Mid Day Market Update 19 Jan

csfx-market-outlook

China’s Quarterly GDP Growth Slackens to 6.8% – Weakest in Six Years

China’s 2015 fourth quarter GDP growth rate contracted to 6.8% which is the weakest since Q1 2009. Industrial production growth also slowed to 5.9% in December last year – down by 0.3% from November’s 6.2%. The annual growth in 2015 was 6.9% which is the weakest since 1990 but in line with the government’s 7% target.  Industrial output, retail sales, exports and investment all slumped to disappointing levels at end of the last year. The downward pressure in the world’s second largest economy may provoke policymakers to think about further monetary easing, continuing with the already in place stimulus measures.

UK Stocks Climbed with Miners Outperform

UK Stocks bounced earlier today spurred by jumps in shares of mining and oil and gas producers. Slowing growth in China has raised hopes for further stimulus in the world’s second-largest economy which may help UK stocks along with equity markets worldwide. The FTSEurofirst 300 index rose 1.5% ,the STOXX Europe 600 Basic rose 4.1 percent and the FTSE100 rose 1.5%.The British Pound has also strengthened today against the US Dollar on the back of positive consumer price inflation data.

IMF Trims Growth Forecast to 3.4% from 3.6%

IMF trimmed the global growth forecast to 3.4% from their earlier projection of 3.6% because of the current sluggishness in the world economy. The effect of falling Oil prices, and the general depression in Commodity markets across the board, are having ripple effects on commodity producing economies worldwide. Coupled with a rising US Dollar, this pollutes the overall picture with U.S growth and export prospects beaten down by the slowing growth worldwide, and higher import prices for those importing in US Dollars. All these issues provoked the IMF to cut the global growth forecast. They entitled the year 2016 as a challenging year. According to IMF the year 2015 had a growth of only 6.1% the weakest since the recession period of 2009.

Technicals

EUR/USD

1

EUR/USD remains in a consolidation zone surrounded by plenty of supports and resistances .So intraday bias in EURUSD is neutral. A sustained move over 1.10 may initiate a strong rally in EURUSD while a sustained move below 1.0800 may lead to a strong sell off.

Trade Suggestion:

It is suggested to stay away from trading EURUSD right now.

GBPUSD

2

The GBP/USD flourished in the European morning, spurred by positive UK data, showing betterment in inflation readings. According to the official data releases, the CPI increased by 0.2% in the year to December 2015, house prices increased by 7.7% in the year to November 2015, RPY increased by 1.2% in the year to December,2015. However a negative note came with the PPI, as the price of goods bought and sold by UK manufacturers, fell by more than expected to -1.5% month on month, as estimated by the producer price index. But a strong selloff initiated in GBPUSD after it was rejected near the strong resistance 1.4350 as BOE Governor Mark Carney said there will be no rate hike any time soon in his Speech in London Today. The GBPUSD breached the 2010 low after the dovish speech of the governor.  So currently our bias in GBPUSD is strongly bearish.

Trade Suggestion:

 Sell below 1.4230 with Stop Loss @1.4350 and Take Profit @1.4080 if it retests the broken support @1.4238 and gets rejected.

Crude Oil

3

Today Oil staged a strong retracement towards the upside but was rejected by the strong resistance zone 30.00-30.20. Now a ‘Flag pattern’ has formed on the hourly chart. A breakdown of this pattern may spur the continuation of strong sell off. Intraday bias in Oil remains bearish as it failed to break the 30.20 hurdle.

Trade Suggestion

Sell Oil below 28.70 with Stop Loss @ 30.50 and Take Profit @27.30

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