Asian stock and risk currencies are higher as we start trading in Europe on positive news from Greece suggesting that a treasury loss agreement is close to being reached. The main question is the amount of loss private holders of Greek debt will be willing to accept and according to the Prime Minister (Papademos), we should be seeing a final agreement this week. Looking ahead, traders will be watchful of the Consumer Confidence figures scheduled for release in the US, and these are expected to show some additional strength for the month of January. This, if realized, would follow the stronger Business Confidence numbers that were seen in Australia overnight and help support the latest gains in equity markets.
In the UK, we will see some macro releases that have the potential to move markets, with the M4 Money Supply figures, Net Consumer Credit, and monthly Mortgage Approvals. The data is more likely to cause volatility in the FTSE 100 (rather than in currency markets) as this will be followed by some significant earnings reports from British Sky Broadcasting (BSkyB) Ocado Group and ARM Holdings.
In the US, additional macro data will come in the form of the Case-Shiller Home Price Index, the Employment Cost Index and the Chicago Purchasing Managers’ Index (PMI). The earnings docket is also heavy today, with Pfizer, Exxon Mobil, Amazon.com, United Parcel Service (UPS), Archer-Daniels-Midland McGraw-Hill and BroadCom all scheduled for release. Retail stocks saw some major volatility yesterday as Radio Shack dropped nearly 20 percent in the after market session as its fourth quarter earnings report failed to live up to market expectations. Best Buy Staples, and Align Technology were also trading lower after downward revisions to first quarter earnings forecasts for 2012.
The positive stories out of Greece are helping to push the DAX and CAC futures higher, and currently showing gains of 40 and 20 points, respectively. Key macro releases for today will come with the German Retail Sales report and the German Unemployment Rate while the Eurozone Unemployment Rate and the UBS Swiss Consumption survey will also be seen later in the session. The main earnings release will come from Banco Santander, so watch the financials again as this is where we might see most of the price activity.
The AUD/JPY is continuing its medium term uptrend, with prices showing higher lows and coming close to Fibonacci and historical resistance at 83.50. We expect prices to have some difficulty in this area, as this will be the first test but the MACD has turned bullish and is trading firmly in positive territory, so our bias is for a break higher in the coming weeks. Support is seen at 80.40 and this is also where the 100 period EMA is resting so prices are likely to be contained to the downside within these technical parameters.
The S&P 500 is making new highs for the week and have made the initial test of the 61.8% Fibonacci retracement of the move from downward from 1330. This area matches nicely with historical levels so if we can see a 4H close above this level, we will look for a full retracement of the previous decline. Support comes in initially just below 1310 and only a break back below here will take pressure off of the topside. The MACD has just turned to positive and thisis supportive for the generally bullish bias for the index.