Tuesday, 4 November 2014

Markets | 04/11/2014 | Euro Slips to More Than 2-Year Lows and Saudis cutting Crude Prices to US

 Euro Slips to More Than 2-Year Lows. The euro slipped to more than 2-year lows against the U.S. dollar on Monday, as disappointing manufacturing data from the euro zone dampened demand for the single currency. The euro came under pressure after Markit research group said that the German manufacturing PMI fell to 51.4 in October from a reading of 51.8 the previous month, confounding expectations for the index to remain unchanged. Markit's manufacturing PMI for the entire euro zone also ticked down to 50.6 this month from 50.7 in September

 Sterling Gains on UK Manufacturing Data. Sterling gained against the greenback and strengthened for a fourth day against the euro as data showed manufacturing growth in the U.K. unexpectedly accelerated last month, while it was close to stagnating in the 18-nation currency bloc. U.K. manufacturing PMI climbed to 53.2 from a revised 51.5 in September. Cable also bolstered by expectations that separate PMI data this week will show U.K. construction and services output also grew last month. Bank of England policy makers will meet Nov. 5-6 to decide on interest rates. In the past three months, 2 officials have voted for higher borrowing costs.

Aussie Sinks Ahead RBA Meeting. Australia’s dollar had its biggest decline in more than 2 weeks as building approvals fell the most since July 2012 and Chinese manufacturing slowed. A government report showed the nation’s building approvals plummeted 11% in September from August. While a measure of China’s services industry fell to a 9-month low in October, joining manufacturing in signaling a broadening economic slowdown in the nation. Traders are pricing in no chance Reserve Bank of Australia Governor Glenn Stevens and his board will move the benchmark interest rate tomorrow from 2.5%.

ISM: Surge in New Orders Boosts U.S Manufacturing. U.S. manufacturing companies expanded at a faster rate in October as new orders rose to the second highest level in five years, a survey of executives found. The Institute for Supply Management said its manufacturing index jumped to 59% from 56.6% in the prior month. Economists in a survey has expected the index slipped to 56.2%. Readings over 50% indicate more companies are expanding instead of shrinking. The ISM's new-orders index climbed 5.8 point to 65.8%, trailing only a 66.7% reading in August as the highest level since 2009. The production index edged up 0.2 points to 64.8%, while the employment gauge increased 0.9 points to 55.5%. Meanwhile, separate report from U.S. Commerce Department showed Outlays for U.S. construction projects fell 0.4% in September to a seasonally adjusted annual rate of $950.9 billion

Asia Equities Lackluster After China Factory Data. Most Asian equities were under pressure on the first trading day of November as investors digested a raft of Chinese data amid a quiet mood sentiment as Japan markets closed for a holiday. HSBC's China final PMI for October rose to a 3-month high at 50.4, unchanged from a preliminary reading but higher than September's figure at 50.2. The report followed data over the weekend that showed China's official PMI for October falling to a 5-month low at 50.8 from 51.1 in previous month. The KOSPI index retreated 0.58% after a private gauge of domestic manufacturing activity fell to a 4-month low in October. The South Korean index also weighed down by the KIA Motors and Hyundai Motor shares that tanked 6% each after KIA's CEO resigned late on Friday. The Hang Seng index also finished 0.34% lower on Monday as investors took profits following solid gains last week., with Chinese economy data adding to bearish sentiment.

PMI Data Weighs on European Stocks. All major European indexes closed lower on Monday after data revealed euro zone manufacturing activity expanded slightly less than expected in October. The U.K.'s FTSE 100 and the French CAC 40 both ended down 0.9%, while the German DAX closed 0.8% lower. Market sentiment also weighed by German magazine Der Spiegel reports on Sunday, which said German Chancellor Angela Merkel would rather see the U.K. exit the European Union than compromise over the principle of free movement of workers. In stocks news, Ryanair traded over 9% higher after the airline hiked its annual profit forecast by almost 20% following a surge in winter bookings. HSBC stock slipped by up to 2% after it confirmed it had set aside $378 million for a U.K. watchdog foreign exchange probe.

Wall St Mixed as Energy Sector Smacked by Oil's Drop. U.S. stocks mostly declined on Monday, with Chevron and Exxon Mobilamong the blue chips hit as the price of crude fell to a more than 2-year low. Monday’s economic reports had the Institute for Supply Management's gauge of manufacturing rising to 59 in October, matching August as the best reading since March 2011. While separate data had construction spending falling 0.4% in September. The Dow Jones Industrial Average ended down 0.15%, with Chevron pacing blue-chip losses. Had rising to an all-time high just after the open, the S&P 500 closed 0.01%, with energy hardest hit as the price of crude marked its first close below $79 a barrel since mid-2012. Stepping into the red for the first time late in Monday's session, TheNasdaq recovered to end up almost 0.2%.

Stronger Greenback Weighs Gold Further. Gold fell on Monday to near a recent 4-year low as the dollar index rose to its highest since mid-2010 on speculation that the U.S. Federal Reserve will act before other major central banks to tighten monetary policy. Strength in the U.S. dollar knocked gold below key support at $1,180 an ounce on Friday, sparking a wave of selling that took prices as low as $1,161.05 an ounce. Analysts said bullion seems to be under further pressure given very few fundamental factors which could ignite a turnaround in gold's fortunes.

Crude Oil Ends Below $79/Barrel. Crude oil prices tumbled by more than 2% to closed under $79/barrel on Monday, after a big hike in Saudi Arabia's monthly export prices was viewed as a signal OPEC's largest producer may be seeking to curb output. State oil firm Saudi Aramco said it would raise the price of its flagship Arab light crude in December for customers in Asia and Europe, reversing some price cuts the previous month. It will cut prices for U.S. Buyers.

Home Depot is The Biggest Dow Decliner. Home Depot Inc. dropped 1.5% to be the biggest Dow decliner on Monday after Raymond James lowered the rating to market perform from outperform. Analyst Budd Bugatch said the largest U.S. home-improvement retailer, as of its closing price on Friday, has surpassed his previous 12-month price target. While the retailer's stock price is the key reason behind the downgrade, Bugatch said there are also some mixed signs about the strength and health of the housing market and related consumer spending. Meanwhile, existing home prices are still below new home prices, and mortgage availability remains tight and may not improve much next year, he said.

 Ford's Hit by October Vehicle Sales. Shares of Ford Motor slipped 0.6% early Monday, after the automaker reported another monthly decline in U.S. vehicle sales. Total sales for the month fell 1.7% from the same period a year ago to 188,654, as car and truck sales declined 11.5% and 2.6%, respectively, while utilities sales increased 10.3%. Ford said the second-straight monthly sales decline was expected, and was the result of a plant changeover related to the introduction of new 2015 F-150 vehicles. Ford's stock has lost 9.2% so far this year.

 Technical Outlook
     EUR/USD. The bias is bearish in nearest term but we need a clear break below 1.2440 area to trigger further bearish momentum aiming 1.2390 key support area. Immediate resistance is seen around 1.2530 area, another consistent break above that area would trigger further bullish correction scenario retesting 1.2600 area before continue the bearish major trend.
         GBP/USD. The bias is bearish in nearest term especially if price able to make a clear break below 1.5930 area to trigger further bearish momentum aiming 1.5880 area or even lower. On the upside, only a clear break back above 1.6050 area would trigger further bullish correction scenario retesting 1.6100 resistance area.
       USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 114.60 area to trigger further bullish momentum targeting 115.30 resistance area. On the downside, only a clear break back below 113.50 area would trigger further bearish correction scenario retesting 112.70 area before recovery to the upside.
       USD/CHF. The bias is bullish in nearest term especially if price able to make a clear break above 0.9700 area to trigger further bullish momentum aiming 0.9760 area. Immediate support is seen around 0.9600 area, another consistent break below that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.9540 region.
       AUD/USD. The bias is bearish in nearest term but we need a clear break below 0.8660 area to trigger further bearish momentum aiming 0.8615 area. Immediate resistance is seen around 0.8760 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8810 region.
        XAU/USD. The bias is bearish in the short term especially if price able to break below the 1160 area, which would trigger further bearish momentum to test the 1156 area before approaching the 1145 area. Conversely, it takes at least a consistent break above the 1175 area to relieve the negative pressure on prices. That will open up an opportunities to retesting the 1180 area.
      Hang Seng Futures. The bias is bearish in the short term tough it still needs a break below the 23710 area to trigger further bearish momentum towards the 23625 area before retesting the 23565 area. Conversely, immediate resistance is seen around the 23875 area. A consistent break above that area would bring the price to neutral zone in the short term with the possibility of testing the 23935 area or even the 24000 area.
         Nikkei Futures. The bias is bullish in the short term targeting the 17485 area. A clear break above that area could trigger the sustainability of bullish momentum towards the 17600 area. Conversely, immediate support is seen around the 17180 area. Break below that area could potentially trigger a bearish correction scenario towards the psychological level of 17000 or even lower.

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