Daily FX Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD The pair gains strength at the beginning of the European session, after rather quiet Asian session trading moved around 1.2350 level. Surge through the upper boundaries of short-term range at 1.2380/1.2400, signals the fresh direction, after being entrenched within 1.2250/1.2380, one-week range. Immediate focus turns towards key short-term barrier at 1.2441, 06/07 Aug double top, break of which is required resume recovery off 1.2042, 24 July low and expose psychological 1.2500 barrier. However, overbought hourly conditions see potential for a pause of current rally, with previous resistances at 1.2400/1.2380, now being reverted to initial supports. Res: 1.2415, 1.2441, 1.2474, 1.2500 Sup: 1.2400, 1.2380, 1.2367, 1.2340

GBP/USD Cable moves above 200 day SMA and 1.5743, previous high, after making base at 1.5670 zone. As the latest rally dented key med-term barrier and range top at 1.5760/70 zone, the upside remains favored, as indicators on a daily chart moved into positive territory, with break here to open fresh bull phase and expose 1.5800 next. Near-term price action may be delayed by corrective pullback, as hourly studies enter overbought zone. Supports lie at 1.5743; 1.5716 and 1.5700, while only loss of 1.5670 higher base and trendline support would sideline bulls. Res: 1.5760, 1.5766, 1.5776, 1.5800 Sup: 1.5743, 1.5716, 1.5700, 1.5670 USD/JPY Near-term corrective easing off 79.65 on overbought hourly conditions is attempting to base at initial 79.30 support, also Fib 23.6% of 78.15/79.65 rally and 20 day EMA, As hourly indicators started to point higher, regain of 79.65 is required to confirm higher low and resume short-term bulls towards our next target and psychological barrier at 80.00. Day’s low at 79.25, now acts as initial support, ahead of more significant 79.10/78.90 zone, where Fib 38.2% and 50% levels, reinforced by ascending 55 day EMA, lie. Res: 79.56, 79.65, 79.94, 80.09 Sup: 79.25, 79.08, 79.00, 78.90 USD/CHF The pair remains under pressure, as fresh weakness accelerated on a break below higher base at 0.9700. As short-term structure remains negative, immediate focus turns towards 0.9655, key short support / Fib 61.8% of 0.9461/0.9970 ascend and trigger for possible extension of broader reversal from 0.9970, 24 July peak. Previous range floor and support at 0.9700, now offers initial resistance Res: 0.9700, 0.9730, 0.9747, 0.9771 Sup: 0.9655, 0.9600, 0.9550, 0.9500

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Stimulus hopes drive gains
Market Movers

• techMARK 2,128.24 +0.47%
• FTSE 100 5,857.52 +0.57%
• FTSE 250 11,639.47 +0.66%

- Miners lead the way higher on Tuesday
- Central banks in China and Europe expected to act
- Glencore-Xstrata merger at risk

Hopes of central bank action in Europe and China boosted stocks today with the mining sector benefitting the most from increased risk appetite.

Michael Hewson, the senior market analyst at CMC Markets UK, said this afternoon: "Markets continued their slow low volume move higher today on reports that Germany might be persuaded to grant some concessions to Greece. Meanwhile speculation that the ECB [European Central Bank] may well be minded to go against the Bundesbank in capping bond yields has also helped underpin equity markets.

"It would appear that the prospect of further central bank intervention, no matter how unlikely, is continuing to drive what capital there is into equities as the preferred asset of choice," he said.

The Daily Telegraph confirmed today that ECB technicians are examining plans to cap Spanish and Italian bond yields, among other options, despite the ECB denying those same rumours yesterday.

Meanwhile, the People's Bank of China last night ramped up its reverse-repurchase operations, injecting 220bn yuan ($34.6bn) into the financial system. Meanwhile, state-run news agency Xinhua said that China is considering fresh stimulus for the second half of the year.

In domestic news, UK public sector net borrowing in July was £600m, compared with a surplus of £2.8bn the year before. Economists had forecast a surplus of £2.2bn.

Europe Market Report 

Europe close: Euro leaders aim for endgame
Markets rise on growing hope for Europe
- Copper price lifts miners
- Europe's chocolate market hurts Lindt

FTSE 100: +0.57%%
Dax 30: +0.79%
Stoxx 600: +0.52%
Cac 40: +0.94%
Ibex 35: +1%
FTSE MIB: +2.4%

Europe's main equity markets posted strong gains on Tuesday as Europe's leaders appeared to be heading towards a cohesive plan for easing the debt crisis.

The head of the "Eurogroup" of EU finance ministers, Jean-Claude Juncker, is set to visit Greece tomorrow as speculation mounts that the country's lenders will agree to more concessions as long as the recently elected Greek government sticks to the main points of its aid-for-reform plan. It's thought Greece will ask for, and receive, a two year extension to allow it to implement reforms.

French President Francois Hollande, and German Chancellor Angela Merkel are both due to meet Prime Minister Antonis Samaras this week to cement a deal.

Further providing hope for investors was news of a successful sale of €4.5bn worth of Spanish government bonds at 12 and 18 month maturities, both at lower yields than recent auctions.

Markets have generally been bullish since early August when the President of the European Central Bank, Mario Draghi, indicated the ECB would intervene directly in the secondary bond markets to reduce the yields on Spanish and Italian debt.

US Market Report

US open: Atlanta Fed warns of risks of excessively agressive policy
-Talks between Apple and Samsung fall through
-Atlanta Fed chief warns of excessivelu aggressive monetary policy

US open:
Dow Jones Industrial: 0.11%
Nasdaq Comp.: 0.45%
S&P 500: 0.32%

The main US equity benchmarks have begun today´s session with slight gains as investors re-evaluate yesterday´s news-flow and reach the conclusion that the European Central Bank is still likely to act.

Nonetheless, and as the President of the Federal Reserve Bank of Atlanta, Dennis Lockhart, is pointing out, there are also home-grown problems to watch out for. For him one such obstacle is that the central bank could over-do its hand when trying to compensate for an inert fiscal policy.

Significantly, last minute talks between Apple and Samsung last night are said to have fallen through.

Urban Outfitters is rocketing 17% higher after the release of better than expected profit figures, while Best Buy is plummeting 10% after its own results.

Barns&Noble is moving 4.5% higher after unveiling a smaller than expected fiscal first quarter loss.

Front month West