MORNING BRIEFING:  Markets see the return of some risk appetite

What’s new:
Ireland: Comments from Irish officials point to a works-in-progress bailout plan
United States: Philly Fed Business Index reading surprises to the upside
Asia: Major equity indices in the green
FOREX: EUR/USD upside persists, but we may be in for a retracement
FOREX: USD/JPY trading reaches month’s high yesterday at 83.78


Today:



Rates in Asia and Indices:
EURUSD: 1.3698 - 1.3608.
USDCHF: 0.9973 – 0.9916.
GBPUSD: 1.6081- 1.6013.
EURJPY: 114.14 – 113.53.
USDJPY: 83.64 – 83.31
DowJones: 11’181.23 +1.57%
NASDAQ:  2’514.40 +1.55%
S & P 500: 1’196.69 +1.54%
Nikkei: 10’022.39 +0.09%
Shanghai: 2888.56 +0.81%
Gold: $ 1'357.80
Crude Oil: $ 82.07

Comments:

Euro support continued into this morning’s session, helped by comments by Irish officials pointing towards what seems to be a works-in-progress bailout plan which might not be positive in itself for the Euro Zone, but at least does away with some of the uncertainty that was clouding the markets. Less uncertainty over Ireland combined with a remarkably stronger Philadelphia Fed Business index (coming out at 22.5 against an expected 5.0 and a previous 1.0) was supportive of risk appetite.

Even the major Asian equity indices, following yesterday’s positive US close, were reflecting this bout of risk appetite when trading mostly in the green earlier this morning. Apart from Ireland, and Philly Fed data, a well received General Motors IPO also helped to buoy risk appetite, given that this same company managed a transition from bail out to a successful IPO in such a short time.

EUR/USD traded in the range of 1.3608-1.3691 in this early session, and seems to be eyeing the very close 1.37 levels, according to RTFX Trader Tip next resistance is seen at 1.3753 and overall, outlook sees the possibility of a retracement.

USD/JPY reaches month’s high at 83.78 yesterday, levels which we had last seen back in early October. To the upside a break over 84.15 would be considered bullish, to the downside first support lies at 83.16.

Later this morning speeches from ECB’s Trichet, IMF’s Strauss-Kahn, and the Fed’s Bernanke at an ECB central banking conference being held in Frankfurt – will attract investor’s attention given today’s otherwise quiet economic calendar.

Good day,

Rudolf Muscat
Trading desk

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