– As if the Eurozone debt crisis and latest contagion into Spain hadn’t been enough, escalating geopolitical tensions between North and South Korea have also jumped back into the headlines, with Kim Jong Il declaring that the country should be “battle ready.” The elevated risk aversion does not bode well for the regional currencies, which are now exposed against the USD
on a flight to safety, but also vulnerable to even the Euro
, as investors begin to contemplate whether the Norges Bank may have moved too aggressively to hike rates, not taking into account any fallout in the local economy resulting from the ongoing global macro economic problems. For now, the focus shifts to Sweden, with the release of the unemployment rate at 7:30GMT. In our opinion, the risks are to the downside, with a disappointing result seen having a deeper impact that a better than expected showing, given the current state of markets.
An interim base and 2010 low looks to be in place just ahead of 9.50, with the market in the process of unwinding from oversold levels. Longer-term technicals show room for plenty of additional corrective gains, and the latest break back above 9.89 helps to confirm recovery structure and open the door for a push above 10.00. .
A very well defined bear channel dating back to mid-2009 looks to have finally been violated, with the market rallying sharply back above 8.00 and suggesting that a key low has been set down by 7.67, in favor of additional gains over the medium-term back towards the 8.40-50 area. We would recommend looking for opportunities to buy on dips.
The market continues to extend gains to fresh 2010 highs, with the market rallying to 8.00 thus far before stalling out. For now, there is some risk for a pullback to allow for short-term studies to unwind, but any setbacks are expected to be well supported ahead of 7.40, in favor of the next upside extension beyond 8.00 and towards 8.20 further up.
The market continues to extend gains to fresh 2010 highs, with a test of next key barriers by 6.60 seen over the coming sessions. For now, there is some risk for a pullback to allow for short-term studies to unwind, but any setbacks are expected to be well supported ahead of 6.20, in favor of the next upside extension beyond 6.60 and towards 7.00 further up.
As we had written in previous commentary, the market was very well supported by the 9.00 handle, with a multi-day consolidation holding just above the figure and finally breaking to the upside back towards next key topside resistance by 9.50. Look for a test of 9.50 over the coming days.
Had been well confined to a very choppy range trade over the past several months, largely defined between 14.00 and 16.50. However, the lower end of this range has now been broken, with the cross dropping to trade below 14.00. This now opens the door for a retest of the key multi-year lows from early 2009 by 12.00.