Markets | 18/11/2014 | Euro Drops as Draghi Said Growth Momentum Has Weakened

        Euro Drops as Draghi Said Growth Momentum Has Weakened. The euro falls againts dollar after posted first weekly gains in four weeks as European Central Bank (ECB) President Mario Draghi told European lawmakers Monday that euro zone's economic growth has weakened over the summer months,  but stressed that he was willing to do more to stimulate the economy if required. The bank's governing council remained "unanimous in its commitment to using additional unconventional instruments if needed", Draghi added.

      Pound Falls as Carney Signals Disinflation Risks. The pound fell for a fourth day against the dollar, approaching a 14-month low, as Bank of England Governor Mark Carney and Chief Economist Andy Haldane signaled they’re concerned that inflation is slowing. Carney said that the U.K. has “huge disinflationary forces coming” from its trade partners. Haldane said in a speech published yesterday he’s watching economic developments “like a dove.” Carney and Haldane’s comments came days after the BOE lowered its U.K. growth and inflation forecast because of “moribund” global expansion and stagnation in Europe.

        Yen Steadies Near Seven-Years-Low after GDP Shock. The Japanese yen steadied near seven-years-low against the U.S. dollar on Monday, after Japan's economy unexpectedly slipped into recession in the third quarter. Japan's economic shock sets the stage for Prime Minister Shinzo Abe to delay sales tax hike and call a snap election two years before he has to go to the polls. Uncertainty around these events is likely to keep the Japanese currency volatile, though the yen may gain if stocks decline. The yen normally tends to rise as Tokyo's stock market falls.

        Indonesia Raises Fuel Price to Free Funds for Economy Revamp. Indonesian President Joko Widodo raised fuel prices to free up funds for ports and programs for the poor, fulfilling an election pledge to curtail a decades-old subsidy that has weighed on government finances. The price of subsidized gasoline will increase to 8,500 rupiah a liter from 6,500 rupiah effective tomorrow, Widodo told reporters in Jakarta today. Diesel will rise to 7,500 rupiah a liter from 5,500 rupiah, he said. “The country needs a budget to build infrastructure and for education and health,” Jokowi said at a press conference today at which the increases were announced. “Hopefully, the decision to shift the subsidy to the productive sector will open the door for a budget that will be more beneficial for the Indonesian people.”

         Asia Markets Finished in Red; Japan Recession Hits Nikkei. Most Asian markets ends lower on the first trading day of the week, hit by unexpected news that Japan had slipped into recession zone, within amid as mainland markets reacted to the launch of the Shanghai-Hong Kong stock connect. Data on Monday showed Japan's gross domestic product (GDP) contracted an annualized 1.6 percent, compared with a Reuters forecast for a 2.1 percent gain. Related to the data front, investors booked profits from the out-sized gains of the last two weeks. The Nikkei benchmark closed down 2.96 percent, its lowest since Nov 10. South Korea's benchmark KOSPI index closed slightly lower 0.08 percent and finished near a session low of 1,935 on Monday.  Meanwhile Hong Kong shares swinging between gains and losses, but finally finished down on Monday, the first day of trading for the landmark Shanghai-Hong Kong stock connect scheme. Profit-taking tone pulled down the Hang Seng, which bring the Hang Seng index closed down 1.21 percent.

         European Stocks Rise Most in a Week After Draghi Comments. European stocks rose the most in a week, reversing earlier losses, after Mario Draghi said the European Central Bank’s expanded purchase program could include government bonds. The Stoxx Europe 600 Index added 0.5 percent to 337.25 at the close of trading in London, after earlier falling as much as 0.8 percent as Japan unexpectedly slipped into a recession. The Stoxx 600 has rebounded 8.8 percent from this year’s low on Oct. 16 as the Bank of Japan unexpectedly boosted its stimulus and most lenders in Europe passed capital-strength tests.

       S&P 500 Scores Record High on M&A Activity. U.S. stocks were little changed, with the Standard & Poor’s Index 500 Index at an all-time high, as a slump in small-cap shares and concern over Japan’s recession offset corporate deals. The S&P 500 ended 1.5 points higher at 2,041.32. The Dow Jones Industrial Average added 13 points, or 0.1%, to 17,647.75. The Nasdaq Composite closed 17.5 points, or 0.4%, lower at 4,671. “I think the central theme for the day is overriding concern that global growth is continuing to decelerate,” Chad Morganlander, a money manager at St. Louis-based Stifel Nicolaus & Co., which oversees about $160 billion, said by phone. “There’s a hope that monetary policy will stay accommodative across the board, which has emboldened risk-taking.”

      Gold Falls From Two-Week High as Dollar Rallies. Gold futures fell from this month’s high as the dollar’s rebound crimped demand for precious metals as alternative investments. Silver dropped the most in a week. Gold is heading for the second straight annual loss. Today, the dollar approached a five-year high against a basket of 10 major currencies. The Federal Reserve moved closer to its first U.S. interest-rate increase in eight years, while other economies announced more stimulus. European Central Bank Mario Draghi cited an “urgent need to agree on concrete short-term commitments for the euro area.” Gold futures for December delivery fell 0.2 percent to settle at $1,183.50 an ounce on the Comex in New York.

      Oil Falls as Japan Recession Reduces Fuel Demand Outlook. West Texas Intermediate and Brent crudes dropped after Japan, the world’s third-largest oil consuming country, unexpectedly slipped into a recession. “The new Japanese data certainly doesn’t help the demand perception,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “OPEC will remain in the foreground, putting downward pressure on the market for the foreseeable future, until we get definitive word that they are going to cut output.” WTI for December delivery fell 18 cents to settle at $75.64 a barrel on the New York Mercantile Exchange.

         Apple Adds China’s Most Popular Card as App Store Option. Apple Inc. (AAPL) said customers in China can now use the country’s most popular payment card for transactions on the App Store, as the iPhone maker seeks to woo users in the world’s largest smartphone market. App Store users in China can link their China UnionPay Co. debit or credit cards to their Apple ID accounts to make one-tap purchases, the company said in a statement. The App Store lets customers download programs to run on Apple devices such as iPhones and iPads. UnionPay has a monopoly on bank-card clearing in China, and has issued more than 4.5 billion payment cards in China and abroad, according to the statement. Apple said the new payment option has been sought by customers in China, where the new iPhone 6 and 6 Plus debuted last month to heavy demand. Cupertino, California-based Apple sold more than 10 million iPhones in their first weekend when they were rolled out in other countries in September.

         Ford Expands Ranger Pickup Recall for Takata Air Bags. A recall of Ford Motor Co. Ranger pickup trucks in the U.S. was expanded to include more vehicles and more flawed Takata Corp. air bags after a fatal accident in Malaysia exposed a defect in the safety device that wasn’t previously known. Ford will replace driver’s-side and passenger air bags in certain 2004 and 2005 model year Rangers, according to a National Highway Traffic Safety Administration statement yesterday. Ford added an unspecified additional number of the trucks to a recall it announced in June, which included only passenger air bags. The action followed a NHTSA review to identify which U.S. cars have air bags similar to one in a Honda Motor Co. vehicle that crashed in Malaysia four months ago -- the first fatality from a ruptured Takata product outside the U.S

  

Technical Outlook

   

         EUR/USD. The bias is bearish in nearest term especially if price able to make a clear break back below 1.2400 area to trigger further bearish momentum aiming 1.2340 region. On the upside, only a clear break back above 1.2490 area would trigger further bullish correction scenario retesting 1.2530 region.

  

         GBP/USD. The bias is bearish in nearest term but we need a clear break back below 1.5580 area to trigger further bearish pressure targeting 1.5540 support area. On the upside, only a consistent break above 1.5675 area would trigger further bullish correction scenario perhaps retesting 1.5770 area as price getting oversold.

        USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 116.90 area to trigger further bullish pressure aiming 117.80 region. On the downside, only a consistent breakdown below 115.70 area would trigger further bearish correction scenario retesting 115.20 support area.

       USD/CHF. The bias is bullish in nearest term especially if price able to make a clear break above 0.9680 area to trigger further bullish momentum aiming 0.9730 area. Immediate support is seen around 0.9620 area, another consistent break below that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.9570 region.

       AUD/USD. The bias is bearish in nearest term but we need a clear break below 0.8670 area to trigger further bearish momentum aiming 0.8640 area. Immediate resistance is seen around 0.8730 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8780 region.

       XAU/USD. Bias is sideways in nearest term with potential trading is seen between 1180 - 1200 area, needed to break out one of that area to get further direction. For upside immediate resistance is found at 1200 area, a clear break above that area should strength bullish trend aiming 1210 region. For downside, a clear break below 1180 could change bias become bearish targeting 1160 for next support level.

     Hang Seng Futures. The bias is neutral in the nearest term, immediate support is seen around 23720, and resistance 23960 area. A clear break below 23720 should trigger bearish pressure to test 23550 area. On the other side, a consistent break above 23960 area would bring the price up to test 24180 area.

        Nikkei Futures. The bias is neutral in the nearest term potentially move lower testing 16980 area. A clear break below that area should trigger bearish pressure to test 16830 area. On the up side, immediate resistance is seen around 17310, a consistent break and movement above that area would bring the price up aiming 17480 area.