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Calm trading conditions make for consolidation moves in the majors as market participants are away for the Holidays
MORNING BRIEF
Friday was a relatively quiet day for traders and with the holidays’ season already under way trading conditions are expected to remain calm. Dollar retreated a bit against the Euro with the European currency trading around the 1.3700 mark but the Pound fell versus the buck trading around the 1.6350 mark. Following last week’s FOMC decision we expect the US Dollar to extend its gains as the new year begins and rise against currencies that remain dovish like the Euro. The tapering schedule at this point calls for a continuous unwinding of the added stimulus nearly every month and the string of better than expected results like the 4.1% revision in US Q3 GDP support Fed’s decision to start cutting back asset purchases. The next few days are poor in news releases or events that could be potential market movers and as such we expect consolidation trading in the majors. Trading in these conditions might seem easy enough but the reduced liquidity could be a factor behind overextended moves should they be triggered by some development so caution is still advised.
US Personal Spending and UoM Confidence report
The Economic Calendar for the whole holiday’s season is rather poor with no major events scheduled. Today a couple of interesting news releases are scheduled with the US Personal Spending report coming in at 13.30 and the University of Michigan Confidence report scheduled for 14.55. Both figures are expected to print strong and this could be yet another sign of the continued recovery in the US. Reaction to these reports is expected to be light and with a couple of days away from Christmas trading will be scarce.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
13.30 |
USD |
Personal Spending |
Medium |
0.4% |
0.3% |
|
14.55 |
USD |
UoM Confidence |
Medium |
82.6 |
82.5 |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
The Euro pulled back higher as expected on Friday and tested the 1.3700 level before settling around 1.3680. We expect the Euro to remain range-bound for the next few sessions and since market volatility is expected to remain low throughout this week we wouldn’t suggest a trade for you at this time. Tomorrow is Christmas Eve and this Christmas being right in the middle of the week we expect this whole week to be rather poor in opportunities.
GBP/USD
The Pound appeared rather undecided but volatile at the same time on Friday triggering our short trade just below the 1.6330 support but never reached our targets. Unfortunately a large spike in the afternoon stopped us out on a trade that found it hard to evolve. At this time we will offer no other suggestion for the Pound as we’d like the picture to clear out and with Christmas a couple of days away we don’t see it happening this week.
FTSE 100
The FTSE 100 is still on the rise and has reached as high as the 6,600 points level on an extended uptrend. As we mentioned in our last report we were looking for a pullback to let us follow the uptrend but this never came. No matter, the UK index should pull back at some point and retest the 6,575 support area and until that we will remain patiently on the sidelines.
Gold
Gold rebounded a bit on Friday and climbed above the $1,200 price tag to test the 55-period EMA. We’re very interested to see how will Gold behave as it is nearing the $1,212 resistance area and whether it will continue to weaken against the Dollar or take advantage of the low volatility of the holiday season and rebound even further to the upside.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] Plc.
The Alpesh Patel Value/Growth filter has indicated [Restricted Content] Plc. as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] Plc. has been rated an 8 out 10 in our Value/Growth rating and gets an B Grade rating on our Bullish Momentum meter. The P/E ratio is relatively low suggesting that the stock might be underpriced, the ratio of the price earnings growth is also low and Turnover is up year on year supporting the growth potential. From a technical standpoint, the MACD indicator has been stalling in the weekly chart above so we’d suggest that you wait for the stock to clear above the recent highs prior to acquiring it. The suggested holding period for a stock of this type is 6-12 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
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