Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
Major FX pairs demonstrate mixed perfomances ahead of the FOMC meeting, investors undecided on what to expect
MORNING BRIEF
Mixed performance by the US Dollar yesterday with the American currency retreating against the Euro and the Pound but gaining against other majors. The inconsistency in performance is a definite sign that market participants are not sure what the Fed will decide during their meeting tomorrow on the tapering issue. We’ve made the case for both outcomes in our recent reports and as we mentioned yesterday it all comes down to whether the Christmas holiday season is the appropriate time for them to act. Considering the better than expected results from the US economy during the past period but also taking into account the fact that Christmas is upon us and possibly the notion that Ben Bernanke doesn’t want to ‘steal Christmas’ from the Americans a moderate reduction seems to be the most likely decision and further reductions could be labeled “data-dependant”. We’ll have to wait and see whether the FOMC members see it the way we see it. Turning our attention to today’s session we have some major events coming up for the European region with the UK CPI report and the ZEW survey being the most significant ones. The Pound stood fast against the Dollar yesterday and today ‘s Consumer Price Index figures might send it higher above the 1.6350 mark. The Euro approached 1.3800 once again and it seems that the European currency has formed a double top formation. We still believe that the pair is unreasonably high and we expect a correction to come into play at some point.
British CPI and EZ’s ZEW survey to provide friction for the day ahead.
As we mentioned above, today’s focus will be on the European session as the British CPI report is scheduled for release early in the morning. Expectations are set for a strong printing and this could provide the Pound with enough demand to overcome the 1.6350 barrier and climb even higher during the day. The Euro will also require our attention as the Euro-zone CPI report and the very important ZEW survey are both set for release during the morning session and could send the European currency either way. Finally, the US Consumer Price Index scheduled for later in the day might cause some temporary volatility in the markets but we all know that everyone’s attention is focused on tomorrow’s FOMC decision so reaction to this report should be limited.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
9.30 |
GBP |
British CPI (YoY) |
High |
2.2% |
2.2% |
|
9.30 |
GBP |
British CPI (MoM) |
Medium |
0.2% |
0.1% |
|
10.00 |
EUR |
German ZEW survey |
High |
55.0 |
54.6 |
|
10.00 |
EUR |
Euro-zone CPI |
Medium |
0.9% |
0.9% |
|
13.30 |
USD |
US CPI |
High |
1.3% |
1.0% |
This is the free, time-delayed version of NewsletterPro, a subscription-based product.
If you would like to receive it before 7:30am, please subscribe by clicking here.
TECHNICAL ANALYSIS & LEVELS
EUR/USD
The Euro pulled back higher yesterday as it continues to demonstrate an inconsistent behavior. The recent price action threatened our stops that are set just above the 1.3800 peak and retreated lower to end the day around the 1.3770 mark. It seems like the Euro has formed a double top formation that might prove to be a reversal sign and finally send the pair lower where it is supposed to be if you take into account the area’s fundamentals. We have no choice but to remain patient and wait for our short trade to play out.
GBP/USD
The Pound yesterday pulled back higher and closed out our short trade at the breakeven price and it seems that it has formed a reversal pattern as the higher low of 1.6285 signals that the recent downtrend might have come to an end. As such we favor a long entry in the Pound today, we’d like to enter just above the 1.6350 mark and target the 1.6385 and 1.6450 price tags with a stop just below the 1.6280 low. The Pound has the British CPI report scheduled for release early in the morning and a strong printing might provide the required demand to lift the currency higher.
FTSE 100
The FTSE 100 broke higher yesterday after opening marginally lower for the day and it almost made us follow it as well. This is something we’d like to note for your consideration: when it comes to indices that don’t trade around the clock like the currency pairs do, we need you to be extra careful when an index opens at a price that might trigger a trade for you. A perfect example is yesterday’s FTSE 100 opening, that opened just below the entry level we’ve suggested but within minutes from the opening bell pulled back higher. We’d like you to employ your patience in cases like this and wait for the first minutes of trading to pass before placing your trade if the entry level gets triggered during opening moments. Moving forward, the UK index triggered our long entry and already hit our first target. Now, our stops have been moved to the breakeven price and we’re waiting for the FTSE to move higher to complete our trade suggestion. Second target lies at the 6,555 points price tag.
Gold
Gold seems to have calmed down a bit and we’d like to try and enter a trade towards higher levels as a small uptrend seems to be forming. We’d like a long entry just above the recent $1,252 peak to target the $1,259 and $1,270 marks with a stop just below the $1,238 support.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] Plc.
The Alpesh Patel Momentum/Value filter has indicated [Restricted Content] Plc as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] Plc has been rated an 8 out 10 in our Momentum/Value rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is relatively low suggesting that the stock might be underpriced, the ratio of the price earnings is also low and Earnings are up year on year supporting the growth potential. From a technical standpoint, the MACD indicator has been pointing upwards on the weekly chart above pointing towards higher levels. The suggested holding period for a stock of this type is 2-3 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
This is the free, time-delayed version of NewsletterPro, a subscription-based product.
If you would like to receive it before 7:30am, please subscribe by clicking here.
Disclaimer Notice
Past performance is not indicative of future results. Trading forex, CFDs and equites carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
The information provided by InvestingBetter.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. InvestingBetter.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite.
InvestingBetter.com and/or its owners will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on InvestingBetter.com. InvestingBetter.com does not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
