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Compass Directions Morning Report – Friday, 17 February 2012

Compass Global Markets — Fri, 17 Feb 2012 13:49:07 +0000

The markets continue to oscillate like a yoyo between mania and depression as news surrounding Greece dominates market sentiment. Yesterday, we saw the EUR plunge below 1.3000 before surging to above 1.3150 after Germany’s Die Welt newspaper reported that the European Central Bank will proceed to swap its EUR 50 billion in Greek government debt for new Greek bonds. Reports that Germany wants eurozone finance ministers to move towards an approval for the EUR 130 billion rescue package at a February 20 meeting along with a finalization of the debt swap deal also buoyed markets.

Good US economic also helped to halt the slide in the markets and prompted a sharp reversal in the currency markets. US jobless claims fell to a four year low whilst the Federal Reserve Bank of Philadelphia’s economic index came in better than expected. The numbers were not as impressive as the rise in markets would suggest and it appears that investors are intent on getting the most out of the recent bull run in markets. Jobless claims fell by 13,000 last week while housing starts increased by 1.5%. After falling to as low as 1.0645, the Australian dollar rocketed back above 1.0750.

Share markets yesterday were once again mixed. Asian markets were broadly lower while European bourses were largely flat with the DAX losing o.09% while the FTSE was down 0.12% as Greek default concerns dominated the markets. However, this all changed with positive news developments and the good economic data out of the US. The S&P 500 surged to its highest levels in nine months with all 10 industry groups rising and financials gaining on speculation that European governments are considering cutting interest rates on loans to Greece. The index has closed 1.1% higher to 1,358.

Commodity prices firmed as US equity markets surged. The CRB index closed 1.46 points higher at 316.41. WTI Crude oil continues to rise, gaining more than 0.5% to $102.35. After falling in European trade, precious metals have recovered with gold gaining 0.1% to $1,730 while silver has risen 0.23% to $33.49. Soft commodities are mixed while copper is higher by 0.12%.

GOLD:

GOLD continues to very much trade as we expect between a range of $1,705 to $1,730 yesterday and has now provided the range trader multiple opportunities to benefit from its recent price action. Gold remains stuck in a broad $1,705 to $1,750 band while trading between a $1,715 to $1,730 band for most of the past two weeks now and we expect more of the same to come. We are beginning to suspect that a break will come with some upheaval that will cause increased volatility in the equity markets. Price swings in the S&P 500 have narrowed to a nine month low just as the index rallies towards a nine month high. An interesting fact is that the last time that the 10 day average volatility in the index was as low as it is currently was after it peaked in April last year from where it fell 19% through to October . Continue to buy on dips towards $1,710 and sell on rallies to $1,740 with stop losses outside of recent ranges. This strategy has served us well for now and we see no reason for a change to this.

AUD/USD:

AUD/USD jumped on the much better than expected Employment numbers with the expected 10.5k giving way to a 46.3k positive result. This almost reversed the losses seen the previous month with a strong female part time number. The result was greeted by the markets with a jump of the AUD above 1.0700 and topping out in the mid 1.0740’s before quickly turning lower as the risk off sentiment in the majors took control of the AUD pricing again. By the European morning the pair was looking likely to test major support levels at 1.0625, however, the price made a quick about face heading for a return into the 1.07’s. The level of the bounce has been a surprise with Asia high easily taken out with the markets now believing Greek funding will happen soon and better than expected Housing numbers in the US supported a strong equity market and the old link to AUD. No data Friday and the positive lead in should see the AUD bounce between 1.0750 and 1.0780 during the morning before the bears again take control for the next swing of the YOYO!

DISCLOSURE AND DISCLAIMER
Compass Global Markets Pty Ltd (“Compass Global Markets”) ACN 144 657 885, Authorised Representative No. 377377, is a Corporate Authorized Representative of Calibre Investments Pty Ltd (Australian Financial Services License No. 337927). Please refer to the Financial Services Guide which is available through our website www.compassmarkets.com for more information regarding the financial services that we offer.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
This report is provided for Australian residents only and is not intended for use by residents of any other country.
GENERAL ADVICE WARNING: The advice provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should, before acting on the advice, consider the appropriateness of the advice having regard to these matters and, if appropriate, seek independent financial, legal and taxation advice before making any financial investment decision.
This report has been prepared for the general use of Compass Global Markets clients and must not be copied, either in whole or in part, or distributed to any other person. This report and its contents are not intended to be construed as a solicitation to buy or sell any security, product or asset, or to engage in or refrain from engaging in any transaction.
Compass Global Markets does not guarantee the performance of any investment discussed or recommended in this report. This report and the information used within may include estimates and projections which constitute a forward looking statement that express an expectation or belief as to future events, results or returns. No guarantee of future events, results or returns is given or implied by Compass Global Markets. Such statements are made in good faith and based on reasonable assumptions at the time of publication. However, such statements are also subject to risks, uncertainties and other factors which could cause actual results to differ substantially from the estimates and projections contained in this report or otherwise provided by Compass Global Markets.
Any information referencing past performance is not indicative of future performance. All information in this report has been obtained from sources believed to be accurate. Compass Global Markets does not give any representation or warranty as to reliability, accuracy or completeness of information contained in this report and therefore all responsibility is expressly disclaimed, whether due to negligence or otherwise. The information presented and opinions expressed in this report are given as of the date hereof and are subject to change without notice. We hereby disclaim any obligation to inform you of any changes after the date hereof in any matter set forth in this report.
Global Compass Markets, its affiliate and their employees may hold positions in the financial products, or securities or derivatives of, in the companies referred to in this report from time to time.
Analyst Certification: The views or opinions expressed in this report accurately reflect the personal views of the analyst(s) and no part of the remuneration of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this report. Any views or opinions expressed are the author’s own and may not reflect the views or opinions of Compass Global Markets unless specified otherwise.

Compass Directions Morning Report – Thursday, 16 February 2012

Compass Global Markets — Thu, 16 Feb 2012 13:53:26 +0000

The negotiations surrounding the refinancing of Greece are now hitting a nationalistic nerve in Athens as continued uncertainty over the timing of the ratification of the nation’s second bailout weighed on investor sentiment. The Greek President Karolos Papoulias made cutting remarks about German Finance Minister Schaeuble as the debacle begins to increase tensions between Greece and other members of the eurozone. The language has become increasingly emotive with Schaeuble’s deputy saying that Greece was a “bottomless pit” while Greece’s President said “I don’t accept insults to my country by Mr Schaeuble. I don’t accept it as a Greek . Who is Mr. Schaeuble to ridicule Greece?” The EUR fell from as high as 1.3192 to 1.3043 despite Luxembourg PM Juncker saying that he was confident that a decision on the bailout would be made at the next euro-area finance ministers summit on February 20.

Andrew Su, CEO of Compass Global Markets had warned in a Bloomberg Television interview that the economic crisis and a rising wave of nationalism amongst Greek politicians is threatening to throw the country into political and social chaos. Investor concerns that Greece is moving closer to default dominated the news wires yesterday. The release of the latest minutes of the Federal Reserve showed debate amongst members in terms of more easing. Some members believe that the Fed must consider more security purchases soon while other stated that the economic outlook would have to worsen be-fore they considered this. The lack of a united view further added to the risk averse tone in the markets last night. The Australian dollar rose to as high as 1.0777 before crashing to below 1.0700 as the EUR plunged.

Share markets were mixed as the war of words escalated in the Greek negotiations. Asian markets had risen strongly with the Nikkei and Hang Seng gaining more that 2% on news that Japan would pursue more security purchases and comments out of China that were broadly supportive of European efforts to fight the debt crisis. European bourses were mixed with the DAX gaining 044% while the FTSE fell 0.13%. However, the positive sentiment failed to flow through to US equities. The S&P 500 closed lower by 0.54% to. 1,343 as minutes of the Federal Reserve showed a division between members on the issue of further asset purchases.

Commodity prices were firm yesterday despite the rising concerns over the Greek debacle. The CRB index closed 1 point higher at 314.95. WTI crude prices continued to rise, gaining 1% to $101.75, after reports that Iran has halted shipments to Europe and US inventories rose. Precious metals were mixed with gold rising 0.6% to $1,728 while silver has fallen 0.1% to $33.30. Soft commodities were mixed with cocoa surging more than 5% while coffee fell 1.75%. Copper lost 0.33%.

WATCH THE LATEST INTERVIEW BY A MEMBER OF THE COMPASS GLOBAL MARKETS TEAM AT:
http://www.bloomberg.com/video/86400750/

Feb. 15 (Source: Bloomberg) — Andrew Su, chief executive officer of Compass Global Markets in Sydney, talks about the outlook for the European sovereign debt crisis and its implications for global financial markets. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

GOLD:

GOLD continues to very much trade as we expect between a range of $1,712 to $1,728 overnight. Since our revision of our short bias to neutral gold has been stuck in a $1,710 to $1,750 band and we expect more of the same to come. We are beginning to suspect that a break will come with some upheaval that will cause increased volatility in the equity markets. The recent rise and reduction in equity markets has seen trading in gold extremely subdued and until we see some volatility in the markets we don’t expect this situation to change. There are two possible triggers at the moment for a expected spike in the gold price. Firstly, a rapid deterioration in negotiations over the Greek refinancing and secondly an escalation in the Middle East precipitated further tensions between Israel and Iran. For today look for more of the same. Buy on dips towards $1,710 and sell on rallies to $1,740 with stop losses outside of recent ranges.

AUD/USD:

AUD/USD continues the rollercoaster ride as the sentiment swings with every new headline. The Chinese reports about helping fund the European crisis was well taken during the Asia session with the AUD jumping from below 1.0700 to close the Asia session at 1.0750. The rally continued during the European morning but once more reports about Greece funding delays due to hurtles not being meet or likely to be meet the sentiment changed bearish with all of the gains being given with the AUD now closing NY at 1.0688. Helping the decline was solid selling from intraday traders that follow the link to US equity markets as it was up 0.6% at the US open and fell to be close to – 0.2% at the close. FOMC minutes helped the last slide with a more dovish outlook for growth. Important day for data with Employment Change and the unemployment Rate! Expectations of 10.5k of new job but a rise in the unemployment rate is clearly mixed. However, like last months correct forecast we like a number below zero as the European crisis continues to affect hiring.

Compass Directions Morning Report – Wednesday, 15 February 2012

Compass Global Markets — Wed, 15 Feb 2012 14:13:18 +0000

European officials continued to apply pressure on the Greek government yesterday to deliver legislated austerity cuts whilst still insisting that default is not an option. Both Merkel and Sarkozy have said that Greece will not be allowed to fail so we wonder if the Greeks really care what anybody is demanding? However, the markets were unsettled by the cancellation of a meeting between finance ministers due to-day in Brussels and they will instead hold a teleconference to discuss the Greek situation as Luxembourg PM Juncker said that he was not convinced that the leaders of the Greek coalition parties were committed to the austerity program. The next meeting is now scheduled for February 20 and for the first time the possibility of an exit of Greece from the eurozone has entered the mainstream political debate. The EUR fell yesterday to as low as 1.3080.

It wasn’t all bad news for Europe as Italy successfully sold EUR 6 billion of bonds at lower costs as investors largely ignored a downgrade of the country’s credit rating by Moody’s. However, there is no a storm brewing on another front that cause chaos in financial markets. The rising wave of assassinations and retaliations between Israel and Iran is threatening to escalate to a flash point and plunge the nations into a disastrous military conflict. Israel is upping the ante in relation to its protests against Iran’s nuclear programme and has not ruled out the possibility of a military strike. At the same time, threat assessments from US intelligence sources indicate that Iran is now more willing to conduct attacks against US interests. USDJPY rose strongly yesterday after the BoJ increased its asset purchase fund from JPY 55 trillion to JPY 65 trillion. The Australian dollar fell to as low as 1.0628 yesterday.

Equity markets closed yesterday lower as the Greek tragedy dragged on and US economic data disappointed. In Asia, stocks were mixed while European bourses fell with the DAX losing 0.15% to 6,728 while the FSTE lost 0.10% to 5,899. The S&P 500 has closed 0.09% low-er at 1,350 with commodity and financial shares leading the falls in the indexes 10 groups. US retail sales figures only rose 0.4% against median expectations of a 0.8% and investors are beginning to worry about the so far one way traffic in equity prices this year.

Commodity prices eased only slightly yesterday despite increasing worries over Greece and tensions rising in the Middle East. The CRB index closed 0.11 points lower at 313.95. WTI crude has held onto gains to close flat for the session at $100.90. Precious metals continue to ease with gold lower by 0.41% to $1,718 while silver has lost 0.85% to $33.40 . Soft commodities were mixed with cocoa rising more than 3% while coffee lost almost 4%. Copper is down 0.86%.

GOLD:

GOLD continues to trade the range between $1,712 and $1,728 yesterday and we expect more of the same today. The $1,710 to $1,750 channel remains rock solid despite the escalation of tensions in the Middle East and the continuation of the Greek tragedy. As the price remains trapped in this tight channel we are hearing of building stop losses just outside of the current range. The possibility of a breakout in the gold price has increased significantly as the situation between Israel, the West and Iran looks likely to deteriorate. This breakout will be higher and will see prices escalate quickly through $1,800 and then the all time highs on the way to $2,000 an ounce before the middle of the year. However, a short term fall to support at $1,705 cannot be ruled out as the Greek situation lingers and the possibility of a sharp correction in equity prices remain. We will remain neutral in the short term and continue to trade recent ranges until a solid break of $1,755 occurs.

AUD/USD:

AUD/USD bounced off the 1.0665 support during the change over between Asia and European trading, with the pair taking the morning European positive spin on the back of Better German data as the pair recovered to 1.0730. However, the bears were to win out as Moody’s downgrade some European sovereigns and then reports that the European Finance Ministers meeting was to be delay being the final straw early in the US morning. Weaker than expected US Retail Sales numbers didn’t help the cause as equities fell and from there the writing was on the wall for the Aussie. We close the US session with the pair having just bounced off 1.0625 support. The change of late to the double bearish bias looks to have been timely and now we are starting to see the rewards. A break below the past 1.0570 support will have the rest of the markets following the bearish lead and if the European crisis builds again we could be talking much lower numbers again. However, at this stage 1.0350 is the first major target.

Gold strong uptrend stalled

Compass Global Markets — Thu, 09 Feb 2012 16:34:04 +0000

GOLD our move to a neutral stance on gold in the short term has been validated over the past week as the strong uptrend has clearly stalled. The range overnight was $1,724 to $1,751. Gold looks likely to maintain this range for the short term as investors seek further developments and clarification of the situation in Europe. Gold opens the morning at $1,732. Given our neutral short term bias we expect more of the same with gold expected to maintain recent ranges for now. It will only take some form of even minor shock, most likely emanating from Europe or the Middle East to propel the price above strong resistance at $1,750. For today, we are unlikely to initiate any trades given the high event risk associated with announcements that may come from any one of the parade of cast members involved in the Greek drama. We clean break of $1,755 will have us buy while a test of support at $1,720 will see us enter into a short term long position.

Market Outlook for February 9, 2012

Compass Global Markets — Thu, 09 Feb 2012 16:27:38 +0000

Recap of the Latest Global News
By Keagan York on Feb 9, 2012

European finance ministers have convened an emergency meeting in Brussels today as the Greek government continues to struggle to finalize of terms of its next rescue package. The ministers will meet with IMF chief Christine Lagarde but no agenda has been announced. Meanwhile, the caretaker government led by Prime Minister Papademos is locked in intense talks with its coalition partners to finalize terms on the package which is crucial if Greece is to meet a EUR 14.5 billion bond payment on March 20. Papademos is also holding talks simultaneously with the so called ‘troika’. In the absence of further developments the EUR has firmed to trade at 1.3260.

The unprecedented action by central banks around the world to intervene in the markets has clearly impacted in a positive way on volatility in the markets. The move by the Federal Reserve to announce that it will keep interest rates low until 2014 and the action of other institutions globally to increase liquidity in the financial markets has seen volatility reduce significantly this year. The risk on/ risk off moves encountered last year with multi percentage moves in assets prices on what seemed like a weekly basis have now subsided. Investors appear happy to undertake a wait and see response. The Australian dollar continues to perform extremely well in this environment and opens today at 1.0800.

Central bank action and intervene have clearly impacted on share market volatility. Once again markets were relatively subdued. The Dow Jones is still trading at its highest levels since 2008 as investors tread water in anticipation of some sort of a resolution in Greece. Finance and technology stocks gained the most on the S&P 500 which closed 0.22% higher at 1,350. Earlier in Europe, bourses closed relatively flat with the DAX down 0.08% to 6,749 while the FTSE lost 0.24% to 5,876.

Commodities News

Commodity prices have eased slightly. The CRB index has closed 0.23 points lower at 314.77. After spiking to above $100.00 on the back of rising stockpiles, WTI crude has back to $99.00 this morning. Precious metals have lost ground with gold losing 0.71% to 1,736 while silver fell 0.58% to $34.00. Soft commodities were broadly lower while copper is up 0.76%.

GOLD

FX News

AUDJPY

AUD/USD during Asia drifted down to find support at 1.0780 with no real momentum to back below small bids which built up towards the end of the US session. It wasn’t until the Europe-an morning and a positive run of the majors and again some caught intraday shorts buying as the pair again broke above 1.0800, which saw a test and break of the previous high to post a 6mth top of 1.0845. Slow US equity markets and the Troika draft report being delivered to the market has got the markets asking more questions than before. How will the Greek Gov cut medical spending from 1.9% to 1.5% of GDP with such a high number of pensioners. Anyway, the AUD fell back below 1.0800 to hit our major support line of 1.0765 before closing the day at 1.0792. Data free Thursday for the Australian markets, however, there is a lot of European session releases, which could have a large bearing on the price of the AUD at the time of the data releases. A break below 1.0765 is this a pivotal level to us with a likely fall to 1.0725 possibly 1.0655.

Compass Global Markets

DISCLOSURE AND DISCLAIMER
Compass Global Markets Pty Ltd (“Compass Global Markets”) ACN 144 657 885, Authorised Representative No. 377377, is a Corporate Authorised Representative of Calibre Investments Pty Ltd (Australian Financial Services License No. 337927). Please refer to the Financial Services Guide which is available through our website www.compassmarkets.com for more information regarding the financial services that we offer.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
This report is provided for Australian residents only and is not intended for use by residents of any other country.
GENERAL ADVICE WARNING: The advice provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should, before acting on the advice, consider the appropriateness of the advice having regard to these matters and, if appropriate, seek independent financial, legal and taxation advice before making any financial investment decision.
This report has been prepared for the general use of Compass Global Markets clients and must not be copied, either in whole or in part, or distributed to any other person. This report and its contents are not intended to be construed as a solicitation to buy or sell any security, product or asset, or to engage in or refrain from engaging in any transaction.
Compass Global Markets does not guarantee the performance of any investment discussed or recommended in this report. This report and the information used within may include estimates and projections which constitute a forward looking statement that express an expectation or belief as to future events, results or returns. No guarantee of future events, results or returns is given or implied by Compass Global Markets. Such statements are made in good faith and based on reasonable assumptions at the time of publication. However, such statements are also subject to risks, uncertainties and other factors which could cause actual results to differ substantially from the estimates and projections contained in this report or otherwise provided by Compass Global Markets.
Any information referencing past performance is not indicative of future performance. All information in this report has been obtained from sources believed to be accurate. Compass Global Markets does not give any representation or warranty as to reliability, accuracy or completeness of information contained in this report and therefore all responsibility is expressly disclaimed, whether due to negligence or otherwise. The information presented and opinions expressed in this report are given as of the date hereof and are subject to change without notice. We hereby disclaim any obligation to inform you of any changes after the date hereof in any matter set forth in this report.
Global Compass Markets, its affiliate and their employees may hold positions in the financial products, or securities or derivatives of, in the companies referred to in this report from time to time.
Analyst Certification: The views or opinions expressed in this report accurately reflect the personal views of the analyst(s) and no part of the remuneration of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this report. Any views or opinions expressed are the author’s own and may not reflect the views or opinions of Compass Global Markets unless specified otherwise.

Best performer – EUR/USD

Compass Global Markets — Wed, 08 Feb 2012 14:30:18 +0000

The euro seems to have a mind of its own today being the best performer out the risk currencies, reaching levels we haven’t for 2 months. Perhaps statements from Sarkozy and Merkel that Greece will not be allowed to go bankrupt has helped boost confidence in the single currency and as Greece and the troika are putting the finishing touches on the terms required for a 130 billion-euro ($173 billion) bailout package. The market is looking at the ‘outcome glass’ as half-full. Technically if today’s low of 1.3244 (38.2% fib level) holds and euro continues with the momentum, the 50% retracement is within reach at 1.3435. At this time it may be ripe to look for rallies to sell for the long term.

Market Outlook for February 8, 2012

Compass Global Markets — Wed, 08 Feb 2012 14:19:29 +0000

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 8, 2012

Markets rallied yesterday for no apparent reason other than that the Greek government’s negotiations with the troika, made up of the European Commission, the European Central Bank and the International Monetary Fund, hadn’t broken down irrevocably. Greek PM Papademos postponed a meeting with his coalition partners for the second consecutive day as terms for the second aid package remain unresolved. The expectation of the markets is that final terms are being completed for the EUR 130 billion rescue package today. The package has been under discussion since July and we are somewhat surprised at international investors’ patience and optimism. It appears that statements from Sarkozy and Merkel that Greece will not be allowed to go bankrupt have done the trick for now and the EUR rallied to as high as 1.3289 today.

In news that seems to have been largely ignored by the markets, Fed Chairman Bernanke made comments that the US unemployment rate understates the weakness in the US labour market and that he was particular troubled by the very high levels of long term unemployment. The USD continues to weaken across the board with the commodity currencies such as the AUD and CAD making strong gains.

Yesterday, the Dow Jones rose to its highest levels since May 2008 on hopes that the situation in Greece will soon be resolved as a final draft of the conditions of the second bailout package is completed. Coca Cola shares rose 1% on better than expected earnings and 7 out of 10 groups in the S&P 500 rose. The S&P 500 closed 0.2% higher at 1,347. Asian share markets rose more than 1% while European bourses are higher by 0.5% in mid session.

Commodities News

Commodity prices managed to rise yesterday with the CRB index gaining 0.8 points to 315. WTI Crude recovered from earlier falls to gain strongly to $99.50 as the USD fell and crude inventories fell. Precious metals were underpinned by the falling Dollar as gold consolidated at $1,749 and silver rose 0.5% to $34.35. Soft commodities are broadly higher while copper has gained 0.7%.

FX News

EURUSD

USDJPY

USD/JPY continued its upward trend on the hourly chart hitting 100-day MA of 77.20 at the time of writing. Yen selling was spurred today on the back of current account data which saw Japan’s current account surplus shrink 44% in 2011 from the previous year to 9.63 trillion yen ($125 billion), the lowest since 1996. If 76.85 level holds on the downside, the next resistance level should be 78.25. We think USD/JPY is a selling opportunity above 78.00.

Compass Global Markets

Stealth Intervention

Compass Global Markets — Tue, 07 Feb 2012 14:25:26 +0000

The jaw-boning seems to be working for the Ministry of Finance and Bank of Japan as USD/JPY drifts higher today towards the 76.80 level. Again between 76.50 and 76.80 is where the market is comfortable for the moment. While the market contemplates its next move, it was timely of the Finance Ministry to release data today showing Japan’s unannounced or ‘stealth’ intervention in the first four days of November 2011 totaling 1.02 trillion yen. This was after selling a record 8.07 trillion yen on Oct 31 (which they made public at the displeasure of the US) when yen reached a post WWII low of 75.35 against the USD. One Official agreed that the unannounced intervention was the most effective strategy to weaken the currency. Food for thought if you see USD/JPY rally for no apparent reason.

Market Outlook for February 7, 2012

Compass Global Markets — Tue, 07 Feb 2012 14:12:52 +0000

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 7, 2012

Markets eased yesterday as the Greek government continues to struggle to make the necessary austerity budget cuts to qualify for more financial aid and avoid an ever more likely default. Pressure is mounting on the Greeks to meet the conditions of the EUR 130 billion bailout as PM Papademos negotiates into the second day with the so-called troika. Chancellor Merkel made her frustrations clear by saying “I can’t understand why we need a few more days. Time is running out.” The French and Germans are coming up with increasingly ‘creative’ solutions to the Greek problem by yesterday proposing the setting up of an account for Greek interest payments to ensure that lenders are paid. We aren’t sure that guaranteeing interest payments that are already highly discounted on junk debt will do any good. The EUR is largely unchanged during the Asian and is trading at 1.3120.

Nicolas Sarkozy said at a meeting in Paris that allowing Greece to “go bankrupt is not an option.” It is messages like this that undermine the process that the Europeans are attempting to undertake. Leaders need to let the Greek government know that bankruptcy is an option if they do not comply with the conditions of the bailout package. If bankruptcy is not an option than the Greeks will simply continue to flout agreements in an attempt to get a better deal while the relatives continue to support the black sheep of the family at all costs. Today, the Reserve Bank of Australia surprised investors by keeping its benchmark rate unchanged at 4.25%. The market had priced in a 0.25% cut and the decision saw the AUD rise sharply from just above 1.0700 before the announcement to as high as 1.0825.

US equities eased yesterday with the Dow Jones falling from almost 4 year highs on renewed concerns over the Greek refinancing and debt swap deal as a planned meeting of Greek leaders was delayed as a joint response had yet to be agreed upon. The S&P 500 was largely unchanged at 1,344. Asian stocks closed lower today while European bourses are down 0.5% in mid-trade.

Commodities News

Commodity prices has eased very slightly yesterday with the CRB losing only 0.02 points to 314.20. They have continued to fall in trade today. WTI crude has fallen again on renewed Greek concerns and expectations of rising inventories, losing 0.5% to $96.40. Precious metals also losing ground with gold falling 0.2% to $1,722 while silver lost 0.7% to $33.50. Soft commodities have been mixed in trade while copper has lost 1%.

GOLD

GOLD Traded in a range of $1,711 to $1,738. We had expected a move lower in gold yesterday and our move to a neutral stance on gold yesterday was well timed as the metal had a rare down day. Within the last few days, we have seen gold prices react negatively to both good news in the form of the US employment data and bad news in the form of the continuing Greek tragedy. When will gold prices behave and act as they have in the past like any good safe haven asset? We believe a number of factors are now playing out which will see gold soon spike towards $2,000 by mid year. For now we maintain our neutral short term stance due to a number of significant risks in the market this week which may have an entirely unpredictable effect on gold. Barring any further bad news out of Europe, look for a tight range in trade today between $1,710 and $1,730. We expect that gold will retest support just below $1,710 today but that this level should hold.

FX News

EURUSD

What was said about the euro yesterday, the day before and before that is quite similar to what is going to be said here today about Greece and the Eurozone Officials. However EUR/USD has broken the 1.3076 resistance level yesterday making this new support level. It appears that traders are going long in the hope that Greece will come through and if it doesn’t, Germany and France may come to rescue because the other alternative might be too messy to deal with. We wouldn’t want to get carried away with long euro just yet but rather prefer to sell on rallies. We still think 1.3230 is still a galaxy far, far away but if we get there in light year or close to there, go short with tight stops..

USDJPY

AUDUSD

AUD/USD was initial taken lower during Monday morning trade by the developments regarding the next round of funding for the Greek’s, which looks a little shaky and then the weaker than market expected Australian Retail Sales numbers. We were leading to the downside on the number due to the heavy discounting from the department and retail stores leading into Christmas, which is something which hasn’t been seen for years. Anyway, the price continued to remain heavy during the European session and managed to find a low of 1.0680. The support we reported yesterday at 1.0675 was more than enough to hold up a slow moving market. The price recovered during the US session on nothing much than position squaring and a better bid S&P500! Today will be all about the RBA with almost every economist picking a 25bp cut, whilst we favour the cut we are leaning towards the almost unheard of move by the RBA of 50bps. We have changed our bias ahead of time as we like the look of the charts for a return towards 1.0600 even without the RBA.

Compass Global Markets

Losing Ground

Compass Global Markets — Mon, 06 Feb 2012 14:42:38 +0000

The euro continued to lose ground and it was mostly a one way affair in Asian trade today after reaching 1.3206 on Friday due to positive US NFP and employment data. On London open the tune was the same but the rhythm and beat came from Greece. The world is now waiting for Greece to respond to demands by the European Union, European Central Bank and International Monetary fund on economic measures, including wage cuts. For the moment 1.3024 looks solid but very vulnerable. One decisive piece of bad news might snap this support level like a toothpick sending it to 1.2826 in double time – a “default” should do it. On the top side, while 1.3200 sounds like a galaxy far, far away now we think 1.3076 to 1.3123 will be a hard nut to crack.

Market Outlook for February 6, 2012

Compass Global Markets — Mon, 06 Feb 2012 14:30:19 +0000

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 6, 2012

Markets rallied on Friday after the release of much better than expected US employment data. The non-farm payrolls data showed an increase of 243,000 in January which was well over the median economist’s forecast of 140,000. Furthermore, the unemployment rate dropped to a three year low at 8.3%. Market analysts, who were extremely bearish at the beginning of the year are now making grand announcements such as ‘the stars are aligning’ to push markets higher. The contrarian in us is now extremely cautious and we expect the USD to make a comeback after losing ground last week as the better than expected data has seen the likelihood of further quantitative easing fall. The EURO has retraced lower during the European trading session to as low as 1.3030 after opening in Asia above 1.3115.

In more sobering news, the situation is coming to a head in Greece with the government there expected to respond to the troika and demands by its international creditors for increasingly severe austerity measures within the next couple of days. It has become apparent that Greece is finding it difficult to come to an agreement with its creditors. The IMF has said that a worsening debt crisis in Europe could cut China’s growth in half. In China, Chinese Lunar New Year sales grew at the slowest pace since the 2009 financial crisis and a full 3% lower than last year at 16%. There are increasing signs of slowing consumer spending in China which does not bode well for the increasing numbers of foreign retailers rushing into the Chinese market. The Australian dollar has eased off highs at 1.0796 on Friday to fall more than a cent to as low as 1.0685 today.

US equity markets rose to their fifth weekly gain last week after the release of the much better than expected US employment data. The Dow Jones is now trading at its highest levels since May 2008 as financial and technology companies gained more than 3%. The S&P 500 closed 1.45% higher at 1,344. Stocks in Asia were largely higher while the continuing Greek tragedy has seen European bourses trading down about 0.5%.

Commodities News

Commodity prices spiked higher on Friday with the CRB index gaining more than 1% to close at 314.22 but it has been one way traffic in the opposite direction today. WTI Crude oil continues to weaken down 1.1% to $96.70. Precious metals continue to fall with gold losing 1.2% to $1,719 while silver fell 1.1% to $33.35. Soft commodities were broadly higher while copper has lost some of its strong gains on Friday to lose 1.2% today.

GOLD

GOLD fell despite the US losing ground on Friday after the non-farm payrolls data release. After failing to hold above $1,750 we now turn neutral gold in the short time as we expect prices to consolidate to range trade this week. The failure of gold to break higher on Friday despite a number of factors favouring such a move has us approach trading in the metal with caution this week. The move from $1,630 critical sup-port to $1,750 has given investors an opportunity to reduce long positions for now to re-evaluate market developments. Gold’s trading range on Friday was $1,723 to $1,763. The better than expected employment data may have had the effect of lowering the market’s expectations of further quantitative easing which is in turn seeing gold lose some of the gains we saw after the last FOMC statement where expectations of QE3 rose. Support at $1,720 held on Friday but if we see this level breached today we will turn bearish in the short term.

FX News

EURUSD

USDJPY

After an impressive Payrolls data (+243k) and a three year low in unemployment rate (8.3%) on Friday USD/JPY is sitting comfortably above 76.50 for now. The high for today so far has been 76.81 a smidgen above last Monday’s high but it failed to break 77.12 where we think it will face strong resistance. On the down side, 76.50 looks well supported but if history does repeat we think the market will test sub 76 again and at the same time test the will of BOJ. As a educated guess, we think the BoJ might pull the trigger this time if we see USD/JPY fall below 75.30. For those who like to go with the flow, trading between 76.50 and 76.80 may be the go while the market treads water.

AUDUSD

AUD/USD was happy to continue the tone of the Asia session ahead of the US Payroll numbers during European trade, as the price ranged be-tween the 1.0675 lows and the 1.0715 tops. The better than expected numbers saw the risk sentiment rally take off with the commodity currencies being the flavour of the month. Jumping from below 1.0700 the price managed to reach into the mid 1.0790’s during the late US morning before profit taking and option protective offers took control. Warnings over Greek spending from the Eurozone leaders as taken some of the shine off Fridays rally as the pair is currently at 1.0744 after opening around 1.0775. Australian Retail Sales numb er are due for release during the late Australian morning with expectations of an improved 0.2% after the previous 0.0%. We remain to the bearish side on a result but heavy discounting by the major department stores of late could give us a positive number. Whilst the price remains above 1.0675 the bulls will look to be winning. Selling the break looks better for the bears at this stage.

Compass Global Markets

EURO’s Volatility

Compass Global Markets — Thu, 02 Feb 2012 13:59:38 +0000

EUR/USD started the day in London paring gains made yesterday after better manufacturing data eased worries about global growth. The market was quite subdued until Chinese Premier Wen suggested the possibility of more involvement in the developments of the EFSF and the ESM as well as positive comments regarding the shared currency and the euro zone. This caused the euro to jump 50pips to 1.3198 before drifting back to where it started which was around 1.3130’ish. It just goes to show the volatility and sentiment of the market hungry for a clear direction. In the meantime it is quite entrenched within the range of 1.3020 1.3230. What may determine a breakout of this range will come from surprising data out of the US or solid news about the Greece deal. The best and only trading strategy may be to play within this range with stops on the breakout.

Market Outlook for February 2, 2012

Compass Global Markets — Thu, 02 Feb 2012 13:42:49 +0000

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 2, 2012

Yesterday, manufacturing strength around the globe from prompted a rally in the markets as investor focus was diverted from the European debt focus. Manufacturing data in the US grew at the fastest rate in seven months while manufacturing in the United Kingdom rose to an eight month high. Gauges of manufacturing in China also improved and manufacturing in Europe contracted less than expected. Manufacturing in China showed a modest expansion beating market expectations of a contraction. The USD weakened across the board and Treasuries stopped a five day rise. with The EUR is trading at 1.3130 while the GBP is currently trading at 1.5830.

Further aiding the positive market sentiment is the expectation that the Greek private sector debt swap deal and the nation’s second financing deal will be completed in the next few days. However, the longer the negotiations drag on, the greater the likelihood of an extended fall in the Euro. The strongest performers yesterday were the risk currencies. The Australian dollar has surged past 1.0700 while the Canadian dollar is once again trading above parity against the USD.

Equity markets powered ahead yesterday spurred by signs of manufacturing strength globally. The S&P 500 closed 0.9% higher at 1,394 with financial and commodity stocks leading the gains. Morgan Stanley rose more than 5% on news that it had won the lead manager role for the upcoming Facebook initial public offering. The appliance maker, Whirlpool, rose almost 20% as it projected higher than expected earnings. Asian stocks gained with the Hang Seng rising 2%. European stocks have lost earlier gains, falling from 6 month highs, as oil producers fell

Commodities News

Commodity prices moved lower yesterday with the CRB index losing 0.78 points to 311.53 with strength in the equity markets failing to spark a rally. WTI Crude continues to fall, down another 0.8% to $96.75 after the US Energy Department reported higher than expected inventories and gasoline demand fell to a 10 year low. Precious metals consolidated with gold steady $1,748 while silver has lost 0.7% to $33.57. Soft commodities were mixed while copper has given up 0.8%.

GOLD

GOLD continues to show strong price con-solidation to gain slightly to hold above $1,740. The range yesterday was $1,733 to $1,751. As we had expected gold had an attempt at the $1,750 resistance level a couple of times before easing back slightly to $1,743 this morning. The market is eyeing critical resistance just above $1,800 before a charge towards the all time high just above $1,900. Our end of second quarter target of USD2.000 on gold remains firmly in play. Gold is showing good price consolidation at the moment and a break out appears immi-nent. Nothing has happened overnight so we maintain our strongly bullish stance on gold in both the short and medium term,. We continue to hear of central bank diversification into the metal which continues to support and drive the price higher. Today, there will more than likely be a lull in liquidity and tightening of trading ranges as the market awaits tomorrow’s release of the US non farm payrolls data.

FX News

EURUSD

USDJPY

A range of about 15pips, 12 hours into the trading day suggests the nervousness of the market about possible intervention by the Bank of Japan. Those that are betting on intervention may be buying USD/JPY large just above 76.00 and those that don’t think it could happen are happy to sell at 76.25 on the back of the US not raising interest rates until 2014. 75.31 was where the last intervention happened back in Oct 31 and the market is thinking that BOJ might not come in until 75.50 is tested. Again Minister Azumi said he is prepared to take firm measures if necessary and that could be interpreted as maybe a solo effort from BOJ if it happens. Given U.S. Treasury expressed disapproval over Japan’s last solo intervention in October, the market is thinking BOJ may not pull the trigger until 75.30 is breached.

AUDUSD

AUD/USD was the big winner on the back of the better than expected data over the last 24 hours with equity markets preforming well also. The break above 1.635 top during early Europe trigger weak stops which gave enough fuel to the fire for the price to bounce and takeout the recent 1.0685 resistance. The buoyant markets and the love of AUD on better risk sentiment took the price above the 1.0700 level briefly with the pair topping out at 1.0740. US afternoon profit taking and posi-tion squaring as we lead into the quiet period before Fridays US non-farm Payrolls has seen the price move back to 1.0700 to close out the eventful day. Building Approval and Trade Balance data will make for an interesting morning with both expected to be below the previous. The current level of the AUD will find early morning covering from Australian Importers and with the price already likely to be below 1.0700 the weaker data could see it return to 1.0600 or below quickly.

Compass Global Markets

5 Day Losing Streak for Yen

Compass Global Markets — Wed, 01 Feb 2012 13:45:18 +0000

USD/JPY continued its five-day losing streak in early London time as it tests the 76.00 big figure. At the time of writing USD/JPY is 76.05 which is today’s low so far. We hear there are stop losses (large) below this figure but margin traders are holding the support line at the moment in the hope of grabbing a bargain. Since the US announced last week that it would keep interest rates near zero at least until late 2014, long term traders are slowly pricing in this factor by selling dollars across the board including selling dollars and buying the yen. Specifically for today, Japanese exporters and model funds were doing most of the selling. Again 75.76 wasn’t tested yesterday but the chances are extremely high today, then 75.55 (Oct low). Watch out for the 75.35 post war low and also watch out for BOJ intervention – real or rumoured. If that happens expect to see 77.12 in a hurry otherwise the trend is strongly bearish.

Market Outlook for February 1, 2012

Compass Global Markets — Wed, 01 Feb 2012 13:42:56 +0000

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 1, 2012

Yet again markets were gripped by ‘europhoria’ surrounding the latest EU summit and more announcements surrounding plans to save Europe. European Union leaders meeting in Brussels have agreed on a fiscal treaty that will allow for action against high deficit states and calls for members to introduce legislation to limit budget deficits. Markets rallied on the news even though these reforms actually do nothing to resolve the current debt crisis. Britain and the Czech Republic have declined to sign the pact. After having rallied to above 1.3200 yesterday, the Euro gains evaporated before once again rising in Europe today.

The Dollar Index rose yesterday by 0.2% yesterday as the USD gained across the majors. USDJPY continues to hover dangerously close to post war lows but is still managing to hold above 76.00. The inevitable sabre rattling and war cries from the Bank of Japan will intensify over the next few trading sessions but the question will be is “anyone listening and does anyone care?” In Europe, the dollar is falling as equity markets rise.

Yesterday, equity markets were soft. The S&P 500 closed 0.05% lower for its fourth consecutive loss, albeit small, as economic data failed to meet expectations. Consumer confidence came in lower than expected while the ISM business activity index came in lower than even the most pessimistic forecasts. Exxon Mobil fell more than 2% after reported sales trailed estimates and Amazon will open significantly lower today after profits fell more than 50%. European bourses are higher by almost 2% as manufacturing data from the US to China looks positive.

Equity markets have recovered from a soft start to the week with Asian shares rising on optimism surrounding the latest EU summit. After falling yesterday over Greek resistance to outside influence in its budgetary affairs, rising bond yields and the collapse of Spanair, European bourses are now higher by 1% mid session today. After losing ground yesterday for the third day as European leaders lectured to Greece over the nation’s second rescue package, S&P 500 futures are signalling a rise in trade today.

Commodities News

Commodity prices moved lower yesterday with the CRB index losing 1.6 points to 312.31 with initial gains over Euro-optimism evaporating as US economic data disappointed. In Europe, prices are making a comeback with WTI Crude gaining 0.75% to $99.20 0.35% to $98.45. Precious metals gained with with gold rising 0.5% to $1,749 while silver has gained 1.8% to $33.85. Soft commodities are broadly stronger while copper has gained 0.8%.

GOLD

GOLD continues to show strong price consol-idation to gain slightly to hold around $1,740. The range overnight was $1,724 to $1,747. The price action played perfectly within our support and resistance levels. In what is certainly a good sign for the metal, it managed to hold onto gains even as the USD rose and equity markets fell. The strong bounce off support at $1,725 has gold maintaining its short term bullish trend and we expect another retest of $1,750 imminently. We believe that gold’s status as a store of value and as a safe haven will come to a fore this year as prices ac-celerate towards $2000 by mid year. We remain strongly bullish. Last year we saw both the USD and gold perform better than mpst other asset classes and we continue to see the same trend this year. Look for support at $1,720 to be tested today. If this level holds, our short term bullish call on the metal will be confirmed.

FX News

EURUSD

EUR/USD found support at 1.3025 (day low) in early London time perhaps in response to no firm progress being made in the debt restructuring negotiations between Greece and private bond holders. On the other hand, with US interest rates near zero until 2014 it isn’t that attractive to buy USD either in terms of yields. Hence EUR/USD may be trapped between 1.3050 – 1.3150 until the market finds new information to trade with. This may come from today’s data out of Europe (Germany PMI, EMU PMI and CPI) and the US (ADP employment change and ISM manufacturing). We think we may have seen the low for the day but for the topside we like 1.3244 revisited.

USDJPY

AUDUSD

AUD/USD like the majors and other risk currencies preformed well during the late Asia and European session as the market grabbed at the idea of a fiscal treaty of 25 European na-tions as a positive step for the current crisis and reports that the ECB was about to release a large chunk of cheap liquidity to European Banks also helped. AUD topped out again ahead of 1.0700 selling with Fund names noted sellers. Weaker US data and a change in stance on the risk asset move saw the Euro sharply decline during the US session and AUD has followed the course. However, at this stage the slide has been limited by the recovering US equity market during the afternoon with the price closing now at 1.0615. HPI q/q and Commodity Price data are the only medium level releases today and we can’t see these hav-ing a major effect on the price action. A fall in the commodities may have an outside effect if the number is large enough only because of our two speed economy at present.

Compass Global Markets

Market Frustration

Compass Global Markets — Tue, 31 Jan 2012 14:02:05 +0000

The Brussels Summit ended yesterday with no favourable resolution for the Greek saga leaving the market showing its frustration on the EUR/USD driving it down to 1.3075. Apparently German Chancellor Angela Merkel shared the same frustration with the Greek government’s failure to carry out its economic reform. Euro found its base at 1.3135 during early Asian session and the theme today for Asia was sell dollar. However moving towards the London session we may see EUR/USD take on a different theme in the form of volatility. With a whole battery of macro data expected today from the Euro zone, it may be touch and go. We have German retail sales (MoM); French Consumer Spending (MoM); German Unemployment Change; Italian Unemployment Rate; Eurozone Unemployment Rate. In New York expect Chicago PMI and more importantly US Conference Board Consumer Confidence. Euro support is seen at 1.3120 but the psychological level of 1.3000 is possible if all the ‘bad’ stars align. Top side try for 1.3230.

Market Outlook for January 31, 2012

Compass Global Markets — Tue, 31 Jan 2012 13:59:04 +0000

Recap of the Latest Global News
By Cory Vi & Andrew Su on Jan 31, 2012

Chancellor Merkel indicated yesterday that there may be a delay in finalisation of a debt deal for Greece by saying “we won’t have a thorough discussion of Greece because the troika is in Greece and we don’t have a result of the talks with the banks.” Fundamental cracks are appearing between Greece, where opposition is growing to German led calls for increased oversight and veto powers for Greek budget decisions, and other European leaders. European leaders want to be able to enforce budget decisions on the Greeks while the nation see such moves as an attack on their sovereignty.

President Nicolas Sarkozy of France said yesterday that “Europe is no longer at the edge of the cliff.” The question has to be ‘what has changed since Europe was at the edge of the cliff?” We fear not much. Certainly markets have been less volatile in response to news developments in the new year. However, even as European leaders work towards rules that are designed to bring about greater fiscal union and budgetary control, member states such as Greece want to play by their own rules. The talk is becoming increasingly tough with the the economic spokesman for Merkel’s Christian Democratic Union saying, “The free lunch is over: no external controls, no money.” European history shows that the continent is least united when nations try to exert their influence on each other. Attempts to “unify” the continent have always led to conflagration.

Yet markets have been once again been gripped by europhoria surrounding EU summits and more announcements surrounding plans to save Europe. European Union leaders meeting in Brussels have agreed on a fiscal treaty that will allow for action against high deficit states and calls for members to introduce legislation to limit budget deficits. Markets have rallied on the news even though these reforms actually do nothing to resolve the current debt crisis. Britain and the Czech Republic have declined to sign the pact. The EUR has rallied above 1.3200 after having traded closer to 1.3100 in early Asian trade.

Commodities News

Commodity prices moved lower yesterday with the CRB index losing more than 1% to 313.91. Today, there has been a broad recovery. WTI Crude oil has gained 1% to trade at $99.85 as tensions in Iran once again dominate trader’s mentality. Precious metals have recovered from yesterday’s falls with gold rising 0.4% to $1,742 while silver has gained 0.7% to $33.75. Soft commodities are broadly stronger while copper is higher by 0.8%.

GOLD

GOLD continues to consolidate after last weeks boost by the Fed Reserve which now sees gold firmly in the $1,700 territory. The range last night was $1,716 to $1,733. Gold opens the morning just below $1,730. As we had suspected gold held up much better than other commodities overnight as markets jitters surrounding Europe resurfaced. We took up our own advice to buy the metal on the dip to $1,720 overnight. This position now has a stop loss at entry and we will seek to trail this stop higher as the market continues take gold higher. We maintain our bullish bias in the short term and medium term for gold although we are currently reviewing our view on commodities in general. An escalation of the European debt crisis is increasingly likely and this will have a negative impact on commodities in general. However, even last year we saw both the USD and Gold manage to gain and expect that this trend will continue especially in the event of a meltdown in Europe.

FX News

EURUSD

USDJPY

USD/JPY tested ‘BOJ waters’ as we predicted yesterday when it broke the76.55 base today reaching as low as 76.16. At the time of writing USD/JPY is trading at 76.20. We are once again approaching the post war low of 75.35 prompting Finance Minister Azumi to say “we are ready to act decisively against excessive and speculative currency moves if needed”. Factors which sent the yen on a three-day rally include industrial production rising more than forecast in December and unresolved Greek debt restructuring which triggered yen buying as a safe haven. In other news the nation’s jobless rate rose to 4.6% in December from 4.5% the previous month. For Tuesday, we are cautiously bearish on the USD/JPY with top side limited to 77.01 without BOJ intervention or ‘rumoured’ intervention. Downside 75.76 may be first support level. Then it will be exciting to see if we will test the post war low.

AUDUSD

AUD/USD finally broke below the 1.0590 support during Monday’s Asia afternoon with the price continuing to fall as the shorter term bulls bailed on positions with the European session providing enough negative signals for the markets to have the bears what looks like in control yet again. Reports that the Greece Bond meetings have stalled and that Greece will also not allow independent fiscal rule helped the decline. Record highs for Portuguese bonds has many fearing Greece round 2. The price bottomed out during the late US morning towards the major support at 1.0525 and as we close the book on Monday the price has recovered to 1.0590 as US equity markets recovered some of its intraday losses. Private Sector Credit and Nab Business Confidence are due during the late morning and with our expectations for weaker numbers the decline back towards 1.0525 is our favoured option. Minor support does come in at 1.0560 but this shouldn’t be to hard to crack.

Compass Global Markets

USD/JPY looking familiar

Compass Global Markets — Mon, 30 Jan 2012 13:59:33 +0000

After reaching 78.27 last week on concerns over Japan’s first monthly deficit in nearly 30 years and a decline in growth outlook, USD/JPY started this week in familiar territory again 76.60 – 76.80. Other than Japan’s Jobless rate tomorrow, there isn’t much news to trade with. Perhaps of more interest is the EUR/JPY movement where Japanese officials have recently hinted concerns over its rapid decline against the JPY. We think the market may test ‘BOJ water’ this week with sub 76.00 and we dare say 75.00 to see if there is any ‘intervention bites’ around. For the rest of Monday market may range 76.54 – 77.12.

Market Outlook for January 30, 2012

Compass Global Markets — Mon, 30 Jan 2012 13:55:43 +0000

Recap of the Latest Global News
By Cory Vi & Andrew Su on Jan 30, 2012

The announcement by the Federal Reserve that it plans to keep interest rates low through till at at least 2014 counterbalanced some weaker than expected economic growth figures last week to keep investor sentiment more optimistic. Furthermore, developments over the weekend suggest that a debt swap deal between Greece and its private creditors is nearing as bondholders appear to have accepted calls by European finance ministers to accept lower interest rates. An undisclosed source cited by Bloomberg has said that creditors are willing to accept an average coupon of as low as 3.6% on new 30 year bonds. The EUR peaked at above 1.3235 in trade on Friday.

However, all is not well in Greece. The IMF’s Christine Lagarde has said, “We’re not terribly positive about what has been done (in Greece)”. There are still fundamental differences of opinion between Greece and other members of the Eurozone over how to manage Greek budget decisions. European policy makers and, in particular, the Germans are calling for the creation of a commission with the power to veto budget decisions by Greece. However, the Greeks have rejected such a plan as they see it as being contrary to national sovereignty. As trading resumed in Asia today it was all one way traffic as markets stumbled on speculation that European leaders meeting today will face difficulties in their efforts to resolve the ongoing debt crisis. The EUR has retreated to as low as 1.3110 while the Australian dollar has lost more than a cent to 1.0550 as the USD surges.

Equity markets rose for the fourth consecutive week last week after the announcement by the Fed which was seen as indicative of an another imminent round of quantitative easing. However, the week has not started so well with Asian stocks closing lower as European leaders meet for another summit. The MSCI Asia Pacific lost 0.8%. In Europe, signs of Greek resistance to outside influence in its budgetary affairs, rising bond yields and the collapse of Spanair has seen European bourses trade down almost one percent.

Commodities News

Commodity prices firmed ever so slightly on the last trading session of the week with the CRB index closing 0.15 points higher at 317.57. However, the trend today has been decidedly lower. WTI Crude oil has lost 0.4% today to trade at $99.15 as International Atomic Energy Agency inspectors arrived in Iran for talks on Iran’s nuclear program. Precious metals also lost ground continue with gold falling 0.7% to $1,723 while silver lost 1.9% to $33.15. Soft commodities were broadly weaker while copper lost almost 2%.

GOLD

GOLD continues to consolidate and move higher after last weeks boost by the Fed Reserve which now sees gold firmly in the $1,700 territory. The range on Friday was $1,713 to $1,740 and it opens the morning near the top of this range. The USD continues to remain weak and whilst there are no other shocks to the financial system gold will continue on its merry way high-er back towards its all time highs above $1,900. We continue to hear of central banks and semi-government organisations diversifying into gold and the very firm bounce off critical support at $1,630 has us confirm our bullish bias on the metal in both the short and medium term. Certainly a retracement towards $1,700 is possible but it will be a temporary move as gold moves aggressively above resistance at $1,750 to target a test of $1,800. For today look for any dips towards $1,720 as an opportunity for those who would like to initiate new long positions. Resistance at $1,655 should hold for today.

FX News

All eyes are on the EU Summit today as the Greek debt deal is thought to be largely in place. Except for USD/JPY the USD gained pretty much across the board on safe-haven demand. AUD/USD also took some beating after Fitch put major Australian banks on a negative ratings watch. GBP/USD is also losing momentum after 10 consecutive sessions in positive territory.

EURUSD

Just before New York close on Friday, Euro reached 1.3235 (highest level since Dec) before giving up gains on Monday on the back of short-term profiting taking and anxiety over the EU Summit. After a five-day advancement in a row, Euro needed to take a breather before deciding on the next move. Market players seem content with the recent rise but are also wary that the ‘doom and gloom’ is nowhere near over in Europe so a reality check is needed hence re-positioning of their portfolio. Also on radar today is German CPI – Expected 2% against previous 2.1% (YoY). Euro may trade within the ranges of 1.3080 – 1.3178.

USDJPY

AUDUSD

AUD/USD took the positive tone out of European to retest the recent highs during the European session to find new profit taking offers around 1.0670 enough to cap the mo-mentum. Weaker than expected US GDP 4Q results took the shine off the markets with the AUD falling sharply to 1.0600 before setting a base. The decline was short lived with the markets disregarding Fitch’s downgrading of five Eurozone countries and this was enough to start a short covering squeeze into the weeks close. Early Monday morning selling has the price opening the main part of Asia at 1.0639. With a lack of Asia zone data the markets will be reading the mixed reports from Fridays US session and the choppy tone looks set to con-tinue for another session. Offers should re-main ahead of 1.0700 at the present time as bears continue to look for resistance to sell into whilst the bulls are happy to sit and wait at present. 1.0450 still remains the pivotal level on the downside at this stage.

Compass Global Markets

Market Expectations

Compass Global Markets — Fri, 27 Jan 2012 15:08:05 +0000

EUR/USD spent the day consolidating after peaking at 1.3183 yesterday. If the technical traders are right, we may have seen the high for a long while and the completion of a technical retracement which began from 1.2624 (16 Jan). However we’re not totally convinced and we cautiously think 1.3244 may be the top if 1.2950 holds. Fundamentally, the latest on the Greek saga is that the Institute of International Finance (which represents the creditors) and Greek officials continue negotiations and may well continue over the weekend. On the radar for the rest of the day is US Gross Domestic Product Q4 (annualised), GDP Price Index (1:.30 GMT) and the University of Michigan Confidence survey (14:55GMT). For US GDP, the market is expecting 3% (last 1.8%) and the Price index is expecting 1.9% (last 2.6%). For the U. Mich survey market expects no change from previous 74. From now until the end of the New York session we see a range of 1.3023 – 1.3170.