TradingFloor.com highlights: Stocks up on fiscal cliff optimism

EQUITIES: FTSE 100 rallies off the back of fiscal cliff optimism

Rakesh Shah, FX Trader at Saxo:

“The FTSE 100 continued to rally with positive news from the US on progress towards resolution of the fiscal cliff problems. Closer to home, the market will begin to question if the rally which started from the lows set on the 16^th November was the beginning of a traditional Christmas rally seen in the stock markets in bullish years. At the same time, the market normally begins to price in results for online retail and high street stores based on expectations of seasonal sales. In this regards Tesco PLC had an interesting technical move where the 50 day moving average crossed the 200 day moving average, setting up what is known as a Golden Cross, a technical analysis term used in the industry to signify a buying signal, which is popular signal with fund managers and long term investors. We will have to see if this is the case for the stock price of Tesco Plc (323p) in the coming weeks.”

FOREX: EURAUD makes a move above big resistance

John Hardy, Head of FX Strategy at Saxo:

“EURAUD is breaking above its 200-day moving average and flatline resistance above 1.2400 today, putting a squeeze on stale shorts in this pair as the EU tail risk trade continues to unwind. The EURAUD move today is rather interesting as this pair has been a popular one to trade in recent years. The tail risk – at least according to the market – is rapidly exiting the single currency, and because the ECB is far more “hard money” and not able/willing to expand its balance sheet in the aggressive manner that the Fed is doing and the BoJ also threatens to do, the Euro has been the strongest of the G3 currencies of late.”

COMMODITIES: Fiscal cliff gives Gold a knock

Ole Hansen, Head of Commodity Strategy at Saxo:

“Following the biggest drop in three weeks gold will be looking to outside markets for guidance as confidence has been knocked back. Once again the fiscal cliff negotiations are driving the markets with the mood yesterday going from pessimism to optimism. This helped turned the markets around, including gold, with stocks rising and the dollar falling. During November future inflation expectations in the US has been falling thus removing some support for gold leaving it to trade more like a "normal" asset. After yesterday’s flash crash, which CME has confirmed was not triggered by a "fat finger" error, traders will be looking for support in the 1700-07 region.”