Risk is still on. Expect a little profit taking here on the opening of European markets, but risk assets will most likely revert and trade higher during today.
Calendar
Economic Data Releases
|
|
Country
| Time (GMT)
| Name
| Expectation
| Prior
| Comment
|
US
| 13:30
| PPI / Core PPI MoM (OCT)
| 0.5% / 0.1%
| -0.6% / -0.1%
|
|
US
| 14:15
| Industrial Production MoM (OCT)
| 0.4%
| 0.7%
|
|
US
| 14:15
| Capacity Utilization (OCT)
| 70.8%
| 70.5%
|
|
What's going on?
· Bernanke’s comments yesterday put an additional weight on the USD as he indicated a longer period of ultra-easy monetary policy.
· The risk-trade is still on and S&P500 forcefully broke the trendline resistance since October 2007. With Bernanke’s comments, we could go somewhat higher in stocks/risk. Long AUD and NZD vs. USD still seem to be the best way to play this theme.
· A fundamental worry: US/UK etc. Sovereign CDS prices are moving sharply higher (but from quite low levels) and interest rate swap options indicate expectations of increasing risk premiums for especially US debt. That might be a real and growing problem.
FX
FX
| Daily stance
| Comment
|
EURUSD
| 0/+
| Still buy dips to 1.4930 suppt for test of 1.5015, poss 1.5065. Stop/reverse below 1.49 for 1.4825.
|
USDJPY
| 0/-
| Initial res at 89.30 expected to hold for retracement back to 88.80, stop abv 89.75.
|
EURJPY
| 0/-
| Seen capped at 133.75-80 lvl for a retracement back to 132.50. Stop abv 134.30.
|
GBPUSD
| 0/+
| Buy dips to 1.6785-90 for re-test of 1.6875. Stop/reverse below 1.6740 for 1.6670.
|
AUDUSD
| 0/+
| Retracement can extend to 0.9310 but buy there for 0.9375, poss 0.9425. Stop below 0.9260.
|
FX Options
FX-Options
| Comment
|
EURUSD
| Despite a move down to 1.4880 in NY, vols ended up largely unchanged. Front end likely
|
| to remain suppressed as the dollar claws back slightly during the Asian session.
|
USDJPY
| Spot was glued tightly to a range throughout asia and that has not helped vols. This
|
| should continue as long as spot holds between 8880 and 8930.
|
AUDUSD
| 1w Tokyo cut got given down to 12.5% this morning and most front end interest in the
|
| brokers are sellers except for the 2w which covers the next RBA date.
|
Equities
Equities
| Daily stance
| Comment
|
Dax
| 0/+
| Buy on dips towards 5747 targeting 5860. S/L below 5732.
|
FTSE
| 0/+
| Buy on dips towards 5350 targeting 5429. S/L below 5331.
|
S&P500
| 0/+
| Buy on dips towards 1100 targeting 1118. S/L below 1096.
|
Nasdaq
| 0/+
|
|
DJIA
| 0/+
|
|
Futures
Commodities
| Daily Stance
| Comment
|
Gold
| 0/+
| Buy on the break of 1144 and target 1155. Stop below 1140.
|
Silver
| 0/+
| Buy on dips towards 18.05 and target 18.35. Stop below 17.90
|
Oil (CLZ9)
| 0/+
| Buy on dips towards 78.00 and target 80.00. Stop below 77.00.
|
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