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| Action Insight Mid-Day Report | Markets Snapshot |
Mid-Day Report: Risk Aversion Continues to Recede on Strong European Stock ReboundEU's announcement of a EUR 750b funding package as well as ECB's U-turn on bond purchases had huge impact on the markets today. The news was well received by markets with CDS on Greece fell over 250 bps to 650 level while that CDS on Portugal and Spain also fell over 160 bps and 80 bps respectively. European stocks are broadly higher with FTSE up over 5%, CAC over 8% while DAX is also up above 4.9%. Dollar and yen reversed last week's again and investors quickly pared back the risk aversion trades. Commodities are generally higher with crude oil back above 78 level. |    |
| Featured Technical Report | |
EUR/JPY Mid-Day OutlookDaily Pivots: (S1) 114.10; (P) 116.31; (R1) 118.99; More. EUR/JPY's rises further to as high as 122.27 today and retreats mildly after hitting 4 hours 55 EMA. At this point, further rise could still be seen as long as 117.39 minor support holds. The stronger then expected rebound from 110.69 dampens our immediate bearish view and we'll turn out focus to whether EUR/JPY could get through 127.88 resistance or reverse. On the downside, below 117.39 minor support will flip intraday bias back to the downside for retesting 110.69 low instead. |
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| Special Reports | |
EU and ECB Announced Tremendous Measures to Stem Debt CrisisIn addition to approving the loans to Greece, EU finance ministers announced a plan worth 750B euro to prevent Greek sovereign crisis from spreading and the euro from free-falling. The ECB also announced to intervene the public and private bond markets. The EU stated that the comprehensive package of measures is to preserve financial stability in Europe and it includes a 500B-euro European Financial Stabilization mechanism of which 440B euro will come from 16 member countries in the Eurozone which the remaining 60B euro will come from European Commission's emergency funding. The IMF has agreed to contribute 250B euro in the package. A Hung Parliament in UK - A Drag on Pound as Long as Uncertainty RemainsThe UK general election resulted in the first hung parliament since 1974. Although the Conservative Party got the most votes and won the most seats, it was 20 seats short of a majority in Parliament. The Conservatives are now seeking to reach an agreement with the Lib Dems so as to form a coalition government. However, it's difficult for them to reach an agreement given the great difference in social and European perspectives of the 2 parties. If the Tories fail, the Labours will forge an alliance with the Lib Dems. The problem here is that even if they reach an agreement, they still need supports from other parties to make up a majority. Therefore, political experts believe the most likely outcome is a Conservative-led minority government. The UK had a minority government in 1974 but it only survived for a few months before a new election was called upon. The uncertainties brought by this election resulted in slump in sterling, gilts and stocks. While we believe the market may have overestimated the negative impacts of a hung parliament, uncertainties should leave these financial instruments vulnerable for some more time. |
| Elliott Wave Daily Trade Ideas |
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Trade Idea: EUR/JPY - Sell at 122.00The strong rebound from 110.49 signals wave iii of 3 has ended there correction to 122.00 cannot be ruled out, however, as long as resistance at 122.35/40 (previous support, wave i trough) holds, prospect of another decline remains. Below 120.00 would bring weakness to 119.50 and then 118.80 (previous resistance). Trade Idea: AUD/USD - Buy at 0.8985Despite last week's selloff to 0.8711, the strong rebound from there suggests the c leg as well as entire wave (ii) has possibly ended there and consolidation with upside bias is seen for gain to indicated resistance at 0.9155/65, break there would confirm and extend gain to 0.9250. | ||
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