Morning Report: 08.30 London

• Markets were dealing with the aftermath of yesterday’s sell off overnight when an earthquake measuring 8.9 on the richter scale hit northern Japan. The situation is still developing with a Tsunami causing havoc across more rural regions and aftershocks still being felt.
• The yen has been volatile as you might expect.

• Right now (08.15) financial markets appear to be easing off the selling pressure with stock market futures coming off the lows of the day. The chart below shows the S&P 500 futures and the reaction to the quake hitting.

• Last night saw big trading volumes with the Dow Jones closing down 1.87%, the S&P 500 closing down 1.89% and the Nasdaq 100 down 1.65%.

• Last night most currencies sold off heavily against the US dollar with the pound, euro and Australian dollar suffering heavy losses.
• The EUR/ USD closed below 1.3800 as concerns over the Eurozone periphery dampened interest rate speculation. The euro is recovering this morning though with the EUR/ USD up 0.31%, the EUR/ GBP up 0.39% and the EUR/ CHF up 0.50%. The EUR/ JPY 0.25% lower though as the yen is in demand.

• The GBP/ USD also sold off heavily and is indifferent this morning as traders priced in Bank of England rate hike as being further away than previously speculated. The GBP/ JPY is down by 0.27%.

Coming up today:

• Coming up today we have UK PPI input at 09.30 with a drop to 1.4% expected.
• At 12.00 Canadian employment change & unemployment rates are released with a mixed picture expected to emerge.
• At 13.30 we have US retail sales followed by preliminary UoM consumer sentiment at 14.55.
• UK Bank of England Governor King could cause some lake activity in the pound with his speech at 20.45.

Bet Idea: Gold

• European leaders are meeting this weekend to discuss the collective response to the Libya crisis and the stressed peripheral European nations. With the situation in Japan developing, Gold is rallying as traders seek the perceived security of the precious metal.
• With the ongoing tensions in the middle east, it may be of little surprise that gold has rallied strongly for the last two Fridays as traders hedge against weekend unrest. Today appears to be following a similar pattern with gold finding support around $1410.

• The situation in Libya and other MENA regions appears to have reached a impasse and the most probable outcome from the meeting of leaders in Europe is strong words rather than strong action, so Gold may not rally too far today.
• A good way to play this might be an IN/ OUT trade predicting that gold will remain rangebound for the next few days, with an upside bias. One set up would be to predict that gold/ USD ends the day between 1410 and 1435 on the 16th of March (5 days).
• If successful, this trade could return 130%. You can find direct links to this trade idea here.
• Gold is found under the commodities menu.

Summary March 11th:

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