LowKeyCapital Breakfast Report Thursday 10/01/2012

LowKeyCapital Breakfast Report Thursday 10/01/2012

LowKeyCapital Signal: Bullish (Cautious)


Overnight we have seen a significant move to the upside in US and European equity classes, this comes on the back of positive Chinese export data (+14.1%) which beat economists expectations and signals stabilisation in the chinese economy. We currently see US equity futures in the green with the DOW trading above the significant 13,400 level and SPX trading at 1,463.68. In terms of the FX market we have seen the EUR pair back some of its losses yesterday against some of the major currencies, continued EUR strength going into the ECB meeting in Frankfurt today (EURUSD 1.30686, EURJPY 115.326 EURGBP .81602).

We expect the morning session to be reasonably quiet as all eyes will be on EBC President Mario Draghi and the EBC Policy meeting this morning. Market expectations have cooled since the last ECB meeting in December and we do not expect an interest rate cut decision this morning. Economic data as improved since the December and it would make sense for the ECB to remained sidelined for the present time and Draghi to replicate his dovish stance laid out in his previous post-meeting press conference.

We will then be switching over to the US as Labour Department Figures (Initial Jobless Claims) are due out at 1.30pm analysts are looking for a figure around 365,000 from 372,000 last week if correct this should help US equities into the opening bell, but it is interesting to note that these figures tend not to have any major influence unless the actual figure is a big miss.

In conclusion the market look like it wants to go higher in the short term, and it will be interesting to see if Draghi sticks to his game plan this morning. Due be aware that across the water we are in earning season and results tend to surprise the markets. We remain bullish in the short term across European and US Indicies, but cautious to the potential correction phase that we have yet to experience.

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