Market Brief
Yesterday’s trading took a dramatic turn late in the European session as the weight of sovereign debt concerns (primarily the possibility that Portugal may pose a greater threat to Eurozone stability than Greece) coupled with higher than expected US claims data knocking the prospects for today’s non-farm payrolls led to a spectacular bout of risk aversion and positions unwinds. Initial claims came in at 480k (vs. 460k expected) and there were slight upward revisions to last week’s data (from 470k to 472k). Continuing claims were also higher (at 4602k vs. 4580k expected) which has negated the positive sentiment from Wednesday’s better that expected ADP employment report.
Not long after the release of the US claims figures, EURJPY was steadily trading around 125.70 levels, but as the momentum of negative sentiment gained (stocks lower, yields on European debt jumping) the pair tumbled to breach 125.00 support and quickly plunged through 124.40 interim support before an outright collapse to 121.58 – a level not seen since Feb 2009. In unison, EURUSD was dragged down through the critical 1.3750 support level, a development which now opens up a look at 1.3450 below.
The moves were echoed by commodity markets as oil witnessed its biggest one day drop since July last year, touching intraday lows of $72.42 before closing down over 5%. Gold also breached major $1074 support and now eyes a move to next technical levels below at $1035 and $985.
The Asian open resulted in another immediate slump for EURUSD down to lows of 1.3674, but more significant was the plunge in EURCHF down through 1.4636 prior lows to touch 1.4559 levels. The real fireworks occurred a couple of hours later as the SNB stepped in to the market to sell CHF with ferocity; sending the pair rocketing to highs of 1.4855, and pushing USDCHF up to highs of 1.0796. At the time of writing, Asian indices are down around 3% on the day, and it is likely that risk aversion is likely to dominate the day’s trading ahead of non-farm payrolls. Reuters consensus is looking for a +5k reading this month; and it will be critical for investor sentiment that the US employment change is positive if belief in the global recovery is to stay on the rails.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10'057.09 | -2.89 |
| Hang Seng Index | 19'714.65 | -3.08 |
| Shanghai Index | 2'925.46 | -2.33 |
| FTSE 100 Index | 5'139.31 | -2.17 |
| DAX Index | 5'533.24 | -2.45 |
| SMI Futures | 6'396.51 | -2.4 |
| S&P future | 1'064.30 | 0.24 |
| World Markets | Current Level | % Change |
| Gold | 1'066.13 | 0.23 |
| Silver | 15.29 | 0.21 |
| VIX | 26.08 | 20.74 |
| Crude wti | 73.39 | 0.34 |
| USD Index | 80.18 | 0.23 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Manufacturing production, % m/m Dec | 0.4 | 0.9 | NOK/09:00 |
| Producer input prices, % m/m (y/y) Jan | 0.5 (6.3) | 0.1 (6.9) | GBP/09:30 |
| Producer output prices, % m/m (y/y) Jan | 0.3 (3.7) | 0.5 (3.5) | GBP/09:30 |
| Germany: Industrial production, % m/m Dec | 0.5 | 0.7 | EUR/11:00 |
| Unemployment rate, % Jan | 8.5 | 8.4 | CAD/12:00 |
| Change in nonfarm payrolls, thous Jan | 5 | -85 | USD/13:30 |
| Unemployment rate, % Jan | 10.1 | 10 | USD/13:30 |
Currency Tech
AUDUSD
R 2. 0.8810
R 1: 0.8695
CURRENT: 0.8680
S 1: 0.8645
S 2: 0.8600
USDCAD
R 2. 1.0870
R 1: 1.0750
CURRENT: 1.0730
S 1: 1.0547
S 2: 1.0465
EURJPY
R 2: 125.00
R 1: 124.50
CURRENT: 123.10
S 1: 122.50
S 2: 121.57
USDMXN
R 2: 13.442
R 1: 13.177
CURRENT: 13.148
S 1: 12.800
S 2: 12.487
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
