Stocks rising this morning across Europe and Asia after the G−20 meeting this weekend

Tue, Sep 8 2009, 11:16 GMT
by Per-Erik Karlsson

Market comment

Stocks rising this morning across Europe and Asia after the G-20 meeting this weekend. The G-20 nations agreed to maintain economic stimulus to help the economy to recover from the financial crisis. Seems the general perception is that economic stimulus needs to be kept to avoid a fall back into recession. Our risk appetite parameter EURJPY is also moving higher in sync with stocks, trading above the 133 level this morning and there is plenty of upside potential is this cross in our opinion as long as S&P holds above 980. The US nonfarm payrolls report came out fairly in line with our expectations Friday and the two prior month’s data was revised up. The Canadian jobless report came out very strong posting an increase of 27 000 jobs for the month, impressive and should give more support to CAD going forward and should see a test of the August low at 1.0633 fairly soon we think. We also pay attention to the reversal in Nat Gas Friday, making new low early in the session and it then made a strong rally off the lows to close on the highs, up by more than 20 cents. The volume was very high on the day as well. This is certainly a bullish signal. Now we are waiting for a “test” on the daily chart to enter long. We are also noting that the money supply has increased rapidly last months in the US and could well bring serious inflation down the line and pressure the USD (See link to article below). Lots of talk in the press lately that China is moving into gold as an alternative to buying treasuries, not good news for USD and we keep an eye on the 1.4450 key resistance vs. Euro to track any potential break out.

Some interesting news stories:

Technical’s

Euro: Key support remains at 1.40, with minor support at 1.4189 (weekly low). Still expect 1.40 to hold as long as S&P stays above 970. See resistance at 1.4350 and key break out level is 1.4450.

Cable: Technically still long term bullish potential above 1.60. Resistance at 1.6623 and 1.67 today.

USDJPY: Weak below 94 with support down at 92.28 and 91.74. Favor weaker JPY in the longer run and Friday’s reversal opens for a test of 94 near term.

Swissy: Range bound with support down at 1.0540 with resistance up at 1.0910. Favor range trading in this mentioned range until proven wrong.

AUDUSD: Broke above the key resistance at 0.8550 overnight, which opens for a test of 0.8814. Key support is now at 0.8241 today.

USDCAD: The falling trend line going back to 9th of March, coming in at 1.1110 held last week and strong Canadian payrolls have since support CAD. Looks like it will test 1.0633 (August low) near term.

EURJPY: Strong support down at the 132 to 133 support zone. Looks bullish as long as S&P 500 stays above 970 and key support in the EURJPY at 132.

GBPJPY: GBP struggling vs. Euro this morning and still expect GBP to underperform Euro for the rest of the year. However GBPJPY should still be dominantly driven by risk appetite in FX, so we favor higher levels over the next weeks. Support down at 149 (last week’s low).

AUDJPY: Key pivot point is 76.65 and basically medium term bullish outlook intact above this level.

Our outlook

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