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Trading Levels and Reports for October 4, 2012

Jump to a section in this post:

1. Market Commentary
2. Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Economic Reports for Thursday October 4, 2012

 

Hello Traders,

 ECB rate decision tomorrow  morning before the cash opens. Review of ECB Rate Announcement below:

WHAT IS IT?
European Central Bank Rate Announcement
WHEN IS IT?
Thursday 4th October 2012, 12:45 BST
DESCRIPTION
The European Central Bank’s decision to increase, decrease or maintain interest rates. Controlling interest rates is the key mechanism of monetary policy, and the ECB influences interest rates by first changing the “overnight rate” through the purchase or sale of government bonds. Lowering rates can spur economic growth but may incite inflationary pressures. On the other hand, increasing rates slows inflation but can hinder growth.The European Central Bank makes a concerted effort to be transparent in its policy. Frequent speeches by Bank Governors make policy goals clear and the Bank adheres to a stated inflation target of 2 percent, changing rates accordingly to meet that goal. Because of this, rate decisions are generally well anticipated, but very important nonetheless.

 

The ECB holds a press conference following the announcement where some rationale for their decision is offered. Market participants pay close attention to the press conference, hoping to clue in on the likelihood of further rate changes. Often, the language used in the press conference holds important signals to how the ECB feels about inflation and the economy.

EXPECTATIONS
The market expects the ECB to cut rates before the year is out, but does not see them cutting at October’s meeting.CPI Data in the 17 countries that share the euro rose 2.7% year-on-year according to Eurostat. This marked a rise from the 2.6% seen in August, and was somewhat higher than the 2.5% expected. The breakdown showed that energy costs soared 9.2% after an 8.9% rise the previous month. Core inflation, however, fell to 1.7%, its lowest level in a year. Although the headline reading was higher, the weak data during the interim indicates that the euro area entered a recession in the 3rd quarter, thus cementing expectations that the ECB won’t wait long before cutting rates again.

 

Howard Archer, economist at HIS global insight says “It seems highly likely that the ECB will take interest rates down from 0.75% to 0.5% in the 4th quarter. While the ECB could act as soon as its October meeting, we lean towards the view that they will probably hold off till November.”

 

This viewpoint is backed up by the consensus reading of economists polled by Reuters. Only 14 of the 73 surveyed expect the ECB to cut rates at the October 4th meeting, but a majority expect them to do so by the end of the year.

 

Nick Matthews, a Senior European Economist at Nomura also expects no major policy announcements at the latest meeting. “We do not expect any movement on rates as the Governing Council continues to see no urgency to cut rates again” the Economist notes. Furthermore, “while the ECB is likely to continue to expect inflation to remain in line with price stability over the policy-relevant horizon, we expect the Council to continue to stress that renewed intensification of financial market tensions could affect the balance of risks for both growth and inflation.” He notes that recent comments from within the Executive Board, have reinforced this wait-and-see attitude on rates.

 

ECB executive board member Coeure speaking on September 23rd said as much when he stated that policy makers may not reduce interest rates further as confidence in the euro-area’s economic outlook improves and inflation stays high. “The jury is open as to whether there should be another rate cut,” Coeure told reporters in the West Bank City of Ramallah where he was attending a conference. “It’s not absolutely obvious that another rate cut would be necessary.”

 

What does the market expect?

 

After some fluctuation in Euribor rates at the start of the week, 3-month rates continued heading lower, hitting fresh record lows on Wednesday. Although a significant portion of the fall is due to expectations of further rate cuts, this is, generally speaking, not factored into this month’s meeting, and is more attributable to rate cuts down the line and the massive amount of excess liquidity in the banking system.

GOOD TRADING!

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

 

Contract Dec. 2012  SP500 (big & Mini) Nasdaq100 (big & Mini) Dow Jones (big & Mini) Mini Russell Dollar Index
Resistance 3 1462.00 2849.33 13550 851.60 483.30
Resistance 2 1455.15 2833.67 13505 846.70 475.80
Resistance 1 1449.70 2822.33 13460 840.90 470.10
Pivot 1442.85 2806.67 13415 836.00 462.60
Support 1 1437.40 2795.33 13370 830.20 456.90
Support 2 1430.55 2779.67 13325 825.30 449.40
Support 3 1425.10 2768.33 13280 819.50 443.70
Contract Dec Gold Dec. Silver Nov. Crude Oil Dec. Bonds Dec. Euro
Resistance 3 1796.1 3528.7 94.75 150 22/32 1.3004
Resistance 2 1790.1 3510.8 93.28 150 10/32 1.2975
Resistance 1 1785.1 3487.2 90.63 150  2/32 1.2945
Pivot 1779.1 3469.3 89.16 149 22/32 1.2916
Support 1 1774.1 3445.7 86.51 149 14/32 1.2886
Support 2 1768.1 3427.8 85.04 149  2/32 1.2857
Support 3 1763.1 3404.2 82.39 148 26/32 1.2827
Contract Dec. Corn Dec. Wheat Nov. Beans Dec. SoyMeal Dec. bean Oil
Resistance 3 775.7 890.3 1583.17 483.30 51.87
Resistance 2 769.6 881.7 1562.58 475.80 51.44
Resistance 1 763.2 877.3 1547.17 470.10 51.08
Pivot 757.1 868.7 1526.58 462.60 50.65
Support 1 750.7 864.3 1511.2 456.9 50.3
Support 2 744.6 855.7 1490.58 449.40 49.86
Support 3 738.2 851.3 1475.17 443.70 49.50


5. Economic Reports

source:http://www.forexfactory.com/calendar.php

All times are Eastern time Zone (EST)

Date 3:48pm Currency Impact Detail Actual Forecast Previous Graph
Thu

Oct 4
 Tentative EUR
French 10-y Bond Auction
2.21|2.1
7:30am USD
Challenger Job Cuts y/y
-36.9%
7:45am EUR
Minimum Bid Rate
0.75% 0.75%
8:30am EUR
ECB Press Conference
8:30am USD
Unemployment Claims
371K 359K
10:00am USD
Factory Orders m/m
-6.0% 2.8%
10:30am USD
Natural Gas Storage
72B 80B
2:00pm USD
FOMC Meeting Minutes

This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading

Tags: > > > Posted in: Future Trading News  

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