Wall St. bought it up again in hopes that Greek austerity measures will pass in parliament, but given the low daily volume investors still remain sceptical. Down 1.1% for the nearly ended quarter, the Dow Jones Industrial Average rose 145.13 points, or 1.2%, to 12,188.69. 1300 on the S&P remains psychological resistance as we’ve been range-bound the past week. Focused on Greece, we all await today’s vote by early morning. The Nasdaq Composite Index gained 41.03 points, or 1.5%, to 2,729.31.
The Euro kissed resistance this morning at the down-trending channel from the previous two highs. Ultimately, 1.44 and 1.4450 will prove to be major resistance and if the trade holds up into the vote, we would like to sell on a spike. In our opinion, a default is imminent as Greece is not too big to fail regardless of how much neighbouring nations have vested. One bad apple ruins the bunch, it’s a ticking time bomb.
In hopes of positive news out of Greece, Crude oil also rallied today having its biggest percentage gain in almost 6 weeks. Benchmark light, sweet crude-oil futures moved between small gains and losses in Nymex electronic trading on Wednesday, with investors pausing after pushing oil to sharp gains in the previous session. API reported a draw of 2.7 million barrels, and EIA analysts expect a draw of 1.7mm to be reported tomorrow.
Today’s Important Economic Announcements (GMT)
9:30 PM CHF KOF Economic Barometer
11:00 PM CAD Core CPI m/m
Tentative EUR Greek Gov Debt Crisis Vote
11:50 PM JPY Retail Sales
2:00 PM USD Pending Home Sales m/m
2:30 PM Crude Oil Crude Oil Inventories
10:45 PM NZD Building Consents m/m
11:00 PM GBP GfK Consumer Confidence
Forex & Commodities Technical Analysis
EUR/USD
Early support for the euro faded while European banks squabble over an extension of the maturities for Greek debt. French banks have the largest exposure to Greek debt and yesterday released their suggestions which would call for a 30-year extension of the debt, similar to the Brady bond plan that was initiated in Latin American. A 48-hour general strike in Greece is also not supporting the euro as participants take to the streets of Athens to protest the austerity package. Previous protests have turned violent; such was the case on June 15th when the euro shed 1.9%. This could give the euro a short term bounce to resistance at last week’s high of 1.4440.
Stop Loss: 1.4323
Take Profit: 1.4440
GBP/USD
Sterling was lower after a host of negative factors underline the recent weakness of the pound. The Q1 current account showed a larger than expected deficit. The Q4 2010 numbers were also revised to show a greater trade deficit and underscored the report’s negative tone. BOE MPC member Adam Posen spoke for greater BOE independence as he lashed out at yesterday’s Bank of International Settlements report that called for an increase in UK interest rates. The negative data, bearish comments, and low growth numbers all underscore the reasons for sterling’s recent weakness. We are on a train heading south.
Stop Loss: 1.6030
Take Profit: 1.5915
USD/CAD
The Consumer Price Index released by the Statistics Canada is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of CAD is dragged down by inflation. The Bank of Canada aims at an inflation range (1%-3%). Generally speaking, a high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the CAD. There is no doubt the direction is down, so we advice our traders to open short positions with relatively lengthy take profit.
Stop Loss: 0.98425
Take Profit: 0.9779
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