FX markets take a pause ahead of elections
City Index December 12, 2014 3:41 PM
<p>The dollar is again under pressure in early European trading as equity markets trade under pressure. Oil futures are now trading below $60 per barrel, […]</p>
The dollar is again under pressure in early European trading as equity markets trade under pressure. Oil futures are now trading below $60 per barrel, with rumours circulating that the BoJ will reject a further stimulus package to stimulate the economy due to the collapse in oil prices.
The Japanese elections will take place this weekend with voting to close on Sunday at 11 am GMT. The total numbers of seats available to drop by 5 to 475 as media polls suggest this election will have the lowest turnout in Japanese history.
- A failure to secure 238 seats would mean that the LDP has failed to secure a majority in the lower house and PM Abe would need to resign.
- 266 seats are needed to give the LDP an absolute majority and govern the house
- If the LDP manage to secure 326 seats and improve on the seats it held before the election announcement, it would mean that the ruling party will be able to pass any law that would signal to the markets that further stimulus to reflate the economy is certainly possible.
In Asia, the NZD saw further gains as consumer confidence came in much stronger at 126.5 versus the November reading of 121.8 as the markets continues to anticipate that China will be lowering the 2015 GDP target highlighted by the release of weaker industrial production data overnight that recorded a 7.2% outcome versus the 7.5% expected.
I’m expecting equity and commodity markets to dominate FX proceedings today as the data releases from across the pond consist of the producer price index along with the university of Michigan consumer sentiment survey.
Supports 1.2340-1.2285-1.2230 | Resistance 1.2495-1.2530-1.2600
Supports 118.00-117.45-117.20 | Resistance 119.25-119.60-120.00
Supports 1.5640-1.5620-1.5540 | Resistance 1.5740-1.5785-1.5820
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.