Wakeup Call: Will Obama Inauguration Have An Positive Effect On Equity Markets? Probably Not

Daily Forex Fundamentals | Written by Saxo Bank | Jan 20 09 08:20 GMT |

The RBS result and UK government intervention was the major story yesterday and will continue to drive markets lower today. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment UK CPI MoM (DEC) 09:30 -0.9% -0.1% Deflation on its way? GE ZEW Survey (econ. Sentiment) 10:00 -43.1 -45.2 CA Bank of Canada Rate (JAN) 14:00 1.00% 1.50% What's going on? The UK bank rescue package II announced yesterday showed how serious trouble UK banks are in. The UK government now owns Northern Rock, RBS and Barclays. Most likely are UK banks not the only ones in trouble. Earnings expectations are being downgraded massively from analysts. Income will shrink 17% compared with a prediction in May stating a 35% growth. Expect earnings expectation to continue going lower from here. Oil dropped significantly to 34 USD/bbl. on continued signs of a contracting economy. Seasonal cold weather are still supportive for the demand side. FX FX Daily stance Comment EURUSD 0 1.3000 key psychological level and support area. Market to transition to range trading? EURJPY 0/- Near bottom of big range, could bounce a bit with big event risk, but prefer to sell. USDJPY 0 90.00 is an important support level here – 90.80 is first resistance (21-day MA) GBPUSD 0 1.4350 resistance now after break lower. GBP weakness very pronounced. USDCAD + BoC today. Prefer upside, but risk of short term consolidation. 1.2675 key resistance Equities Equities Daily stance Comment DAX - Key support at 4300. Sell the break and target 4150. Otherwise stay neutral. FTSE - Sell at the break of 4082. Target 3903. S/L kept at 4150. S&P500 - 50% fibo at 842. Sell at the break of 842 targeting 813. S/L kept at 857. Nasdaq100 - Nikkei225 - Futures Commodities Daily Stance Comment Gold (XAUUSD) 0/+ Support at 825.0. Buy dips with stops below 820 and add above 850. Silver (XAGUSD) 0 Support in 11.00 area. Look rangebound unless breaks above 11.75 Oil (CLG9) 0 40 dollars a barrel is a key psychological level nearby. May follow risk appetite. 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.