Morning Brief

Good Morning Traders......
Today is a big day on the markets for Europe, and it is one that traders have been waiting for all week. Overnight Portugal's credit rating outlook was raised to stable from negative by S&P as the economy showed slight economic improvements over the last 12 months. Last night in the Asian session the BOJ (Bank Of Japan) rejected a call for an immediate start to open-ended asset purchases, on the back of this news we saw the Nikkei loose some ground but it still remains in a strong up-trend. This morning all focus will be on the EBC and the BOE as we are expecting to see interest rate decisions at 12.45. The consensus is to leave rates unchanged but traders will be paying close attention to Draghis press conference at 1.30pm and any commentary he may have about the likelihood of a rate cut during the course of the year. Just to note any commentary in relation to a rate cut will be positive of European equities and negative for the euro currency against its major pairs.

In terms of FX trading we saw a significant move to the downside yesterday for the EURUSD pair and it traded towards the lows under 1.30 overnight testing the significant support level of 1.29800, if this level is breached expect to an extended move lower testing the 2013 low of 1.29600. But as we have said the interest rate decision and the press conference from the ECB will dictate the direction of the pair. At the time of writing the EURUSD has made a move to the upside breaking above the 1.30 handle off the back of GBP  and JPY weakness but this could provide a nice trading level for traders looking to hold a short position into the meeting.

Across the water we saw the US equities make a further move to the upside with the $DOW making new historic highs closing yesterday at 14,296 and the $SPX closing at 1541. An interesting point to note is that $SPX is yet to make historical highs, and continues top lag behind the $DOW, there are numerous factors contributing to this, analysts are pointing the finger to $AAPL which continues to struggle closing at $425 yesterday. If you are trading US equities expect volume to be relatively light with the NFP (Non Foreign Payrolls) due out tomorrow. We expect the numbers to be positive for the US economy as all data has been extremely positive this year, however it will be interesting to see the market reaction to good news as a strong number may be played as risk off, on the basis that it might signal economic improvement and an end to continued QE.

Happy Trading.
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