The key event today will be the result of the ECB’s LTRO

<p>The key event today will be the result of the ECB’s LTRO. The second three-year LTRO auction is due later on today, market consensus expects […]</p>

The key event today will be the result of the ECB’s LTRO. The second three-year LTRO auction is due later on today, market consensus expects a take-up between €400 billion-€500 billion. According to many analysts, far less or far above that range could be considered negative for the markets, triggering a risk-off event.

Range: 1.3459 – 1.3485
Support: 1.3449
Resistance: 1.3500

Euro-dollar closed in New York at 1.3457 after the rate had recovered off pullback lows of 1.3389, pushing to an intraday high of 1.34715 ahead of the close as the risk outlook was boosted on the positive outlook for today’s LTRO take up. The rate posted a session low at 1.3455 into early Asian trade before pushing higher on month end euro-yen demand into the Tokyo fix. The rate ran into decent offers placed at 1.3480, with spec longs covering back to take it rate to 1.3465. Another push higher extended the rate to 1.3486 but met heavy offers from above 1.3485 which then saw rate settle between 1.3470-1.3485. A late paring back of longs allowed the rate to ease back and settle between 1.3465/-1.345. The rate retains an underlying buoyant tone into early Europe with attention on reported barrier interest at 1.3500 and large stops above. Offers seen heavy to 1.3500 though larger barriers noted at 1.3525 and 1.3550.

Range: 1.5916 – 1.5937
Support: 1.5900
Resistance: 1.5938

Gold continues to push higher with the general risk appetite ahead of today’s ECB LTRO operation, rising in Asia to just clip past yesterday’s highs of 1,790.20 to 1,790.50. Further monetary easing is fueling the metal’s rise to three-month highs as inflation looms and heightens safe haven attraction. Silver has also been put in strong gains yesterday, and has tracked gold higher in Asia rising to just shy of yesterday’s 37.224 high. Both metals remain poised to test higher levels, particularly if the ECB LTRO injection comes in higher than the predicted half a trillion euros. Gold support today comes in at 1,776.40 and 1,765.90, with resistance ahead at the psychological 1,800 level and 1,816.50. Silver support is at 35.90 and 35.40 with resistance at 39.72 and 40.69.



Range: 1,784.80 – 1,790.35
Support: 1,776.40
Resistance: 1,800.00

Gold is pushing higher in Asia following S&P’s downgrade of EFSF’s outlook to negative, and talk that Merkel would have to rely on opposition support to gain Germany’s approval of the bail out. The Bundestag eventually passed the deal, but the metal slipped into the New York close at 1,767.60. A gentle rise in crude prices in Asia is also adding support along with lingering concerns over the Middle East and media focus on any potential strike against Iran from Israel or the United States.

Gold has initial support at 1,761.60, a break there leading down to 1,749.35. On the topside offers are seen at 1,779.50 ahead of the 1,800 level which should offer much sterner resistance.

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.