Market Brief
Risk correlated assets continued to improve in the Asian session. The optimism was sparked by the news that CIT Group may avoid bankruptcy or government bailout by accepting a $3bn loan from bondholders. The EURUSD broke above the 1.4190 horizontal resistance, trading to 1.4221, while the JPY was sold across the board, with the AUDJPY finding support on the 21d MA, trading up to 76.60. We are concerned about the rally in risk, as equity is beginning to feel stretched. In addition, with a rash of corporate earnings (big names such as Apple, Caterpillar, Texas Instruments and American Express) reporting, expectations are high but we are concerned that true consumer demand has not recovered and expect earnings to underperform. In the FX markets we believe that the sterling is especially vulnerable this week. While the GBP continues to trade alongside risk appetite, the MPC minutes published on Wednesday will also be a significant event for the currency. The markets celebrated the MPC statement as a signal the additional asset purchases might not happen. However, recent comments by MPC members such as Bean hints the optimism is overdone and we now expect no pause in the BoE purchases and additional fund to be allocated in August. Dovish minutes should lead to a sell off in GBP later in the week.
| Global Indexes | Current Level | % Change |
| Hang Seng Index | 19,502.37 | 3.7 |
| Shanghai Index | 3,266.92 | 2.42 |
| FTSE 100 Index | 4,425.44 | 0.83 |
| DAX Index | 5,034.37 | 1.12 |
| SMI Index | 5,638.39 | 1.12 |
| DJIA futures | 8,728.00 | 0.35 |
| S&P future | 939.9 | 0.32 |
| World Markets | Current Level | % Change |
| Gold | 946.8 | 0.99 |
| Silver | 13.67 | 1.78 |
| VIX | 24.34 | -4.24 |
| Crude wti | 64.62 | 1.66 |
| USD Index | 78.96 | -0.67 |
| Todays Calender | Estimates | Previous | Country / GMT |
| US: FRB of Atlanta President Lockhart speaks on th | -- | -- | USD / 17.30 |
| Leading indicators, % (y/y) Jun | 0.5 (-1.4) | 1.2 (-1.8) | USD / 14.00 |
| BoJ minutes published | -- | -- | JPY / 23.50 |
Currency Tech
AUDUSD
R 2: 0.8238
R 1: 0.8155
CURRENT: 0.8112
S 1: 0.7815
S 2: 0.7700
EURJPY
R 2: 136.90
R 1: 134.80
CURRENT: 134.51
S 1: 131.60
S 2: 129.35
USDCAD
R 2: 1.1530
R 1: 1.1350
CURRENT: 1.1064
S 1: 1.0940
S 2: 1.0785
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S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
