Wakeup Call: Equities Lower On Concern That The Economy Is Contracting Further

Daily Forex Fundamentals | Written by Saxo Bank | Nov 11 08 07:57 GMT |

Last weeks US unemployment data does have an effect afterall. Equities will trade lower at the opening due to fear of further contraction of the economy and the disappointing earnings from Vodafone. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment UK Total Trade Balance (SEP) 09:30 -£4700 -£4737 GE ZEW Survey - Econ. Sentiment (NOV) 10:00 -63.0 -63.0 US IBD/TIPP Economic Optimism (NOV) 15:00 42.0 41.1 What's going on? US stocks session ending on a weak note. The labor market figures might matter after all. The 'anti-hedge fund trade' seems to be losing some of its momentum, but we believe that it will still rule the market until year-end. Our estimates show that hedge funds have increased exposure to EURUSD (long) and that the big exposure to equity markets (MSCI EM and S&P500) is unchanged and large. Exposure to gold has increased a bit. Our estimates show that hedge fund redemptions are still an issue, but it is uncertain whether they increased from October (which was a record). Fannie Mae is stating that the Treasuries' guarantee of $100B might not be enough to keep the mortgage giant afloat. The company is having great difficulties refinancing and issuing debt and it has made significant writedowns of assets. According to a note to the SEC, the Q3 loss was $29B. Fitch cut ratings for 4 EE countries and downgraded outlooks for Russia, South Korea and Mexico. FX FX Daily stance Comment EURUSD - Resistance around 1.2750. A break of 1.2650 => test of 1.2330? EURJPY - Resistance around 125.50. Sell the break of 122.50 for a 120 test. USDJPY 0 A break of 96.75 support could lead to the 95 area. GBPUSD - Big picture calling for 1.5270 test or new lows. USDCAD + A break of 1.20 could lead to 1.2350. Equities Economic Data Releases Country Name Time (GMT) Expectation Prior Comment IT Enel N/A 0,18 Futures Commodities Daily Stance Comment Gold (XAUUSD) 0 Play the range: Support at 722ish. Resistance around 770. Silver (XAGUSD) - Sell below 9.70 and target 9.25. Stops above 10. Oil (CLZ8) - Sell below 60 with stops above 61.30. Target 58. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.