Markets | 21/11/2014 | Oil Gains First Time in 4 Days as Investors Weigh OPEC

     Weak PMI Data Disappointing Euro. The euro slipped against the dollar on Thursday after purchasing managers' surveys from the euro zone showed business growth was weaker than forecasters expected this month, underpinning expectations that monetary conditions will be eased further in the 18-nation bloc. The euro zone's November flash PMI composite came in at 51.4, below expectations of 52.2. The divergence of a strengthening U.S. economy and continued weakness in Europe also keep the euro under pressured.

         Sterling Helped by Retail Sales Data. Sterling edged higher against the dollar after British retail sales beat expectations in October, offering relief to a currency that has struggled in the past few weeks. British retail sales volumes rose 0.8% after a fall of 0.4% in September, beating expectations of a 0.3% rise. For the year, retail sales rose 4.3%. But political risk before next May's general election is also starting to bear on the pound.

         Policy Divergence Continues to Prop Up The Dollar. The U.S. dollar was near a 7-year high against the yen on Thursday as investors bet that the Federal Reserve was on course to begin raising interest rates next year while the Japanese central bank will maintain highly stimulative policies to boost growth in the country. The greenback also posted brief gains on data that showed that the core CPI, which strips out food and energy prices, rose 0.2% last month. While separate data showed new claims for unemployment benefits fell less than expected last week, but continued to point to strengthening labor market conditions.

         Previously Owned U.S. Home Sales Increase to One-Year High. Purchases of previously owned U.S. homes unexpectedly rose in October to a one-year high as low borrowing costs helped sustain the recovery in residential real estate. Existing homes sold at a 5.26 million annual pace, the strongest since September 2013 and up 1.5 percent from a revised 5.18 million pace in September, the National Association of Realtors reported today in Washington. It was the fifth consecutive month that the sales pace topped 5 million. Prices also climbed, the group said. “This is much healthier than we’ve seen over the last year or so,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida, who projected a 5.25 million pace of sales. “We’re still a long way from recovery, but we’re on our way.”

 

         Asian Shares Turned Mixed After China, Japan Data. Asian shares were mixed after declining China manufacturing activity highlight concern about slowing global economy. Nikkei pare gains on profit-taking after recent rally. Kospi edge lower amid continuing worry about South Korea's exporters competitiveness. Hang Seng slide on concern about slowing China's economy after weak China's manufacturing data.

   European Stocks Drop as Manufacturing Slows. European stocks declined as miners fell after manufacturing data missed economists’ estimates for the region and China. The Stoxx Europe 600 Index dropped 0.3 percent to 338.28 at the close of trading. A gauge of mining stocks fell to its lowest level this year, with iron-ore producers BHP Billiton Ltd. and Rio Tinto Group losing more than 2.5 percent. National equity indexes of Spain and Italy dropped the most among 18 western-European markets. “The European economy is still fragile, and the recovery has just run into the sand a little bit,” said William Hobbs, the London-based head of equity strategy at Barclays Plc’s wealth management unit. “It feels difficult to get behind industrial metals. There’s still oversupply, and it doesn’t look like demand will pick up any time soon, particularly as China slows down.”

      Wall Street inches up to New Dow, S&P Records. The U.S. stock market finished Thursday’s mostly subdued trading session slightly higher. The incremental gains on the S&P 500 and the Dow Jones Industrial Average, which came amidst thin trading volumes, were enough to send the indexes deeper into record territory. The S&P 500,closed 4 points, or 0.2%, higher at 2,052.75, the 44th record close this year. The Dow Jones Industrial Average added 33.27 points, or 0.2%, to 17,719.00, logging its 27th record close in 2014.  Kim Forrest, portfolio manager and senior equity analyst at Fort Pitt Capital Group, said that the stock market is very representative of the current economy. “Investors see the latest data as confirmation that the economy is getting better, but not fast enough. At this point, if we see a big rally into the year-end, it will only be at the expense of future gains,” Forrest said

         Gold Rises as Price Drop Tempts Physical Buyers. Gold rose on Thursday on data showing rising U.S. inflation, and after the previous day's 1-percent drop triggered renewed physical interest by price-sensitive Asian buyers. Bullion investors focused on U.S. Labor Department data which showed underlying inflation pressures rose in October, even though that also bolstered expectations of a mid-2015 interest rate hike from the Federal Reserve. The gold market also ignored other data that showed a strengthening U.S. economy, including rising existing home sales and lower weekly jobless claims. U.S. gold futures for December delivery settled down $3 an ounce at $1,190.90.

         Oil Gains First Time in 4 Days as Investors Weigh OPEC. Brent and West Texas Intermediate crude gained for the first time in four days as investors weighed the potential outcome of next week’s OPEC meeting. Leading members of OPEC are resisting calls to reduce output while others including Venezuela seek action to support prices at a Nov. 27 meeting in Vienna. An OPEC production cut looks increasingly likely, Morgan Stanley said in a report yesterday. Brent trading volatility rose to the highest in more than two years. Brent for January settlement gained $1.23, or 1.6 percent, to end at $79.33 a barrel on the London-based ICE Futures Europe exchange. WTI for January delivery, the most-actively traded, rose $1.35, or 1.8 percent, to $75.85 a barrel on the New York Mercantile Exchange. The December contract, which expired today, climbed $1 to $75.58.

        Google Play Allows Chinese Developers to Offer Paid Apps. Google Inc., which closed its Chinese search page in 2010, is making a new effort in the country by allowing domestic developers to sell paid applications in its Play store. The biggest search engine is encouraging app makers in China to join its distribution system and generate sales abroad through in-app purchases and subscriptions, according to a post on the Android Developers Blog. The Google Play online store isn’t available to the nation’s 632 million Internet users. Google is trying to find new ways to tap software development in China and earn revenue in a country where its YouTube service is blocked and its local search page redirects to Hong Kong. Beijing hosts the most software companies created outside the U.S. since 2003 with a value of more than $1 billion, according to venture capital investor Atomico

     VW China Executive Says Carmaker Working to Win Trust. Volkswagen AG, which has been criticized in China by some car owners for its handling of a recall, said it will work hard to gain the trust of customers and treat them with gratitude. “Becoming the most trusted brand of Chinese consumers is more important than sales and market share,” Soh Weiming, executive vice president of Volkswagen China, told reporters at the Guangzhou auto show today. “We should lower ourselves and learn to effectively communicate with consumers with a grateful attitude.” China’s quality regulator this month asked VW to provide technical documents for its recall of almost 600,000 New Sagitar and Beetle vehicles to remedy potential defects with rear suspension axles. The automaker had issued the recall two months after the regulator started an investigation prompted by mounting complaints from owners.

  

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 1.5650 area to trigger further bearish pressure targeting 1.5615 support area or even lower. On the upside, only a consistent break above 1.5770 area would trigger further bullish correction scenario perhaps retesting 1.5840 area in nearest term.

        USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 119.30 area to trigger further bullish pressure aiming 119.80 region. On the downside, only a consistent breakdown below 117.60 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 0.8560 area to trigger further bearish momentum aiming 0.8530 area. Immediate resistance is seen around 0.8640 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8710 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 daily 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 lower testing 17080 area. A clear break below that area should trigger bearish pressure testing 16980 area. On the up side, immediate resistance is seen around 17410 area, a consistent break and movement above that area would bring the price up aiming 17560 area.