Ecofin to boost EU bailout fund

<p>Eurozone finance ministers are set to meet Friday in Copenhagen and they will probably decide to run the €500 billion permanent European Stability Mechanism (ESM) […]</p>

Eurozone finance ministers are set to meet Friday in Copenhagen and they will probably decide to run the €500 billion permanent European Stability Mechanism (ESM) in parallel with the temporary €200 billion (EFSF). But additionally, they will allow €240 billion unused funds to remain available until mid-2013, to lift the ceiling to 940 billion for one year, in an effort to contain the debt crisis.
Range: 1.3307 – 1.3342
Support: 1.3300
Resistance: 1.3335

Euro-dollar closed in NY at 1.3323 after the rate had recovered from session lows of 1.3277 to 1.3330. The rate edged its way back to retest that late NY recovery high but the move met headwind supply linked to euro-yen sales which restricted the recovery move to 1.3332. The rate drifted off highs, the move down led by further sales of euro-yen as well as aussie-yen, which in turn was influenced by the dip in China equities, before meeting support at 1.3306. The rate recovered to settle between 1.3310-1.3330 ahead of the European open. Bids seen placed toward 1.3300, more between 1.3290-1.3280 with further interest noted from 1.3270 through to 1.3250. Resistance noted at 1.3330-1.3335, more at 1.3344. End month and end week EU Summit remain key influences.

Range: 1.5885 – 1.5925
Support: 1.5900
Resistance: 1.5935

Cable closed in NY at 1.5890, off extended pullback lows of 1.5842, as well as finishing the session well clear of its 200-dma at 1.5851 after probing below. The rate marked lows into early Asia at 1.5885 before stepping its way higher through the balance of the session, the rate edging to an eventual session high of 1.5910 ahead of the European open. Early Europe extended this recovery to 1.5917 before momentum faded, the release of weaker than forecast Nationwide house data providing an early knock back to 1.5902 but fresh demand was waiting into the dip and take it back up to 1.5915. Offers seen placed between 1.5935-1.5945, a break to expose the 1.5964 level. A break here seen key to a revisit toward 1.6002. Support now seen toward 1.5900 ahead of 1.5885-1.5880 with the 1.5850-1.5840 area still key.

Range: 1,656.92 – 1,664.94
Support: 1,654.80
Resistance: 1,684.60

Gold prices are under pressure again in Asia slipping to recent lows of 1,658.35 from early highs of 1,665. The move seen as an extension of yesterday’s drop from 1,684.60 as the dollar strength picks up and concerns over China weigh on sentiment. Metal was also dragged lower by falling oil prices and amid talk of release of strategic reserves to combat any supply shortfalls as a result of the Iranian sanctions. Aussie-dollar’s fall this morning has added further downside pressure on the price of gold. Losses do appear to be contained however by underlying fears that the US may yet introduce more quantitative easing in the not too distant future and dips do continue to attract bargain hunters. Support today is seen at 1,654.80 and 1,642.25 with resistance at 1,684.60, 1,688 (200-dma) and 1,697.25.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.