Market Drivers - Currencies

Overnight the Chinese PMI data for service were published; the figure came out at 56.0. Last month it was at 49.7. Hence we are seeing a steep increase. Several Asian investors took the release of this figure as an opportunity to buy both AUD and NZD; this may indicate that the European markets will open on a positive note. Since yesterday, USD has been under pressure, and there have been persistent rumours that investors take profit.

Today the important ISM manufacturing data will be released in the US. It will be interesting to see whether ISM comes out at 53.4 as expected. If that happens, the economic indicators will have improved continuously since last summer. If the economic indicator turns out to be better than expected, it is to be expected that investors will make further purchases, particularly in EM currencies (in that case MXN will be a good position) and sell JPY. Most likely we will see EURUSD continue the upward correction.

EURUSD (NEUTRAL): We maintain our recommendation of a sell order at 128.49. Since yesterday, USD has been under pressure. The first point of resistance will be in the range of 129.90-130.00. A breach of 130 will trigger a movement up towards 131; then the road will be paved towards 134.5-135 (see the chart). The first major level of support is in the range of 129.05-129.12. Please be aware that EUR/USD is oversold at the medium term, and therefore we keep an eye on whether the cross rate is facing a correction. The first meeting at which a discussion of the euro crisis is planned will be held on 9 January.

EURPLN (SELL to NEUTRAL): We recommend BUY and expect that 451.50 will be reached again. We recommend that investors move S/L to 441.40. The intervention on the part of the central bank did not have any significant effect on EURPLN. EURPLN is again ‘flirting’ with the range of 445-447. If 447.50 is breached, we will see additional pressure on PLN and 450-455 will be within reach.

EURSEK (NEUTRAL): Despite the very good performance of the equity indices in Europe yesterday, SEK only increased marginally; the reason for this is most likely that the financial players in the UK and the US had the day off yesterday. Today the Riksbank will publish it minutes at 9.30 am. It will be interesting to see to which degree consensus was reached about an interest-rate cut of 0.25. Based on this, we will see minor fluctuations over the morning. We do not expect that this will change the agenda for EURSEK, which is still in a clear short-term downtrend. We are, however, aware that EURSEK is looking for a bottom this time around. We are now looking for the right time and level for a short-term Buy recommendation. There is strong support in the range of 885.50 -888; subsequently in 879-80.

EURGBP (BUY): Another day with sideways trading; we expect a close above 84.25, which will pave the way towards 86.

EURJPY (NEUTRAL): We recommend placing a BUY ORDER in case of a breach above 100. We also recommend placing a BUY ORDER at 98.75 with a stop at 97.94. There is divergence in the 4-hour chart =lower bottom with higher bottoms based on the technical indicator RSI => potential in buying.