26.11.2013- The bullish move did not last long after a deal on Iran
The reason for the positive mood on global markets was yesterday’s agreements between the "six" negotiating countries and Iran over its nuclear program. Compromise on the use of the atom has been achieved in Geneva. Now Iran will not continue construction of new facilities capable of enriching uranium, and stocks, enriched to 20% level will be recycled to bring this figure up 5%. But still, the “peaceful” atom will continue to work in the Islamic republic. As a result, Iran will be able to supply oil, gas, gold and other resources to the world markets that in the first six months should bring the country 5-7 billion dollars. As a result, European indices showed moderate growth. U.S. markets, in turn, began trading session with slight increase, but finished the day near the previous close levels. Statistics on the housing market has slightly weakened the dollar. Index of pending sales was released at -0.6%, while the forecast was at 2.2%. Previous result was at -4.6%. Among corporate news we should highlight the news from Wal-Mart, where Doug McMillon will replace Mike Duke at the position of CEO. Shares of the company reacted positively to the news. The EUR/USD fell yesterday, after failing to overcome the resistance level 1.3560. Fundamental reason for the fall was the statement of the Governing Council member of the ECB Christian Noyer, he stressed that interest rates should remain low for an extended period of time, and they can be further reduced if it will be necessary. In such way, the ECB will fight deflation and support economic growth. Recouping some of its losses after the publication of data on the U.S. market, the euro is consolidating at 1,3520-1,3540. Growth is still limited by the resistance at 1.3560. The nearest support level is 1.3460. The British pound also weakened. The reason for the sales was the housing data. The number of mortgage approvals in the UK unexpectedly fell in October to 42.8 thousand, at the forecast of 45.2 thousand. The number of permits for home purchases increased by 1/3 compared with the same period last year. This figure indicates the effectiveness of government assistance program for buying a first house. USD/JPY rate rose to six-month highs. Now we are seeing a correction on the yen. Fundamental factors for decline of the pair was the statistics on inflation in October. The consumer prices increased only for 0.8% with expectations of growth on 0,9%. Let us recall that the target of the Bank of Japan is the rate of inflation on 2% level. On this background most Asian indices are traded near the previous close levels, while Japan's Nikkei 225 shows a decrease. Australian dollar continues its correction after the sharp fall. Growth is limited by the resistance levels 0.9250 and 0.9280. After the decline of North Sea standard - Brent on the previous day, the prices rebounded, confirming the rule: "buy the rumor - sell the fact", but in this situation it was necessary to adapt the rule for short positions. On the agreement on Iran nuclear program, the price significantly dropped yesterday, but by today the losses have been vanished. Overall, outlook for oil prices remains negative. The nearest resistance level is at around 112.00 dollars per barrel, support levels lie at 108.00 and 106.50. Stocks of the world's largest gold secured exchange-traded fund SPDR Gold Trust fell yesterday by 3.3 tons to 848.91 tons - the lowest level since February 2009. The possibility of reducing the quantitative easing program keeps the fears of investors and puts pressure on the metal price quotations. On the other hand, in case of cutting down the stimulating measures, people will invest in safe assets, which is gold. Traders are watching the development of the conflict in the East China Sea, where China is planning to change the rules for the use of airspace over the disputed islands. From a technical viewpoint, gold prices are at the upper limit of the downward channel. We expect that the price will continue to move through the channel. The closest objectives are 1230 and 1220. Growth is limited by the resistance levels at 1260 and 1280. Among the important macro in the U.S. today that is worth paying attention is the data on the housing market, including: the number of permits issued for new home construction (13:30 GMT), the index of home prices in 20 major U.S. cities (14 00 GMT). We also need to look after the consumer confidence index and Richmond manufacturing index (15:00 GMT).