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Daily Report: Euro's Post-ECB Weakness Continues, Focus Turn to UK PMI Services and US NFPEuro was sold off sharply yesterday as markets showed their dissatisfaction in ECB's lack of concrete announcement. EUR/AUD and EUR/CAD dived to new record low while EUR/USD and EUR/JPY were stuck in middle of this week's range. An important point to note is that Spanish 10 year yield jumped a massive 43.3 basis point and settled above 7% unsustainable level again at 7.165%. Italian 10 year yield also rose by 39.6 basis point to settle at 6.327%. Bear in mind that Spanish yield made a historical high at 7.751% last week and eyes are back on whether this level would be breached again in near term. |
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| Featured Technical Report | |
EUR/AUD Daily OutlookDaily Pivots: (S1) 1.1586; (P) 1.1656; (R1) 1.1708; More.... EUR/AUD dropped to as another record low of 1.1605 and is possibly building up downside momentum again. Bias remains on the downside and current fall should be targeting next projection level at 1.1352. Note that we're seeing bullish divergence condition in 4 hours MACD, and EUR/AUD could find some support at 1.1352 and rebound. Meanwhile, above 1.1735 will indicate short term bottoming and should bring recovery back to 1.1855 resistance and above. |
| Special Reports |
ECB Stands on the Sideline, Pledges to Defend the Euro with Bond PurchasesAs we had anticipated, the ECB left the main refinancing rate unchanged. At the press conference President Draghi reiterated his comments made last week in London that there's a need to contain risk premia in the bond yields of some countries. While the governments have adopted various measures, including fiscal consolidation, structural reform, European institution building and activation of the EFSF/ ESM when circumstances dictate under the strict and effective conditionality embedded in the existing arrangements, to address the issue, they are not sufficient and he, therefore, announced that the central bank would make outright purchases of sovereign debts with the emphasis on independence. The Fed Left Policy Setting Unchanged, Kept Interest Rates Low Until Late 2014The FOMC meeting was a rather disappointing one as policymakers failed to deliver any new measures to boost the deteriorating economy. While we had anticipated that the Fed would be refrained from announcing QE3 in August, we thought it would at least extend the low rate guidance to 2015. Yet, the Fed decided to leave it unchanged. Policymakers were maintaining easing bias but few changes were found in the languages of the accompanying statement. We expect the Fed was still gauging the impacts of the operation twist which was extended last month. We maintain our view that the QE3 will be announced at the next meeting. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: The single currency recovered after yesterday's selloff from 1.2406 to 1.2134, however, offers from real money accounts are still noted at 1.2215-25 with some stops placed above 1.2240, more selling interests should emerge around 1.2265-75 and further out at 1.2290-00 with bigger stops building up above 1.2315-20. On the downside, light bids are tipped at 1.2150-60 and also at 1.2130-35 with mixture of bids and stops expected further out at 1.2100-10 (related to option barrier at 1.2100) and more sell stop orders are reported below there and 1.2070, followed by combination of bids and stops at 1.2040-50. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: GBP/USD – Sell at 1.5610Despite yesterday’s euro-led selloff to 1.5490, current recovery suggests consolidation above this level would be seen and retracement to the Ichimoku cloud bottom (now at 1.5573) and possibly the Kijun-Sen (now at 1.5585) is likely, however, reckon upside would be limited to 1.5605-10 (61.8% Fibonacci retracement of 1.5680-1.5490) and bring another decline. A break of said support would extend the fall from 1.5768 to 1.5470 Trade Idea: USD/JPY – Buy at 78.00Although dollar slipped again after falling from yesterday’s high of 78.54 and near term downside risk remains for marginal weakness, if our view that a temporary low has been formed at 77.90 is correct, downside would be limited to 78.00 and bring another rebound later. A break of said resistance at 78.54 would bring test of previous resistance at 78.68, however, above there is needed to confirm low and bring further gain to 78.81 resistance 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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