MORNING BRIEFING: Market’s negativity weighs on the markets today

[RTFX-Trading]

MORNING BRIEFING: Negativity weighs on the markets today

What’s new:
United States: Lawmakers seem to be close to approve new bank regulation
G20: Summit ahead, some divergence seen on bank tax and speed of fiscal clean up  
Japan: CPI lower for the 15th consecutive month
Asia: Asian equity started off negatively today

Today:



Rates in Asia and Indices:
EURUSD: 1.2343 - 1.2297.
USDCHF: 1.1047- 1.0999.
GBPUSD: 1.4974 - 1.4916.
EURJPY: 110.67 – 110.03.
USDJPY: 89.71 – 89.41.
DowJones: 10'152.80 -1.41%
NASDAQ: 2'217.42 -1.63%
S & P 500: 1'073.69 -1.68%
Nikkei: 9’719.60 -2.10%
Shanghai: 2'548.10 -0.73%
Gold: $ 1'242.25
Crude Oil: $ 76.26

 
Comments:

There seem to be a taste of pessimism today; the perceived riskier assets EUR, AUD and NZD found less support, Asian equities started off negatively early morning.

Growth prospects remain shaky on the continued mixed data we get from the United States and other economies. Even European debt is in the limelight again as Greek credit default swaps hit new record highs. Globally talks on increased bank regulation have given markets new concerns as late yesterday US lawmakers were agreeing to ways of limiting banks’ trading activity aimed at prohibiting risky trading activity.

Looking at the upcoming G20 summit due this weekend, it appears that countries are split on the need for a bank tax. Even when it comes to fiscal consolidation, though there seems to be agreement that targeting fiscal consolidation is a must – US cautions countries should not rush austerity measures and thus risk short term growth; while on the other hand in Europe: Germany, France and United Kingdom have set ambitious targets for reducing their debt levels aggressively. ECB’s Trichet is dismissing that austerity measures could trigger stagnation.

In Japan CPI data was down again for the 15th month. Analysts are starting to doubt Government’s goal ending deflation next year and BOJ’s forecast of a rise in CPI by 2012.

Looking at the EURUSD  pair even though Euro maybe seen as losing steam it has at least managed to maintain the 1.22 level since 15th June.  Market sentiment seems to favour a downside today, but since it has not yet breached the significant 1.2150 level upside cannot be ruled out completely. To the downside significant resistance seen at 1.2269 (the 23.60% Fibonacci retracement level ) below that 1.2245 and 1.2150 are the following key support levels. Possible targets for the upside are 1.2430/1.2450 as seen on the hourly and four hourly charts.

Today’s economic calendar is a light one, markets set to move on sentiment.


Good day,


Rudolf Muscat
Trading desk

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