Summer Sale Season
Swissquote Bank Ltd | Jul 08, 2015 06:35AM ET
Market Brief
Surprisingly, no deal has been reached between Greece and euro zone officials yet as Alexis Tsipras’ government didn’t have the time to submit a written proposal yesterday. European leaders gave Greece until Sunday July 12 to submit a viable solution. The problem now is that both parties are convinced that they are in a better position now than before the Greek referendum to negotiate the terms of a potential agreement. On one hand, Alexis Tsipras is full of confidence now that Greek people made clear that they support him in its fight against unsustainable austerity measures. On the other hand, euro zone leaders said that any new bailout deal would contain much painful terms than before the referendum as Greece is now in a worse economic shape. Even though both parties said to be strongly against a Greek exit from the Eurozone, we have never been that close to such a situation. Yesterday, EUR/USD printed a 1-month low at 1.0916 in the European session before stabilising around 1.10. We remain bearish on EUR/USD and we suspect that the support standing at 1.0819 will not last long should the situation turns sour.
In the Asian session, Chinese equities are on sale as the Shanghai Composite retreats 6.39% and the Shenzhen Composite loses -2.85%. The market panic is spreading across Asian markets as investors keep unloading equities. Hong Kong’s Hang Seng loses 5.11%, South Korea’s KOSPI is down 1.20% while the Japanese Nikkei 225 drops 3.14%. In the FX market, USD/JPY continues to move lower after Japan posts its bigger current account surplus since 2007 at ¥1,880.9bn in May versus ¥1,570.2bn median forecast and ¥1,326.4bn previous reading. USD/JPY is heading toward the 121.55 support (Fib 61.8% on May-June rally).
In Australia, equities pare losses with the S&P/ASX 200 down 2.01% on Chinese worries and falling commodity prices. Iron ore for immediate delivery at the port of Qingdao in China dropped another 5% yesterday, down almost 25% from its high of June 11. Futures on copper are down 2.2% this morning, down almost 10% since July 3. AUD/USD broke another strong 0.7416 (low from October 2006) support and is heading to the next support standing at 0.7270 (low from June 2006).
In Europe, equity future stabilised this morning despite the absence of positive news from Brussels. DAX is up 0.69%, CAC 40 40 0.79%, SMI 0.53% while Euro Stoxx 50 gains 0.76%. In UK, the FTSE 100 adds 0.16% after data indicate that house prices rose 1.7% in June as pressure increases on the housing market. GBP/USD is currently testing the 1.5415/29 support area (40-week moving average and low from August 2013). Further south, a support can be found at 1.5235 (January 2012 low).
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Today traders will be watching Brazil’s IPCA monthly inflation; building permits from Canada; the minutes from June 16-17 FOMC meeting.
Currency Tech
EUR/USD
R 2: 1.1436
R 1: 1.1278
CURRENT: 1.1009
S 1: 1.0955
S 2: 1.0819
GBP/USD
R 2: 1.5930
R 1: 1.5803
CURRENT: 1.5406
S 1: 1.5171
S 2: 1.5089
USD/JPY
R 2: 125.86
R 1: 124.45
CURRENT: 121.59
S 1: 121.45
S 2: 120.64
USD/CHF
R 2: 0.9719
R 1: 0.9543
CURRENT: 0.9446
S 1: 0.9151
S 2: 0.9072
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