Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our latest Daily FX Report. U.S. stocks rose on Monday on hopes that China will take further accommodative monetary policy action if needed, while merger deals kept traders focused even as volumes were below average.Energy shares weighed, with declines in Exxon and Chevron keeping the Dow industrials flat while the S&P 500 energy sector was down 1 percent. U.S. crude and Brent fell ahead of an OPEC meeting this week.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
The yen dropped to almost a seven-year low versus the dollar as central banks worldwide add to monetary stimulus, damping demand for low-yielding haven assets such as Japan ́s. It leads losses versus the dollar this month, falling 5 percent, followed by South Korea ́s won, which is down 3.9 percent, according to data compiled by Bloomberg. It depreciated 0.4 percent against the dollar to 118.27 today, having touched 118.98 on November 20, the weakest level since August 2007. It dropped 0.8 percent to 147.15 yen per euro. The 18-nation euro rose against the U.S. currency after European Central Bank Governing Council member Jens Weidmann said expanding bond purchases to government debt would face “legal hurdles”. The euro rose for the first time in three days. It gained 0.4 percent to $1.2442, having dropped to $1.2358 on November 7, the lowest since August 2012. The German Ifo institute ́s business climate index, based on a survey of about 7000 executives, rose to 104.7 in November from 103.2 in October. Economists predicted a decline to 103, according to the median of estimates in a Bloomberg survey. The shared currency fell the most since the five days ending October 31 last week after ECB President Mario Draghi said policy makers “will do what we must” to boost consumer prices. The central bank won ́t make a hasty decision on further stimulus and will hinge any measures on incoming data, Executive Board memner Benoit Coeure said today. The ECB meets December 4 to discuss further measures to support the economy, after reducing rates to record lows and announcing a program to buy covered bonds and asser-backed securities. China joined Europe in easing its monetary policy last week, surprising markets with its first interest-rate cut since 2012. The Bank of Japan maintained its pace of monetary base expansion.
Daily Technical Analysis
EUR/USD (4 Hours)
One of the most important currency pairs worldwide is held under control by the bears. It doesn’t seem to be a stable support line, as this pair is highly influenced by economic world data. The euro has already touched a two-year low. It stopped the recent fall at 1.2364 and is moving between this level and the resistance at 1.2568. The ECB meeting on Dec. 4 may determine the future direction of this pair at least in the short run.
Support & Resistance (4 Hours)
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