CFD Markets News and Forecasts — 24-01-2011

Bank of England Monetary Policy Committee Member Andrew Sentance warns again tonight that a failure to raise interest rates gradually risks a larger rate rise further down the road and the loss of the MPC's policy credibility. In a speech to the European Policy Forum here, Sentance says: "If we do not start to raise UK interest rates gradually soon, we risk having to do so more aggressively in the future - which could create a big shock to business and consumer confidence further down the track. The lack of a substantive policy response to persistent above-target inflation also enhances the risk of a loss of credibility in the inflation target itself and a loss of belief in the commitment of the MPC to achieving it".

In a question and answer session here Sentance said the MPC needs to focus on the inflation outlook and getting it back to target. He argued the emphasis should stay on a broad inflation measure, and said he was skeptical about core inflation measure, which strip out various factors.

    The major equity averages are up with strong gains after stumbling in the early going. The move has been broad based, but materials stocks and large-cap tech issues have made the biggest gains.

Comments: Dollar continues to decline and currently probes key support at Chf0.9480 (23.6% of Chf1.0070 - Chf0.9300). Below support comes at Chf0.9420 witj a break under will open the way to Dec 31 lows on Chf0.9300. Daily highs on Chf0.9620 are minor resistance with stronger is at Chf0.9670 (channel line from June).

Resistance 3:$1.6300         
Resistance 2:$1.6060        
Resistance 1:$1.6010        
Current price: $1.6005
Support 1: $1.5930

Support 3: $1.5710

Resistance 3:$1.3930             
Resistance 2:$1.3780             
Resistance 1:$1.3700
Current price: $1.3677

USD/JPY skidded lower as the greenback wilted elsewhere, this pair retreating to the overnight low area at Y82.55. Pair earlier said to hold bids below Y82.50 while topside is still said to have a raft of stops above Y83.10, although offers ahead of the level still seem to cap.

GBP/USD edges above resistance at $1.5980 and expected to meet resistance around $1.5989 (76.4% $1.6010/1.5922). A break here to expose the Asia high at $1.6010, a move above here to expose the NY high Friday at $1.6017 with stops placed on a break of $1.6020.

March WTI sinks again after a rally back to $89.00, with sharp drop through support at $87.91 and targeting $86.71. Crude trades $87.57/62 after low print of $87.51.

U.S. stocks were headed for a flat open Monday, as investors mulled earnings results from McDonald's and Halliburton, with no market-moving economic reports on tap.
Stocks closed mixed Friday, with technology shares lagging behind the broader market. For the week, the Dow gained 1.2% while the S&P was flat. The Nasdaq lost about 1.7% over the last five trading days.

Companies: Before the opening bell, Halliburton (HAL, Fortune 500) logged earnings of 68 cents a share on revenue of $5.2 billion. That beat expectations, with analysts looking for earnings of 63 cents, on $4.9 billion in revenue. Shares of the company edged up modestly in pre-market trading.
McDonald's (MCD, Fortune 500) reported earnings of $1.16 per share on revenue of $6.2 billion - in line with expectations. Shares of the fast food chain slipped 0.5%.
American Express (AXP, Fortune 500) is expected to report earnings of 97 cents per share, on revenue of $7.3 billion, after the market close.
Sara Lee Corp. (SLE, Fortune 500) jumped 2% in pre-market trading on reports the food company received a takeover bid higher than its current market value, from a group of private equity firms.
World markets: European stocks were mixed in morning trading. Britain's FTSE 100 edged up 0.3%, while the DAX in Germany slipped 0.5% and France's CAC 40 was flat.
Asian markets ended the session mixed. The Shanghai Composite slid 0.7% and the Hang Seng in Hong Kong fell 0.3%, as Japan's Nikkei ticked up 0.7%.

EUR/USD nudges up to $1.3600 area and traders on alert for any fresh sightings of semi-official name again after that account was seen as a euro seller around $1.3600. Offers remain at $1.3600/05.

Prices paid 85.0
New orders 63.3 vs 68.0
Employment 63.0 vs 64.5
Prodction 69.0

EUR/JPY posts a high of Y112.73 on the day as euro-dollar rally gathers pace and cross moves firmly away from the 200 day MA (Y112.24) breached on Friday. Next resistance the Nov22 low of Y112.95. Cross trades Y112.61/64.

EUR/USD up to $1.3590 area as any ECB fixing related pressure passes, chatter had been for LHS interest at that event. Flows modest, offers expected $1.3600/05.

USD/JPY moves higher again to Y82.92 with real money demand evident in the Y82.80's but pair still wading through offers ahead of larger supply from exporters above Y83.00. Spot currently Y82.89/91.

The dollar advanced from a two-month low against the euro before U.S. data this week that economists said will show a growing economy and increasing consumer confidence.
The euro weakened against the dollar for the first day in five. Irish political leaders said they’ll press to pass a budget before elections after the Green Party left Prime Minister Brian Cowen’s coalition. Passing the plan is a condition of Ireland’s 85 billion-euro ($115 billion) aid package from the International Monetary Fund and the European Union.
The single currency is likely to continue “an unwind of what was extremely strong euro pricing last week, particularly given the Irish news,” said Geoff Kendrick, head of European foreign-exchange strategy at Nomura International Plc in London.
The pound snapped two weeks of gains against the greenback before tomorrow’s growth report amid waning speculation that the Bank of England will raise interest rates this year. U.K. gross domestic product likely rose 0.5 percent in the fourth quarter, compared with a 0.7 percent increase in the third quarter, according to a Bloomberg News survey.
“The markets are a bit premature in expecting the Bank of England to hike rates anytime in the next few months,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole CIB, said. “That might just see a little more downside risk to sterling.”


EUR/USD: eased to $1.3540, before bounced back to $1.3570. Offers: $1.3575/80, $1.3600/05, $1.3620/25, $1.3650. Bids: $1.3535/25, $1.3510/00, $1.3485/80.

 EPS $1.16 versus analysts estimates of $1.16. Revenues were $6.21 bln versus estimates of $6.2 bln.

EUR/USD
Offers: $1.3575/80, $1.3600/05, $1.3620/25, $1.3650
Bids: $1.3535/25, $1.3510/00, $1.3485/80

• Who would think we could replace USD with imf sdrs?;
• Dollar will remain 'absolutely preponderant' currency;
• Attempts to cast doubt on USD will not be taken well;
• Dollar preponderant currency, but not only currency.

Who would think we could replace USD with imf sdrs?
Dollar will remain 'absolutely preponderant' currency
Attempts to cast doubt on USD will not be taken well
Dollar preponderant currency, but not only currency

Finds support at $1.5920 ($1.5924 61.8% $1.5867/1.6017), recovering to $1.5932. A break of $1.5920 to expose area from $1.5911 (Dec 14 high) through to $1.5900, with $1.5902 the 76.4% retracement level. A break of $1.5980 to allow for a move on toward $1.5990/1.6000. A break here to expose the overnight highs at $1.6010 ahead of the Friday's NY high at $1.6017.

Extends pullback, begins pressure on reported Asian sovereign demand interest in the $1.3560/50 area. Talk of stops placed on a break of this level, more below $1.3540, but spec buyers may emerge on any downside stalling in the $1.3535/25 area. Topside seen restricted by reported semi official supply in the $1.3575/80 area.

Turnover was HK$64.67 million, with 12 gainers, 30 losers and three stocks unchanged. Weakness in financials and basic materials was the primary drag, though oil majors and consumer goods stocks gained. China Merchants Holdings (144) sunk 2.77% to HK$31.60. Li & Fung added 4.01% to HK$51.84.

Philips fell 6.6% after reporting lower-than-expected fourth-quarter net profit, as poor TV sales hit its lifestyle division, and it warned that consumers in mature markets will be reluctant to spend this year.