Markets | 04/12/2014 | Euro Slides to 27-Month Low Ahead ECB Meeting

        Euro Slides to 27-Month Low Ahead ECB Meeting. The euro slumped to a fresh 27-month low versus the dollar as mounting signs of weakness in the region’s economy amplify calls for the European Central Bank to ease further when it meets on Thursday. Markit Economics reports on Wednesday showed composite PMI fell to 51.1 in November from 52.1 in October. The reading is the lowest in 16 months and points to economic growth of just 0.1% this quarter. A separate data also showed lower-than-expected euro zone's retail sales in October.

       Solid U.K. Services PMI Boosts Sterling. Sterling turned higher against the dollar on Wednesday, after a survey showed Britain's dominant services sector grew much faster than expected in November and finance minister George Osborne gave an upbeat budget statement. In his Autumn Statement, Osborne raised near-term growth forecasts and while the government will miss deficit-reduction targets, Britain will sell fewer bonds in 2014/15 than previously forecast, sending gilt futures and the pound higher.

      Loonie Climbs After BoC Policy Decision. Canada’s dollar climbed from almost a 5-year low after the nation’s central bank said a long-awaited shift to an economy driven by exports and business investment may be under way. The Loonie gained even as the Bank of Canada held the benchmark interest rate at 1%, where it has stayed since September 2010. Policy makers said while a slump in oil, the nation’s biggest export, would slow consumer-price gains, faster U.S. growth and a weaker Canadian currency were broadening the economic recovery to include more exporters.

     Australia's Economy Grows by Less Than Expected. Australia's economy grew by much less than expected in the third quarter as commodity prices tumbled and mining investment slumped, driving calls for interest-rate cuts next year. The resource-rich economy grew by a less-than-expected 0.3% in the third quarter from the second, government data on Wednesday showed. Gross domestic product also rose by a less-than-expected 2.7% from a year earlier. Economists had anticipated growth of 0.7% from the second quarter and 3.1% from a year earlier.

    

         Nikkei Rose ss Yen Fall. Asian shares were mixed despite better US construction spending and automotif sales signaled continuing US economy recovery. Nikkei gained, supported by weaker yen that could improve Japan exporters' competitiveness. Kospi edge higher amid optimism about US economy recovery. Hang Seng fell on worry about prolong demonstration in Hong Kong after students defying calls by leaders of the civil disobedience movement Occupy Central for them to retreat.

      Europe Stocks Climb Amid ECB Optimism. European stock markets rose amid bets that the European Central Bank will expand stimulus. Speculation has been rising that the ECB may move a step closer to full-scale quantitative easing. That has spurred investor spiling into the region’s equities. Germany’s DAX 30 index rose 0.4% to 9,971.79, and France’s CAC 40 index ended up 0.1% at 4,391.45. But the U.K.’s FTSE 100 index fell 0.4% to 6,716.63, as investors assessed the closely watched Autumn Statement, a wide-ranging update from the government on the state of the U.K. economy and future government plans.

      U.S. Stocks Rise as Energy Stocks. U.S. stocks rose, following the biggest advance in a month for the Standard & Poor’s 500 Index, as energy and commodity shares rallied while data boosted confidence in the economy before Friday’s jobs report. Companies in the U.S. added 208,000 workers in November, indicating steady progress in the labor market, a private payrolls report showed. The increase in employment followed a revised 233,000 gain the prior month, figures from the Roseland, New Jersey-based ADP Research Institute showed today. Payrolls have climbed by at least 200,000 in seven of the last eight months. The S&P 500 rose 0.4 percent to 2,074.33. The Dow Jones Industrial Average climbed 0.2 percent, to 17,912.62. The Nasdaq added 0.4 percent to 4774.47.

        Gold Reclaims $1,200 Level. Gold gained on Wednesday to close above $1,200 as tepid U.S. data and higher oil prices revived buying interest. Hiring in the private sector expanded by a seasonally adjusted 208,000 jobs in November, the slowest in three months, ADP reported. Economists had expected an increase of 223,000. Meanwhile the higher energy prices damped concern that inflation will remain low and revived demand for the precious metal as a store of value. The correlation between crude oil and gold has become more apparent recently, rose close to 0.4 on Wednesday, the strongest link since July 2013. A reading of 1 means the prices move in lockstep.

         Crude Oil Flat after Surprise U.S. Supply Decrease. West Texas Intermediate oil flat after a government report showed that U.S. crude inventories dropped as refineries bolstered operating rates. The Energy Information Administration said earlier Wednesday U.S. crude-oil supplies declined 3.7 million barrels on the week ended Nov. 28. Analysts surveyed by Platts had expected crude inventories to increase by 380,000 barrels on the week. The EIA also reported gasoline inventories rose by 2.1 million barrels, while supplies of distillates rose by 3 million barrels. Analysts polled by Platts had expected distillates supplies to decline by 1.2 million barrels and gasoline stockpiles to end the week unchanged.

         Intel To Make Smart Eyewear With Luxottica. Intel Corp. will collaborate with Luxottica Group SpA to produce smart eyewear, another expansion of the semiconductor giant’s push into wearable tech. The first product from the companies’ multiyear research and development collaboration will launch in 2015. Luxottica, a leader in premium and sports eyewear, is best known for brands such as Ray-Ban, Persol and Oakley. The Wall Street Journal reported Monday that Intel will supply the chip for Google Inc.’s Google Glass next year, replacing a processor from Texas Instruments Inc. that was used in the first version of the glass. In addition, Intel will promote Glass to companies such as hospital networks and manufacturers, while developing new workplace uses for the device, according to one of the people.

        McDonald’s Raises Russian Big Mac Price. McDonald’s Corp. increased prices in Russia after the ruble plummeted against the dollar. The cost of a Big Mac was raised by 2.2 percent to 94 rubles ($1.77). The average price increase was about 1.3 percent in ruble terms. The ruble fell to a record low this week and has declined by almost a third against the dollar in four months, increasing pressure on international brands to put up their prices. KFC Russia raised prices by about 1 percent in mid-November,, while Apple Inc. last week added 25 percent to the cost of an iPhone in the country.

Technical Outlook

 

         EUR/USD. The bias is bearish in nearest term especially if price able to make a clear break back below 1.2280 area to trigger further bearish momentum aiming 1.2200 region. Immediate resistance is seen around 1.2355 area, another consistent break above that area would bring the price to neutral zone in nearest term perhaps retesting 1.2400 resistance area.

       GBP/USD. The bias is bearish in nearest term but we need a clear break below 1.5640 area to trigger further bearish pressure aiming at least 1.5600 area before retesting 1.5580 region. On the upside, only a clear break above 1.5700 area would trigger further bullish correction scenario aiming 1.5760 area before continue the major bearish scenario.

       USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 119.90 area to trigger further bullish momentum aiming 120.60 region. Immediate support is seen around 119.30 area, another consistent breakdown below that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 118.80 area before recovery to the upside.

          USD/CHF. The bias is bullish in nearest term but we need a clear break above 0.9795 area to trigger further bullish pressure retesting 0.9850 region. Immediate support is seen around 0.9720 area, another consistent break below that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.9655 region.

       AUD/USD. The bias is bearish in nearest term but we need a clear break below 0.8380 area to trigger further bearish momentum aiming 0.8340 area. Immediate resistance is seen around 0.8475 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8530 region.

     XAU/USD. The bias is neutral in the nearest term, a clear break above 1214 area is needed to trigger bullish momentum testing 1222 area. On the downside, immediate support is seen around 1200 area, a consistent break below that area would bring the price down, furthermore testing 1190 area. 

       Hang Seng Futures. The bias is neutral in the nearest term, a clear break above 23810 is needed to trigger bullish momentum aiming 24000 area. On the down side, immediate support is seen around 23300 area. A consistent break and movement below that area would bring the price down, potentially testing 23130 area.

     Nikkei Futures. The bias is bullish in the nearest term potentially testing 17885 area. A consistent break and movement above that area should trigger further bullish momentum retesting 17940 area. On the down side, a clear break below 17640 area would bring the bias back into neutral, furthermore testing 17510 area.