Mon, Feb 18, 2019 @ 17:14 GMT

Italy’s “Contract for the Government of Change”

    The populist parties of the League and the 5-Star Movement signed an accord to form a ruling coalition. The agreement is called “Contratto Per Il Governo Del Cambiamento” or “Contract for the Government of Change”. Five Star leader Luigi Di Maio said on Facebook that “it has been 70 very intense days, so many things have happened, but in the end we managed to achieve what we announced in the campaign.”

    The 58-page document contains no mention of exit from the Eurozone. But it called for a review of EU governance and fiscal rules.

    Regarding fiscal policies, it said “the government’s actions will target a programme of public debt reduction not through revenue based on taxes and austerity, policies that have not achieved their goal, but rather through increased GDP by the revival of internal demand.”

    That indicates there could be less revenue and more debt for the governement in the near term. Italian 10 year yield jumps to high as 2.22 today, hitting the highest level since last July.

    The joint program will be put to vote by 5-Star and League members. After approval, it will be presented to Italian President Sergio Mattarella.

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    ECB forum live: Draghi, Powell, Lowe, Kuroda

      Policy panel

      • Mario Draghi, President, European Central Bank
      • Philip Lowe, Governor, Reserve Bank of Australia
      • Jerome Powell, Chair, Board of Governors of the Federal Reserve System
      • Haruhiko Kuroda, Governor, Bank of Japan (tbc)

        Moderator: Stephanie Flanders, Bloomberg Economics

       

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      Australia NAB business confidence dropped to 3, house prices dropped -1.5% qoq

        Australia NAB business confidence dropped to 3 in November, down from 5. Business conditions dropped to 11, down from 13.

        Alan Oster, NAB Group Chief Economist noted that “the downtrend in conditions has continued in November” and, “this trend suggests that the business sector has lost some momentum since late 2017 and early 2018.” He added “confidence is now below average, suggesting that businesses themselves think momentum will slow further”.

        On falling house prices, though, Oster noted “businesses do not yet suggest they are having a material impact.” And, “falling house prices in themselves may have a ‘wealth effect’ on households but given the prior large run up the impact of the declines to date is unclear”.

        Full release here.

        Also from Australia, house price index dropped for the third quarter by -1.5% qoq in Q3, matched expectation. Over the year, house priced dropped -1.9% yoy.

        Among the capital cities, Sydney’s house prices dropped -1.9% qoq, -4.4% yoy. Melbourne’s dropped -2.6% qoq, -1.5% yoy. However, gains was recorded in Hobart (1.3% qoq, 13.0% yoy), Adelaide (0.6% qoq, 2.0% yoy) and Brisbane (0.6% qoq, 1.7% yoy).

        Full release here.

         

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        China lowers RRR by 1% for some banks to release CNY 750B funds

          China’s central bank PBoC announced on Sunday to cut the reserve requirement ratio (RRR) for some lenders by 1%, effective October 15. According to the bank’s statement, this will release a total of CNY 1.2T. Of which, CNY 0.45T will be used to repay existing medium-term funding (MLF) facilities which will mature on the same date. The cut will apply to large commercial banks, joint-stock commercial banks, city commercial banks, non-county rural commercial banks and foreign banks.

          PBoC said that objective of the RRR cut is to “optimize the liquidity structure and enhance the financial ability of financial services.” Release of CNY 750B of funds can “increase the financial institutions’ support for small and micro enterprises, private enterprises and innovative enterprises, promote the vitality and resilience of economic innovation, enhance the growth of endogenous economic growth, and promote the healthy development of the real economy.”

          PBoC also maintained that despite the RRR cut, monetary policy is “stable and neutral” and the “orientation has not changed”. It added that the cut added liquidity but monetary policy is “not relaxed while market interest rate is stable. PBoC does not expect “depreciation pressure” on the Chines Yuan after the move.

          PBoC’s statement and Q&A in simplified Chinese.

          Overall, to us, the central bank’s RRR cut is clearly a pre-emptive counter measures to the market volatility last week. That is, the steep decline in Asian equities as well as surge in global treasury yields, which China was on holiday for a whole week. It’s measures to stabilize the Chinese market when it’s back from holiday tomorrow. We’ll have too see the reactions in the Shanghai SSE and USD/CNH tomorrow to see how the cut is received by the markets.

          Meanwhile, we will cancel the AUD/USD short strategy as noted in weekly report, and see how the markets react first.

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          BoE to stand pat tomorrow, August hike uncertain

            BoE will most likely keep the Bank Rate unchanged at 0.50% tomorrow. Known hawks Ian McCafferty and Michael Saunders are expected to vote for rate hike while others would vote for standing pat. There will be no inflation report but just the meeting minutes. And attention will on whether the minutes give any hint on an August hike.

            According to the latest Bloomberg survey, only 55% of respondents forecast a hike in August. That’s even down from 60% in a similar survey in May. The economists projected UK economy to growth 1.4% in 2018, better than May projection of 1.3%, after some positive economic data. Inflation forecast was unchanged at 2.5% yoy in 2018 and 2.1% yoy in 2019.

            One side note to mention is that McCafferty will end his term on August 31. He will be replaced by Jonathan Haskel, an professor of economics at Imperial College Business School. At this point, it’s unsure how the replace with reshape the MPC.

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            US NFP rose 250k, unemployment at 3.7%, average hourly earnings rose 0.2%, Dollar trying to recover

              US non-farm payrolls rose 250k in October, above expectation of 200k. Prior month’s figure was revised down from 134k to 118k. Unemployment rate was unchanged at 3.7%, matched expectations. Average hourly earnings rose 0.2% mom in October, matched expectations. Also from US, trade deficit widened to USD -54.0B in September. Dollar is trying to recover after the release

              From Canada, employment market grew 11.2k in October, below expectation of 25.0k. Unemployment rate dropped to 5.8%, below expectation of 5.9%. Trade deficit narrowed to CAD -0.4B but missed expectation of CAD 0.2B surplus.

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              ECB Mario Draghi’s introductory statement in press conference

                One important point to note in the introductory statement is the revision in economic projections. ECB now projects annual GDP growth to be at 2.1% in 2018, that’s notable downward revision from March projection of 2.4%. For 2019 and 2020, GDP projections were kept unchanged at 1.9% and 1.7% respectively. On the other hand, HICP inflation is projected to be 1.7% in 2018, 2019 and 2020. That’s notably revised up from March projection of 1.4% in 2018, 1.4% in 2019 and 1.7% in 2020.

                Below is the statement.

                Mario Draghi, President of the ECB,
                Luis de Guindos, Vice-President of the ECB,
                Riga, 14 June 2018

                INTRODUCTORY STATEMENT

                Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. I would like to thank Deputy Governor Razmusa for her kind hospitality and express our special gratitude to her staff for the excellent organisation of today’s meeting of the Governing Council. We will now report on the outcome of our meeting.

                Since the start of our asset purchase programme (APP) in January 2015, the Governing Council has made net asset purchases under the APP conditional on the extent of progress towards a sustained adjustment in the path of inflation to levels below, but close to, 2% in the medium term. Today, the Governing Council undertook a careful review of the progress made, also taking into account the latest Eurosystem staff macroeconomic projections, measures of price and wage pressures, and uncertainties surrounding the inflation outlook.

                As a result of this assessment, the Governing Council concluded that progress towards a sustained adjustment in inflation has been substantial so far. With longer-term inflation expectations well anchored, the underlying strength of the euro area economy and the continuing ample degree of monetary accommodation provide grounds to be confident that the sustained convergence of inflation towards our aim will continue in the period ahead, and will be maintained even after a gradual winding-down of our net asset purchases.

                Accordingly, the Governing Council today made the following decisions:

                First, as regards non-standard monetary policy measures, we will continue to make net purchases under the APP at the current monthly pace of €30 billion until the end of September 2018. We anticipate that, after September 2018, subject to incoming data confirming our medium-term inflation outlook, we will reduce the monthly pace of the net asset purchases to €15 billion until the end of December 2018 and then end net purchases.

                Second, we intend to maintain our policy of reinvesting the principal payments from maturing securities purchased under the APP for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

                Third, we decided to keep the key ECB interest rates unchanged and we expect them to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path.

                Today’s monetary policy decisions maintain the current ample degree of monetary accommodation that will ensure the continued sustained convergence of inflation towards levels that are below, but close to, 2% over the medium term. Significant monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term. This support will continue to be provided by the net asset purchases until the end of the year, by the sizeable stock of acquired assets and the associated reinvestments, and by our enhanced forward guidance on the key ECB interest rates. In any event, the Governing Council stands ready to adjust all of its instruments as appropriate to ensure that inflation continues to move towards the Governing Council’s inflation aim in a sustained manner.

                Let me now explain our assessment in greater detail, starting with the economic analysis. Quarterly real GDP growth moderated to 0.4% in the first quarter of 2018, following growth of 0.7% in the previous quarters. This moderation reflects a pull-back from the very high levels of growth in 2017, compounded by an increase in uncertainty and some temporary and supply-side factors at both the domestic and the global level, as well as weaker impetus from external trade. The latest economic indicators and survey results are weaker, but remain consistent with ongoing solid and broad-based economic growth. Our monetary policy measures, which have facilitated the deleveraging process, continue to underpin domestic demand. Private consumption is supported by ongoing employment gains, which, in turn, partly reflect past labour market reforms, and by growing household wealth. Business investment is fostered by the favourable financing conditions, rising corporate profitability and solid demand. Housing investment remains robust. In addition, the broad-based expansion in global demand is expected to continue, thus providing impetus to euro area exports.

                This assessment is broadly reflected in the June 2018 Eurosystem staff macroeconomic projections for the euro area. These projections foresee annual real GDP increasing by 2.1% in 2018, 1.9% in 2019 and 1.7% in 2020. Compared with the March 2018 ECB staff macroeconomic projections, the outlook for real GDP growth has been revised down for 2018 and remains unchanged for 2019 and 2020.

                The risks surrounding the euro area growth outlook remain broadly balanced. Nevertheless, uncertainties related to global factors, including the threat of increased protectionism, have become more prominent. Moreover, the risk of persistent heightened financial market volatility warrants monitoring.

                According to Eurostat’s flash estimate, euro area annual HICP inflation increased to 1.9% in May 2018, from 1.2% in April. This reflected higher contributions from energy, food and services price inflation. On the basis of current futures prices for oil, annual rates of headline inflation are likely to hover around the current level for the remainder of the year. While measures of underlying inflation remain generally muted, they have been increasing from earlier lows. Domestic cost pressures are strengthening amid high levels of capacity utilisation, tightening labour markets and rising wages. Uncertainty around the inflation outlook is receding. Looking ahead, underlying inflation is expected to pick up towards the end of the year and thereafter to increase gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth.

                This assessment is also broadly reflected in the June 2018 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 1.7% in 2018, 2019 and 2020. Compared with the March 2018 ECB staff macroeconomic projections, the outlook for headline HICP inflation has been revised up notably for 2018 and 2019, mainly reflecting higher oil prices.

                Turning to the monetary analysis, broad money (M3) growth stood at 3.9% in April 2018, after 3.7% in March and 4.3% in February. While the slower momentum in M3 dynamics over recent months mainly reflects the reduction in the monthly net asset purchases since the beginning of the year, M3 growth continues to be supported by the impact of the ECB’s monetary policy measures and the low opportunity cost of holding the most liquid deposits. Accordingly, the narrow monetary aggregate M1 remained the main contributor to broad money growth, although its annual growth rate has receded in recent months from the high rates previously observed.

                The recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. The annual growth rate of loans to non-financial corporations stood at 3.3% in April 2018, unchanged from the previous month, and the annual growth rate of loans to households also remained stable, at 2.9%.

                The pass-through of the monetary policy measures put in place since June 2014 continues to significantly support borrowing conditions for firms and households and credit flows across the euro area. This is also reflected in the results of the latest Survey on the Access to Finance of Enterprises in the euro area, which indicates that small and medium-sized enterprises in particular benefited from improved access to financing.

                To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that today’s monetary policy decisions will ensure the ample degree of monetary accommodation necessary for the continued sustained convergence of inflation towards levels that are below, but close to, 2% over the medium term.

                In order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer-term growth potential and reducing vulnerabilities. The implementation of structural reforms in euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. Regarding fiscal policies, the ongoing broad-based expansion calls for rebuilding fiscal buffers. This is particularly important in countries where government debt remains high. All countries would benefit from intensifying efforts towards achieving a more growth-friendly composition of public finances. A full, transparent and consistent implementation of the Stability and Growth Pact and of the macroeconomic imbalance procedure over time and across countries remains essential to increase the resilience of the euro area economy. Improving the functioning of Economic and Monetary Union remains a priority. The Governing Council urges specific and decisive steps to complete the banking union and the capital markets union.

                We are now at your disposal for questions.

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                USD lifted as 10 year yield breaks 2.9, heading to 2018 high at 2.943

                  Dollar receives some solid buying as the rally in 10 year yield picks up steam to above 2.9 handle.

                  That’s a wake up call to traders that TNX could now be taking on 2.943 high, which is a key near term resistance. Break of which will finally resume the larger up trend, through 3.0 handle, 20 2013 high and 3.036. The correlation of Dollar and yield has somewhat broken down in recent months. But a break above 3% could be the turning point to realign the correlation.

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                  Sterling rebounds strongly as Germany and UK dropped key Brexit demand

                    Sterling rebounds strongly as Bloomberg reports that both Germany and UK have dropped key Brexit demands, citing unnamed source. Additionally, there are signs of progress on the key sticky issue of Irish border.

                    In short, Germany is said to accept a less detailed agreement regarding the future relationship. Meanwhile, UK is also prepared to accept a more vague statement of intent on the relationship too.

                    Most importantly, EU’s chief Brexit negotiator Michel Barnier has openly said he strong opposed to the Chequer’s plan. That’s the trigger for Sterling’s selloff this week. But Bloomberg’s source said that such opposition isn’t necessarily an obstacle for the agreement.

                    That could finally ease the path to a Brexit deal to be concluded in October, or may be later in November.

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                    Trump highly unlikely to hold off 25% tariffs on $200B Chinese goods, threaten another $267B

                      In an interview with the WSJ, Trump said it was “highly unlikely” for him to hold off on raising tariffs on USD 200B in Chinese goods from 10% to 25% on January. We went further to threaten China for more tariffs if they cannot make a deal.

                      Trump said, “the only deal would be China has to open up their country to competition from the United States”. And, “as far as other countries are concerned, that’s up to them.”

                      Then Trump warned “If we don’t make a deal, then I’m going to put the $267 billion additional on”.

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                      ECB maintains interest rates and forward guidance, to end APP this month

                        ECB let interest rates unchanged today as widely expected. That is, main refinancing rate, marginal lending facility and deposit facility rates are held at 0.00%, 0.25% and -0.40% respectively.

                        ECB maintained forward guidance that interest rates will “remain at their present levels at least through the summer of 2019”.

                        Also, the asset purchase program will end this month as scheduled.

                        Full statement below:

                        Monetary Policy Decisions

                        At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.

                        Regarding non-standard monetary policy measures, the net purchases under the asset purchase programme (APP) will end in December 2018. At the same time, the Governing Council is enhancing its forward guidance on reinvestment. Accordingly, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

                        The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

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                        Yen higher in Asiaa, ignores strong stock markets rally

                          Asian stocks surge strongly and broadly today. At the time of writing, Nikkei is up 0.88%, and Singapore Strait Times is up 0.66%. But the more powerful rallies are found in Chinese and Hong Kong stocks. The Shanghai SSE is up 1.43% while HSI is up 2.06%. The moves are partly follow-up to record close in NASDAQ and S&P 500 on Friday. Also, the markets responded positively to the PBoC’s measures to pause Yuan’s decline. In short, China’s central bank reintroduced measures that acts counter-cyclical to market forces to keep Yuan from falling too quickly.

                          USD/CNH (offshore Yuan) is now notably below August high at 6.9586. And 6.9871 key resistance 2016 high, temporarily defended. With a short term top formed, USD/CHN will likely gyrate lower to 55 day EMA (now at 6.7238) and possibly further to 38.2% retracement of 6.2358 to 6.9586 at 6.6825. But we’d like to emphasize that the pull back is also due post-Powell weakness in Dollar. And, for such a heavily intervened currency, technical analysis is not that useful generally.

                          Meanwhile, the currency markets are not too fuzzed with the developments. Yen ignores the return of risk appetites and trades higher today. Australian Dollar turns softer while Dollar remains weak. After all, the forex markets are quietly mixed. The UK will be on holiday today and the only notable data is German Ifo business climate. Light summary holiday trading might prevail.

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                          Trump tweeted down the Dollar?

                            USD trades broadly lower today. And some attributes the weakness to Trump’s tweet on Russia and China devaluation.

                            Originally, we prefer not to cover some random morning comments like that. But it’s getting a bit annoying to see reports on this flying around, making it a big news.

                            It’s not, at least for now.

                            Just take a look at the D heatmap. Yes USD is in red against all others. But it’s only in deep red against EUR and GBP. Meaning that it’s staying in Friday’s range except versus EUR and GBP.

                            And take a look at this, EUR/USD. It can’t find enough buying through 1.2396 resistance yet.

                            How about USD/JPY? It’s well above 106.64 support and even holding above a near term trend line.

                            So, USD weak? Yes. But not that weak to make it an everywhere headline. Looking at the above D heatmap, it’s GBP’s strength that’s worth a mention. Even if USD dives further during the rest of the session, it’s likely because of some other reason.

                            And some people said that Trump needs to stay away from his tweets. We’ll say it’s the media and people who need to stay away from these random nonsense.

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                            Big miss for headline NFP, but wage growth solid. USD/CAD dives

                              US non farm payrolls come in much weaker than expected, showing 103k growth in March only, versus expectation of 189k. Prior month’s figure was revised up from 313k to 326k. Unemployment rate was unchanged at 4.1% versus expectation of 4.0%. Nonetheless, average hourly earnings rose 0.3% mom, meeting expectation.

                              Canada employment grew 32.3k in March, way above expectation of 20k. Unemployment rate was unchanged at 5.8%, meeting consensus.

                              Dollar is trading lower against most major currencies on the head line NFP number. It remains to be seen if the solid wage growth number could give it enough support.

                              USD/CAD is at the center of attention regarding the batch data in early US session. Apparently, market are responding with a selloff in the pair after the releases.

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                              HKMA bought HKD 3.59b in fifth intervention move

                                The Hong Kong Monetary Authority (HKMA) intervenes in the markets again today to defend the peg to US Dollar. HKD 3.59b (USD 457m) was bought by HKMA (at around 3pm HKT) as the currency remains persistently weak and continues to press its trading band.

                                This is the fifth action intervention in recent period and the first time that happens during HK stock trading house. Accumulatively, HKMA bought HKD 13.55b in total.

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                                Canada Trudeau announced retaliation on CAD16.6b of US imports.

                                  Canadian Prime Minister Justin Trudeau criticized Trump’s steel and aluminum tariffs as “totally unacceptable” and announced retaliatory tariffs on CAD 16.6b in US imports.  A 15-day consultation period immediately began the tariffs will come into effect on July 1. There are two list of goods, one list that will be subject to a 25% tariff; a second list that will be subject to a 10% tariff. The details of the goods can be found here.

                                  Trudeau emphasized that “Americans remain our partners, our allies and our friends” and “the American people are not the target” of the retaliation measures. He pledged to  continue to make arguments based on logic and common sense” and hoped that “eventually they will prevail against an administration that doesn’t always align itself around those principles.”

                                  Foreign Minister Chrystia Freeland, also said that the unilateral trade restrictions by the US are “in violation of NAFTA and WTO trade rules”. And Canada will launch dispute settlement proceedings under  NAFTA Chapter 20 and WTO Dispute Settlement. Freeland also pledged to “closely collaborate with like-minded WTO members, including the European Union” to challenge the “illegal and counterproductive US measures at the WTO. Statement can be found here.

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                                  Trump approved Section 301 tariffs on USD 50B of Chinese imports

                                    It’s reported that Trump has approved the Section 301 tariffs on USD 50B in Chinese imports and the formal announcement would be made today. That came after a 90-minute meeting with the core team of senior White House officials, national-security officials and senior representatives of the Treasury, Commerce Department, Trade Representative’s Office. The initial proposal include around 1,300 lines of products targeting the “Made in China 2025” plan. But it’s uncertain what changes would be made to the list after public hearing. Also, it’s uncertain when the tariffs will come into effect.

                                    China has pledged retaliation yesterday if the tariffs are enforced. Foreign Minister Wang Yi warned yesterday that China and the US faced a choice between cooperation and confrontation. Wand said “China chooses the first”. But “of course, we have also made preparations to respond to the second kind of choice.”

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                                    EU to use Blocking Statute against extraterritorial effects of US sanctions of Iran

                                      EU leaders showed unity in clashing with US President Donald Trump on preserving the Iran nuclear deal. European Council President Donald Tusk said after the summit in Sofia that “on Iran nuclear deal, we agreed unanimously that the EU will stay in the agreement as long as Iran remains fully committed to it. Additionally the Commission was given a green light to be ready to act whenever European interests are affected.”

                                      European Commission President Jean-Claude Juncker added that the “the effects of the US sanctions will be felt” And, “it is the duty of the EU therefore to protect European business and that applies particularly to smaller and medium-size businesses.” He also said in strong words that “we will not negotiate with the sword of Damocles hanging over our heads” and “it’s a matter of dignity, and it’s a matter of principle”.

                                      Juncker will begin a legal process to prohibit EU companies to comply with US sanctions on Iran. The “blocking statue” process will begin, accord to Juncker, to “neutralise the extraterritorial effects of US sanctions in the EU”. And “we will do it tomorrow [Friday] morning at 10.30.” In addition, Juncker said EU “also decided to allow the European Investment Bank to facilitate European companies’ investment in Iran”

                                      German Chancellor Angel Merkel noted “All European Union member states are still backing this agreement, despite the fact the United States has decided not to, and we will continue talks with the United States”. She added “we can see whether we can give small and medium-sized companies certain relief. That is being examined … As for compensating all businesses in a comprehensive way for such measures by the United States of America, I think we cannot and must not create illusions.”

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                                      UK PM May: Salzburg EU meeting a staging post for Chequers Brexit plan

                                        According to UK Prime Minister Theresa May’s spokesman, she will travel to Salzburg next Wednesday to attend an EU informal council. And, that will be “both a staging post in exit negotiations and an opportunity to engage with the rest of the EU on shared challenges”.

                                        Also, referring to the Chequers plan, “it will also be the first time the leaders will discuss together the UK government’s white paper which put forward a series of credible and serious proposals.”

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                                        Gold finally breaks 1214, 1235/6 is the key resistance

                                          Gold finally breaks 1214.30 resistance to resume the rebound from 1160.36, with strong upside momentum. Further rally would now be seen. But at this point, we’re seeing such rally as a correction to the fall from 1365.24 to 1160.36. The key lies in 1235.24/1236.99 cluster resistance zone (38.2% retracement of 1365.24 to 1160.36 at 1238.62, 100% projection of 1160.36 to 1214.30 from 1183.05 at 1236.99). For now we’d expect this resistance to hold to bring down trend resumption.

                                          However, decisive break there will argue that the trend could have reversed and further rally might be seen back to 61.8% retracement at 1286.97 and above.

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