Morning Report: 08.15 London

• This morning stock market futures are rebounding after selling off throughout the European session yesterday. The Dow Jones close down 0.66% and the Nasdaq 100 a hefty 1.35%, but futures activity indicates that those deficits could be overhauled today.

• Forex markets show the US dollar generally dominating, especially against the ‘safe harbour’ currencies of the yen and Swiss franc. The USD/ JPY is up 0.27% while the USD/ CHF is higher by 0.75%.

• The New Zealand dollar is bucking the trend though with the NZD/ USD up 0.42%.

• The GBP/ USD & EUR/ USD are down by by just 0.15%. In Europe, interest rate speculation still seems to be trumping concerns over stress in Ireland and Greece for the moment, as witnesses by the EUR/ CHF rallying by 0.61% this morning.

Coming up today:

• In short, there isn’t much to get excited about from the economic calendar today.
• Of the middle tier economic announcements, we have German factory orders due at 11.00.
• There are a number of central bankers talking which could get markets moving. This starts with Bundesbank President Weber speaking at 10.00. Bank of England Governor King is also expected to speak at some point today, while the Bank of Japan governor Shirakawa is due to speak at 16.00.

Bet Idea:

• The EUR/ JPY shot higher on the 3rd after ECB president Trichet gave strong hints of a rate hike at the next meeting. Since then the euro has been range bound as rate speculation is cancelled out by wider geopolitical tensions and stress in the eurozone periphery.

• If either of these forces gains momentum in the next few days, the EUR/ JPY could break out well above support 116.00 or sink below the mid levels from the 3rd around 114.00.

• One way to play this might be an IN/ OUT trade predicting that the EUR/ JPY will close above 116.50 or below 114.00 in the next 6 days. If successful, this could return 121%.
• You can find direct links to this trade idea here.

Summary:

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