WatchEUR: Despite yesterday's brief fall to 1.2830, the single currency has rebounded as some traders covered their short ahead of the results of the stress test on the Spanish banking system, offers at 1.2900-10 were filled and stops above there were also tripped. At the moment, offers are still noted from 1.2960 all the way up to 1.3000 (every 10 points interval with some buy stop orders placed above 1.2975 and 1.3000), mixture of offers and stops is tipped at 1.3040-50. On the downside, bids are noted at 1.2900 and 1.2880 with some stops placed below 1.2875 but demand from Middle East names are reported around 1.2850-60, followed by mixture of bids and stops located at 1.2820-30 with more bids expected at 1.2800-10 and sell stops are building up below 1.2800, however, fresh demand are likely to emerge around 1.2780-90. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: USD/CHF – Sell at 0.9395Despite overnight rebound to 0.9417 as the greenback has retreated again after faltering below this week’s high of 0.9418 and price just dropped below the lower Kumo, suggesting consolidation below said resistance would take place with mild downside bias for test of 0.9330, break there would signal top is formed there, bring at least a strong correction of the rise from 0.9240 to previous support at 0.9286 Trade Idea: EUR/USD – Buy at 1.2860Despite yesterday’s brief fall to 1.2830, the subsequent rebound and the breach of Ichimoku cloud top suggest a temporary low is possibly formed and consolidation with mild upside bias is seen for test of previous resistance at 1.2971 but break there is needed to confirm this view and bring retracement of the decline from 1.3172 to 1.3000 and possibly towards previous resistance at 1.3048 which is likely to cap upside. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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