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Old 10-03-2014, 14:00
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Default Re: Market news and trade recommendations by FBS

Mar. 10: Asian session

Asian shares fell after reports showed the biggest drop in Chinese exports since 2009 and tensions in Ukraine continue. MSCI Asia Pacific Index dropped by 1%. Japanese Nikkei is also down by 1%. The market’s sentiment was hurt as well as Chinese yuan fell on the central bank’s decision to cut the reference rate by the most in 1 1/2 years.

USD/JPY is testing 103.00 to the downside after peaking to 103.76 on Friday. Japanese GDP grew in Q4 an annualized 0.7% from the previous quarter, less than a preliminary estimate of 1%. The current-account deficit widened to the maximum since 1985.

Commodity currencies extend the downside after having peaked on Friday. The key bearish factors are the upbeat US NFP on Friday and weak China trade data (29B trade deficit vs. expected surplus of 14B) released on Saturday. AUD/USD opened the week with a bearish gap and weakened below $0.9040 after having faced resistance at $0.9135 on Friday. NZD/USD opened with a gap to the upside, but closed it by weakening to $0.8460. Kiwi remains pressured after hitting a 4-month top of $0.8520

EUR/USD rose to $1.3892, but is trading below Friday’s peak at $1.3915. GBP/USD edged up to $1.6440, but is trading below Friday’s peak at $1.6785.

Key option levels (Mar. 10)

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3800, $1.3840, $1.3850 (large), $1.3900;

GBP/USD: $1.6675;

USD/JPY: 102.00 (large), 102.05, 102.20, 102.50 (large), 103.00 (large), 103.50 (large);

AUD/USD: $0.8925, $0.8930, $0.8940, $0.9000, $0.9080, $0.9105 (large), $0.9110, $0.9130 $0.9150;

NZD/USD: $0.8360, $0.8370, $0.8415, $0.8430, $0.8440;

USD/CAD: 1.1050 (large), 1.1100, 1.1150, 1.1200;

EUR/JPY: 143.00 (large);

EUR/CHF: 1.2205, 1.2210;

EUR/GBP: 0.8180, 0.8350.

EUR/USD holds below the $1.3915 peak

EUR/USD strengthened towards the $1.3900 mark in the Asian morning, but holds below the Friday’s 2-year peak of $1.3915. Better-than-expected US NFP on Friday hindered the continuation of EUR-rally. On Monday French industrial production disappointed the markets, contracting by 0.2%. The pair will likely wait until Tuesday for more decisive moves.

Technically, the pair approached a strong resistance in the $1.3900/4000 area. This is the 2008-2014 resistance trend line and the top of the monthly Ichimoku. The ECB-driven move brought the pair into this area, but was not strong enough to overcome it.

We believe EUR/USD still has a potential to hit $1.4000, but there is a clear need for the market to correct lower. Key support lies at $1.3830 and $1.3780 – look to buy euro on dips. Slide below $1.3700 would return the negative outlook.

EUR/USD: Elliott waves (Mar. 10)

Weekly. The pair keeps forming of the rising correctional wave [D], which is close to completion.

Chart. Weekly EUR/USD

Daily. The wave [D] is a double Zigzag w-x-y. Euro’s now forming the final wave of the second Zigzag [C].

Chart. Daily EUR/USD

H4. We are probably seeing the beginning of construction of wave (5). In the coming days the pair will continue rising within the impulse 3, the market will generate a horizontal correction, after which the growth in the wave 5 will continue. The approximate trajectory is shown at the picture.

Chart. H4 EUR/USD
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