Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our latest Daily FX Report. The Dow and S&P 500 closed at record highs on Tuesday, lifted by further gains in healthcare shares and hopes for a stronger global economy. The S&P 500 scored its fourth straight day of gains. Actavis Plc, Gilead Sciences and other biotechs were among the biggest drivers, a day after Allergan agreed to be bought by Actavis. The Nasdaq biotech index rose 2.1 percent. The S&P health care index added 1.6 percent. Shares of Actavis were up 8.7 percent at $269.60, helped by bullish analyst notes, while Gilead's stock rose 3.3 percent to $103.71 percent.
However, we wish you a successful trading day!
Market Review – Fundamental Perspective
Japan's currency fell through 117 yen to the U.S. dollar, a low last touched in October 2007, but recovered some as the dollar declined against the euro and other major currencies. The yen fell against the dollar after Abe's comments, extending recent losses in the wake of stimulus measures announced by Japan's central bank. But some investors later unwound positions, putting dollar/yen at 116.88 yen.
The U.S. dollar weakened against the euro on Tuesday on a better than expected survey of German sentiment and gained against the yen. The greenback has been gaining against the euro and the yen in recent months as the Federal Reserve is expected to begin raising interest rates next year, while the European and Japanese central banks continue highly stimulative policies meant to boost growth in the regions.The release on Wednesday of the Fed's October meeting minutes will be watched for any signs that low inflation could delay an expected rate increase. Some traders say the U.S. dollar rally may need new impetus to continue its bull run. German analyst and investor sentiment rose in November for the first time in almost a year, surpassing expectations and raising hopes of an improvement in Europe's biggest economy after it dodged recession in the third quarter. The data lifted the euro as high as $1.2545 and core euro zone bond yields also climbed after the German survey.
Brent crude oil fell well below $79 a barrel as traders tested OPEC's willingness to agree on a coordinated output cut. Brent crude, which traded above $115 as recently as June, was down 91 cents to $78.40 per barrel while U.S. crude lost $1.30 to $74.34.
Daily Technical Analysis
EUR/JPY (Daily)
After touching the support level at 135.52, the bulls took control over the currency pair and the JPY highly lost in value versus the EUR. At the moment the pair is close to its resistance level of 146.63 which, accoriding to the indicators, may prevent the yen from further losses as it appears to be to strong to pass.
Support & Resistance (Daily)
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Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
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Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.