Equities Trading Higher On Obamas Stimulus Plan

Daily Forex Fundamentals | Written by Saxo Bank | Jan 07 09 08:26 GMT |

Equities has lately been trading higher on the back of Obama's stimulus plan currently infusing hope and optimism in the market. When earnings season starts mid January reality will revert Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment GE Unemployment Rate (DEC) 08:55 7.5% 7.5% US ADP Employment Change (DEC) 13:15 -493K -472K US DOE U.S. Crude Oil Inventories (JAN) 15:30 900K 549K What's going on? S&P500 edged higher, but did not manage to close above the 938 level (big picture 23.6% Fibo), perhaps helped by the better than expected ISM Non-Manufacturing Index (came out at 40.6). The FOMC Minutes revealed a great deal of uncertainty as to how the Fed sees inflation expectations developing. Currently, the 10-year TIPS indicate an average inflation rate of 0.5% over the coming 10 years. The Fed might elect to adopt an inflation targeting regime in order to justify a lax monetary policy accommodating to what they perceive to be a very bleak outlook. Increasing focus at the 'bubble' in Treasuries. Lots of comments recommending to short it. The speculations are valid, but the price (and yield) is at the mercy of the Fed. FX FX Daily stance Comment EURUSD 0/- Consolidation 1.3450-1.3550. Risks 1.3600 before downtrend resumes. EURJPY 0/+ Support 125.50-126.0. Break of 127.20 yields 128.0. Still ranging though. USDJPY + Look for gains past 94.0 to target 95.25. Support 93.25-40 GBPUSD 0/- BOE mtg to keep GBP subdued. Res 1.4995 risks return to 1.4800-25. AUDUSD 0/- Needs to overcome 0.7240-50 for next leg higher towards 0.7350. Support 0.7175-85. Equities Equities Daily stance Comment DAX 0/- Sell at the break of 4980 targeting 4910. Keep S/L at 5035. FTSE 0/- S&P500 0/- Sell at the break of 921 targeting 908 initially, 898 finally. Keep S/L at 930. Nasdaq100 0/- Nikkei225 0/- Futures Commodities Daily Stance Comment Gold (XAUUSD) 0 O/n rally petered out at 870.0. Look to revert back to mid-range 850.0 lvl Silver (XAGUSD) 0 Capped at 11.50 in Asia. Look to range-trade 10.80-11.50 Oil (CLG9) 0 Front month crude continues to test resistance. Looking for a break of $53.00 for further upside. FX Options FX-Options Comment EURUSD Vols paid up yesterday and EUR puts still seem to be the main interest. Flys are bid and RRs are consistently trading around par so don’t rule out a turnaround in Jan. GBPUSD Big UK bank buying low delta upside for end Jan, could suggest another reversal on horizon the horizon. USDJPY Yen vols softer today through the middle of the curve as spot stays closer to 9400. Seen some early Tokyo bid interest in 2 week 9600 area strikes. 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. 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