Daily FX Commentary: (Morning Report)

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX Commentary: (Morning Report)

EUR/USD The pair dropped yesterday to 38.2% Fibo at 1.2325 of 1.2130 to 1.2440 rise, still on a side way trend if 1.2440 high is not broken. On the downside 1.2325 remains the first support ahead of 50% Fibo 1.2285, and 61.8% Fibo at 1.2250, were a break there would open the point the rise started at 1.2215, the upside will be resumed after a break of 1.2440, then to 1.2505, which will open 1.2555 and 1.2625 next. Res: 1.2440, 1.2505, 1.2555, 1.2625 Sup: 1.2325, 1.2290, 1.2250, 1.2215

GBP/USD Maintained after yesterday’s drop to 1.5570 zone, cable managed to rise again to 1.5680/90 zone where previous highs since the beginning of Aug kept the market from rising. Most indicators are showing a side way trend, unless 1.5570 and 1.5690 range is broken. A break above 1.5690 would open 1.5730 and 1.5770. Were the downside is possible after a break of 1.5570 and 1.5545 zone, in which it will open 1.5490 zone. Res: 1.5680, 1.5690, 1.5730, 1.5770 Sup: 1.5570, 1.5545, 1.5490, 1.5455 USD/JPY Still trading in side way range and after Last night’s BOJ rate statement did nothing but a small drop to 78.27. Daily indicators are showing a positive direction to the upside as a daily higher low pattern is forming. However, the pair is still trading between 78.70 and 77.90, which will open the upside to 79.15 and 80.00 next, or the downside to 77.65 and 76.00 next. Res: 78.70, 79.10, 80.00, 80.60 Sup: 77.90, 77.65, 77.30, 76.70

====================================================================

Daily Market Commentary: (Evening Report)

London Market Report

Stocks finish higher after late rally

Market Movers
techMARK 2,116.44 -0.39%
FTSE 100 5,845.92 +0.08%
FTSE 250 11,436.44 -0.21%

After an early fall, London's benchmark index rallied in afternoon trade to finish just a few points higher, extending gains from the previous three sessions.

The last time the FTSE 100 finished higher was on April 2nd when it hit 5,875.

"Stocks and other risky assets have traded higher since Friday. Comments by Mario Draghi that the ECB were ready to act with the EFSF to bring down yields, along with much better than expected Non-Farm Payrolls last month had buoyed markets until now," said analyst Craig Erlam from Alpari.

"A lack of noise from the Eurozone since has left investors impatient and concerned about the safety of their investments. This has caused a shift back into safe haven assets, resulting in stocks falling and yields on Spanish and Italian debt rising, with the former touching 7%," he said.

While last week's optimism about the ECB injecting more stimulus starts to fade, stocks were given a lift today by a decent start by equities across the pond. Wall Street's benchmark indices rose after the opening bell on the back of well-received results from Hewlett-Packard; the S&P 500 reached a three-month high today.

Meanwhile, credit ratings agency S&P lowered its outlook on Greece last night from 'stable' to 'negative' to reflect the possibility of a downgrade if the country fails to secure the next tranche of aid. In a statement, S&P said: "Following delays in implementing budgetary consolidation measures and a worsening Greek economy, we believe Greece is likely to require additional financing for 2012 under the EU/International Monetary Fund."

The Bank of England's inflation report released this morning said that the UK economy will not grow this year, compared with its May estimate of 0.8% growth. “We will get back to the same growth rates we experienced before the crisis . . . but it’s quite impossible to know over what time period," said BoE Governor Mervyn King.

However, the news failed to send markets any lower though as the Bank's comments were widely expected. Analyst Simon Hayes from Barclays Capital said this afternoon in an emailed statement: "There were no major surprises in the August Inflation Report. The MPC's overall assessment remained downbeat as it put through sizeable cuts to its GDP forecasts and lowered its near-term forecast for inflation. We continue to expect more QE in November and possibly a rate cut, although Governor King sought to downplay the prospects of the latter."

Europe Market Report 

European Markets Finished With Modest Losses After Greek Downgrade

The majority of the European markets closed slightly lower on Wednesday, putting a halt to their recent streak of gains. A downgrade of the Greek credit rating by S&P had a negative impact on investor sentiment. Some mixed earnings results across Europe and profit taking after recent gains also factored into the markets' negative performance.

Standard and Poor's downgraded the credit rating outlook on Greece to 'negative' and said worsening economic activity would make it difficult for the government to make further spending cuts, which is crucial to secure the next disbursement under the international bailout program.

The outlook on the country's long-term sovereign credit rating was revised to 'negative' from 'stable', while the 'CCC/C' long- and short-term foreign and local currency sovereign credit ratings remained intact.

Fitch Ratings affirmed Germany's triple-A credit rating on Wednesday with stable outlook, citing the longstanding credit strengths and robust economic performance of the country over the past two years.

However, the biggest Eurozone economy remains exposed to the systemic component of the crisis, Fitch said. A significantly deeper recession of its large eurozone trading partners could also push Germany into recession with negative repercussions for the fiscal stance, it warned.

The Bank of England cut U.K.'s growth estimate as fiscal consolidation and Eurozone debt crisis weigh on demand. Moreover, a below-target inflation forecast added hopes of more asset purchases by the year end.

In its quarterly Inflation Report released Wednesday, the central bank said economic growth is likely to be around 2 percent in two years, down from the 2.6 percent expansion estimated in May.

"The impact of the euro-area debt crisis, together with the fiscal consolidation and tight credit conditions at home, is likely to continue to weigh on demand," the report said. The bank said the outlook for growth remains unusually uncertain.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.33 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, gained 0.16 percent.

The DAX of Germany dropped by 0.03 percent and the CAC 40 of France decreased by 0.43 percent. The FTSE 100 of the U.K. fell by 0.01 percent, but the SMI of Switzerland finished with a gain of 0.00 percent.

US Market Report

US Market Report

Stocks Turn Higher After Seeing Early Weakness After moving lower at the start of trading, stocks have moved back to the upside over the course of the trading day on Wednesday. Buying interest has remained subdued, however, leading to a relatively lackluster performance. The major averages have climbed into positive territory and are currently posting modest gains. The Dow is up 23.04 points or 0.2 percent at 13,191.64, the Nasdaq is up 2.52 points or 0.1 percent at 3,018.38 and the S&P 500 is up 1.93 points or 0.1 percent at 1,403.28. Profit taking contributed to the initial weakness on Wall Street, with traders cashing in on the recent strength in the markets, which lifted the major averages to three-month closing highs. Disappointing comments from Dallas Federal Reserve President Richard Fisher also weighed on the markets, as he told Bloomberg that the Fed has done its job regarding providing the necessary economic stimulus and that it is now up to the private sector. Fisher also said that Congress needs to address the fiscal policy uncertainty in order for the liquidity in the system to be put to work. The remarks from Fisher were in stark contrast to comments by Boston Fed President Eric Rosengren, who called for an "open-ended" quantitative easing program to boost economic growth during an interview with CNBC on Tuesday. However, stocks did not see much follow-through on the initial downward move amid continued optimism about further stimulus from Europe. The subsequent turnaround by the markets is partly due to a rally by shares of Hewlett-Packard (HPQ:Quote), which have risen by 2.5 percent. The gain by HP comes after the computer and printer maker upwardly revised its third quarter earnings guidance.