CFD Markets News and Forecasts — 14-01-2011

GBP/USD continues to flirt with the earlier high at $1.5888, trading currently at $1.5880 but amid light flows, cable still a relative underperformer on the day when compared to the brisker action in euro-dollar. Offers remain at $1.5900 where a barrier strike is touted. Stops positioned above.

The stock market has extended its afternoon advance to a fresh session high. The move has taken the S&P 500 above the 1290 line for the first time since 2008.

Merck (MRK 34.28, -0.42) is a source of weakness in the health care sector as it extends its prior-session sell-off into today's trade.

Meanwhile, Coca-Cola (KO 63.12, -0.28) has weighed down the consumer staples sector after it had put on a relatively solid performance yesterday.

EUR/USD holds $1.3340 area for current dealings, slightly defensive but with little to no momentum after the pair rebounded form $1.3315 to $1.3360, likely defining the afternoon range. Area ahead of $1.3300 said to hold bids with stops below. Upside to find supply atop $1.3400.

The dollar was headed for its biggest weekly loss since September against the currencies of major U.S. trading partners as consumer confidence unexpectedly fell and retail sales rose less than economists forecast.
The euro pared its weekly rally versus the dollar as Fitch Ratings cut Greece’s debt to junk.
“The sentiment is already kind of negative for the U.S. dollar,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “It’s less positive than we’ve seen.”

The Thomson Reuters/University of Michigan preliminary index of consumer confidence dropped to 72.7 this month from 74.5 in December. The median forecast of economists was for an increase to 75.5.
Sales at U.S. retailers gained 0.6% in December after advancing 0.8% in the previous month, the Commerce Department reported. The median forecast of economists was for a 0.8% gain.
European finance ministers will assemble a “comprehensive package” to tackle the crisis by March and discuss details of the “ambitious” program when they meet in Brussels next week, Germany’s Wolfgang Schaeuble said yesterday. Chancellor Angela Merkel indicated this week the government’s desire to do “whatever is needed to support the euro.”
The 17-nation currency was supported as European Central Bank President Jean-Claude Trichet signaled yesterday he’s prepared to raise interest rates to contain inflation.
European inflation quickened to an annual pace of 2.2% in December from 1.9% in the previous month, the European Union’s statistics office said today. That’s the fastest since October 2008 and in line with a Jan. 4 estimate.

Stocks recently stretched to a fresh session high. The move has coincided with a dip in volatility, such that the Volatility Index is now down more than 4% to a new three-week low. While the broader market has gradually added to its gains, Coinstar (CSTR 42.74, -14.24) is still down 25% after it issued lowered its outlook. That announcement had put pressure on Netflix (NFLX 190.07, -1.43) shortly after its release, but NFLX has managed to limit its loss in regular trading hours.

USD/JPY erding the supply layered above Y83.00 with recent prints to Y83.05 or so, the dollar not building much momentum but not showing any pullback either. Offers in place to Y83.10, as noted earlier.

The euro strengthened for a fifth day versus the dollar, headed for its biggest weekly gain in almost two years, amid speculation inflation pressure may spur the European Central Bank to raise borrowing costs this year.
The common currency was set for a weekly advance versus all of its 16 major counterparts as traders bet European finance ministers may next week reinforce measures to stem the region’s debt crisis. ECB President Jean-Claude Trichet yesterday signaled he’s prepared to raise interest rates if needed. The Dollar Index dropped a fifth day as confidence in the U.S. economic recovery wavered and the Swiss franc declined.
“If the periphery is to be ring-fenced, the ECB can concentrate more on price stability,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “People have quite rapidly moved away from the U.S. growth story and are clearly focusing on the euro. Pure hawkishness on the part of Trichet yesterday is a driver for the euro.”
Europe’s currency headed for a weekly gain versus the greenback after the Federal Statistics Office in Wiesbaden said today the German inflation rate, calculated using a harmonized European method, rose to 1.9 percent in December from 1.6 percent in November. That’s the fastest since October 2008. Spain’s underlying inflation rate accelerated in December at the fastest pace in almost two years, a separate report showed.

EUR/USD: traded within  $1.3460-$1.3320.

GBP/USD: consolidated near resent highs.

USD/JPY: eased to Y82.40, but bounsed back to Y83.

Exploring possibility of EFSF bond buying

The euro strengthened to a one-week high against the dollar after a German report showed inflation accelerated to the fastest pace in more than two years.
The common currency was set for a weekly advance versus all of its 16 major counterparts as European finance ministers may increase the size of aid reserves and lower rates on bailout loans at a meeting next week.
The yen rose for the first time in four days against the euro on speculation Japan’s exporters took advantage of yesterday’s biggest drop in six weeks to buy it.
Europe’s currency headed for a weekly gain versus the greenback after the Federal Statistics Office in Wiesbaden said today the inflation rate, calculated using a harmonized European method, rose to 1.9 percent in December from 1.6 percent in November. That’s the fastest since October 2008.
The yen rose versus 15 of its 16 major counterparts on speculation that Japanese exporters purchased the currency after it touched the weakest level since December.

EUR/USD: the pair bargained in the field of the high reached yesterday.

GBP/USD: the pair bargained in the field of the high reached yesterday.

USD/JPY: the pair decreased in around Y82,50.


European data for Friday starts at 0700GMT with the latest ACEA new car registrations data. This morning also sees the release of final HICP data from the German states, including Germany at 0700GMT.
At 0935GMT, ECB Governing Council member Axel Weber is due to speak at the Otto Beisheim School of Management. EMU data includes the November trade balance at 1000GMT as well as the final December HICP data, which
is expected to confirm the preliminary release of 2.2% y/y.
UK data at 0930GMT includes Producer Prices for December, where PPI output is expected to come in at 0.4% m/m, 4.0% y/y, with core output at 0.3% m/m, 3.0% y/y and input prices 1.5% m/m, 10.2%
US data starts at 1330GMT with retail sales and CPI. Retail sales are expected to rise 0.8% in December. Industry auto sales rose slightly in the month, while gasoline prices rose further according to AAA. Sales
excluding motor vehicles are expected to post a 0.7% increase on the higher gasoline prices as well as solid holiday sales. Consumer prices are expected to rise 0.4% in December, on solid gains in both food and
energy prices. AAA reported another rise in gasoline prices in the middle of December from a month earlier. Core CPI is forecast to rise only 0.1%, as pricing power remains very weak. US data continues at
1415GMT, when industrial production is expected to rise 0.5% in December on rising utilities production and moderately stronger manufacturing production. Factory payrolls 10,000 in the month, while auto production
jobs rose 3,000. The factory workweek fell 0.1 to 40.2 hours, while the ISM production index rose to 60.7. Capacity utilization is forecast to rise to 75.6%.
y/y.

The euro rose versus all of its major counterparts as traders speculated that European Union leaders will step up efforts to contain the region’s debt crisis and demand rose at Spain’s debt sale.
Spain sold 3 billion euros ($3.9 billion) of five-year bonds in its first debt auction of the year, meeting its maximum target. Demand was 2.1 times the amount sold, compared with 1.6 times at the previous sale. Italy sold 6 billion euros of bonds due in 2015 and 2026.
The 17-nation currency had its biggest four-day gain versus the dollar since September as European Central Bank President Jean-Claude Trichet signaled an increased risk of inflation.
Trichet signaled he’s prepared to raise interest rates if needed to fight inflation even as leaders struggle to contain the region’s sovereign debt crisis.
The dollar dropped versus the yen as U.S. jobless claims rose to the highest level since October.
U.S. initial jobless claims rose in the first week of 2011 to 445,000, the highest level since October, the Labor Department reported. Separate reports showed the producer price index rose last month by the most in 11 months, while the trade deficit unexpectedly narrowed in November.

EUR/USD: the pair become stronger in around $1.3350.

GBP/USD: the pair become stronger in around $1.5820.

USD/JPY: the pair decreased in around Y82,80.


European data for Friday starts at 0700GMT with the latest ACEA new car registrations data. This morning also sees the release of final HICP data from the German states, including Germany at 0700GMT.
At 0935GMT, ECB Governing Council member Axel Weber is due to speak at the Otto Beisheim School of Management. EMU data includes the November trade balance at 1000GMT as well as the final December HICP data, which
is expected to confirm the preliminary release of 2.2% y/y.
UK data at 0930GMT includes Producer Prices for December, where PPI output is expected to come in at 0.4% m/m, 4.0% y/y, with core output at 0.3% m/m, 3.0% y/y and input prices 1.5% m/m, 10.2%
US data starts at 1330GMT with retail sales and CPI. Retail sales are expected to rise 0.8% in December. Industry auto sales rose slightly in the month, while gasoline prices rose further according to AAA. Sales
excluding motor vehicles are expected to post a 0.7% increase on the higher gasoline prices as well as solid holiday sales. Consumer prices are expected to rise 0.4% in December, on solid gains in both food and
energy prices. AAA reported another rise in gasoline prices in the middle of December from a month earlier. Core CPI is forecast to rise only 0.1%, as pricing power remains very weak. US data continues at
1415GMT, when industrial production is expected to rise 0.5% in December on rising utilities production and moderately stronger manufacturing production. Factory payrolls 10,000 in the month, while auto production
jobs rose 3,000. The factory workweek fell 0.1 to 40.2 hours, while the ISM production index rose to 60.7. Capacity utilization is forecast to rise to 75.6%.
y/y.

Japanese stocks rose, sending the Topix index to its longest winning streak since June, on speculation that Europe will step up efforts to control its debt crisis and as the U.S. economy showed more signs of recovery.
Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank, led lenders higher. Honda Motor Co., a carmaker that gets about 80 percent of its sales abroad, climbed 1.8 percent as the euro strengthened, boosting the outlook for export earnings. Canon Inc., the world’s biggest camera maker, advanced 2.1 percent. Inpex Corp., Japan’s largest oil and gas explorer, rose 2.1 percent as crude prices increased.

European stocks declined from a 28- month high as a larger-than-forecast increase in U.S. initial jobless-benefit claims overshadowed gains by banks after Spain and Italy sold bonds.
Nestle SA, the world’s biggest food company, fell 3 percent on analyst downgrades. Dixons Retail Plc slumped 10 percent after saying earnings will probably be “around the bottom end” of estimates. Commerzbank AG lost 1.2 percent after announcing a capital increase. Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s largest banks, climbed as demand increased at an auction of the nation’s debt.
The European Central Bank kept interest rates at a record low today as ECB President Jean-Claude Trichet said inflation pressures in the euro region have picked up. The Governing Council set the benchmark rate at 1 percent for the 21st month

U.S. stocks fell, pulling benchmark indexes down from two-year highs, as a bigger-than-forecast increase in jobless claims tempered optimism about fourth- quarter earnings reports.
Merck & Co. slid 6.7 percent, the biggest drop in the Dow Jones Industrial Average, as a trial for a blood-thinner drug was halted. Deere & Co. rose 2.6 percent after being raised to “overweight” at JPMorgan Chase & Co., while Micron Technology Inc. jumped 3.2 percent as Robert W. Baird & Co. advised buying shares of the largest U.S. maker of memory chips.
The Standard & Poor’s 500 Index 0.2 percent to 1,283.14 at 2:18 p.m. in New York after yesterday rising to the highest since August 2008. The Dow Jones Industrial Average fell 36.25 points, or 0.3 percent, to 11,719.19.

Resistance 3:Y83,70 (Jan 7 high)
Resistance 2:Y83.15 (Jan 13 high)
Resistance 1:Y82,85 (session high)
Current price: Y82.56
Support 1:Y82.50 (session low)
Support 2:Y82.30 (50,0 % FIBO Y80,90-Y83,70)
Support 3:Y82.00 (61,8 % FIBO Y80,90-Y83,70)

Comments: the pair bargains below mark Y83,00. The nearest resistance - Y82,85. Above growth is possible to Y83.15. The nearest support - Y82,50. Below losses are possible to Y82.30.

Resistance 3: Chf0.9915 (Dec 8 high)
Resistance 2: Chf0.9850 (Dec 13 high)
Resistance 1: Chf0.9765/85 (Jan 13 and 11 high)
Current price: Chf0.9651
Support 1: Chf0.9630 (session low, МА(200) for Н1)
Support 2: Chf0.9600 (38,2 % FIBO Chf0,9300-Chf0,9785, Jan 7 low)
Support 3: Chf0.9540 (50,0 % FIBO Chf0,9300-Chf0,9785)

Comments: the pair bargains in the field of Chf0,9650. The nearest resistance Chf0,9765/85. Above is located Chf0.9850. The nearest support Chf0,9630. Below loss may extend  to Chf0.9600.

Resistance 3: $ 1.6100 (Nov 19 high)
Resistance 2: $ 1.6000 (psychological mark)
Resistance 1: $ 1.5810 (Dec 14 high)
Current price: $1.5834
Support 1 : $1.5820 (session low)
Support 2 : $1.5720 (Jan 13 low, support line from Jan 7)
Support 3 : $1.5580 (Jan 12 low)

Comments: the pair bargains in the field of the high reached yesterday. The nearest support - $1,5820. Below decrease is possible to $1.5720. The nearest resistance - $1,5810. Above growth is possible to $1,6000.

Resistance 3: $ 1.3500 (Jan 14 high)
Resistance 2: $ 1.3430 (Jan 4 high)
Resistance 1: $ 1.3380 (session high)
Current price: $1.3343
Support 1 : $1.3320 (session low)
Support 2 : $1.3190 (38,2 % FIBO $1.2870-$ 1.3380)
Support 3 : $1.3130 (50.0 % FIBO $1,2870-$ 1,3380)

Comments: the pair bargains in the field of the high reached yesterday. The nearest support - $1,3320. Below decrease  is possible to $1.3190. The nearest resistance - $1,3380. Above growth is possible to $1,3430.

07:00     Germany     CPI (December) final         1.0%    1.0%
07:00     Germany     CPI (December) final Y/Y         1.7%    1.7%
09:30     UK     PPI (Output) (December) unadjusted         0.4%    0.3%
09:30     UK     PPI (Output) (December) unadjusted Y/Y         3.9%    3.9%
09:30     UK     PPI Output ex FDT (December) adjusted         0.3%    0.2%
09:30     UK     PPI Output ex FDT (December) unadjusted Y/Y         -    3.3%
09:30     UK     PPI (Input) (December) adjusted         1.5%    0.9%
09:30     UK     PPI (Input) (December) unadjusted Y/Y         10.2%    9.0%
10:00     EU(16)     Harmonized CPI (December) final         0.6%    0.1%
10:00     EU(16)     Harmonized CPI (December) final Y/Y         2.2%    1.9%
10:00     EU(16)     Harmonized CPI ex EFAT (December) Y/Y         1.1%    1.1%
10:00     EU(16)     Trade balance (November) adjusted, bln          4.1    3.6
10:00     EU(16)     Trade balance (November) unadjusted, bln          -    5.2
13:30     USA     CPI (December)         0.4%    0.1%
13:30     USA     CPI (December) Y/Y         -    1.1%
13:30     USA     CPI excluding food and energy (December)         0.1%    0.1%
13:30     USA     CPI excluding food and energy (December) Y/Y         -    0.8%
13:30     USA     Retail sales (December)         0.8%    0.8%
13:30     USA     Retail sales excluding auto (December)         0.7%    1.2%
14:15     USA     Industrial production (December)         0.4%    0.4%
14:15     USA     Capacity utilisation (December)         75.4    75.2
14:55     USA     Michigan sentiment index (January) preliminary         75.2    74.5
15:00     USA     Business inventories (November)         0.8%    0.7%