The big news overnight was that German investor confidence jumped in December, with the closely watched ZEW economic sentiment index of Germany spiking to 6.9 in December, higher than the -12.0 forecast and the previous reading of -15.7. Combining with the market looking for a very dovish statement from the FOMC, this is a recipe for a bullish day in the equity markets, and that is what we are seeing.
DEC12 E-mini S&P 500 futures are rallying hard this morning right from the open, trading up 9 points within the first hour of trading. This market is well above first and second intraday resistance levels and above our key longer term pivot of 1420. Staying above 1420, we view this market is very biased to the upside. The E-mini Nasdaq actually is the strongest of the U.S. equity indexes, trading up more than 1% already today at around 2680. Our next resistance level on the chart is 2700, and next upside target is 2775.
In grains news, an important USDA report came out this morning at 7:30CST. The U.S. Department of Agriculture lowered its forecast for soybean stocks in the U.S, but raised the prediction for wheat stocks because of lower exports. Wheat futures felt the effect of this key data, trading lower sharply after the report. Wheat futures are down around 12 cents now, and JAN13 soybeans are up almost 5 cents to 1479. There were no changes to the USDA supply and demand forecast for corn.
In currency news, the Aussie dollar remains strong, and we hold our bullish bias. Our next upside target is 1.0575. Now the currency is trading at 1.0502. The New Zealand dollar is on fire this December, rallying from .82 to .8373 just in the first two weeks. Bullish economic data coming from NZ is supporting this upward trend.
We focus more on the Canadian dollar for you today. As of now, the Canadian dollar is trading above our key pivot level of 1.01. The base at .9975 has been a good support area. Our next resistance level is 1.0170, which we don’t believe will be that difficult to get through, especially if the FOMC statement is very dovish tomorrow. Our next major target/resistance level is 1.0225. We think the Canadian dollar can get up to this level.
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