Wakeup Call: Markets Fueled By Liquidity Injection From ECB And Prolonging Of Credit Facilities By FED

Daily Forex Fundamentals | Written by Saxo Bank | Jun 26 09 06:49 GMT |

The injection of cheap liquidity from ECB and the prolonging of credit facilities by FED will make markets trade higher in the short run. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment US 12:30 Personal Income MoM (MAY) 0.3% 0.5% US 12:30 Personal Spending MoM (MAY) 0.3% -0.1% US 14:00 Consumer Confidence (JUN) 69.0 69.0 What's going on? The US GDP figures were generally as expected, but Jobless Claims were disappointing. The Fed yesterday released a press statement that it would prolong (to 2010) and change some of its credit providing facilities in order to ensure easy credit conditions to households and financial markets. This statement led to a general lift-off in all asset classes (including treasuries) – but the USD was down. Combined with the cheap EUR 442B credit expansion from the ECB earlier this week, we believe that the Fed’s initiative should stimulate to even more risk-taking today and possibly into next week. Buy on dips into next week. Watch out for the PCE figures today. We believe that they could be lower than expectations, lifting bonds higher. FX FX Daily stance Comment EURUSD 0/- EURUSD stalling around 1.4045 and expected to fall towards 1.4000. EURJPY 0/- Can look to trade narrow range as EURJPY expected to converge towards 134.50. USDJPY 0 Uptrend support line expected to support USDJPY around 95.60, buy looking for 96.60. GBPUSD 0/- Heard of large buying of EURGBP, pushing cable lower, expect further weakness towards 1.6280. AUDUSD 0/- Offered throughout Asia session, still looks heavy and we are looking for a test of 0.8000 support. Equities Equities Daily stance Comment DAX 0/+ Buy towards 4829 targeting 4878. S/L below 4800. FTSE 0/+ Buy towards 4274 targeting 4311. S/L below 4250. S&P500 0/+ Buy towards 915 targeting 922. S/L below 908. Nasdaq100 0/+ Buy towards 1473 targeting 1490. S/L below 1466. Nikkei 0/+ Futures Commodities Daily Stance Comment Gold 0/+ Buy at the break of 944 and target 960. Stop below 937. Silver 0/+ Buy at the break of 14.25 and target 14.60. Stop below 14.05. Oil 0/+ Buy on dips towards 70.50 and target 72. Stop below 70 FX Options FX-Options Comment EURUSD vols sold heavily today, and frontend interests all abt EUR puts. 1.37 and 1.38 for early next week among the biggest interests. Vols were at a relatively high level and this off is not unexpected, and our 1-3mo view is still that EURUSD will trade higher, but we will likely see a small correction the next few days. 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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