16/01/2015: Markets continue to come to terms with the fallout from the SNB about-turn

This morning has been difficult to stomach. Working in the foreign exchange industry and watching the reports rolling in of who might be the next broker to fall is a horrible feeling that I do not want to experience again. However, ultimately it is business as usual and the financial markets are not stopping. So where are we sitting now on the various markets?

Forex

  • EUR/USD is still weighed down. The volatility has been not so great today but the market is still unsure after a huge decline yesterday. There is a resistance in place now around $1.1640 which was the old key November 2005 low. Pressure remains on with the ECB surely ready to engage full blown QE.
  • GBP/USD continues to trade around $1.5200 which I see as a near term pivot and a line in the sand. If support can be found consistently above $1.5200 then the outlook for a technical rally could remain on.
  • USD/JPY has found support around 116.00 and is currently trying to claw back some lost ground. The resistance at 117.20 is first on the radar but it needs a move above 118.00 for the bulls to look on for a sustainable rebound.
  • EUR/CHF has been relatively calm, but if you looked on a normal trading basis a 350 pip range would be considered incredibly high volatility. The rate looks to be settling around parity to the euro (see below). One thought though, could you imagine what volatility might do to the price on Thursday if the ECB opts against QE?
  • USD/CHF is still searching for a new level. Even today there has been a 300 pip daily range. Latterly it seems as though 0.8700 is a level. Just a thought though.

EURCHF   16012015

Equity markets have been reasonably settled today and earlier weakness has unwound back to neutral for both DAX and FTSE 100. The outlook for the DAX has been positive and continues to look to push to in a sequence of higher highs and higher lows in recent days. A retest of the 10,093 could easily be seen, however such is the volatility, if Wall Street continues to decline (and the futures on the S&P are pointing to a 7 point fall around the open) then the DAX could struggle to make headway. The prospect of QE next week is underpinning the corrections though.

DAX   16012015

Gold is consolidating yesterday’s losses. The big question is that once the dust settles and the safe haven trading sentiment subsides, will the gold bugs be able to hold on to the recent gains. There is a good band of support now between $1224/$1244 on the intraday chart.

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