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Daily Market Report 03/01/2012

European Shares
Market price action in the new year has been risk positive as investors appear to have returned to the market with renewed appetite for risk. European stocks rose in early trade as mining stocks were lifted by recent stronger than expected manufacturing data from China, but the gains are slowly being eaten away this morning as the buying momentum seems to be drying up. The FTSE is trading below yesterday’s close at 5638 at the moment of writing. Near term support is seen at 5554.
FX
After breaking below the lows from January by 1.2870, the single currency looks poised for the next major downside extension. EUR/USD is on the up at the moment but we are in a bearish market and the upside is likely to be limited. At the time of writing the pair is trading at 1.2986. Setbacks could extend towards 1.2000. The sterling has enjoyed some good strength against the greenback in the new year and it looks set to recapture the 1.6000 level. The cable is trading at 1.5584 this morning with key support sitting at 1.5360.
Commodities
The bulls seem to be back in town in the commodity sector with silver logging more than 2% gains and trading at 28.46 this morning. Silver lost nearly 10% in 2011 as worries over the global economy weakened prospects of industrial metals but this year investors appear prepared to take bets on riskier assets such as commodities. Gold has also seen a renewed interest as it made strong gains yesterday and is now trading up at 1.586. Any increase in the risk appetite that has built up recently could add further strength to the precious metal. Brent crude, one of the best performers among commodities in 2011 with annual gain of 13%, rose above $109 a barrel this morning buoyed by strong Chinese manufacturing data that lifted hopes of higher oil demand and by fears over the rising tensions between Iraq and the West.
Today’s Calendar
On the economic data front things are a little quite today. Later in the day eyes will be on the other side of the Atlantic with the Mfg Index and the Construction Spending released at 15.00 GMT

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