Pre-Market Brief - Currency Chaos

Good morning. World capital markets are in something of a state of turmoil.. with the Swiss having dropped their peg to the Euro. Overnight futures swung from +15pts to -25pts, but now back to sp -4pts, we're set to open at 2007.. but things are VERY unstable now.


sp'60min

Summary

Frankly... 'OMG'.... things really have got wild overnight.

First... see HERE for a BBC story on the Swiss currency change. The price action has been absolutely wild.
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Key issues...

Swiss bank have decided to abandon the Euro peg...  that has stood since Sept'2011.
Perhaps most disturbing... they have dropped the interest rate from -0.25% to -0.75%

World equities all sharply collapsed on the news.... but most have rebounded.
Precious metals gaining huge on the turmoil, Gold +$23
The USD itself is somewhat lower on the news, -0.6% @ 91.60

Yet... there are far bigger implications to all this... and so many questions. Why did the Swiss do this? Why now... why not yesterday? What do they believe is coming?

Are the Swiss re-positioning ahead of the ECB next Thursday, when QE t-bond buying is set to be announced?
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Update from Oscar... although somewhat irrelevant, since it was before the Swiss news....



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Without question, we have one wild day ahead... very hard to have much idea how we'll close today.

A drop to sp'1965 remains viable.... but as things are now... clearly... there are 'system' changes underway.

*don't forget....econ-data due.. along with a Lagarde interview this lunchtime.

Good wishes for Thursday trading.
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8.19am.. Notable weakness, BBRY -15% @ $10.60s... having denied the bid talk.

sp +1pt at 2012... ahead of the econ-data.... price action remains VERY unstable.


8.32am... PPI comes in -0.3%.... weak.

Equities claw higher, sp +3pts ... 2014.  Gold holding gains of $25  Oil +3.1%


8.46am.. despite lousy jobs data... futures swinging... sp +12pts... 2023.

 8.51am. WTIC Oil... soaring +5.0%... biggest gain in a very long while... $51s


9.09am... Oil loses almost half the gains, +2.7%...

sp +6pts... 2017.... overall price action remains highly unstable.... a wild day ahead....

The ECB are set to ruin the bear party

It was a fourth day for the equity bears, but the ECB are set to ruin the party next week, with a very likely announcement of a t-bond buying programme. Regardless of the QE amount, the market will likely be 'inspired' higher into month end.


sp'weekly

sp'monthly

Summary

*With the earlier break under sp'2000, the monthly cycle has been offering an initial warning sign, via a MACD bearish cross. As things are.. if the market can ramp hard into month end (seemingly likely).. then bears will be still be awaiting a confirmed closing monthly turn.
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So far this month, we're net lower by -2.3%... in the scheme of things, its not a massive amount, and it won't take more than a few days of upside to turn the month positive.

Considering the ECB are set to launch a T-bond buying program, the market looks set to rally into end Jan/early Feb. Those currently short should have good short-stops of at least some degree.
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Update on Copper

A new multi-year low of $2.42... close to target zone. I would get 'deflationary spooked' on a monthly close <$2. That seems unlikely though.
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Looking ahead

Thursday has a quartet of data.. weekly jobless claims, PPI, empire state, and phil' fed manu' survey.

*clown finance TV 'economic expert' Liesman is set to interview IMF 'Managing Director' Christine Lagarde at 12pm, and Mr Market will no doubt be watching.
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Goodnight from a very stormy London city

Daily Index Cycle update

US equities closed lower for the fourth consecutive day, sp -11pts @ 2011 (intra low 1988). The two leaders - Trans/R2K, settled -0.9% and -0.3% respectively. Near term outlook offer a hit of the 200dma of sp'1965, before renewed upside into early February... to be 'inspired' by further QE from the ECB.


sp'daily5

R2K

Trans

Summary

Another day for the equity bears.

However you want to count this nonsense... near term price action remains very weak... and price structure is offering a series of lower highs.. and lower lows.

With sp'1992 failing to hold, a further decline into the sp'1960s looks likely.

From there though... with the ECB set to spool up the printers... most world markets are set for renewed upside next week.. and probably across much of the spring.
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a little more later...