Daily FX & Market Commentary

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Daily FX Commentary: (Morning Report)

AUD/USD

The pair accelerates near-term recovery off strong support and range floor at 1.0150, following break above previous peak at 1.0290 and more significant 1.0330 barrier, 26 Sep low / Fib 38.2% of 1.0623/1.0150 descend. Near-term bulls are fully in play, as the price breaks through psychological 1.0400 level, also 01 Oct high, with 1.0442, Fib 61.8% and 1.0473, 28 Sep peak, seen as next targets, break of which is required to shift focus towards the upper boundaries of one and a half month range. Near-term indicators are in overbought territory, however, no clear reversal signal seen yet.

Res : 1.0442, 1.0461, 1.0473, 1.0500
Sup : 1.0364, 1.0308, 1.0292, 1.0273

USD/CAD

Upside rejection at 0.9877, just under previous peak at 0.9883, posted on 03 Oct and subsequent sharp fall, keep the upside limited, as the pair fully retraces 0.9763/0.9883 upleg. Immediate focus is shifted towards near-term range floor at 0.9733, break of which to signal double-top formation and open way towards key support and 14 Sp low at 0.9631. With near-term studies in the negative territory, test of downside barriers would be the likely scenario. Only bounce above 0.9830, Fib 61.8% of 0.9877/0.9763 / 55 day MA, would avert immediate downside risk.

Res: 0.9790, 0.9807, 0.9820, 0.9833
Sup: 0.9763, 0.9743, 0.9733, 0.9700

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Daily Market Commentary: (Evening Report)

London Market Report

Barclays limits gains after PPI confession

Market Movers
techMARK 2,112.67 +0.19%
FTSE 100 5,917.05 +0.10%
FTSE 250 12,071.25 +0.21%

After swinging between gains and losses for most of the session, UK stocks finished flat on Thursday despite some robust growth figures from China as some worse-than-expected jobless claims in the US and the EU summit weighed on investors' minds.

Chinese gross domestic product (GDP) grew at a 7.4% year-on-year rate in the third quarter of the year as expected, down from the 7.6% in quarter two. While this was the slowest rate of expansion in 12 years - except for that seen in the first quarter of 2009 - economists reckons that they can see hopeful signs which point to a stabilisation, such as a better tone to exports and a progressive improvement in residential investment.

"China, one of the few global economies still experiencing strong growth is very much viewed as one of the engines to keep global demand high," said trader Simon Furlong from Spreadex.

Stocks fell in afternoon trade after US weekly initial jobless claims rose by 46,000 last week to 388,000, as the seasonal factors evident in last week's data were unwound. Consensus estimates were for a rise to 365,000.

Investors were also keeping a close eye on the EU summit in Brussels today at which leaders are expected to discuss several topics such as the bailout for Spain, the situation in Greece and the banking union although only this last item is officially on the agenda.

Despite the enormous importance of the issues at stake, and as is often the case, market expectations are low ahead of this meeting of the heads of state of the 27 member countries. It's no wonder as there have been some 22 summits since the crisis in Greece began to intensify in 2009, including four already in 2012 alone.

In domestic economic news, UK retail sales volumes rose 0.6% from August to September, according to the Office for National Statistics. Consensus expectations were for a gain of 0.4%.

Europe Market Report 

European Markets Struggled To Find Direction Following Mixed U.S. Reports

The European markets ended a choppy trading session with mixed results on Thursday. Afternoon trading was impacted by some mixed economic reports from the United States. The larger than expected increase in weekly jobless claims put pressure on the markets, but then the strong Philly Fed report provided a boost in late trade. Also, Spain sold more government bonds than its maximum target on Thursday at lower cost, ahead of European Union leaders gathering for a two-day summit in Brussels.

Moody's affirmation of Spain's sovereign rating at investment grade and expectations among investors that the nation is moving closer to a bailout request helped to lower borrowing costs. Also, German Chancellor Angela Merkel's comment in Parliament about stability taking hold as well as creation of a new fund to finance ailing European economies supported today's auction.

The benchmark 10-year bonds were sold at a yield of 5.458 percent, down from 5.666 percent on September 20.

The borrowing cost for July 2015 bonds fell to 3.227 percent from 3.68 percent on September 6. Likewise, the yield on 2016 bonds came in at 3.977 percent, down from 4.60 percent last time.

Bad loans at Spanish banks surged to a new record high in August, the latest figures from the Bank of Spain showed Thursday. The value of loans at risk of not being repaid rose to EUR 178.6 billion or 10.5 percent of the total lending from EUR 173.2 billion in the previous month.

German Chancellor Angela Merkel has proposed giving stronger powers to the European Union to intervene in national budgets while suggesting creation of a new fund to finance ailing European economies, reports said Thursday.

Speaking at the lower house of Parliament, ahead of the EU summit in Brussels, she recommended setting up of a new aid fund at EU level to finance specific projects in struggling nations.

Citing Cyprus's failure to clinch a timely deal with the troika after officially requesting European financial support in June, Standard and Poor's on Thursday downgraded the nation's credit rating deeper into junk status.

Cyprus' long-term sovereign credit rating was cut by three-notches to 'B' from 'BB', with a 'negative' outlook. S&P put much of the blame for not having a deal on "domestic political constraints."

The Euro Stoxx 50 index of Eurozone bluechip stocks increased by 0.20 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, advanced by 0.22 percent.

The DAX of Germany climbed by 0.58 percent and the CAC 40 of France gained 0.22 percent. The FTSE 100 of the U.K. rose by 0.20 percent, but the SMI of Switzerland declined by 0.07 percent.

US Market Report

Mixed Economic Data Leads To Choppy Trading On Wall Street Stocks have shown a lack of direction over the course of the trading day on Thursday after trending higher over the past few sessions. The choppy trading comes on the heels of the release of a mixed batch of economic data. The major averages are currently turning in a mixed performance, with the Nasdaq posting a modest loss. While the Nasdaq is down 4.08 points or 0.1 percent at 3,100.04, the Dow is up 25.19 points or 0.2 percent at 13,582.19 and the S&P 500 is up 2.17 points or 0.2 percent at 1,463.08. Early selling pressure was generated by the release of a report from the Labor Department showing a bigger than expected rebound by initial jobless claims. The report showed that jobless claims jumped to 388,000 in the week ended October 13th after falling to a four-year low 342,000 in the previous week. Economists had been expecting jobless claims to rise to 365,000 from the 339,000 originally reported for the previous week. The rebound from the four-year low set in the previous week was partly due to the normalization of distortions caused by seasonal adjustment challenges in California. However, a positive reaction to a batch of largely upbeat Chinese economic data helped to limit the downside for the markets. China reported a 7.4 percent increase in third quarter GDP, which was slower than the 7.6 percent growth recorded in the second quarter but in line with estimates. The communist country also reported stronger than expected industrial production and retail sales growth in September. Stocks subsequently regained some ground following the release of a pair of upbeat reports on Philadelphia manufacturing activity and leading U.S. economic indicators. The Philly Fed said its diffusion index of current activity jumped to a positive 5.7 in October from a negative 1.9 in September, with a positive reading indicating an increase in regional manufacturing activity. With the increase, the index returned to positive territory for the first time since April. Separately, the Conference Board said its leading economic index rose by 0.6 percent in September following a revised 0.4 percent drop in August. Economists had expected the index to edge up by 0.2 percent compared to the 0.1 percent dip originally reported for the previous month.