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Daily FX Commentary: (Morning Report)
EUR/USD
The Euro extends its latest upleg from 1.2900, as penetration through initial 1.3000 barrier triggered fresh strength that cleared 1.3070, 05 Oct high and figure resistance at 1.3100. Immediate focus now turns towards September’s double-top at 1.3170, break of which to confirm higher base and double-bottom at 1.2800 zone and signal resumption of broader uptrend from 1.2042, 24 July low, towards psychological 1.3200 barrier. Near-term bullish structure remains intact, however, corrective pullback on overbought hourlies cannot be ruled out. Immediate supports lie atb1.3085/60 zone, ahead of 1.3030 and 1.3000 that should contain any stronger dips.
Res: 1.3122, 1.3170, 1.3180, 1.3200
Sup: 1.3085, 1.3060, 1.3030, 1.3014
GBP/USD
Cable’s rallied through important 1.6100/24 barriers, bringing near-term bulls that were interrupted by 1.6100/1.6020 pullback, back to play. Clearance of Fibonacci barrier at 1.6124 now opens way towards trendline resistance at 1.6175 and Fib 61.8% of 1.6308/1.5975, break of which to focus more significant 1.6200/16 zone, round figure resistance / 05 Oct lower top. Positive near-term structure supports the notion, with immediate support at 1.6100, reinforced by 55 day EMA.
Res: 1.6140, 1.6175, 1.6180, 1.6200
Sup: 1.6115, 1.6100, 1.6090, 1.6059
USD/JPY
The pair falls to approx 38.2% of 77.94/78.96 rally, following failure to clear important 79.00 barrier and reversal being signaled by hourly MACD bearish divergence. Hourly studies moved into negative territory, but overall bullish structure remains intact for now. However, break above 79.00 is required to resume rally for test of key barriers at 79.21/37, 19 Sep high / 200 day MA. Conversely, slide below78.60 breakpoint would sideline near-term bulls and allow for stronger correction towards 78.45 and 78.30/25, Fib 61.8% / higher platform.
Res: 78.90, 79.00, 79.21, 79.37
Sup: 78.60, 78.45, 78.30, 78.26
USD/CHF
Bears remain fully in play, as the price slides below key near-term support at 0.9237, with fresh extension lower confirming double-top pattern and opening way for further bearish action. Psychological support at 0.9200 comes under pressure, with brief consolidation on overextended hourly studies seen so far. Gains stay limited at previous low and 20 day EMA, with any stronger bounce expected to be capped at 0.9273, previous low / Fib 38.2% of 0.9370/0.9214 slide. Only break above 0.9300 would provide relief. On the downside, break below 0.9200 would risk full retracement of 0.9041/0.9970 ascend in the near-term.
Res: 0.9246, 0.9273, 0.9292, 0.9310
Sup: 0.9214, 0.9200, 0.9113, 0.9100
Daily Market Commentary: (Evening Report)
Unemployment data boosts sentiment
Market Movers
techMARK 2,108.57 -0.22%
FTSE 100 5,910.91 +0.69%
FTSE 250 12,045.88 +0.51%
Market Movers
techMARK 2,108.57 -0.22%
FTSE 100 5,910.91 +0.69%
FTSE 250 12,045.88 +0.51%
The Footsie finished the day firmly
in the blue and just short of the day's high after
better-than-expected unemployment figures lifted sentiment.
Miners were also playing their part, boosted by investor confidence ahead of the third quarter growth data due out from China, which is expected to increase demand for commodities. Metals futures were higher for gold, silver, platinum and copper.
Chinese Premier Wen Jiabao was quoted as saying that the Chinese government is confident of achieving 2012 growth targets of 7.5%.
The number of people in the UK out of work fell by 50,000 between June and August to 2.53m. This put the unemployment rate at 7.9%, down 0.2% from the March to May figure.
Most analysts had expected the figure from the Office of National Statistics to remain steady at 8.1%.
Dr Howard Archer, chief UK economist at IHS, said the figures marked "another set of impressively resilient and healthy labour market data which gives a lift to recovery hopes".
However, he added that the employment figures were being propped up by ongoing restrained earnings growth as well as significant increases in part-time jobs and self-employment.
The day's other big economic news related to the October meeting of the Bank of England’s Monetary Policy Committee (MPC).
“There were some differences of view between members about the outlook and the likelihood that further easing in policy would be required,” the minutes of the meeting, released this morning, revealed.
Some members of the MPC felt that there was still considerable scope for asset purchases to provide further stimulus. Other members, while acknowledging that asset purchases had the scope to lower long-term yields further, questioned the magnitude of the impact that lower long-term yields on corporate debt and equity would have on the broader economy at the present juncture.
Most economists remain convinced that the central bank will go ahead in any case with a widely expected increase in the size of its asset repurchase programme by £50bn.
Miners were also playing their part, boosted by investor confidence ahead of the third quarter growth data due out from China, which is expected to increase demand for commodities. Metals futures were higher for gold, silver, platinum and copper.
Chinese Premier Wen Jiabao was quoted as saying that the Chinese government is confident of achieving 2012 growth targets of 7.5%.
The number of people in the UK out of work fell by 50,000 between June and August to 2.53m. This put the unemployment rate at 7.9%, down 0.2% from the March to May figure.
Most analysts had expected the figure from the Office of National Statistics to remain steady at 8.1%.
Dr Howard Archer, chief UK economist at IHS, said the figures marked "another set of impressively resilient and healthy labour market data which gives a lift to recovery hopes".
However, he added that the employment figures were being propped up by ongoing restrained earnings growth as well as significant increases in part-time jobs and self-employment.
The day's other big economic news related to the October meeting of the Bank of England’s Monetary Policy Committee (MPC).
“There were some differences of view between members about the outlook and the likelihood that further easing in policy would be required,” the minutes of the meeting, released this morning, revealed.
Some members of the MPC felt that there was still considerable scope for asset purchases to provide further stimulus. Other members, while acknowledging that asset purchases had the scope to lower long-term yields further, questioned the magnitude of the impact that lower long-term yields on corporate debt and equity would have on the broader economy at the present juncture.
Most economists remain convinced that the central bank will go ahead in any case with a widely expected increase in the size of its asset repurchase programme by £50bn.
Europe Market Report
European Markets Climbed On Spanish Optimism Again Wednesday
The European markets finished in positive territory again on Wednesday, after Moody's Investors Service left its Spanish sovereign rating unchanged. The Spanish government is also reportedly close to making an official bailout request. The markets also received a boost from the unexpected drop in the British unemployment rate and the strong increase in U.S. housing starts.
The possibility of Spain requesting financial aid through a precautionary credit line from the EUR 500 billion rescue fund, the European Stability Mechanism, is currently under discussion, the Financial Times reported Wednesday.
This money could then be used to purchase Spanish bonds at auction in an emergency, the newspaper said citing senior officials. Because the aid would only be a credit line rather than a bailout, the scheme is expected to face less political opposition in northern creditor countries, it said.
Offering some respite to the Spanish government that is under pressure to officially request a European bailout, Moody's Investors Service on Tuesday left its Spanish sovereign rating unchanged at investment grade, but with a 'negative' outlook.
For today's rating decision, the rating agency cited a number of positive developments since June, including the European Central Bank's announcement of the bond-purchase program and evidence of the Spanish government's continued commitment to implement the fiscal and structural reform measures.
Moody's has a Baa3 rating on Spanish government bonds. The ratings agency found that the risk of the Spanish sovereign losing market access has been materially reduced by the willingness of the ECB to undertake outright purchases of Spanish government bonds to contain their price volatility.
The German government on Wednesday lowered its 2013 economic growth forecast to 1 percent from 1.6 percent.
Economy Minister Philipp Roesler, however, said gross domestic product will grow 0.8 percent this year, marginally higher than the earlier projection of 0.7 percent. The economy expanded 3 percent in 2011.
Bank of England policymakers unanimously decided to leave the current size of asset purchases unchanged in early October, but they split over whether to add more stimuli over the next month. According to the minutes of the Monetary Policy Committee meeting, the nine-member panel unanimously voted to maintain quantitative easing at GBP 375 billion and the interest rate unchanged at 0.50 percent.
There was an agreement among policymakers that there was little to be gained at this meeting in changing the current quantitative easing programme, the minutes showed Wednesday. The meeting was held on October 3 and 4.
Some members said there was still considerable scope for asset purchases to provide further stimulus, while other members questioned the magnitude of the impact that lower long-term yields on corporate debt and equity would have on the broader economy at the present juncture.
The Euro Stoxx 50 index of Eurozone bluechip stocks increased by 0.89 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.55 percent.
The DAX of Germany climbed by 0.25 percent and the CAC 40 of France advanced by 0.76 percent. The FTSE 100 of the U.K. gained 0.69 percent and the SMI of Switzerland rose by 0.17 percent.
Eurozone construction output grew for the second straight month in August, Eurostat reported Wednesday. In construction sector, output climbed at a faster pace of 0.7 percent from a month ago, when it gained 0.1 percent.
Jobless rate in the U.K. declined unexpectedly in the three months through August, to the lowest level in more than a year as the labor market absorbed record number of workers during the Olympics, data from the Office for National Statistics revealed Wednesday.
The unemployment rate, under the definition of the International labor Organization, declined to 7.9 percent in the June-August period from 8.1 percent during March-May.
Investor confidence in Switzerland improved in October amid less pessimistic view of the economy's prospects in the coming six months, a survey by the Center for European Economic Research (ZEW) showed Wednesday. The ZEW-Credit Suisse Indicator of Economic Sentiment improved by 6 points to -28.9 in October.
US Market Report
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