Category: Countries & Regions

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Europe’s Debt Crisis: ECB Hints at Help Pending Euro-Zone Integration – SPIEGEL ONLINE

[ ECB chief Mario Draghi] seemed to hint at a possible way out of the downward spiral, saying that the ECB could be prepared to take additional steps to halt the crisis. First, however, Europe needed to move quickly toward greater economic integration.

“Other elements might follow,” he said, in reference to the coordinated central banks’ action taken on Wednesday. “But the sequencing matters.” He added that “a new fiscal compact would be the most important signal from euro-area governments for embarking on a path of comprehensive deepening of economic integration.”

via Europe’s Debt Crisis: ECB Hints at Help Pending Euro-Zone Integration – SPIEGEL ONLINE – News – International.

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Jobless Rate Dips to Lowest Level in More Than 2 Years – NYTimes.com

In the midst of the European debt crisis, lingering instability in the oil-rich Middle East and concerns about a Chinese economic slowdown, the American unemployment rate unexpectedly dropped last month to 8.6 percent, its lowest level in two and a half years.

The Labor Department also said that the nation’s employers added 120,000 jobs in November and that job growth for the previous two months was better than initially reported.

via Jobless Rate Dips to Lowest Level in More Than 2 Years – NYTimes.com.

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Inside China’s ugly PMI – macrobusiness.com.au

China’s official manufacturing purchasing managers index PMI dipped below 50 for the first time since the recovery yesterday. The headline PMI declined to 49, below consensus of 49.8. Looking into the components probably provides an even gloomier picture. New exports order declined further to 45.6 from 48.6, indicating continued deterioration of global demand.

via Inside China’s ugly PMI – macrobusiness.com.au | macrobusiness.com.au.

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Japanese Yen

The two overriding features on the USD/Yen chart are the strong primary down-trend — as indicated by the descending trendline — and a strong bullish divergence on 63-day Twiggs Momentum warning of a reversal. Recovery above resistance at ¥80 would confirm the reversal.

JPYUSD

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Euro Sterling rally

The euro respected primary support at $1.32. Recovery above $1.36 would signal another attempt at $1.42. But the primary trend, as indicated by 63-day Twiggs Momentum below zero, is downward and breakout below $1.32 would signal a decline to $1.22*.

EURUSD

* Target calculation: 1.32 – ( 1.42 – 1.32 ) = 1.22

The Pound also rallied but again 63-day Twiggs Momentum is weak. Follow-through above $1.57 would suggest another attempt at $1.615. But the primary trend remains downward and failure of primary support at $1.53 is more likely, offering a target of $1.45*.

GBPUSD

* Target calculation: 1.53 – ( 1.61 – 1.53 ) = 1.45

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Loonie rallies

Canada’s Loonie also responded to rising commodity prices with a rally to test resistance at $1.01. Breakout remains unlikely, but would offer a long-term target of $1.07. The probability would increase if 63-day Twiggs Momentum recovers above zero.

CADUSD

* Target calculation: 1.01 + ( 1.01 – 0.95 ) = 1.07

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Aussie dollar strengthens

The Aussie dollar recovered above parity, breach of the declining trendline indicating that the correction is over. Breakout of the CRB Commodities Index above 325 would be a bullish sign, suggesting another test of $1.08 against the greenback. Breakout above $1.08 remains unlikely, but would offer a long-term target of 1.20*.

AUDUSD

* Target calculation: 1.08 + ( 1.08 – 0.96 ) = 1.20

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Dow in strong bear rally

Dow Jones Industrial Average rallied strongly in response to news of a European rescue by major central banks. Sharp rallies are typical of shorts covering in a bear market. Strong volume indicates resistance — if you look back over the last few months (ignore triple-witching at [W]) volume above 200 million normally precedes a reversal. Expect selling pressure at 12000 to 12300, leading to a reversal. Breakout above 12300 is unlikely but would be a strong bull signal, indicating that buyers have overcome resistance.

Dow Jones Industrial Average

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Europe’s big banks need a bailout

David Weidner, Marketwatch: “Give me a swap line on currency and I will bet the farm….I am shocked that the market is rallying this much today on this news [European markets up about 10pc in dollar terms].”

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David Weidner interviewed by Evan Newmark of Mean Street.

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