Thursday, 20 November 2014

Markets | 20/11/2014 | Yen Fell Further After BoJ Decisions

         Sterling Recovers on BoE Minutes. Sterling rose from a 14-month low against the dollar on Wednesday after Bank of England minutes showed concern among some policy makers that inflationary pressure may build, reducing the need to keep borrowing costs lower for longer. The minutes of the Nov. 5-6 meeting showed officials voted 7-2 to maintain the key interest rate at a record low this month, the same ratio as in October. The minutes contrast with a more downbeat assessment presented by Governor Mark Carney at the Nov. 12 Inflation Report press conference.

         Yen Fell Further After BoJ Decisions. The yen dropped to a new 7-year low against the greenback as the Bank of Japan pursues further economic stimulus, while Fed minutes show the U.S. moving toward higher interest rates. The BoJ on Wednesday kept a plan to expand its monetary base by a record annual pace of 80 trillion yen ($680 billion) unchanged. Japanese Prime Minister Shinzo Abe also postponed a sales tax hike in a move seen as supportive for stock markets but negative for the currency.

         Aussie Dragged by Iron Ore Prices Fall. The Australian dollar fell more than 1% versus the U.S. currency on Wednesday after the price of iron ore, the country's top export earner, slipped to its lowest in 5 years. The so-called Aussie also  still burdened by the Reserve Bank of Australia Governor Glenn Stevens comment in the previous day, which said  that there was a ‘‘pretty material risk” that the currency will go lower than its current level.

         Fed Officials Saw Need to Watch for Drop in Inflation Expectations. Many Federal Reserve policy makers last month said they should be on the lookout for signs of a decline in the public’s expectations for inflation, minutes of their meeting show. “Many participants observed the committee should remain attentive to evidence of a possible downward shift in longer-term inflation expectations,” according to a record of the Oct. 28-29 Federal Open Market Committee meeting released today in Washington. “Some of them noted that if such an outcome occurred, it would be even more worrisome if growth faltered.” Fed Chair Janet Yellen and her colleagues last month focused on improvements in the labor market when they announced an end to their stimulative bond purchases. They also said that the risk of inflation remaining persistently below their goal had ebbed. The minutes show the members “continued to expect inflation to move back to the committee’s 2 percent target over the medium term as resource slack diminished in an environment of well-anchored inflation expectations.”

         Asian Indices Lackluster on Japan & FOMC Woes. Trading was slightly lower in Asia on Wednesday, as sentiment turned cautious amid concerns over the health of Japan and ahead of the release of the U.S. Federal Reserves' meeting minutes. Japanese stocks turned lower 0.32 percent on Wednesday as investors booked profits as they took stock of Prime Minister Shinzo Abe's decision to delay a sales tax hike. While Bank of Japan (BOJ) Governor Haruhiko Kuroda told that the economy is likely to continue to grow above potential, but added that the BOJ will adjust its economic projections as a the Japanese economy is recovering moderately. After briefly touching a one-week high of 1,974, South Korean stocks - KOSPI lost early gains to finish little changed with 0.01 percent lower. The KOSPI mostly flat on the back of nagging concerns over a weakening yen and its impact on domestic firms. While the Hang Seng Index unofficially closed down 0.66 percent, and fell for the third consecutive day, dragged down by disappointment that the highly-anticipated Shanghai-Hong Kong stock connect scheme was not bringing capital southbound from the mainland.

       Europe Closes Flat to Lower Ahead of Fed Minutes. European shares closed flat to lower on Wednesday, with commodity producers falling as investors awaited the minutes from the last Federal Reserve policy meeting.The Stoxx Europe 600 Index slipped less than 0.1 percent to 339.15 at the close of trading, after sliding as much as 0.3 percent and gaining 0.3 percent earlier, with the basic resources sector posting major declines, hit by ongoing price falls in commodity.  The U.K.'s FTSE 100 closed down around 0.2 led lower. The French CAC closed up around 0.1 percent, and the German DAX was flat.

         U.S. Stocks Decline as Fed Minutes Show Concern on Deflation. U.S. stocks fell from all-time highs as Federal Reserve minutes showed some members said the central bank should remain attentive to the possibility prices in the U.S. economy aren’t rising fast enough. The S&P 500 closed 3.1 points lower at 2,048.72. The Dow Jones Industrial Average lost 2.1 points to 17,685.73. The Nasdaq Composite finished down 26.73 points, or 0.6%, at 4,675.71. “The Fed is admitting they have no idea where inflation is going long term,” said Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York.

        Gold Slides as Swiss Support For Referendum Wanes Gold retreated on reports Wednesday that support for a Swiss referendum to require the country’s central bank to hold 20% of its reserves in gold bullions is losing momentum. Only about 38% of those polled plan to vote for the Swiss gold measure, according to the Daily Mail, while Bloomberg reported that about 47% are likely to vote against it. The referendum, scheduled for Nov. 30, must secure more than 50% support to pass. However, the precious metal managed to pare some losses following the release of minutes from the latest Federal Open Market Committee meeting. Gold for December delivery slid $3.20 to settle at 1,193.90 an ounce. In electronic trading, gold had slumped as low as $1,173.90 an ounce before bouncing back.

        WTI settles below $75, traders wait for signs from OPEC. Contracts for U.S. crude pared earlier losses to settle down 14 cents at $74.50 after Libya's representative to OPEC fueled hopes of an output cut, prompting traders to focus on next week's meeting of the producer group and ignore an unexpected surge in U.S. crude inventories. U.S. crude and Brent futures shrugged off the bearish build and were both up about 1 percent after Libya's OPEC Governor Samir Kamal told Reuters he expected the group at a Nov. 27 meeting to agree to stop producing over its target, a step that would cut about 600,000 barrels per day.

         Ford Takes Explorer on High Road With ‘Nirvana’ Leather. Ford Motor Co.’s  Explorer sport-utility vehicle, hauling in huge profits for a quarter century, is going upscale next year with a luxury version swathed in “Nirvana” leather. The updated 2016 Explorer debuting in the middle of next year will feature a “platinum edition” with a Sony stereo, a 365-horsepower, twin-turbo engine and the first-ever brushed aluminum Ford logo on the steering wheel, the company said yesterday. Though Ford hasn’t set specific prices, it said the Platinum will start at more than $50,000. The highest-priced Explorer now is the Sport version, which starts at $43,100.

       Wells Fargo Names Ex-Fed Governor Duke to Board of Directors. Wells Fargo & Co. (WFC) elected Elizabeth “Betsy” Duke, a former Federal Reserve Board governor, to its board of directors. Duke’s appointment will be effective Jan. 1, and she’ll serve on the risk committee, the San Francisco-based lender said today in a statement. Her election expands Wells Fargo’s board to 15 directors. “She brings in-depth, firsthand understanding of community banking and has more than 30 years of experience leading banking operations in markets where Wells Fargo does business,” Chief Executive Officer John Stumpf said in the statement. “She will bring perspectives that are both strategic and practical to the board.”

 Technical Outlook
       EUR/USD. The bias is neutral in nearest term with potential trading range seen between 1.2470 – 1.2580 area. Another consistent break above that area would trigger further bullish correction scenario retesting 1.2620 resistance area. On the downside, only a clear break back below 1.2470 area would trigger further bearish pressure retesting 1.2425 region.
         GBP/USD. The bias is bearish in nearest term but we need a clear break back below 1.5615 area to trigger further bearish pressure targeting 1.5580 support area. On the upside, only a consistent break above 1.5730 area would trigger further bullish correction scenario perhaps retesting 1.5770 area in nearest term.
        USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 117.90 area to trigger further bullish pressure aiming 118.55 region. On the downside, only a consistent breakdown below 117.30 area would trigger further bearish correction scenario retesting 116.60 support area.
       USD/CHF. The bias is neutral in nearest term with potential trading range seen between 0.9560 – 0.9650 area. Another consistent breakdown below 0.9560 area would trigger further bearish momentum aiming 0.9530 area or even lower. On the upside, only a clear break back above 0.9650 area would trigger major bullish scenario retesting 0.9730 resistance area.
        AUD/USD. The bias is bearish in nearest term but we need a clear break below 0.8600 area to trigger further bearish momentum aiming 0.8570 area. Immediate resistance is seen around 0.8670 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8730 region.
       XAU/USD. Bias is sideways in nearest term with potential trading is seen between 1175 - 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 1175 could change bias become bearish targeting 1160 for next support level.
         Hang Seng Futures. The bias is bearish in the nearest term, a clear break below 23150 area is needed to trigger further bearish momentum to test  23000 area. The price could move higher if failed to break below 23150 area as stochastic indicator on 4H chart is in oversold region. Immediate resistance is seen around 23400 area, a consistent break above that area would bring the price up to test 23570 area.
          Nikkei Futures. The bias is neutral in the nearest term potentially move higher testing 17450 area. A clear break above that area should trigger bullish pressure retesting 17560 area. On the down side, immediate support is seen around 17250, a consistent break and movement below that area would bring the price down aiming 17080 area.

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