Wednesday, February 22, 2012
Asian shares made modest headway as China's February manufacturing PMI touched a four month high of 49.7 from 48.8 the previous month, though still below the key figure of 50 which divides between expansion and contraction. New export orders continue to weaken and so does domestic demand. The figure could also be distorted with the Lunar New Year weeklong holiday.
European markets look to remain in positive territory today despite the continued concerns that ail Greece. According to the Financial Times, the report prepared by the troika for the euro-zone finance ministers highlighted some key worries: 1) the additional reforms that Greece has to undertake may put Greece on a path of deep recession that it may not be able to achieve the GDP to debt ratio of 120% by 2020; 2) The euro-zone finance ministers may have approved the bailout but each sovereign parliament still has to pass the aid package and 3) the troika can halt aid at any time should they believe that Greece is not living up to its commitments. The bailout package by no means signal the end of the European debt crisis as Portugal is reported to require further assistance.
January German Purchasing Manager's Index disappointed markets with a print of 50.1 for manufacturing and 52.6 for services. Analysts had called for a reading of 51.5 and 53.9 respectively. For the euro zone, PMI for the month of January also missed estimates at 49.4 for services and 49 for manufacturing. This would mean that the euro zone economy remains fragile and can still slip into a technical recession. Industrial orders year-on-year in December declined less than expected at -1.7%.
The euro has weakened with the data. Technically, the inability of EUR/USD to pass the hurdle at the 1.3300 handle could lead it to decline to 1.2974. Immediate pressure comes I at the 20 day moving average of 1.3170. On the upside, immediate resistance can be found at 1.3223, 1.3274 and 1.3313.
With oil losing momentum, so has the Canadian dollar, reaching a session high of 0.9984.
Even though commodity prices have been on the rise of late with oil reaching nine month highs above $106 a barrel, there is growing concern that it could also curb global demand.
Technically, resistance for USD/CAD lie at 0.9985, followed by 1.0040 and 1.0065. Near term support comes in at 0.9945, 0.9910 and 0.9900.
The North American session will see the release of existing home sales.
Disclaimer: This Market Report is provided for informational purposes only. Some information provided in this Market Report has been obtained from external sources. Cambridge is not responsible for the accuracy, completeness, or currency of the information obtained from external sources. This Market Report may include views, opinions and recommendations of individuals or organizations, and the recipient understands that Cambridge does not necessarily endorse such views or opinions, nor is it providing any trading, investment, tax, accounting or legal advice. Any opinion expressed as to future direction of prices of specific currencies are purely opinions, and are not guaranteed in any way. In no event shall Cambridge have any liability for losses incurred in connection with any decision made, action or inaction taken by the recipient or any party in reliance upon the information provided. Any currency rates/prices contained in or forwarded with this Market Report are indicative and subject to change without notice. Prices quoted may vary substantially based upon the size of the transaction and market volatility.