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Cable Rallies on Strong UK GDP
00:00, 25 April 2013
UK GDP posted 0.6% growth over year in Q1, beating the street and putting to bed fears of a triple dip recession. This also takes the pressure off of the Bank of England to bring in new stimulus ahead of this summer’s change in leadership. The positive GDP surprise has ignited a big rally in GBPUSD (Cable) boosting it to the top of the leaderboard among majors with a big figure gain. The overall trend of supportive central banks remains intact. With Spain’s unemployment rate continuing to worsen the pressure on the ECB and governments to switch from austerity to stimulus keeps growing. USD has been falling today with capital moving out of defensive positions while JPY has fallen at a similar pace to the greenback. Outflows from defensive plays have been funding rallies in risk markets. Stocks around the world continue to climb along with energy commodities. Metals have been particularly strong with gold testing $1,445 and copper testing $3.20. This has given resource currencies a boost, including CAD and AUD. Even EUR despite the risk of an ECB rate cut has been gaining on USD today. US stocks may benefit from better than expected jobless claims and earnings reports. Many individual names could be active with this being one of the busiest days of the season for earnings reports. Sentiment could turn against Newmont after the gold miner cut its dividend Today could give an indication of whether Barrick Gold was able to clear the air with its shareholders at yesterday’s AGM and if a positive earnings report will be enough to offset other disappointments. . Later this morning, the natural gas market could be active with storage due out at 10:30 am ET. The delayed arrival of spring in consuming regions has kept natgas up near 52-week highs in what is usually the softer shoulder season. It started to break down yesterday and could be vulnerable is storage increases more than expected. Economic News Significant economic announcements released overnight include: South Korea Q1 GDP 1.5% vs street 1.4% Spain unemployment 27.16% vs street 26.50% UK Q1 GDP 0.6% vs street 0.4% and previous 0.2% Brazil unemployment 5.7% vs street 5.9% US jobless claims 339K vs street 350K Economic reports due later this morning include: 10:30 am EDT US natural gas storage street 32 BCF Corporate News Earnings season continues today. Highlights include: Potash $0.63 vs street $0.60, walked away from proposed purchase of Israel Chemicals 3M $1.61 vs street $1.65 Exxon Mobil $2.12 vs street $2.05 UPS $1.04 vs street $1.00 Chevron raises dividend 11%to $1.00 Newmont Mining cuts dividend 17% to $0.35 PulteGroup $0.21 vs street $0.16 North American indices US30 remains in an uptrend despite falling RSI holding above 14,700 with next key resistance near 14,740 and 14,900 and key trend support near 14,640. SPX500 continues to creep toward the high end of its 1,535 to 1 600 trading channel currently holding near 1,585. NDAQ100 is climbing within a 2,825 to 2,865 trading zone as it takes a break within a broader uptrend. US SmallCap 2000 remains supported above 930 as it advanced into the upper half of a 900-955 trading range. Canada60 (Toronto60) is breaking out of a base through 700 today with RSI breaking out of a downtrend signalling momentum turning positive. Next resistance test appears near 715. UK and European Indices UK 100 remans above its 6,400 breakout point and RSI remans above 50, keeping its upswing intact with next resistance near in the 6,480 to 6,500 area. Germany30 is breaking out of a month-long downtrend today while RSI clears 50, a bullish technical momentum signal. Testing 7,800, next key upside resistance appears near 7,890 then 7,950 with support rising toward the 7,750 breakout point. France 40 is driving toward a test of the high end of a 3,600 to 3,900 trading range. Italy 40 continues to advance although the pace has slowed somewhat. Currently Next resistance appears in the 16,660-16730 area with support near 16,480. Spain 35 has slumped back in a normal correction but remains in a broader upswing, trading above 8,240. Resistance remain in place near 8,430 then 8,500. Commodities Gold is breaking out today, driving through $1,445, a key Fibonacci retracement levels. Next potential resistance appears in the $1,485-$1,500 area as support moves up toward $1,440. Silver is advancing on the high end of its $22.00-$24.00 base building channel. RSI back above 30 suggests that upward momentum is starting to build. Platinum is breaking out of a base today, clearing $1,450 which support moves up toward $1,440. Next test appears near $1,465, the bottom of an old gap. Copper is breaking out today, blasting through $3.20 and driving higher. Next potential upside resistance appears in the $2.30-$2.32 area. US crude is consolidating yesterday’s big rally but remains well supported, holding above the $91.00 level. Next key resistance appears near $93.40. UK crude continues to rally, building on yesterday’s breakout and retaking $102.00 as support moves up toward the $101.00 breakout point. Key downtrend resistance looms near $102.80. Gasoline continues to build a base in the $2.70 to $2.80 area as RSI suggests downward momentum slowing. Natural Gas broke down through $4.20 yesterday, signalling the start of a seasonal correction with next potential support near $4.00 then $3.85. FX USDCAD has turned decisively lower, breaking $1.0250 which caused an ascending triangle to fail, and driving toward $1.0200. RSI suggests mo turning in CAD;s favour with next support near $1.0180 then $1.0140 and par. EURUSD has bounced back over $1.3000 but $1.2950 was a lower low so it remains in a downswing and needs to clear $1.3150 to confirm the start of a new upleg GBPUSD is on fire today. Cable has broken out over $1.5400 signalling the start of a new upleg while rising RSI suggests upward momentum accelerating. Currently near $1.5460, Next potential resistance appears near $1.5540. CMC Markets is an execution only service provider. The material on this site (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.