OVERVIEW
U.S. stocks rose on Thursday, with the Nasdaq turning positive for the year-to-date, as a batch economic data that was not as dire as expected fed optimism the economy's worst days were behind. Best Buy jumps on results; retailers rally Final Q4 GDP, weekly jobless claims data roughly in line. The Dow Jones industrial average rose 174.75 points, or 2.25 percent, to 7,924.56. The Standard & Poor's 500 Index gained 18.98 points, or 2.33 percent, to 832.86. The Nasdaq Composite Index added 58.05 points, or 3.80 percent, to 1,587.00.
Gains in banks and miners prompted by recovering risk appetite on Thursday outweighed weakness in oils, retailers and utilities, to leave Britain's FTSE 100 closing 0.6 percent higher. Britain's blue chip index closed 24.95 points higher at 3,925.20, having lost 11.21 points, or 0.3 percent on Wednesday. The index is down 11.5 percent this year but remains over 13 percent higher than this year's trough.
Japan's Nikkei average rose 1.8 percent to hit a 2-1/2-month closing high on Thursday as exporters such as Sony Corp gained after unexpectedly strong U.S. economic data sparked hopes for an economic recovery. The benchmark Nikkei ended up 156.34 points at 8,636.33, its highest close since Jan. 9. The Nikkei has jumped nearly 1,600 points or over 22 percent from a 26-year closing low hit near 7,000 on March 10. The broader Topix gained 1 percent to 826.81.
The dollar and euro advanced against the yen on Thursday, as investors grew more comfortable buying risky assets such as stocks and commodities, dampening the Japanese currency's safe-haven appeal. Sharp gains on wall Street led by consumer shares along with the surge in oil, gold, and other base metals have offset persistent concerns about the viability of the U.S. banking system. The increase in risk appetite has also triggered gains in commodity currencies such as the Australian and New Zealand dollars. In early afternoon trading, the dollar rose 1.0 percent against the yen to 98.53 yen while the euro rose 0.7 percent to 133.42 yen. The yen along with the dollar have been a refuge for investors in times of financial distress, rising as traders unwind risky bets in stocks and oil financed in both currencies' low rates. The euro slipped 0.3 percent against the dollar to $1.3538, after going as low as $1.3522. Sterling fell 0.8 percent against the dollar to $1.4444, also pressured by data showing UK retail sales were much weaker than expected. The New Zealand dollar surged to a 10-week high against the dollar at US$0.5801 and touched more than nearly a four-month peak of 57.09 yen, according to Reuters data, as NZ government debt yields surged in a sign investors were reining in expectations for lower rates.
U.S. Treasuries rose on Thursday, snapping a five-session losing streak as they benefited from a decent debt auction and hopes of profiting from Federal Reserve government bond purchases. The yield on one-month Treasury bills briefly slipped into negative territory, according to TradeWeb, as banks and money managers built up cash before closing their books at the end of the first quarter. Benchmark 10-year Treasury notes were up 19/32 in price, pushing yields down to 2.73 percent from 2.80 percent at Wednesday's close. Still, the 10-year yield has retraced roughly half of the near 50-basis-point drop last Wednesday, the biggest in more than two decades, in reaction to the Fed's surprise announcement it will buy $300 billion in Treasuries over the next six months.
Gold ended higher after a volatile session on Thursday, underpinned by growing investment appetite and gains in other commodities such as oil and metals. Spot gold was at $938.05 an ounce at 3:00 p.m. EDT, up 0.5 percent from its last quote $933.15 in New York late Wednesday. U.S. gold futures for April delivery settled up $4.20 at $940.00 an ounce on the COMEX division of the New York Mercantile Exchange.
Copper surged 3 percent to hit 4-½ month highs on Thursday, boosted by a rise in U.S. durable goods orders and a jump in new home sales which lifted the outlook for the economy and demand. London Metal Exchange copper for three-month delivery rose to close at $4,085 a tonne versus Wednesday's close of $3,990. Prices for the metal used in the power and construction industries earlier matched Monday's 4-½ month high of $4,135.
Oil prices touched a four-month high over $54 a barrel on Thursday tracking Wall Street as better-than-expected economic data improved investor sentiment. U.S. crude rose $1.57 to $54.34 a barrel after hitting $54.66 a barrel earlier in the session -- its highest since Nov. 28. London Brent crude rose $1.71 to $53.46 a barrel.
ASIA
Japanese retail sales plunged in February, further proof that with an economy mired in recession, Japanese consumers are pulling back. The 5.8% annual decline was the steepest decline in years, and worse than the 3% decline expected by economists. In January, retail sales fell 2.4% year-over-year. Large retailers' fared the worst, seeing a 6.7% year-over-year decline in sales, worse than the 6.5% drop forecast. That follows a 3.8% decline in January. According to the Cabinet office, the survey's headline confidence index has been falling steadily since September 2008.
Japan's national inflation rate fell in line with expectations in February compared to a year earlier, while Tokyo CPI declined less-than-expected. According to data from the national statistics bureau, the annual inflation rate fell to -0.1% in February from a flat reading in January, in line with expectations. Meanwhile, CPI excluding fresh food fell remained flat at 0.0%, as expected, while CPI excluding fresh food and energy came in at -0.1%, slightly better than the 0.2% decline expected and the 0.2% contraction seen the month prior. The report had more timely information available for Tokyo. The city's headline inflation for March in grew by 0.2% year-over-year, slightly less than the 0.3% rate expected and down from the 0.5% rate in February. CPI excluding fresh food was up 0.4%, in line with expectations for a 0.4% gain and below the previous month's 0.6% gain. Tokyo CPI excluding fresh food and energy declined 0.4%, against expectations for a 0.3% drop and January's -0.1% figure.
Meanwhile the decline in New Zealand imports in February outpaced the drop in exports, resulting in a larger-than-expected trade surplus, Statistics New Zealand reported. The NZ$489 million surplus was larger than the NZ$75 million surplus expected. January's deficit of NZ$187 was revised down to a NZ$104 deficit. The report showed February's imports were down to NZ$2.97 billion, smaller than the NZ$3.30 billion worth of imports expected. Imports in January were revised down to NZ$3.28 billion from the initially-reported NZ$3.36 billion figure. Exports were higher than expected, up to NZ$3.46 billion from the revised NZ$3.17 billion in January. Expectations had been for a rise to NZ$3.35 billion.
Compared to a year ago, merchandise exports fell 6.6%, or NZ$243 million, Statistics New Zealand reported, while the value of merchandise imports fell 14.2%, or NZ $490 million over the same period. This is the first fall in exports since August 2007, the statistical agency said. The trade balance year-to-date came in at -NZ$5.161 billion from a revised -NZ$5.408 billion in January. Expectations had been for a -NZ$5.5 billion reading. New Zealand's GDP fell by 0.9% in the fourth quarter, against expectations for a 1.1% decline and following the revised 0.5% drop in the third quarter. On an annual basis, GDP fell by 1.9%, against expectations for a 2.0% decline and following the 0.1% annual decrease in the third quarter.
COMMODITIES
Gold prices are holding on to gains despite a stronger U.S. dollar and rising equity markets on Friday morning. It has been a relatively quiet day for gold as prices remain in a fairly tight range. The precious metal is holding on to the gains made Wednesday after a sharp sell-off in the U.S. dollar. At the start of the North American session, gold prices showed a strong rally, hitting daily highs at $945.55 per ounce. Although prices are well off their highs, they remain strong, hovering around $937.
Mike Glaser, futures broker at LaSalle Futures, said gold appears to be stuck in a broad range, with investors buying at around $900 and selling at $960. He said he expects the trend to continue. According to some strategists, gold could still be reacting to misinterpreted comments from Treasury Secretary Timothy Geithner on Wednesday. Media outlets reported that he was "open" to exploring the Chinese proposal to move towards an SDR currency system and away from the U.S. dollar as a reserve currency. Commodity strategists at Barclays Capital said comments from mining company Hochschild yesterday could help support gold prices. The company announced it has a production target of 19.1 million ounces of silver and 148,000 ounces of gold. The company also said that "fundamentals for silver and gold are strong."
Inflationary pressure and dollar's outlooks are 2 major factors affecting gold price's movement. Since the Fed's announcement on debt purchase program last week, inflation expectation has been shot up again. The difference in yield between 10-year Treasury Inflation- Protected Securities (TIPS) and comparable securities, known as the breakeven rate has widened to 139.23 yesterday, compared with 123.82 last Friday. However, speech by policymakers may damp such expectations. Janet Yellen, President of the San Francisco Federal Reserve Bank, said in an occasion that 'for some time to come, disinflation, and even deflation, will represent greater risks than inflation' as economy will remain sluggish 'for several more years'. The president added that while the US may not experience the kind of deflation happened in Japan in last decade, the government will need to monitor the situation and make preventions. The market has vigorous debates after China's push for a global reserve currency. Some believed as G20's powers have been growing rapidly, china's proposal will receive serious consideration in next week's G20 summit. Others expect the US will not give up its reserve currency position and will not allow another other currency to compete for the USD's position.
Earlier this week, Zhou Xiaochuan, China's central bank governor urged the IMF to use its Special Drawing Rights to create a reserve super currency as the nation, which is holding US Treasury of $739.6B as of January (up from $535B in June 08), concerns about inflation and depreciation in USD. Special Drawing Rights refers to issuance of IMF's in-house reserve asset. On one hand, China this time looks very serious about putting the USD-ruling era to an end; on the other hand, other sources showed that the Chinese Government has sharply increased their holdings of US Treasuries over the past month. Therefore, the main purpose for Chinese Government's speech is not looking for a replacement of the dollar but to warn the US to take measures to guarantee its 'good credit'.
Crude oil price continues to hold above 52.5 despite unexpected build in crude inventory as driven by rallies in stock markets. In Asia, the MSCI Asia Pacific Index gained 1.5% while Nikkei 225 Stock Average and Hong Kong's Hang Seng Index added 1.84% and 3.57% today as corporations' earnings results beat estimates. In European morning, UK's FTSE 100 opened slightly higher despite weaker-than-expected retail sales data which contracted -1.9% mom in February which annual gain came in at +0.4%, the smallest in 13 years.
In the mining sector, spot gold is trading up $0.96 to $934.98 USD. In Canadian dollars, gold is down $2.14 to C$1149.00. Silver contracts at the CBOT are up $0.08 to $13.58.
WTI Crude oil is up $1.41 to $54.18, while ICE crude oil is trading up $1.62 to $53.37.
Meanwhile, ICE RBOB gasoline futures are unchanged at $149.50 and Globex natural gas is down $0.01 to $1.35.
Heating oil at the ICE is down $3.49 to $146.47.
In the mining sector, spot gold is trading up $0.96 to $934.98 USD. In Canadian dollars, gold is down $2.14 to C$1149.00. Silver contracts at the CBOT are up $0.08 to $13.58.
Bloomberg's index for base metals is up 3.80 points to 124.78.
CURRENCIES
Dollar strengthens mildly in early US session but remains bounded in range so far. Treasury Geithner said that the US needs comprehensive reform in face of the most server global financial crisis in generations. Geithner proposes a major expansion of federal authority over the financial system and impose tougher standards on financial institutions. Federal regulations will also be extended to financial derivatives, exotic instruments as well as hedge funds. Data released in US session saw final Q4 GDP revised slightly down to -6.3% annualized rate. Personal consumption was unchanged at -4.3%. Initial jobless claims rose slightly to 652k while continuing claims rose to new high of 5.56m.
Sterling remains pressured after worse than expected retail sales data from UK. Retail sales slid -1.9% mom in February, worse than market expectation of -0.4% and upwardly revised gain of +0.8% a month ago as deteriorating economic and employment conditions constrained consumer spending. On annual basis, the gain of 0.4% during the month was the smallest increase since 1995. Growth of Eurozone's money supply M3 slowed to +5.9% yoy in February from +6% in January, indicating lower demand and easing inflation in the economy. Germany Gfk consumer confidence dropped to 2.4 in Apr. Japan's CSPI had the deepest fall in 7 years to -2.6% in February, the 5th consecutive monthly plunge, following a downwardly revised -2.4%drop in the previous month. In its half-yearly Financial Stability Review, the RBA stated that the Australian banking system is 'considerably better placed to weather the current challenges than many other systems around the world' though it's still facing a more difficult environment than it has for some years'. Regarding problem loans, RBA said they have risen from 'very low levels'.
Technically, note that while we're continuing to look for reversal signal above 81/82 key support, a break above 84.64 resistance is still needed to confirm that the dollar index has bottomed out. On the other hand, DOW is displaying some loss of momentum is hourly MACD and RSI which argues that recent strong rebound might be near to a halt. A break below 7550 support (yesterday's low) will provide an important sign of near term topping and will bring pull back to retest 7000 psychological level. In such case, the dollar would probably be lifted up by risk aversion. Also, note that New Zealand dollar remains the strongest currency today and focus will turn to key data from the country including Q4 GDP as well as Feb trade balance.
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TECHNICAL ANALYSIS
DOW JONES INDEX
The Dow closed higher on Thursday following yesterday's key reversal up and extended this month's rally. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that additional gains are still possible near-term. If the Dow extends this month's rally, the reaction high crossing at 7970 is the next upside target. Closes below the 20-day moving average crossing at 7163 would confirm that a short-term top has been posted. First resistance is today's high crossing at 7923. Second resistance is the reaction high crossing at 7970. First support is the 10-day moving average crossing at 7504. Second support is the 20-day moving average crossing at 7163.
S&P500
The June S&P 500 index closed higher on Thursday and the high-range close sets the stage for a steady opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near- term. If June extends this month's rally, the reaction high crossing at 833.20 is the next upside target. Closes below the 20-day moving average crossing at 745.60 would temper the near-term friendly outlook. First resistance is today's high crossing at 829.00. Second resistance is the reaction high crossing at 833.20. First support is the 10-day moving average crossing at 786.96. Second support is the 20-day moving average crossing at 745.70.
NASDAQ
The June NASDAQ 100 closed sharply higher on Thursday as it extends this month's rally. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but are neutral hinting that a short-term top might be in or is near. If June extends this week's rally, February's high crossing at 1285.25 is the next upside target. Closes below the 20-day moving average crossing at 1153.60 would confirm that a short-term top has been posted. First resistance is today's high crossing at 1278.00. Second resistance is February's high crossing at 1285.25. First support is the 10-day moving average crossing at 1210.40. Second support is the 20-day moving average crossing at 1153.58.
TAIWAN INDEX
The Index has reached our previous target objective at 200.57 (38.2% Fibonacci - 15/10/08 low) as mentioned yesterday and a high of 202.17. Note: Price is moving in ascending formation however as we noted the bull steam seems to be waning and we will be watching closely for the next 5 hours. As mentioned previously if price is able to close and hold above 200.57, we may see subsequent move higher towards the 215.22 (50% Fibonacci - 30/9/08 low). On the downside, if 180.31 breaks, we will likely see a move lower towards the 178/175 cluster zones subsequently.
COMMODITIES
Daily Pivot PointsNormal Range Last Bar
CommodityR3R2R1PPS1S2S3HLCDate
Crude Oil56.7255.6954.8253.7952.9251.8951.0254.6652.7653.9527/3
Gold957.93952.27943.33937.67928.73923.07914.13946.60932.00934.4027/3
Silver14.03813.89213.69313.54713.34813.20213.00313.74513.40013.49527/3
Copper1.97271.92481.89321.84531.81371.76581.73421.87701.79751.861527/3
GOLD
Gold moved according to our expectation as of yesterday after reaching a high at 946.70. Note: Currently price is moving into the Senkou clouds and Ichimoku studies indicates a possible upside move as we noted the intersection of the Tenkan-Sen and Kijun-Sen on a 4h chart which is supported by Stochastic and MACD. As mentioned previously if price breaks low at 922 we anticipate further downside movements towards 907.00 (intraday basis initial support areas); particularly if it succeeded to make a 4 hour candle stick close below 930.00 zones (38.2%) Fibonacci of the short term wave started at 1006.00(Feb.20th -2009) to 889.00 (Mar.18th -2009).
The trading range for today is among the key support now at 915.00 and key resistance now at 963.00.
The general trend is to the upside as far as 820.00 remains intact with targets at 1035.00 and 1060.00.
Support: 925.00, 916.00, 912.00, 907.00, 900.00
Resistance: 940.00, 952.00, 956.00, 966.00, 977.00
Note: We will update the movement in our evening note.
COPPER
News: Mitsubishi Materials Corporation will continue a 10 percent output cut at its smelters in Japan for the next six months and raise exports as domestic demand tumbles. Combined output from the Tokyo-based company’s Naoshima and Onahama smelters was reduced by 10 percent in February as global demand slowed. Japan’s manufacturers are slashing production as the economy heads for its worst recession since 1945. Exports plunged by a record 49.4 percent in February, the Finance Ministry said yesterday, as deepening slumps in the U.S. and Europe reduced demand. Output of copper alloy products fell by a record last month, an industry group said today. “Output tumbled as demand from the semiconductor and auto industries deteriorated,” Keizo Tani, research section manager at the Japan Copper and Brass Association, told reporters. Mitsubishi Materials may increase exports by as much as 31 percent next fiscal year to 85,000 tons because of shrinking domestic consumption, Kobayashi said. The company’s major export markets include China, Taiwan and Southeast Asia, he said.
Technical: Noted changed. The price have previously broken the resistance at 1.8410 and as mentioned previously we revert our perspective to the upside. Note: we see a laddering candlestick formation in place and the key resistance at 1.8745 have been broken successfully. Ichimouku studies indicates a probability of further incline. Currently we keep our outlook towards 2.00 levels as mentioned previously and ceteris paribus we expects this level to be tested near term.
The trading range for today is among the key support now at 1.8670 and key resistance is now at 2.000 level.
The general trend is to the upside as far as 1.6460.00 remains intact with targets at 2.0060.
Support: 1.8680, 1.8555, 1.8465, 1.8345, 1.8255, 1.8155
Resistance: 1.8750, 1.8865, 1.8945, 1.9045, 1.9115
Note: We anticipate further upside as far as 1.8555 remains intact.
SILVER
This morning we noted a new upside reactionary wave is under construction and its highly anticipated on the intraday basis that it will move to the upside again retesting 13.80 areas once more. Carefully note that stochastic shows a positive sign forming while ichimoku studies support this outlook as we noted Tenkan-Sen and Kijun-Sen is generating a upside bias as of this hour.
The trading range for today is among the key support at 12.95 and key resistance now at 14.25.
The general trend is to the upside as far as 12.00 remains intact with targets at 16.50.
Support: 13.35, 13.25, 13.12, 13.06, 12.95
Resistance: 13.66, 13.74, 13.90, 14.00, 14.05
Note: We will update the movement in our evening note.
MAY CRUDE
Oil is rising gradually and succeeded to breach first resistance area at 53.80 and the next level at 54.00. Hence we keep our morning bullish overview towards 55.90 followed by the initial resistance of the ascending channel at 56.70 as far as 52.65 remains intact.
The trading range for today is among the key support at 53.55 and the key resistance at 57.60.
The general trend is changing to the upside as far as 52.60 remains intact with targets at 64.50.
Support: 54.00, 53.55, 53.10, 52.80, 52.65
Resistance: 55.45, 55.90, 56.70, 57.25, 57.80
Note: Our morning position is still valid and we see a possibility of testing targets at 55.90.
FX :
DXY : The June Dollar posted an inside day with a higher close on Thursday as it consolidates above the 62% retracement level of the December-March rally crossing at 84.10. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near- term. Closes below the weekly uptrend line crossing near 83.00 would confirm that a major top in the Dollar has been posted while opening the door for a larger-degree decline this spring. Closes above the 20-day moving average crossing at 87.23 would temper the near-term bearish outlook in the market. First resistance is the 10-day moving average crossing at 85.28. Second resistance is the 20-day moving average crossing at 87.23. First support is last Thursday's low crossing at 83.14. Second support is the weekly uptrend line crossing near 83.00.
GBP/USD
An intraday top should be in place at 1.4778 in GBP/USD. Intraday outlook is turned neutral for the moment and some deeper pull back could be seen towards 4 hours 55 EMA (now at 1.4370). However, note that rise from 1.3654 is still expected to continue as long as 1.4230 cluster support holds. Such rise is treated as the third leg of consolidation from 1.3503, is expected to extend further towards 1.4984 resistance next. However, break of 1.4230 will argue that it has completed and will turn short term outlook bearish for 1.3654 support.
In the bigger picture, a medium term bottom is in place at 1.3503 after GBP/USD completed the five wave sequence from 2.0158 (1.7445, 1.8668, 1.4557, 1.5722, 1.3503). Consolidation from 1.3503 is still in progress and has started the third leg which could extend to 100% projection of 1.3503 to 1.4984 from 1.3654 at 1.5135 or further to 1.5722 resistance. On the downside, below 1.4230 will turn focus back to 1.3503 low. But after all, decisive break of 1.3503 is needed to confirm long term down trend resumption. Otherwise, further range trading could still be seen. .
AUD/USD
AUD/USD's consolidation from 0.7091 is still in progress and another retreat might be seen to 4 hours 55 EMA (now at 0.6825). Nevertheless, downside should be contained above 0.6564 support and bring rally resumption. Current rise from 0.6248, which is treated as part of consolidation from 0.6008, is still expected to extend further to 0.7267 cluster resistance (161.8% projection of 0.6248 to 0.6849 from 0.6284 at 0.7256) before completion.
In the bigger picture, rise from 0.6248 is treated as the third leg of consolidation from 0.6008 low (0.7267, 0.6248, ...) and should target 0.7256/67 cluster resistance. But upside is expected to be limited by 38.2% retracement of 0.9849 to 0.6008 at 0.7475 to complete the consolidation and bring down trend resumption. Below 0.6564 will argue that such rise has completed earlier than we thought will turn short term outlook bearish again for retesting 0.6008 low).
Thank You
Best Regards
Friday, March 27, 2009
Tuesday, March 24, 2009
FOREX analysis US session 20090324
OVERVIEW
US Equities staged their largest one day rally since the beginning of the new Presidential administration, with S&P futures closing above 800 for the first time since mid February, as the US Treasury outlined its plan to work with the private equity community to deal with the toxic assets that continue to plague the global financial system and fuel the ongoing credit freeze up. The plan was well received by a number of major private equity entities such as Pimco and Black Rock Private Equity. Both of these financial management firms offered their support for the plan and stated their commitment to participate. The acceptance of the plan triggered a broad based rally led not surprisingly by the financial sector. Bank of America rose over 20% and Citigroup rallied near 18%. The exceptional support for the plan appears to stem from the notion that the government would be taking control of the financing terms for the joint ventures on extremely generous terms. This perceived winning strategy is perceived as a strong draw to bring back a lot of the “smart money” which pulled out of the market in mid 2008 and has been waiting for the right terms and structure to be put into place in order to draw back working funds into the financial markets.
Key points of the plan include initial joint investment from private equity and Tarp funds creating a public private fund worth about $500 billion. The investors as well as the fund will buy the bad loans at auction using loans that will be guaranteed by the FDIC. The financial institutions will have the ability to decide which of the toxic assets they wish to offer and which they will try to make a go of on their own. The markets have been at this crossroads before. A sustainable rally will likely be contingent upon how quickly the financing program can be put into place. Even more significant will be the measure of the banking sectors ability to raise and offer credit once these assets have found new homes.
US Treasuries traded in relatively narrow range on Monday, continuing the pullback from last week record post FOMC rally, as the details of the Treasury Plan to create a market for the balance of toxic assets on financial institutions books was met with a resounding cheer in the equity markets. With the major indices rising over 4% today, it would seem that lower yielding fixed income should have fallen a greater amount than the near 1 basis point lost in the longer yielding 30 year today, This was not the case, due to the fact that Treasuries continue to hold a bid in the market in expectation of the Federal Reserve becoming a major purchaser of Treasury Debt.
This week, the US Treasury is scheduled to auction of $134 billion worth of government debt. The two key auctions that the markets will be watching will be the nearly $75 billion of US 2 and 5 year notes scheduled for auction this week. Market direction for the week could be determined by the Federal Reserve making its presence known as a buyer within these auctions. If the markets perceive that the Federal Reserve is not going to jump right out of the starting gate with purchases of Treasury Debt, then overall supply concerns will likely reenter market and could cause further erosion of last week’s upward spike in prices.
US AND CANADA
Today will see a chorus of speakers in North America, including testimony on AIG from Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner to the U.S. House Financial Services Committee. AIG has come under severe attack for awarding multimillion-dollar bonuses to executives following a $180 billion bailout from the U.S. government.
Also on Tuesday, markets will receive information on the Richmond region manufacturing sector. The Richmond Fed manufacturing index is expected to remain unchanged at -51 in March, deep in contractionary territory. The index is nevertheless better than the record low -55 level set in December. The Federal Housing Finance Agency will also release its house price index for January on Tuesday. House prices are expected to fall 0.9% against a 0.1% increase in December. Bullard, President of the Federal Reserve Bank of St. Louis, will speak in London.
In Singapore Time:
18:00 US Fed's Evans Speaks on Economic Outlook at Czech National Bank
22:00 US House Price Index (M/M) January Exp: -0.9% Prior: +0.1%
22:00 US Richmond Fed Manufacturing Index March Exp: -51 Prior: -51
22:00 US Bernanke, Geithner Testify About AIG
23:30 US Treasury to Sell 4-Week Bills
01:00 US Treasury to Sell $40B 2-Year Notes
02:35 US Bullard Speaks at Cass Business School in London
05:00 US ABC Consumer Confidence W/E March 22 Prior: -47
UK AND EUROPE
The focus on Tuesday in the euro zone will be on manufacturing and services purchasing managers indexes while in the UK, economists will look for further confirmation that inflation is easing further. At 5:00 p.m. Singapore Time, Markit Economics will publish its "flash" estimates for the euro zone March PMIs. Ahead of the release, expectations are for the manufacturing PMI to have stabilized, coming in unchanged at the 33.5 level. The services PMI is also expected to remain unchanged after slipping to an all-time low of 39.2 in February. Economists at Citigroup, however, expect the manufacturing PMI will drop substantially, while the services index will probably be largely unchanged.
"Other parts of the report probably will show a further decline in the employment plans and the assessment of prices," the economists added. In the UK, expectations are for inflation to ease to 2.6% in the 12 months to February, down 0.4 percentage points from January's print. On a monthly basis, the price growth rate is expected to have slowed to 0.3% in February from 0.7% previously.
The retail price index will also be released for the month of February. Currently, expectations are for the RPI to contract 0.7% year-over-year, down from January's 0.1% gain. Month-over-month, economists expect retail prices to have fallen 0.1% following January's 1.3% decline. "Despite a rise in petrol prices on the month, the year-on-year inflation rate should fall," Morgan Stanley analyst Melanie Baker said. "For RPI, further falls in house prices and mortgage interest payments help inflation decline by more on that measure," Baker added. "We continue to expect a further significant decline on both measures in coming months, bottoming out in the Autumn."
Shortly after the CPI and RPI releases, Bank of England Monetary Policy Committee members Mervyn King, Tim Besley, Paul Tucker and David Blanchflower, along with BOE chief economist Spencer Dale will testify to the House of Commons Treasury Select Committee.
In Singapore Time:
16:30 DE PMI Manufacturing March Advance Exp: +32.0 Prior: +32.1
16:30 DE PMI Services March Advance Exp: +41.0 Prior: +41.3
17:00 EU ECB Euro-Zone Current Account SA January Prior: -€7.3B
17:00 EU PMI Manufacturing March Advance Exp: +33.5 Prior: +33.5
17:00 EU Euro-Zone Current Account (NSA) January Prior: +1.4B
17:00 EU PMI Services March Advance Exp: +39.2 Prior: +39.2
17:00 EU PMI Composite March Advance Exp: +36.2 Prior: +36.2
17:00 EU ECB Council Member Liikanen Speaks in Helsinki
17:30 GB CPI (M/M) February Exp: +0.3% Prior: -0.7%
17:30 GB CPI (Y/Y) February Exp: +2.6% Prior: +3.0%
17:30 GB Core CPI (Y/Y) February Exp: +1.3% Prior: +1.3%
17:30 GB Retail Price Index February Exp: +209.2 Prior: +210.1
17:30 GB RPI (M/M) February Exp: -0.1% Prior: -1.3%
17:30 GB RPI (Y/Y) February Exp: -0.7% Prior: +0.1%
17:30 GB RPI Ex Mort Interest Payments (Y/Y) February Exp: +1.9% Prior: +2.4%
17:30 GB BBA Loans for House Purchase February Prior: 23376
17:45 GB BOE's King, Tucker, Dale, Besley, Blanchflower to testify
02:00 EU ECB's Constancio Speaks at University in Lisbon
02:30 GB Bank of England's Blanchflower to Make Speech
March 24-31 GB Nationwide House prices (M/M) (SA) March Exp: -1.5% Prior: -1.8%
March 24-31 GB Nationwide House prices (Y/Y) (NSA) March Exp: -18.1% Prior: -17.6%
March 23-27 DE Import Price Index (Y/Y) January Exp: -6.0% Prior: -5.1%
March 23-27 DE Import Price Index (M/M) January Exp: -0.4% Prior: -4.0%
ASIA
Asia markets rallied as the Dow closed higher on Monday on announcements of the plan to deal with the toxic assets.
The Bank of China, the world’s third-largest lender by market value, received initial government approval for its delayed 236 million-euro ($322 million) investment in La Compagnie Financiere Edmond De Rothschild, two people with knowledge of the matter said. The purchase of a 20 percent stake in the Paris-based asset manager was endorsed by China’s State Council ahead of an April 1 deadline, the people said, declining to be identified because the matter is private. Bank of China was forced to extend an original Dec. 31 deadline for the deal, announced in September, after failing to get state approval. The move may be a sign the Chinese government is easing curbs on overseas acquisitions by financial firms that were imposed after almost $10 billion of losses on investments, including in Morgan Stanely and Barclay. Bank of China, which is expected to report today that 2008 profit climbed 21 percent to 67.8 billion yuan ($9.9 billion) according to a Bloomberg survey of analysts, rose 0.9 percent in Hong Kong at 2:30 p.m. Financial stocks rallied worldwide after the U.S. yesterday unveiled a plan to remove $500 billion of toxic assets from its banks.
Compagnie Financiere Edmond de Rothschild, the French fund- management unit of closely held LCF Rothschild Group, and Bank of China will begin an asset-management and private-banking venture to sell Rothschild’s financial products through the Chinese lender’s 10,800 branches, according to a Sept. 18 statement announcing the investment. The French firm managed 29.6 billion euros in assets at the end of 2007. Chinese banks are more confident about making acquisitions over the next 12 months than rivals in other parts of the Asia- Pacific region because of their “comparatively stronger balance sheets,” PricewaterhouseCoopers LLP said yesterday, citing a survey done this year. Chinese Banks posted a 31 percent increase in combined profit for 2008 and will continue to outperform overseas rivals, Liu Ming Kang chairman of the China Banking Regulatory Commission, said last month. The nation’s three largest banks held a total of $570 billion in cash and cash equivalents as of Sept. 30, more than the combined market value of the world’s seven biggest non- Chinese lenders. The last overseas bank acquisition to receive approval was China Merchants Bank's purchase of Hong Kong’s Wing Lung Bank Ltd. in September. That acquisition was completed only after China Merchants twice extended a deadline.
COMMODITIES
A 4% rise in U.S. equities is not providing much of a drag on gold prices yesterday. Risk appetite is receiving a boost following the positive news about both the U.S. housing sector (existing home sales surprised to the upside in February) and the Treasury's plan to purchase up to $1 trillion in toxic assets from major banks. Despite this major announcement from the Treasury, it has been a relatively quiet session for CBOT spot gold prices, as they bounce between session highs at $959.00 an ounce and support at $945.52. Prices are hovering in the middle of the range, heading into the last few hours of the North American trading session.
George Gero, senior vice-president of global futures, said the fact that gold is not selling-off - on a day with a more than 4% rally in the Dow Jones and S&P 500 stock indexes - indicates the commodity is still seen as a safe haven investment against inflation concerns. Although prices are struggling to move higher, Gero still has a positive outlook on prices. He says it is only a matter of time before gold hits $1,000 an ounce, and he added the question is if prices will be able to sustain that level once it is attained. "Investor interest is the only thing that is driving gold prices higher," he said. "The demand outlook is weak and the question is will higher prices support the future jewellry demand." Commodity strategists from Barclays Capital said they are expecting to see more gains in gold prices as the U.S. dollar remains weak. Technical analysts from Citigroup are also looking for further gains in gold prices and have a target of $1,122. In the mining sector, spot gold is trading down $0.51 to $951.70.
The rally also led to a the rally in oil prices started at 10 p.m. on Monday. Prices dropped near session lows ahead of the existing home sales report and rebounded sharply following the better-than-expected data. Existing home sales rose 5.1% in February against expectations for a 0.9% decline, according to the National Association of Realtors. The positive news helped WTI crude break through $53 per barrel, hitting session highs at $53.84. Prices remain near the session highs and are holding above the $53 mark. Prices have been on a strong uptrend since March 15 with strong support at $51.
Rising risk appetite could suggest that underlying investor confidence is improving. Commodities market could also be moving higher in anticipation that global supply and demand will move back into balance. US crude oil has broken through $53.00/bbl yesterday, and out of a trading channel that has been in place since December. While a measured move suggests $71.00/bbl may be attainable over time, nearer term resistance looms near $60.00/bbl. Analysts from Citigroup said the technical indicators are pointing to further gains in oil prices. They noted that last week oil prices closed above $50 per barrel, and they believe this opens the way for $68.
In Canadian dollars, gold is down $8.98 to $1172.90. Silver contracts at the CBOT are up $0.02 to $13.83. WTI Crude oil is up $1.33 to $53.40 per barrel, while Brent crude oil is trading up $1.87 to $53.09 a barrel. Meanwhile, ICE RBOB gasoline futures are up $5.84 to $151.54 and Globex natural gas is unchanged at $1.36. Heating oil at the ICE is up $7.31 to $145.65. Bloomberg's index for base metals is up 1.27 points to 123.90. Wheat futures at the CBOT are up $5.25 to $555.50.
CURRENCIES
Overall, the majors were pulled higher by the rally seen in the equity markets yesterday. The move was extended in the Asian session, as traders re-priced the latest fundamental news coming from the U.S. session. As such, the currency market had a strong momentum in the Asian session, something not seen for a while. The European calendar looks very busy, and this will probably cause the currency market to trade on the same strong momentum and volume.
U.S. markets were pulled higher by the Treasury's plan to revive the mortgage and toxic asset markets by providing non-recourse loans to private investors. However, despite the joy experienced by the equity traders, most analysts and economists did not appear impressed by the new plan. the financials led the gains in the U.S. markets, as the Treasury is preparing to buy as much as $1 trillion of distressed assets. The S&P 500 rose 7.08%, capping its biggest 10-day gain since 1938. Additionally, the MSCI World Index rose tonight for the ninth time in the last ten days, gaining around 20% over this period.
In the mean time, some of the banks that needed to be bailed out remain in the spotlight. After causing a little riot in the Congress because of its bonuses, AIG announced that nine of the top ten beneficiaries agreed to return the money. Out of the $165 million paid in bonuses for AIG's activity in the last year, when it needed to be bailed out four times by the U.S. government, the insurer recovered $50 million and is probably (but not likely) to recover another $30 million. Learning from other's mistakes, J.P. Morgan took a different approach when deciding what is best for its employees. The bank, which received $25 billion in TARP funds, is going to buy two luxury corporate jets, worth of $120 million and build an $18 million hangar for them. This is great news for the two, especially when they are surviving on the taxpayer's money.
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TECHNICAL ANALYSIS
US INDICES
DJI closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that additional gains are possible near-term. SPI closed sharply higher on Monday extending this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. NDI closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term.
Technically, June Dow futures settled near a key resistance level of 7750. If this level can be breeched and held above, look for the market to find significant resistance at 7910. Pullback in Dow could move back to 7580 before next move up. Support has reset at the 7310 level.
EQUITY RANGESOPENHIGHLOWCLOSECHANGE
DJM9 (JUNE DOW)7400774573657712+497
SPM9 (JUNE S&P)783.50821.00780.50817.30+53.20
NDM9 (JUNE NASDAQ)1214.001259.001202.001252.00+64.00
Technically, the move up in June 30 year futures is coming under pressure as the markets seemed poised to retrace the gap back to an initial support level of 127.290. A break of this level could leave the contract open to retest a long term support level at 125.12. Look for an upward resistance level at 130.145. If this breaks, market could be on track to test 133.050.
US DEBT FUTURESOPENHIGHLOWCLOSECHANGE
US M9 (US 30 YRS)129.030129.235128.075128.195-20.5/32nds
TY M9 (US 10 YRS)124.165124.270124.030124.090-08/32nds
TAIWAN INDEX
Nothing changed, as current movement supports our earlier view as we anticipate a possible test at with targets at 200.57 (38.2% Fibonacci - 15/10/08 low) and if this level is able to hold successfully, we may see subsequent move higher towards the 215.22 (50% Fibonacci - 30/9/08 low). On the downside, if 180.31 breaks, we will likely see a move lower towards the 178/175 cluster zones subsequently.
COMMODITIES
GOLD
By placing a low yesterday at 935.25 the price proved that it respects the technical target of the head and shoulder appeared on the hourly chart. Now we see a sideway action confirmed by the bearish candle stick pattern appearing on 4h chart in addition to the overlapping sign on Stochastic. At this point, we are watching closely at the 925 support level. A drop below this level will accelerate the downside move towards 920/910 cluster zones. However if the price is able to move and sustain above 935/936 this will be accelerated if the price breached 50 % Fibonacci successfully at 945.00. Note: MA’s of RSI moves in a neutral areas preparing to support the price.
The trading range for today is among the key support now at 925.00 and key resistance now at 1000.00.
The general trend is to the upside as far as 820.00 remains intact with targets at 1035.00 and 1060.00.
Support: 930.00, 925.00, 916.00, 912.00, 907.00
Resistance: 945.00, 956.00, 963.00, 973.00, 984.00
Note: According to our analysis, a move and close above 945.00 with supports the probability of testing the level at 970.00.
COPPER
News : Comex copper is higher on general optimism also pushing stocks higher, says Bill O'Neill, one of the principals with LOGIC Advisors. One of the catalysts is the Treasury's plan on dealing with toxic real-estate debt on banks' books. "There are still indications of Chinese interest in the market," he adds. "There have been some reports of copper shipments going out to China." Overnight data shows the country imported 270,948 metric tons of refined copper last month. "We're seeing very good interest from China, and China is a driving force in the market," O'Neill says. Also constructive is the weaker U.S. dollar lately, he adds. "So there are a lot of factors going into this gradual move," he says. Still, the analyst says he fears the overall 2009 demand outlook for copper remains "questionable."
Technical : Copper have retraced over last few hours led partially by the rebound in USD during the Asia trading hours. The price have dropped below the 1.8355 support and as of now we are focusing on the next level of key support which comes at 1.8145. Note: Based on the laddering formation, we expect of the continuation of the bullishness in copper. We will be keeping track of the closing price as of today and currently we maintained an upside bias remains unchanged towards targets at 2.00. However we would be watching cautiously of any potential signs of correction.
The trading range for today is among the key support now at 1.8145 and key resistance is now at 1.9135 level.
The general trend is to the upside as far as 1.6460.00 remains intact with targets at 1.8785.
Support: 1.8230, 1.8145, 1.8055, 1.7920, 1.7865
Resistance: 1.8455, 1.8750, 1.8885, 1.8940, 1.907
Note: At point in time we keeping close watch of the movement and any indications of a possible start short term correction.
SILVER
Silver is definitely supported via previous mentioned Fibonacci expansion level as shown in the chart and as we expected yesterday the price moved downside aiming to gather the proper momentum to complete the upside action again in particular after it succeeded to close 4h candles above 13.50. Therefore additional upward action is now highly anticipated towards testing 13.90 critical areas followed by 14.30 and we notice that the camarilla studies on shorter time frames support our bullish overview today as far as 13.25 remains unbroken.
The trading range for today is among the key support at 13.25 and key resistance now at 14.60.
The general trend is to the upside as far as 12.00 remains intact with targets at 16.50.
Support: 13.55, 13.45, 13.35, 13.25, 13.00
Resistance: 13.74, 13.88, 13.95, 14.15, 14.25
Note: According to our analysis, a close above 13.65 opens the probability of testing targets at 14.25.
MAY CRUDE
The price achieved a sharp break out above 52.55 again and started to move steadily above 53.00. Hence this stability above 52.55 shows that the short and medium term trading systems change the direction to the upside inside the inclining channel targeting 55.25 and 56.50 as far as 52.60 remains unbroken.
The trading range for today is among the key support at 51.60 and the key resistance at 56.50.
The general trend is changing to the upside as far as 52.60 remains intact with targets at 64.50.
Support: 52.60, 52.20, 51.60, 50.95, 50.25
Resistance: 53.95, 54.55, 55.20, 55.95, 56.50
Note: According to our analysis, if price move and close above 52.60 it will open the targets at 55.20.
FX
Dollar index: DXY has turned neutral and is currently trading near 83.77, below the resistance of 84.60. The support stays at 82 levels which if broken can turn the outlook majorly bearish for DXY. The stochastic is flat in over-sold region at 12.34%.
Euro: Euro retraced to a low of 1.3485 in the early US session yesterday from where it rebounded and is now trading at 1.3660. Euro could not hold the lows despite disappointing Trade Balance data of Eurozone and strong Retail Sales of US. The stochastic in daily and weekly chart has flattened indicating further upmove. Immediate cluster resistance remains at 1.3867 (100 Weekly EMA & 61.8% Retracement of the fall) which could hold temporarily. Breaking of this resistance may push Euro towards 1.4180.
Pound: Cable as expected bounced back from 1.4448 lows (55 Hourly EMA) yesterday and is currently trading higher around 1.47 levels. The daily stochastic is extremely overbought, however, not indicating a sell yet. Immediate support comes at 1.4588 (21 hourly EMA & 38.2% of the recent rise) and then at 1.4458 (21 4-hourly EMA) whereas the resistance is traced around 1.4960 (100 Daily EMA & previous high as on Feb 9th, 2009) which could be held.
Yen: The Usd/Jpy pair surged almost 170 pips in yesterday's session from the bids of 95.62 to 97.35 highs. This morning the pair further strengthened and is trading close to the 200 Daily EMA at 98.16. The daily and 4-hourly charts are indicating further upside. As long as 95.50 support holds, further rally upto 100.10 levels (55 Weekly EMA) is still in favour of the Pair.
Swiss Franc: The Usd/Chf pair held strongly below the 200 daily EMA (1.1341) and fell to close the session at 1.1247. The 4-hourly chart indicates a downside while the daily chart is oversold. Resistance continues to be around 1.1330.
Australian Dollar: Aussie rose 156 pips yesterday from 0.6904 and breached the 0.70 mark. This morning it is sustaining above the 0.70 levels and is heading towards the next target of 0.7230 (200 Monthly EMA). Major charts are over-bought but room for further upside is still there.
Thank You
Best Regards
Alfred Wang
US Equities staged their largest one day rally since the beginning of the new Presidential administration, with S&P futures closing above 800 for the first time since mid February, as the US Treasury outlined its plan to work with the private equity community to deal with the toxic assets that continue to plague the global financial system and fuel the ongoing credit freeze up. The plan was well received by a number of major private equity entities such as Pimco and Black Rock Private Equity. Both of these financial management firms offered their support for the plan and stated their commitment to participate. The acceptance of the plan triggered a broad based rally led not surprisingly by the financial sector. Bank of America rose over 20% and Citigroup rallied near 18%. The exceptional support for the plan appears to stem from the notion that the government would be taking control of the financing terms for the joint ventures on extremely generous terms. This perceived winning strategy is perceived as a strong draw to bring back a lot of the “smart money” which pulled out of the market in mid 2008 and has been waiting for the right terms and structure to be put into place in order to draw back working funds into the financial markets.
Key points of the plan include initial joint investment from private equity and Tarp funds creating a public private fund worth about $500 billion. The investors as well as the fund will buy the bad loans at auction using loans that will be guaranteed by the FDIC. The financial institutions will have the ability to decide which of the toxic assets they wish to offer and which they will try to make a go of on their own. The markets have been at this crossroads before. A sustainable rally will likely be contingent upon how quickly the financing program can be put into place. Even more significant will be the measure of the banking sectors ability to raise and offer credit once these assets have found new homes.
US Treasuries traded in relatively narrow range on Monday, continuing the pullback from last week record post FOMC rally, as the details of the Treasury Plan to create a market for the balance of toxic assets on financial institutions books was met with a resounding cheer in the equity markets. With the major indices rising over 4% today, it would seem that lower yielding fixed income should have fallen a greater amount than the near 1 basis point lost in the longer yielding 30 year today, This was not the case, due to the fact that Treasuries continue to hold a bid in the market in expectation of the Federal Reserve becoming a major purchaser of Treasury Debt.
This week, the US Treasury is scheduled to auction of $134 billion worth of government debt. The two key auctions that the markets will be watching will be the nearly $75 billion of US 2 and 5 year notes scheduled for auction this week. Market direction for the week could be determined by the Federal Reserve making its presence known as a buyer within these auctions. If the markets perceive that the Federal Reserve is not going to jump right out of the starting gate with purchases of Treasury Debt, then overall supply concerns will likely reenter market and could cause further erosion of last week’s upward spike in prices.
US AND CANADA
Today will see a chorus of speakers in North America, including testimony on AIG from Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner to the U.S. House Financial Services Committee. AIG has come under severe attack for awarding multimillion-dollar bonuses to executives following a $180 billion bailout from the U.S. government.
Also on Tuesday, markets will receive information on the Richmond region manufacturing sector. The Richmond Fed manufacturing index is expected to remain unchanged at -51 in March, deep in contractionary territory. The index is nevertheless better than the record low -55 level set in December. The Federal Housing Finance Agency will also release its house price index for January on Tuesday. House prices are expected to fall 0.9% against a 0.1% increase in December. Bullard, President of the Federal Reserve Bank of St. Louis, will speak in London.
In Singapore Time:
18:00 US Fed's Evans Speaks on Economic Outlook at Czech National Bank
22:00 US House Price Index (M/M) January Exp: -0.9% Prior: +0.1%
22:00 US Richmond Fed Manufacturing Index March Exp: -51 Prior: -51
22:00 US Bernanke, Geithner Testify About AIG
23:30 US Treasury to Sell 4-Week Bills
01:00 US Treasury to Sell $40B 2-Year Notes
02:35 US Bullard Speaks at Cass Business School in London
05:00 US ABC Consumer Confidence W/E March 22 Prior: -47
UK AND EUROPE
The focus on Tuesday in the euro zone will be on manufacturing and services purchasing managers indexes while in the UK, economists will look for further confirmation that inflation is easing further. At 5:00 p.m. Singapore Time, Markit Economics will publish its "flash" estimates for the euro zone March PMIs. Ahead of the release, expectations are for the manufacturing PMI to have stabilized, coming in unchanged at the 33.5 level. The services PMI is also expected to remain unchanged after slipping to an all-time low of 39.2 in February. Economists at Citigroup, however, expect the manufacturing PMI will drop substantially, while the services index will probably be largely unchanged.
"Other parts of the report probably will show a further decline in the employment plans and the assessment of prices," the economists added. In the UK, expectations are for inflation to ease to 2.6% in the 12 months to February, down 0.4 percentage points from January's print. On a monthly basis, the price growth rate is expected to have slowed to 0.3% in February from 0.7% previously.
The retail price index will also be released for the month of February. Currently, expectations are for the RPI to contract 0.7% year-over-year, down from January's 0.1% gain. Month-over-month, economists expect retail prices to have fallen 0.1% following January's 1.3% decline. "Despite a rise in petrol prices on the month, the year-on-year inflation rate should fall," Morgan Stanley analyst Melanie Baker said. "For RPI, further falls in house prices and mortgage interest payments help inflation decline by more on that measure," Baker added. "We continue to expect a further significant decline on both measures in coming months, bottoming out in the Autumn."
Shortly after the CPI and RPI releases, Bank of England Monetary Policy Committee members Mervyn King, Tim Besley, Paul Tucker and David Blanchflower, along with BOE chief economist Spencer Dale will testify to the House of Commons Treasury Select Committee.
In Singapore Time:
16:30 DE PMI Manufacturing March Advance Exp: +32.0 Prior: +32.1
16:30 DE PMI Services March Advance Exp: +41.0 Prior: +41.3
17:00 EU ECB Euro-Zone Current Account SA January Prior: -€7.3B
17:00 EU PMI Manufacturing March Advance Exp: +33.5 Prior: +33.5
17:00 EU Euro-Zone Current Account (NSA) January Prior: +1.4B
17:00 EU PMI Services March Advance Exp: +39.2 Prior: +39.2
17:00 EU PMI Composite March Advance Exp: +36.2 Prior: +36.2
17:00 EU ECB Council Member Liikanen Speaks in Helsinki
17:30 GB CPI (M/M) February Exp: +0.3% Prior: -0.7%
17:30 GB CPI (Y/Y) February Exp: +2.6% Prior: +3.0%
17:30 GB Core CPI (Y/Y) February Exp: +1.3% Prior: +1.3%
17:30 GB Retail Price Index February Exp: +209.2 Prior: +210.1
17:30 GB RPI (M/M) February Exp: -0.1% Prior: -1.3%
17:30 GB RPI (Y/Y) February Exp: -0.7% Prior: +0.1%
17:30 GB RPI Ex Mort Interest Payments (Y/Y) February Exp: +1.9% Prior: +2.4%
17:30 GB BBA Loans for House Purchase February Prior: 23376
17:45 GB BOE's King, Tucker, Dale, Besley, Blanchflower to testify
02:00 EU ECB's Constancio Speaks at University in Lisbon
02:30 GB Bank of England's Blanchflower to Make Speech
March 24-31 GB Nationwide House prices (M/M) (SA) March Exp: -1.5% Prior: -1.8%
March 24-31 GB Nationwide House prices (Y/Y) (NSA) March Exp: -18.1% Prior: -17.6%
March 23-27 DE Import Price Index (Y/Y) January Exp: -6.0% Prior: -5.1%
March 23-27 DE Import Price Index (M/M) January Exp: -0.4% Prior: -4.0%
ASIA
Asia markets rallied as the Dow closed higher on Monday on announcements of the plan to deal with the toxic assets.
The Bank of China, the world’s third-largest lender by market value, received initial government approval for its delayed 236 million-euro ($322 million) investment in La Compagnie Financiere Edmond De Rothschild, two people with knowledge of the matter said. The purchase of a 20 percent stake in the Paris-based asset manager was endorsed by China’s State Council ahead of an April 1 deadline, the people said, declining to be identified because the matter is private. Bank of China was forced to extend an original Dec. 31 deadline for the deal, announced in September, after failing to get state approval. The move may be a sign the Chinese government is easing curbs on overseas acquisitions by financial firms that were imposed after almost $10 billion of losses on investments, including in Morgan Stanely and Barclay. Bank of China, which is expected to report today that 2008 profit climbed 21 percent to 67.8 billion yuan ($9.9 billion) according to a Bloomberg survey of analysts, rose 0.9 percent in Hong Kong at 2:30 p.m. Financial stocks rallied worldwide after the U.S. yesterday unveiled a plan to remove $500 billion of toxic assets from its banks.
Compagnie Financiere Edmond de Rothschild, the French fund- management unit of closely held LCF Rothschild Group, and Bank of China will begin an asset-management and private-banking venture to sell Rothschild’s financial products through the Chinese lender’s 10,800 branches, according to a Sept. 18 statement announcing the investment. The French firm managed 29.6 billion euros in assets at the end of 2007. Chinese banks are more confident about making acquisitions over the next 12 months than rivals in other parts of the Asia- Pacific region because of their “comparatively stronger balance sheets,” PricewaterhouseCoopers LLP said yesterday, citing a survey done this year. Chinese Banks posted a 31 percent increase in combined profit for 2008 and will continue to outperform overseas rivals, Liu Ming Kang chairman of the China Banking Regulatory Commission, said last month. The nation’s three largest banks held a total of $570 billion in cash and cash equivalents as of Sept. 30, more than the combined market value of the world’s seven biggest non- Chinese lenders. The last overseas bank acquisition to receive approval was China Merchants Bank's purchase of Hong Kong’s Wing Lung Bank Ltd. in September. That acquisition was completed only after China Merchants twice extended a deadline.
COMMODITIES
A 4% rise in U.S. equities is not providing much of a drag on gold prices yesterday. Risk appetite is receiving a boost following the positive news about both the U.S. housing sector (existing home sales surprised to the upside in February) and the Treasury's plan to purchase up to $1 trillion in toxic assets from major banks. Despite this major announcement from the Treasury, it has been a relatively quiet session for CBOT spot gold prices, as they bounce between session highs at $959.00 an ounce and support at $945.52. Prices are hovering in the middle of the range, heading into the last few hours of the North American trading session.
George Gero, senior vice-president of global futures, said the fact that gold is not selling-off - on a day with a more than 4% rally in the Dow Jones and S&P 500 stock indexes - indicates the commodity is still seen as a safe haven investment against inflation concerns. Although prices are struggling to move higher, Gero still has a positive outlook on prices. He says it is only a matter of time before gold hits $1,000 an ounce, and he added the question is if prices will be able to sustain that level once it is attained. "Investor interest is the only thing that is driving gold prices higher," he said. "The demand outlook is weak and the question is will higher prices support the future jewellry demand." Commodity strategists from Barclays Capital said they are expecting to see more gains in gold prices as the U.S. dollar remains weak. Technical analysts from Citigroup are also looking for further gains in gold prices and have a target of $1,122. In the mining sector, spot gold is trading down $0.51 to $951.70.
The rally also led to a the rally in oil prices started at 10 p.m. on Monday. Prices dropped near session lows ahead of the existing home sales report and rebounded sharply following the better-than-expected data. Existing home sales rose 5.1% in February against expectations for a 0.9% decline, according to the National Association of Realtors. The positive news helped WTI crude break through $53 per barrel, hitting session highs at $53.84. Prices remain near the session highs and are holding above the $53 mark. Prices have been on a strong uptrend since March 15 with strong support at $51.
Rising risk appetite could suggest that underlying investor confidence is improving. Commodities market could also be moving higher in anticipation that global supply and demand will move back into balance. US crude oil has broken through $53.00/bbl yesterday, and out of a trading channel that has been in place since December. While a measured move suggests $71.00/bbl may be attainable over time, nearer term resistance looms near $60.00/bbl. Analysts from Citigroup said the technical indicators are pointing to further gains in oil prices. They noted that last week oil prices closed above $50 per barrel, and they believe this opens the way for $68.
In Canadian dollars, gold is down $8.98 to $1172.90. Silver contracts at the CBOT are up $0.02 to $13.83. WTI Crude oil is up $1.33 to $53.40 per barrel, while Brent crude oil is trading up $1.87 to $53.09 a barrel. Meanwhile, ICE RBOB gasoline futures are up $5.84 to $151.54 and Globex natural gas is unchanged at $1.36. Heating oil at the ICE is up $7.31 to $145.65. Bloomberg's index for base metals is up 1.27 points to 123.90. Wheat futures at the CBOT are up $5.25 to $555.50.
CURRENCIES
Overall, the majors were pulled higher by the rally seen in the equity markets yesterday. The move was extended in the Asian session, as traders re-priced the latest fundamental news coming from the U.S. session. As such, the currency market had a strong momentum in the Asian session, something not seen for a while. The European calendar looks very busy, and this will probably cause the currency market to trade on the same strong momentum and volume.
U.S. markets were pulled higher by the Treasury's plan to revive the mortgage and toxic asset markets by providing non-recourse loans to private investors. However, despite the joy experienced by the equity traders, most analysts and economists did not appear impressed by the new plan. the financials led the gains in the U.S. markets, as the Treasury is preparing to buy as much as $1 trillion of distressed assets. The S&P 500 rose 7.08%, capping its biggest 10-day gain since 1938. Additionally, the MSCI World Index rose tonight for the ninth time in the last ten days, gaining around 20% over this period.
In the mean time, some of the banks that needed to be bailed out remain in the spotlight. After causing a little riot in the Congress because of its bonuses, AIG announced that nine of the top ten beneficiaries agreed to return the money. Out of the $165 million paid in bonuses for AIG's activity in the last year, when it needed to be bailed out four times by the U.S. government, the insurer recovered $50 million and is probably (but not likely) to recover another $30 million. Learning from other's mistakes, J.P. Morgan took a different approach when deciding what is best for its employees. The bank, which received $25 billion in TARP funds, is going to buy two luxury corporate jets, worth of $120 million and build an $18 million hangar for them. This is great news for the two, especially when they are surviving on the taxpayer's money.
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TECHNICAL ANALYSIS
US INDICES
DJI closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that additional gains are possible near-term. SPI closed sharply higher on Monday extending this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. NDI closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term.
Technically, June Dow futures settled near a key resistance level of 7750. If this level can be breeched and held above, look for the market to find significant resistance at 7910. Pullback in Dow could move back to 7580 before next move up. Support has reset at the 7310 level.
EQUITY RANGESOPENHIGHLOWCLOSECHANGE
DJM9 (JUNE DOW)7400774573657712+497
SPM9 (JUNE S&P)783.50821.00780.50817.30+53.20
NDM9 (JUNE NASDAQ)1214.001259.001202.001252.00+64.00
Technically, the move up in June 30 year futures is coming under pressure as the markets seemed poised to retrace the gap back to an initial support level of 127.290. A break of this level could leave the contract open to retest a long term support level at 125.12. Look for an upward resistance level at 130.145. If this breaks, market could be on track to test 133.050.
US DEBT FUTURESOPENHIGHLOWCLOSECHANGE
US M9 (US 30 YRS)129.030129.235128.075128.195-20.5/32nds
TY M9 (US 10 YRS)124.165124.270124.030124.090-08/32nds
TAIWAN INDEX
Nothing changed, as current movement supports our earlier view as we anticipate a possible test at with targets at 200.57 (38.2% Fibonacci - 15/10/08 low) and if this level is able to hold successfully, we may see subsequent move higher towards the 215.22 (50% Fibonacci - 30/9/08 low). On the downside, if 180.31 breaks, we will likely see a move lower towards the 178/175 cluster zones subsequently.
COMMODITIES
GOLD
By placing a low yesterday at 935.25 the price proved that it respects the technical target of the head and shoulder appeared on the hourly chart. Now we see a sideway action confirmed by the bearish candle stick pattern appearing on 4h chart in addition to the overlapping sign on Stochastic. At this point, we are watching closely at the 925 support level. A drop below this level will accelerate the downside move towards 920/910 cluster zones. However if the price is able to move and sustain above 935/936 this will be accelerated if the price breached 50 % Fibonacci successfully at 945.00. Note: MA’s of RSI moves in a neutral areas preparing to support the price.
The trading range for today is among the key support now at 925.00 and key resistance now at 1000.00.
The general trend is to the upside as far as 820.00 remains intact with targets at 1035.00 and 1060.00.
Support: 930.00, 925.00, 916.00, 912.00, 907.00
Resistance: 945.00, 956.00, 963.00, 973.00, 984.00
Note: According to our analysis, a move and close above 945.00 with supports the probability of testing the level at 970.00.
COPPER
News : Comex copper is higher on general optimism also pushing stocks higher, says Bill O'Neill, one of the principals with LOGIC Advisors. One of the catalysts is the Treasury's plan on dealing with toxic real-estate debt on banks' books. "There are still indications of Chinese interest in the market," he adds. "There have been some reports of copper shipments going out to China." Overnight data shows the country imported 270,948 metric tons of refined copper last month. "We're seeing very good interest from China, and China is a driving force in the market," O'Neill says. Also constructive is the weaker U.S. dollar lately, he adds. "So there are a lot of factors going into this gradual move," he says. Still, the analyst says he fears the overall 2009 demand outlook for copper remains "questionable."
Technical : Copper have retraced over last few hours led partially by the rebound in USD during the Asia trading hours. The price have dropped below the 1.8355 support and as of now we are focusing on the next level of key support which comes at 1.8145. Note: Based on the laddering formation, we expect of the continuation of the bullishness in copper. We will be keeping track of the closing price as of today and currently we maintained an upside bias remains unchanged towards targets at 2.00. However we would be watching cautiously of any potential signs of correction.
The trading range for today is among the key support now at 1.8145 and key resistance is now at 1.9135 level.
The general trend is to the upside as far as 1.6460.00 remains intact with targets at 1.8785.
Support: 1.8230, 1.8145, 1.8055, 1.7920, 1.7865
Resistance: 1.8455, 1.8750, 1.8885, 1.8940, 1.907
Note: At point in time we keeping close watch of the movement and any indications of a possible start short term correction.
SILVER
Silver is definitely supported via previous mentioned Fibonacci expansion level as shown in the chart and as we expected yesterday the price moved downside aiming to gather the proper momentum to complete the upside action again in particular after it succeeded to close 4h candles above 13.50. Therefore additional upward action is now highly anticipated towards testing 13.90 critical areas followed by 14.30 and we notice that the camarilla studies on shorter time frames support our bullish overview today as far as 13.25 remains unbroken.
The trading range for today is among the key support at 13.25 and key resistance now at 14.60.
The general trend is to the upside as far as 12.00 remains intact with targets at 16.50.
Support: 13.55, 13.45, 13.35, 13.25, 13.00
Resistance: 13.74, 13.88, 13.95, 14.15, 14.25
Note: According to our analysis, a close above 13.65 opens the probability of testing targets at 14.25.
MAY CRUDE
The price achieved a sharp break out above 52.55 again and started to move steadily above 53.00. Hence this stability above 52.55 shows that the short and medium term trading systems change the direction to the upside inside the inclining channel targeting 55.25 and 56.50 as far as 52.60 remains unbroken.
The trading range for today is among the key support at 51.60 and the key resistance at 56.50.
The general trend is changing to the upside as far as 52.60 remains intact with targets at 64.50.
Support: 52.60, 52.20, 51.60, 50.95, 50.25
Resistance: 53.95, 54.55, 55.20, 55.95, 56.50
Note: According to our analysis, if price move and close above 52.60 it will open the targets at 55.20.
FX
Dollar index: DXY has turned neutral and is currently trading near 83.77, below the resistance of 84.60. The support stays at 82 levels which if broken can turn the outlook majorly bearish for DXY. The stochastic is flat in over-sold region at 12.34%.
Euro: Euro retraced to a low of 1.3485 in the early US session yesterday from where it rebounded and is now trading at 1.3660. Euro could not hold the lows despite disappointing Trade Balance data of Eurozone and strong Retail Sales of US. The stochastic in daily and weekly chart has flattened indicating further upmove. Immediate cluster resistance remains at 1.3867 (100 Weekly EMA & 61.8% Retracement of the fall) which could hold temporarily. Breaking of this resistance may push Euro towards 1.4180.
Pound: Cable as expected bounced back from 1.4448 lows (55 Hourly EMA) yesterday and is currently trading higher around 1.47 levels. The daily stochastic is extremely overbought, however, not indicating a sell yet. Immediate support comes at 1.4588 (21 hourly EMA & 38.2% of the recent rise) and then at 1.4458 (21 4-hourly EMA) whereas the resistance is traced around 1.4960 (100 Daily EMA & previous high as on Feb 9th, 2009) which could be held.
Yen: The Usd/Jpy pair surged almost 170 pips in yesterday's session from the bids of 95.62 to 97.35 highs. This morning the pair further strengthened and is trading close to the 200 Daily EMA at 98.16. The daily and 4-hourly charts are indicating further upside. As long as 95.50 support holds, further rally upto 100.10 levels (55 Weekly EMA) is still in favour of the Pair.
Swiss Franc: The Usd/Chf pair held strongly below the 200 daily EMA (1.1341) and fell to close the session at 1.1247. The 4-hourly chart indicates a downside while the daily chart is oversold. Resistance continues to be around 1.1330.
Australian Dollar: Aussie rose 156 pips yesterday from 0.6904 and breached the 0.70 mark. This morning it is sustaining above the 0.70 levels and is heading towards the next target of 0.7230 (200 Monthly EMA). Major charts are over-bought but room for further upside is still there.
Thank You
Best Regards
Alfred Wang
FOREX analysis Asia overview 20090324
OVERVIEW
Stock markets heartily endorsed a plan to help lift $1 trillion in hard-to-value assets from the balance sheets of financial institutions, giving the main indexes their best day since October. Treasury Secretary Timothy Geithner pledged to spend up to $100 billion in TARP funds for the Private Public Investment Program, which could help purchase $1 trillion in toxic assets. The Dow Jones industrial average closed up 497 points, or 6.8%, to 7776, the S&P 500 up 54 points, or 7.1%, to 823 and the Nasdaq up 99 points, or 6.8%, to 1556. It was the largest percentage gain in the S&P 500 since Oct. 28.
The plan involves creating five different public-private funds that will bid on toxic assets. Bill Gross, co-chief investment officer at Pimco, said his firm intends to participate as a manager and buyer. "This is perhaps the first win/win/win policy to be put on the table," Gross said in an emailed statement. He also said the returns could be "in the teens". Financials were among the chief beneficiaries of the plan. Shares of Citigroup gained 17%, Bank of America climbed 19% and JPMorgan added 18.6%. Analysts at Capital Economics said the plan deserves a cautiously optimistic welcome because it is unclear how enthusiastic banks will be to sell the troubled assets. "There is still plenty of uncertainty surrounding how the pricing of these assets and loans will occur. In particular, banks may prefer to continue to sit on the assets rather than accept a substantial loss," they wrote in a client note. Also helping stocks was a strong report on existing home sales. Sales grew 5.1% in February against expectations for a 0.9% decline, and following a 5.3% drop in January, according to the National Association of Realtors. The optimism from the plan spilled over to international stock markets. In Canada, the S&P/TSX composite index closed up 424 points to 8930 and the main European bourses gained 2-4%.
It was a volatile day for USD/CAD following the announcement of the U.S. Treasury's plan to purchase toxic assets, and better than expected U.S. housing data. Early in the session, the currency pair traded in a one-cent range and had little reaction to surging equity markets. But as stocks made gains and oil hit a 10-week high, the Canadian dollar surged. Late in the session, USD/CAD was down 0.0165 to 1.2243. Most of Monday's volatility is due to the news that the U.S. Treasury will invest up to $1 trillion to purchase mortgage-backed securities and other toxic debt. Over the weekend, the Wall Street Journal published a story releasing some of the proposed details. USD/CAD moved higher following the release of the official report. Currency strategists said the stronger U.S. dollar reflected some uncertainty over the plan. Steve Butler, director of FX trading at the Bank of Nova Scotia, said he sees the rally in the U.S. dollar as short covering, as investors take some profits off the table. "It sounds like a great plan but I think people might have some questions as to exactly how this would work," he said. The Canadian dollar recovered some of its losses following a better-than-expected U.S. existing home sales report.
Marc Chandler, senior currency strategist from Brown Brothers Harriman, said he is looking for the U.S. dollar to continue to weaken as risk appetite continues to improve. The U.S. dollar also weakened against the other currencies as Treasury Secretary Timothy Geithner detailed the program. The U.S. dollar was up 1.11 to 97.06 against the yen and the Dollar Index was down 0.415 to 83.426. The euro was up 0.0063 to 1.3645 against the U.S. dollar, down 0.0171 to 1.6682 against the Canadian dollar, down 0.0028 to 0.9361 against the pound sterling and was higher by 2.15 to 132.42 against the yen. The pound sterling was up 0.0110 to 1.4575 against the U.S. dollar and down 0.0136 to 1.7819 against the Canadian dollar.
The U.S. Treasury's plan to purchase toxic assets and stronger-than-expected existing home sales helped to boost oil on Monday, sending it to a two-and-a-half month high. The rally in oil prices started at 10 a.m. EDT. Prices dropped to near session lows ahead of the existing home sales report and rebounded sharply following the better-than-expected data. The positive news helped WTI crude break through $54 per barrel, hitting session highs at $54.03. Most recently, WTI crude oil was up $1.78 to $53.85. Also helping to boost risk appetite is the latest news from the U.S. Treasury, which announced it would invest up to $1 trillion to purchase mortgage-backed securities and other toxic debt. Colin Cieszynski, market analyst from CMC Markets, said rising risk appetite could suggest that underlying investor confidence is improving. He added the commodities market could also be moving higher in anticipation that global supply and demand will move back into balance.
"U.S. crude oil has broken through $53.00/bbl today, and out of a trading channel that has been in place since December. While a measured move suggests $71.00/bbl may be attainable over time, nearer term resistance looms near $60.00/bbl," he wrote. Analysts from Citigroup said the technical indicators are pointing to further gains in oil prices. They noted that last week oil prices closed above $50 per barrel, and they believe this opens the way for $68. The powerful rally in equities left the Treasury market in limbo on Monday. Lowered risk aversion argued for higher rates but the Federal Reserve's pledge to buy Treasuries capped the gains. "Monday's session was lackluster at best," said David Ader, head of government bond strategy at RBS Greenwich Capital. "The Treasury Department's long-awaited bad-bank bailout program failed to create enough selling pressure to push yields meaningfully higher." On the session, U.S. two-year yields were up 4.1 bps to 0.91%, with five-year yields up 5.6 bps to 1.70%, 10-year yields up 4.1 bps to 2.68% and 30-year yields up 3.9 bps to 3.70%. "The lack of any further details from the Fed on the Treasury-purchase plan has left the market in a bit of suspense," Ader said. Elsewhere, yields on two-year Canadian government bonds were up 2.8 bps to 1.04%, with five-year yields up 2.6 bps to 1.76%, 10-year yields up 2.9 bps to 2.77% and 30-year yields up 1.5 bps to 3.61%. The September 09 BAX contract was down 3.0 ticks to 99.45. In Germany, returns on two-year German bonds were up 1.5 bps to 1.33%, with five-year yields up 3.6 bps to 2.25%, 10-year yields up 4.5 bps to 3.02% and 30-year yields up 2.0 bps to 3.89%. Yields on UK two-year bonds were down 3.4 bps to 1.31%, with five-year yields up 6.4 bps to 2.31%, 10-year yields up 9.6 bps to 3.12% and 30-year yields up 2.6 bps to 4.10%.
ASIA
The Bank of Japan's minutes from the February 18-19 meeting revealed the bank felt that buying corporate bonds was necessary to stabilise financial markets. At the meeting, the central bank held the target rate unchanged at 0.1% as expected, but also announced further measure to boost corporate financing. The bank said it would begin purchases of corporate bonds and extend the period of time they will buy commercial paper. The bank has met since then and expanded their purchases of Japanese government bonds. Japan's money market had been nervous," the minutes read, citing several irregularities on interest rates and exchange rates. The Bank of Japan members agreed they should support a decline in term rates through a special funding, but also acknowledged that an exit strategy from the programs was needed. One member, Miyako Suda, said the purchase of corporate bonds was unnecessary and would have limited impact.
The Reserve Bank of Australia's Assistant Governor Philip Lowe said Tuesday that the country needs to revamp its electronic payment systems. Speaking in Sydney, the central banker made no reference to the Australian economy or interest rates. The bank is working on reforming online purchases and setting a cap on the fees a merchant's bank pays a customer's bank when the merchant accepts credit cards such as Visa or Mastercard.
COMMODITIES
Oil price remains strong in European morning as driven by rallies in stock markets. Sentiment has improved significantly after central banks around the world showed efforts to revive the economy. Currently trading at 55.5, the May futures should trade firmly above 50 in the neart-term. However, we doubt if it can head for 60 without much volatility as investment demand has grown since last week. Any bad news, such as another week of inventory gain, will trigger profit-taking.
In Asia, the MSCI Asia pacific Index added almost 4%, the biggest jump since Dec 15 while Japan's Nikkei 225 Stock Average climbed d3.4%. In China, stocks have risen for the 6th consecutive day as investors speculate the nation will be first economy to recover from global recession with the Chinese government's stimulus plans.
Sinopec, Asia's largest refiner, gained 4.6% after the corporation said its profit may double to RMB 46.2B in 2009, following a first-in-7-years decline in net income in 2008. Other oil stocks also surged. Petrochina also gained 7.5%, which CNOOC (the largest offshore oil producer in China) also added 6.8%.
In European morning, UK's FTSE 100 Index climbed 1.7% as driven by banking stocks. In Germany and France, DAX and CAC 40 added 1.9 and 1.6% respectively. Market's focus today is on Treasury Secretary Timothy Geithner introduction on Public Private Investment Program. The dollar's weakness continues to support gold. After the 3% intraday decline after the Fed's asset buying plan, the USD index's outlook remains bearish. Yesterday, the index dropped 0.5% further to 83.31
CURRENCIES
Yesterday ECB Trichet said that the bank will continue to take "non-conventional" measures through the banking channel. IMF managing director Strauss-Kahn urged further action to be taken to prevent a "wasteland of unemployment" Also, he called for more stats to reduce tax rates and spending as monetary policy has "reached its limit". Australian Treasurer Swan said that it's "virtually impossible" for Australia to avoid economic contraction given the slump in global economy. Japan Finance Minister Yosano urged a new fiscal stimulus of more that $200b to revive the economy of Japan.
The Bank of Japan released minutes for last week's meeting. The central bank increased purchase of long term JGB up to 21.6trillion yen from 16.8 trillion yen in order to revive the economy. Despite this, the BOJ still lags BOE and Fed in terms of balance sheet expansion. Technically, with 4 hours MACD staying well above signal line, intraday outlook in dollar index is turned neutral for the moment. However, note that another decline cannot be ruled out as long as 84.61 resistance holds. We'd maintain the view that 81/82 level is critical to the long term up trend in the dollar index. As discussed before, there is an important cluster support of 61.8% retracement of 77.69 to 89.62 at 82.24 and 38.2% retracement of 70.70 to 89.62 at 82.39. In addition, the long term rising trend line support is now sitting at 81.40 level. Strong rebound from that level, followed by break of 84.61 resistance will keep the long term up trend intact. However, as noted before, sustained trading below 81/82 will strongly suggest that the long term up trend has completed with bearish divergence conditions in both daily and weekly MACD and RSI
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TECHNICAL ANALYSIS
DOW JONES INDEX
The Dow closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that additional gains are possible near-term. If the Dow extends this month's rally, the reaction high crossing at 7970 is the next upside target. Closes below the 20-day moving average crossing at 7090 would confirm that a short-term top has been posted. First resistance is today's high crossing at 7780. Second resistance is the reaction high crossing at 7970. First support is the 10-day moving average crossing at 7280. Second support is the 20-day moving average crossing at 7090.
S&P
The June S&P 500 index closed sharply higher on Monday extending this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If June extends this month's rally, the reaction high crossing at 833.20 is the next upside target. Closes below the 20-day moving average crossing at 737.69 would temper the near-term friendly outlook. First resistance is today's high crossing at 820.30. Second resistance is the reaction high crossing at 833.20. First support is the 10-day moving average crossing at 761.60. Second support is the 20-day moving average crossing at 737.69.
NASDAQ
The June NASDAQ 100 closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If June extends this month's rally, February's high crossing at 1285.25 is the next upside target. Closes below the 20-day moving average crossing at 1139.11 would confirm that a short-term top has been posted. First resistance is today's high crossing at 1258.00. Second resistance is February's high crossing at 1285.25. First support is the 10-day moving average crossing at 1175.85. Second support is the 20-day moving average crossing at 1139.11.
TAIWAN INDEX
The Index is moving according to our expectation as mentioned yesterday. With the successful break of the resistance level at 189.54, we anticipate a possible test at with targets at 200.57 (38.2% Fibonacci - 15/10/08 low) and if this level is able to hold successfully, we may see subsequent move higher towards the 215.22 (50% Fibonacci - 30/9/08 low). On the downside, if 180.31 breaks, we will likely see a move lower towards the 178/175 cluster zones subsequently.
COMMODITIES
Daily Pivot PointsNormal Range Last Bar
CommodityR3R2R1PPS1S2S3HLCDate
Crude Oil57.1155.5854.6853.1552.2550.7249.8254.0551.6253.7824/3
Gold974.43966.27952.33944.17930.23922.07908.13958.10936.00938.4024/3
Silver14.07813.98213.80813.71213.53813.44213.26813.88513.61513.63524/3
Copper1.96301.91901.88801.84401.81301.76901.73801.87501.80001.857024/3
GOLD
Gold was affected by "monster rally" on Wall Street last night as investors moved into equities. However by closing the price was able to hold above 925 (above the ichimoku cloud) and this supports our previous explained scenario. We expects some incline and keep our overview towards upside bias as far as 925.00 remains unbroken.
The trading range for today is among the key support now at 925.00 and key resistance now at 1000.00.
The general trend is to the upside as far as 820.00 remains intact with targets at 1035.00 and 1060.00.
Support: 935.00, 925.00, 916.00, 9132.00, 907.00
Resistance: 952.00, 963.00, 977.00, 988.00, 995.00
Note: We will monitor closely and will update in our evening note.
COPPER
News : Copper touched a 4-1/2 month high before easing back on Monday, as a U.S. plan to cleanse the banking sector of toxic assets boosted the outlook for the economy and demand, and after data showed robust Chinese import demand. Copper for three-month delivery on the London Metal Exchange was last bid at $4,060/$4,065 a tonne in official rings, from Friday's close of $3,955. It earlier touched a day's high of $4,135, its highest level since Nov. 10.
Technical : We expect of the continuation of the bullishness in copper. As mentioned yesterday, 1.85 is a key benchmark level that we are focusing. Currently our upside bias remains unchanged towards targets at 2.00. However we would be watching cautiously of any potential signs of correction.
The trading range for today is among the key support now at 1.8355 and key resistance is now at 1.9135 level.
The general trend is to the upside as far as 1.6460.00 remains intact with targets at 1.8785.
Support: 1.8555, 1.8425, 1.8355, 1.8230, 1.8145
Resistance: 1.8750, 1.8885, 1.8940, 1.9075, 1.9135
Note: At point in time we keeping close watch of the movement and any indications of a possible start short term correction. We will update in our evening note.
SILVER
Similar to gold, price was affected by the rally that we witnessed on Wall Street as of last night. However silver was able to hold above above the 13.60 Fibonacci expansion level. Our overview will be towards upside bias as far as 13.00 zones remains unbroken
The trading range for today is among the key support at 12.95 and key resistance now at 14.60.
The general trend is to the upside as far as 12.00 remains intact with targets at 16.50.
Support: 13.55, 13.40, 13.25, 13.00, 12.95
Resistance: 13.95, 14.08, 14.23, 14.40, 14.60
Note: According to our analysis, a close above 13.88 open the path towards targets at 14.15.
MAY CRUDE
Momentum indicators are still showing overbought case supporting a possible retracement towards the downside targeting 53.85 and 52.00 to cover the Gap. We notice that a clear close of the daily candle below 56.20 will confirm our expected bullish scenario.
The trading range for today is among the key support at 51.75 and the key resistance at 54.55.
The general trend is still support upside for the time being however we expect downside actions if a clear 4h close occurred below 53.55 targeting 52.30 and 45.90.
Support: 54.80, 54.60, 53.90, 53.25, 53.00
Resistance: 55.85, 56.25, 56.60, 56.95, 57.35
Note: We will update our observation in our evening note.
DXY
The June Dollar closed lower on Monday and below the 62% retracement level of the December-March rally crossing at 84.10. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. Closes below the weekly uptrend line crossing near 83.00 would confirm that a major top in the Dollar has been posted while opening the door for a larger-degree decline this spring. Closes above the 20-day moving average crossing at 87.83 would temper the near-term bearish outlook in the market. First resistance is the 10-day moving average crossing at 86.56. Second resistance is the 20-day moving average crossing at 87.83. First support is last Thursday's low crossing at 83.14. Second support is the weekly uptrend line crossing near 83.00.
FX
IMM POSITIONING
The latest IMM data cover the week from 10 to 17 March.
The data, which was collected ahead of the last Fed meeting, show a further increase in net long USD positions, primarily at the expense of positions in JPY. This implies that at the beginning of last week, speculative investors had the largest long USD positions since October. This could explain the sharp USD sell-off on the back of Fed's bold initiatives, the latter causing a major shift in sentiment towards the greenback.
Yen positioning has now turned negative, for the first time since September 2008. The JPY is no longer the safe-haven currency it used to be, and long positions have continually been reduced since February, turning short last week.
Speculative investors added to their AUD and NZD positions, reducing NZD shorts while turning AUD positioning neutral. This coincided with a pick-up in risk appetite.
USD/CAD shorts were added as USD/CAD traded above 1.30 on poor data and concerns of the BoC adopting unconventional measures at the next monetary meeting in April.
Dollar index: The June Dollar closed lower on Monday and below the 62% retracement level of the December-March rally crossing at 84.10. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. Closes below the weekly uptrend line crossing near 83.00 would confirm that a major top in the Dollar has been posted while opening the door for a larger-degree decline this spring. Closes above the 20-day moving average crossing at 87.83 would temper the near-term bearish outlook in the market. First resistance is the 10-day moving average crossing at 86.56. Second resistance is the 20-day moving average crossing at 87.83. First support is last Thursday's low crossing at 83.14. Second support is the weekly uptrend line crossing near 83.00.
EUR/USD
The pair's consolidation from 1.3737 is still in progress. Downside is expected to be contained well above 1.2991 support and bring rally resumption. Above 1.3737 will target 1.3822 next. (61.8% retracement of 1.4719 to 1.2456 at 1.3855). Break will then target 1.4719 resistance.
In the bigger picture, recent development suggests that EUR/USD is still bounded in sideway consolidation that started at 1.2329, with rise from 1.2456 as the third leg. Having said that, current rise might extend further to 1.4719 or above. But after all, such consolidation should be limited by 1.4867 resistance and bring down trend resumption. On the downside, below 1.2991 will turn focus back to 1.2329 low.
GBP/USD
No change in GBP/USD's outlook. Intraday bias remains mildly on the upside as long as 1.4394 minor support holds. Current rise from 1.3654, which is treated as the third leg of consolidation from 1.3503, is expected to extend further towards 1.4984 resistance next. On the downside, below 1.4394 will bring pull back again but downside should be contained well above 1.3843 support and bring rally resumption.
In the bigger picture, a medium term bottom is in place at 1.3503 after GBP/USD completed the five wave sequence from 2.0158 (1.7445, 1.8668, 1.4557, 1.5722, 1.3503). Consolidation from 1.3503 is still in progress and has started the third leg which could extend to 100% projection of 1.3503 to 1.4984 from 1.3654 at 1.5135 or further to 1.5722 resistance. On the downside, below 1.3843 will turn focus back to 1.3503 low. But after all, decisive break of 1.3503 is needed to confirm long term down trend resumption. Otherwise, further range trading could still be seen.
AUD/USD
The pair's rise resumes after brief consolidation and extends further. At this point, intraday bias remains on the upside as long as 0.6815 minor support holds. Further rally should still be seen targeting 0.7267 cluster resistance (161.8% projection of 0.6248 to 0.6849 from 0.6284 at 0.7256). On the downside, below 0.6815 minor support will turn intraday outlook neutral and bring consolidation. But downside should be contained above 0.6564 support and bring rise resumption.
In the bigger picture, the break of 0.6849 resistance suggests firstly that rise from 0.6248 has resumed. Such rise is treated as the first leg of consolidation from 0.6008 low (0.7267, 0.6248, ...) and should target 0.7256/67 cluster resistance. But upside is expected to be limited by 38.2% retracement of 0.9849 to 0.6008 at 0.7475 to complete the consolidation and bring down trend resumption. Below 0.6564 will argue that such rise has completed earlier than we thought will turn short term outlook bearish again for retesting 0.6008 low).
Thank You
Alfred Wang
Stock markets heartily endorsed a plan to help lift $1 trillion in hard-to-value assets from the balance sheets of financial institutions, giving the main indexes their best day since October. Treasury Secretary Timothy Geithner pledged to spend up to $100 billion in TARP funds for the Private Public Investment Program, which could help purchase $1 trillion in toxic assets. The Dow Jones industrial average closed up 497 points, or 6.8%, to 7776, the S&P 500 up 54 points, or 7.1%, to 823 and the Nasdaq up 99 points, or 6.8%, to 1556. It was the largest percentage gain in the S&P 500 since Oct. 28.
The plan involves creating five different public-private funds that will bid on toxic assets. Bill Gross, co-chief investment officer at Pimco, said his firm intends to participate as a manager and buyer. "This is perhaps the first win/win/win policy to be put on the table," Gross said in an emailed statement. He also said the returns could be "in the teens". Financials were among the chief beneficiaries of the plan. Shares of Citigroup gained 17%, Bank of America climbed 19% and JPMorgan added 18.6%. Analysts at Capital Economics said the plan deserves a cautiously optimistic welcome because it is unclear how enthusiastic banks will be to sell the troubled assets. "There is still plenty of uncertainty surrounding how the pricing of these assets and loans will occur. In particular, banks may prefer to continue to sit on the assets rather than accept a substantial loss," they wrote in a client note. Also helping stocks was a strong report on existing home sales. Sales grew 5.1% in February against expectations for a 0.9% decline, and following a 5.3% drop in January, according to the National Association of Realtors. The optimism from the plan spilled over to international stock markets. In Canada, the S&P/TSX composite index closed up 424 points to 8930 and the main European bourses gained 2-4%.
It was a volatile day for USD/CAD following the announcement of the U.S. Treasury's plan to purchase toxic assets, and better than expected U.S. housing data. Early in the session, the currency pair traded in a one-cent range and had little reaction to surging equity markets. But as stocks made gains and oil hit a 10-week high, the Canadian dollar surged. Late in the session, USD/CAD was down 0.0165 to 1.2243. Most of Monday's volatility is due to the news that the U.S. Treasury will invest up to $1 trillion to purchase mortgage-backed securities and other toxic debt. Over the weekend, the Wall Street Journal published a story releasing some of the proposed details. USD/CAD moved higher following the release of the official report. Currency strategists said the stronger U.S. dollar reflected some uncertainty over the plan. Steve Butler, director of FX trading at the Bank of Nova Scotia, said he sees the rally in the U.S. dollar as short covering, as investors take some profits off the table. "It sounds like a great plan but I think people might have some questions as to exactly how this would work," he said. The Canadian dollar recovered some of its losses following a better-than-expected U.S. existing home sales report.
Marc Chandler, senior currency strategist from Brown Brothers Harriman, said he is looking for the U.S. dollar to continue to weaken as risk appetite continues to improve. The U.S. dollar also weakened against the other currencies as Treasury Secretary Timothy Geithner detailed the program. The U.S. dollar was up 1.11 to 97.06 against the yen and the Dollar Index was down 0.415 to 83.426. The euro was up 0.0063 to 1.3645 against the U.S. dollar, down 0.0171 to 1.6682 against the Canadian dollar, down 0.0028 to 0.9361 against the pound sterling and was higher by 2.15 to 132.42 against the yen. The pound sterling was up 0.0110 to 1.4575 against the U.S. dollar and down 0.0136 to 1.7819 against the Canadian dollar.
The U.S. Treasury's plan to purchase toxic assets and stronger-than-expected existing home sales helped to boost oil on Monday, sending it to a two-and-a-half month high. The rally in oil prices started at 10 a.m. EDT. Prices dropped to near session lows ahead of the existing home sales report and rebounded sharply following the better-than-expected data. The positive news helped WTI crude break through $54 per barrel, hitting session highs at $54.03. Most recently, WTI crude oil was up $1.78 to $53.85. Also helping to boost risk appetite is the latest news from the U.S. Treasury, which announced it would invest up to $1 trillion to purchase mortgage-backed securities and other toxic debt. Colin Cieszynski, market analyst from CMC Markets, said rising risk appetite could suggest that underlying investor confidence is improving. He added the commodities market could also be moving higher in anticipation that global supply and demand will move back into balance.
"U.S. crude oil has broken through $53.00/bbl today, and out of a trading channel that has been in place since December. While a measured move suggests $71.00/bbl may be attainable over time, nearer term resistance looms near $60.00/bbl," he wrote. Analysts from Citigroup said the technical indicators are pointing to further gains in oil prices. They noted that last week oil prices closed above $50 per barrel, and they believe this opens the way for $68. The powerful rally in equities left the Treasury market in limbo on Monday. Lowered risk aversion argued for higher rates but the Federal Reserve's pledge to buy Treasuries capped the gains. "Monday's session was lackluster at best," said David Ader, head of government bond strategy at RBS Greenwich Capital. "The Treasury Department's long-awaited bad-bank bailout program failed to create enough selling pressure to push yields meaningfully higher." On the session, U.S. two-year yields were up 4.1 bps to 0.91%, with five-year yields up 5.6 bps to 1.70%, 10-year yields up 4.1 bps to 2.68% and 30-year yields up 3.9 bps to 3.70%. "The lack of any further details from the Fed on the Treasury-purchase plan has left the market in a bit of suspense," Ader said. Elsewhere, yields on two-year Canadian government bonds were up 2.8 bps to 1.04%, with five-year yields up 2.6 bps to 1.76%, 10-year yields up 2.9 bps to 2.77% and 30-year yields up 1.5 bps to 3.61%. The September 09 BAX contract was down 3.0 ticks to 99.45. In Germany, returns on two-year German bonds were up 1.5 bps to 1.33%, with five-year yields up 3.6 bps to 2.25%, 10-year yields up 4.5 bps to 3.02% and 30-year yields up 2.0 bps to 3.89%. Yields on UK two-year bonds were down 3.4 bps to 1.31%, with five-year yields up 6.4 bps to 2.31%, 10-year yields up 9.6 bps to 3.12% and 30-year yields up 2.6 bps to 4.10%.
ASIA
The Bank of Japan's minutes from the February 18-19 meeting revealed the bank felt that buying corporate bonds was necessary to stabilise financial markets. At the meeting, the central bank held the target rate unchanged at 0.1% as expected, but also announced further measure to boost corporate financing. The bank said it would begin purchases of corporate bonds and extend the period of time they will buy commercial paper. The bank has met since then and expanded their purchases of Japanese government bonds. Japan's money market had been nervous," the minutes read, citing several irregularities on interest rates and exchange rates. The Bank of Japan members agreed they should support a decline in term rates through a special funding, but also acknowledged that an exit strategy from the programs was needed. One member, Miyako Suda, said the purchase of corporate bonds was unnecessary and would have limited impact.
The Reserve Bank of Australia's Assistant Governor Philip Lowe said Tuesday that the country needs to revamp its electronic payment systems. Speaking in Sydney, the central banker made no reference to the Australian economy or interest rates. The bank is working on reforming online purchases and setting a cap on the fees a merchant's bank pays a customer's bank when the merchant accepts credit cards such as Visa or Mastercard.
COMMODITIES
Oil price remains strong in European morning as driven by rallies in stock markets. Sentiment has improved significantly after central banks around the world showed efforts to revive the economy. Currently trading at 55.5, the May futures should trade firmly above 50 in the neart-term. However, we doubt if it can head for 60 without much volatility as investment demand has grown since last week. Any bad news, such as another week of inventory gain, will trigger profit-taking.
In Asia, the MSCI Asia pacific Index added almost 4%, the biggest jump since Dec 15 while Japan's Nikkei 225 Stock Average climbed d3.4%. In China, stocks have risen for the 6th consecutive day as investors speculate the nation will be first economy to recover from global recession with the Chinese government's stimulus plans.
Sinopec, Asia's largest refiner, gained 4.6% after the corporation said its profit may double to RMB 46.2B in 2009, following a first-in-7-years decline in net income in 2008. Other oil stocks also surged. Petrochina also gained 7.5%, which CNOOC (the largest offshore oil producer in China) also added 6.8%.
In European morning, UK's FTSE 100 Index climbed 1.7% as driven by banking stocks. In Germany and France, DAX and CAC 40 added 1.9 and 1.6% respectively. Market's focus today is on Treasury Secretary Timothy Geithner introduction on Public Private Investment Program. The dollar's weakness continues to support gold. After the 3% intraday decline after the Fed's asset buying plan, the USD index's outlook remains bearish. Yesterday, the index dropped 0.5% further to 83.31
CURRENCIES
Yesterday ECB Trichet said that the bank will continue to take "non-conventional" measures through the banking channel. IMF managing director Strauss-Kahn urged further action to be taken to prevent a "wasteland of unemployment" Also, he called for more stats to reduce tax rates and spending as monetary policy has "reached its limit". Australian Treasurer Swan said that it's "virtually impossible" for Australia to avoid economic contraction given the slump in global economy. Japan Finance Minister Yosano urged a new fiscal stimulus of more that $200b to revive the economy of Japan.
The Bank of Japan released minutes for last week's meeting. The central bank increased purchase of long term JGB up to 21.6trillion yen from 16.8 trillion yen in order to revive the economy. Despite this, the BOJ still lags BOE and Fed in terms of balance sheet expansion. Technically, with 4 hours MACD staying well above signal line, intraday outlook in dollar index is turned neutral for the moment. However, note that another decline cannot be ruled out as long as 84.61 resistance holds. We'd maintain the view that 81/82 level is critical to the long term up trend in the dollar index. As discussed before, there is an important cluster support of 61.8% retracement of 77.69 to 89.62 at 82.24 and 38.2% retracement of 70.70 to 89.62 at 82.39. In addition, the long term rising trend line support is now sitting at 81.40 level. Strong rebound from that level, followed by break of 84.61 resistance will keep the long term up trend intact. However, as noted before, sustained trading below 81/82 will strongly suggest that the long term up trend has completed with bearish divergence conditions in both daily and weekly MACD and RSI
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TECHNICAL ANALYSIS
DOW JONES INDEX
The Dow closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that additional gains are possible near-term. If the Dow extends this month's rally, the reaction high crossing at 7970 is the next upside target. Closes below the 20-day moving average crossing at 7090 would confirm that a short-term top has been posted. First resistance is today's high crossing at 7780. Second resistance is the reaction high crossing at 7970. First support is the 10-day moving average crossing at 7280. Second support is the 20-day moving average crossing at 7090.
S&P
The June S&P 500 index closed sharply higher on Monday extending this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If June extends this month's rally, the reaction high crossing at 833.20 is the next upside target. Closes below the 20-day moving average crossing at 737.69 would temper the near-term friendly outlook. First resistance is today's high crossing at 820.30. Second resistance is the reaction high crossing at 833.20. First support is the 10-day moving average crossing at 761.60. Second support is the 20-day moving average crossing at 737.69.
NASDAQ
The June NASDAQ 100 closed sharply higher on Monday as it extended this month's rally. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If June extends this month's rally, February's high crossing at 1285.25 is the next upside target. Closes below the 20-day moving average crossing at 1139.11 would confirm that a short-term top has been posted. First resistance is today's high crossing at 1258.00. Second resistance is February's high crossing at 1285.25. First support is the 10-day moving average crossing at 1175.85. Second support is the 20-day moving average crossing at 1139.11.
TAIWAN INDEX
The Index is moving according to our expectation as mentioned yesterday. With the successful break of the resistance level at 189.54, we anticipate a possible test at with targets at 200.57 (38.2% Fibonacci - 15/10/08 low) and if this level is able to hold successfully, we may see subsequent move higher towards the 215.22 (50% Fibonacci - 30/9/08 low). On the downside, if 180.31 breaks, we will likely see a move lower towards the 178/175 cluster zones subsequently.
COMMODITIES
Daily Pivot PointsNormal Range Last Bar
CommodityR3R2R1PPS1S2S3HLCDate
Crude Oil57.1155.5854.6853.1552.2550.7249.8254.0551.6253.7824/3
Gold974.43966.27952.33944.17930.23922.07908.13958.10936.00938.4024/3
Silver14.07813.98213.80813.71213.53813.44213.26813.88513.61513.63524/3
Copper1.96301.91901.88801.84401.81301.76901.73801.87501.80001.857024/3
GOLD
Gold was affected by "monster rally" on Wall Street last night as investors moved into equities. However by closing the price was able to hold above 925 (above the ichimoku cloud) and this supports our previous explained scenario. We expects some incline and keep our overview towards upside bias as far as 925.00 remains unbroken.
The trading range for today is among the key support now at 925.00 and key resistance now at 1000.00.
The general trend is to the upside as far as 820.00 remains intact with targets at 1035.00 and 1060.00.
Support: 935.00, 925.00, 916.00, 9132.00, 907.00
Resistance: 952.00, 963.00, 977.00, 988.00, 995.00
Note: We will monitor closely and will update in our evening note.
COPPER
News : Copper touched a 4-1/2 month high before easing back on Monday, as a U.S. plan to cleanse the banking sector of toxic assets boosted the outlook for the economy and demand, and after data showed robust Chinese import demand. Copper for three-month delivery on the London Metal Exchange was last bid at $4,060/$4,065 a tonne in official rings, from Friday's close of $3,955. It earlier touched a day's high of $4,135, its highest level since Nov. 10.
Technical : We expect of the continuation of the bullishness in copper. As mentioned yesterday, 1.85 is a key benchmark level that we are focusing. Currently our upside bias remains unchanged towards targets at 2.00. However we would be watching cautiously of any potential signs of correction.
The trading range for today is among the key support now at 1.8355 and key resistance is now at 1.9135 level.
The general trend is to the upside as far as 1.6460.00 remains intact with targets at 1.8785.
Support: 1.8555, 1.8425, 1.8355, 1.8230, 1.8145
Resistance: 1.8750, 1.8885, 1.8940, 1.9075, 1.9135
Note: At point in time we keeping close watch of the movement and any indications of a possible start short term correction. We will update in our evening note.
SILVER
Similar to gold, price was affected by the rally that we witnessed on Wall Street as of last night. However silver was able to hold above above the 13.60 Fibonacci expansion level. Our overview will be towards upside bias as far as 13.00 zones remains unbroken
The trading range for today is among the key support at 12.95 and key resistance now at 14.60.
The general trend is to the upside as far as 12.00 remains intact with targets at 16.50.
Support: 13.55, 13.40, 13.25, 13.00, 12.95
Resistance: 13.95, 14.08, 14.23, 14.40, 14.60
Note: According to our analysis, a close above 13.88 open the path towards targets at 14.15.
MAY CRUDE
Momentum indicators are still showing overbought case supporting a possible retracement towards the downside targeting 53.85 and 52.00 to cover the Gap. We notice that a clear close of the daily candle below 56.20 will confirm our expected bullish scenario.
The trading range for today is among the key support at 51.75 and the key resistance at 54.55.
The general trend is still support upside for the time being however we expect downside actions if a clear 4h close occurred below 53.55 targeting 52.30 and 45.90.
Support: 54.80, 54.60, 53.90, 53.25, 53.00
Resistance: 55.85, 56.25, 56.60, 56.95, 57.35
Note: We will update our observation in our evening note.
DXY
The June Dollar closed lower on Monday and below the 62% retracement level of the December-March rally crossing at 84.10. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. Closes below the weekly uptrend line crossing near 83.00 would confirm that a major top in the Dollar has been posted while opening the door for a larger-degree decline this spring. Closes above the 20-day moving average crossing at 87.83 would temper the near-term bearish outlook in the market. First resistance is the 10-day moving average crossing at 86.56. Second resistance is the 20-day moving average crossing at 87.83. First support is last Thursday's low crossing at 83.14. Second support is the weekly uptrend line crossing near 83.00.
FX
IMM POSITIONING
The latest IMM data cover the week from 10 to 17 March.
The data, which was collected ahead of the last Fed meeting, show a further increase in net long USD positions, primarily at the expense of positions in JPY. This implies that at the beginning of last week, speculative investors had the largest long USD positions since October. This could explain the sharp USD sell-off on the back of Fed's bold initiatives, the latter causing a major shift in sentiment towards the greenback.
Yen positioning has now turned negative, for the first time since September 2008. The JPY is no longer the safe-haven currency it used to be, and long positions have continually been reduced since February, turning short last week.
Speculative investors added to their AUD and NZD positions, reducing NZD shorts while turning AUD positioning neutral. This coincided with a pick-up in risk appetite.
USD/CAD shorts were added as USD/CAD traded above 1.30 on poor data and concerns of the BoC adopting unconventional measures at the next monetary meeting in April.
Dollar index: The June Dollar closed lower on Monday and below the 62% retracement level of the December-March rally crossing at 84.10. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. Closes below the weekly uptrend line crossing near 83.00 would confirm that a major top in the Dollar has been posted while opening the door for a larger-degree decline this spring. Closes above the 20-day moving average crossing at 87.83 would temper the near-term bearish outlook in the market. First resistance is the 10-day moving average crossing at 86.56. Second resistance is the 20-day moving average crossing at 87.83. First support is last Thursday's low crossing at 83.14. Second support is the weekly uptrend line crossing near 83.00.
EUR/USD
The pair's consolidation from 1.3737 is still in progress. Downside is expected to be contained well above 1.2991 support and bring rally resumption. Above 1.3737 will target 1.3822 next. (61.8% retracement of 1.4719 to 1.2456 at 1.3855). Break will then target 1.4719 resistance.
In the bigger picture, recent development suggests that EUR/USD is still bounded in sideway consolidation that started at 1.2329, with rise from 1.2456 as the third leg. Having said that, current rise might extend further to 1.4719 or above. But after all, such consolidation should be limited by 1.4867 resistance and bring down trend resumption. On the downside, below 1.2991 will turn focus back to 1.2329 low.
GBP/USD
No change in GBP/USD's outlook. Intraday bias remains mildly on the upside as long as 1.4394 minor support holds. Current rise from 1.3654, which is treated as the third leg of consolidation from 1.3503, is expected to extend further towards 1.4984 resistance next. On the downside, below 1.4394 will bring pull back again but downside should be contained well above 1.3843 support and bring rally resumption.
In the bigger picture, a medium term bottom is in place at 1.3503 after GBP/USD completed the five wave sequence from 2.0158 (1.7445, 1.8668, 1.4557, 1.5722, 1.3503). Consolidation from 1.3503 is still in progress and has started the third leg which could extend to 100% projection of 1.3503 to 1.4984 from 1.3654 at 1.5135 or further to 1.5722 resistance. On the downside, below 1.3843 will turn focus back to 1.3503 low. But after all, decisive break of 1.3503 is needed to confirm long term down trend resumption. Otherwise, further range trading could still be seen.
AUD/USD
The pair's rise resumes after brief consolidation and extends further. At this point, intraday bias remains on the upside as long as 0.6815 minor support holds. Further rally should still be seen targeting 0.7267 cluster resistance (161.8% projection of 0.6248 to 0.6849 from 0.6284 at 0.7256). On the downside, below 0.6815 minor support will turn intraday outlook neutral and bring consolidation. But downside should be contained above 0.6564 support and bring rise resumption.
In the bigger picture, the break of 0.6849 resistance suggests firstly that rise from 0.6248 has resumed. Such rise is treated as the first leg of consolidation from 0.6008 low (0.7267, 0.6248, ...) and should target 0.7256/67 cluster resistance. But upside is expected to be limited by 38.2% retracement of 0.9849 to 0.6008 at 0.7475 to complete the consolidation and bring down trend resumption. Below 0.6564 will argue that such rise has completed earlier than we thought will turn short term outlook bearish again for retesting 0.6008 low).
Thank You
Alfred Wang
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