Breakfast Blog

We have seen a continued move to the upside during the Asian Trading session, most asset classes moved higher as a result Charles Evans (Federal Bank Of Chicago President) speech in which he reiterated the fact that the Fed will continue to support the economic recovery in the US.

In the FX market we have seen EUR/USD continuing its strong rally off the back of Thursdays ECB's meeting. The pair broke through the 1.3400 level overnight but at the time of writing we are back at 1.33545  as a direct result of profit taking. With no significant news due out this morning all eyes will be on today's option expiries to dictate the direction on the pair (1.3300,1.3350, 1.3400).
Overnight the USD/JPY reached highs as 89.67 but we have seen the pair retreat back to 89.404 since the opening bell in the European market. If we see a clean break of the 89.00 level the next resistance falls at 92.89.

In the Equity markets we have seen both US Equity Indicies retrace off their highs from the Asian session. $SPX reached a high of 1,475.50 and analysts are targeting 1,500.00 in the coming weeks. The $DOW broke through 13,500 and looks to be targeting 13,600-13,700. The Fiscal Cliff has slipped into the background over the past week, but investors should be weary that we are in Earnings Season and this week will see some of the 'Big Banks' post their earnings, so keep it simple and buy the dips until we encounter any bad news.

Happy Trading

Now Yesterday was a TRADING DAY! What an active market we had, Draghi sent the euro soaring as he erased expectations for the ECB to cut rates, saying the decision was unanimous. Once the momentum got rolling, it was unstoppable with the euro rising more than 200 pips. S&P 500 closed at a 5 year high of 1472 up 0.8% on the day. To add fuel to the fire, the Japanese Prime Minister Abe says the BOJ is to target Unemployment, which sent the JPY tumbling against all pairs. The USD/JPY has taken out the 89 Figure and has 90 firmly in its sites, as I type the price action is just above the 89 handle. The Euro led whilst the JPY lagged yesterday so the 350 pip spike through the 200 week moving average is no surprise, this pair looks like an express train heading at the moon. Up 1800 pips in under 2 months, surely this has to correct soon? I would heavily advise against, there is no sign of any decent pullbacks, its a buy the dips trade at the moment.

What's in store for today?

The data calendar is very sparse today, with only an Italian Debt auction this morning.
Some of the levels to look out for on the EUR/USD are 1.325 for small bids, and further down to 1.321 where there is reported real money and sovereigns on the Ride hand Side of the Order book. Topside you have to look at the obvious psychological 1.33 level, which maybe tough to clear today considering the Euro's rally yesterday.
A pullback to 1.32 before going higher and taking out the 2012 highs could be a medium term target for the EUR/USD. A rally above 1.35 might be unsustainable with Europe's Macro outlook.
Moving onto Equities, 5 year highs on the S&P 500 and a close of 1472, the market has completely forgotten all the ongoing Fiscal Cliff problems and pushed higher, up 3.2% for this year already. Coming into Earning season's a pullback could be inevitable. Support on the downside near term can be seen at 1461 and 1450 whilst there may not be a lot of resistance until 1490, what will be the catalyst to bring us there? As I type the market has pulled back a few points with a quiet morning in prospect.

Happy Trading follow us at @lowkeycapital

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.

For all your daily trading updates find us @loekeycapital
Happy Trading

Breakfast Blog: Morning Update

This week to date we have seen a continuation of the upward momentum across the board, on the economic front markets have received support from Spanish bailout rumours and stronger then expected data out of the US. All eyes today will be on the EU summit, we are not expecting anything major to be released but any further mention of Spanish bailout or an update from Greece could steer the market higher. Overnight we have seen data from China showing the economy slowed for a seventh straight quarter in July-September, missing the government's target for the first time since the depths of the global financial crisis. The Chinese have supported the data stating that 'This is within expectations, the economy is showing signs of stabilizing, that is good news', traders will look to the market reaction for a more clear view on the stability of the chinese economy.
In terms of levels we need to be aware of today, SPX levels on the upside (Yst Highs 1463, Sept Highs 1474), DowJ ( Yst Highs 13,563, Sept Highs 13,662 and downside support at 13,492).
Although market sentiment has remained bullish throughout the course of the week, we need to keep in mind that a correction could take place before the christmas rally begins.

Happy Trading

Good Morning Markets,
Yesterday saw the Euro climb out of the 1.28-1.30 range it had been trapped in for the last few weeks, with traders getting out of there Euro short positions it has caused a squeeze and the price action currently sits above the 1.31 mark. You can wait weeks for a move like this and before you know it and 110 pips later its happened and you haven't even blinked yet! A typical buy the rumour move ocured yesterday with a rumoured credit line to Spain this was later said to be "over-interupted" by a Senior German Lawmaker. Then Talks between Greece and The Troika broke down, but you can't keep a bad Euro down and with a brief correction to 1.302 the 23.6% Fibo Retracement of the Euro rally this week, it went higher and pushed thru the 1.31 level during the Asian session.
The Equity markets joined in with the Risk Sentiment, The S&P 500 finished up, closing above the important  1455 level. This is a far cry from last Friday when the 1425 level was tested. Dow Jones finished at the 13,550 Level, But sold off right after the close and sits at 13,525 as I type.
A quiet day regarding news today so all eyes will be on any more developments from Europe and especially Spain.

Breakfast Blog

Asian equities followed the European and American sentiment of Monday and edged higher on speculation over a Spanish aid request, a Greek extension to its bailout terms, and better activity data and earnings in the US.
Tuesday promises to be a busy day with respect to data releases we are expected to see Economic sentiment from Germany and inflation from the U.K.
In the currency markets all eyes will be on the EUR/USD as we have seen the pair hold on to Mondays gains and the pair at the time of writing currently trades at 1.29912 testing the psychological barrier of 1.30. There are bound to be plenty of sell orders clustered around the 1.29900-1.3000 level so traders will be looking to any middle eastern buying in the morning session to push us over this next level which could lead to a break in the pairs range.


Happy Trading

Breakfast Blog

Top of the Risk Management morning to all, Yesterdays Euro rally started at the 200 Day MA average and did 200 pips before fizzling out at 1.2951...a very important fibonacci retracement. This was the 50% retracement of the 1.2824-1.3072 rally. I can guarantee there will be a lot of orders around here with stops just above. The Euro rally yesterday broke through the 1.2910 barrier with apparent Macro Fund stops being tripped just past this level allowing further upside. The Euro has since consolidated and now sits at 1.2935 as I type. The American equity markets opened in positive territory yesterday trying to stop the rot after 3 sessions in the negative. Wall street reached the heights of 13,435 before selling off nearly 100 points. This has been typical of the American sessions this week. The Initial Jobless claims were the lowest since February 2008 but there was errors cited in the results as one large state was omitted from the calculations. A quiet Asian Session saw the Euro once again go for the 1.2951 Barrier but this was stopped once the Europeans entered the frame at 7 O'clock London time.
On the order board note we see big bids for the EUR/USD pair at 1.2900/10 and big offers from 1.2960 upwards. It looks like another day in the range but markets do seem more positive so the upside would be favoured. Happy Trading