Daily Commentary

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 single currency continues to move sideways during the past week, with price action being entrenched within 1.2588 and 1.2464 range. As near-term structure remains weak and repeated upside attempt failed on approach to the range top, more risk is seen towards the downside in the near-term. Violation of key near-term support at 1.2464, to signal double-top pattern., while break above the upper range boundary will trigger fresh bull leg, as a part of one-month uptrend. Res: 1.2550, 1.2565, 1.2575, 1.2588 Sup: 1.2519, 1.2506, 1.2489, 1.2464

GBP/USD The pair remains supported in the near-term action, as rally 1.5753 low has retraced over 61.8% of 1.5911/1.5753 downleg at 1.5854 yesterday. As the price holds above important 1.5800 handle, with 1.5850/70 resistance zone being cracked, more focus is seen towards the upside. Hourly studies keep neutral/positive mode, but overall near-term picture is still seen fragile, as long as 1.5870 stays intact, with slide below 1.5800 to be a trigger for fresh weakness towards key near-term support at 1.5753. Res: 1.5840, 1.5854, 1.5868, 1.5900 Sup: 1.5820, 1.5800, 1.5784, 1.5775 USD/JPY The near-term price action remains capped at the upper limits of one-week 78.27/78.83 range, with the pair moving in a sideways mode. Neutral near-term and larger picture studies see potential for more directionless movements, with break of either extreme points required to define fresh direction. On the upside, key barriers lie at 78.80, range top; 79.00, figure resistance and Ichimoku cloud base and 78.25, 200 day MA, break of which to attract further gains. Alternative scenario see violation of initial 78.44/27 supports as a trigger for retest of key short-term supports at 78.00 and 77.65. Res: 78.80, 78.83, 78.96, 79.12 Sup: 78.59, 78.44, 78.35, 78.27 USD/CHF Continues to consolidate the recent losses that bottomed at 0.9537, with recovery attempt being capped just under 0.9600 barrier at 50% retracement of 0.9634/0.9537 downleg and 20 day EMA. With near-term structure still weak and initial barriers at 0.9600/34 intact, the downside remains vulnerable, as larger picture bears remain in play. Slide below 0.9550/37 to spark fresh leg lower and expose 0.9500 and 0.9461, while only break above trendline resistance at 0.9700 would improve short-term structure and avert the downside risk. Res: 0.9600, 0.9634, 0.9655, 0.9679 Sup: 0.9560, 0.9537, 0.9500, 0.9461

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

Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks slip as stimulus hopes fade
Market Movers

• techMARK 2,090.74 -0.42%
• FTSE 100 5,719.45 -0.42%
• FTSE 250 11,325.91 -0.54%

- Speculation ramps up ahead of Jackson Hole meeting
- Decent US data dampens hopes for extra stimulus
- Volatility could increase in coming weeks, says UniCredit

The FTSE 100 index experienced its third consecutive day in the red on Thursday as economic stimulus-related optimism began to fade ahead of the Jackson Hole symposium.

The meeting of central bankers in Wyoming will undoubtedly be focused on Federal Reserve Chairman Ben Bernanke who was widely expected in the lead up to the event to hint at further quantitative easing, or QE3, at his speech tomorrow.

However, market analyst Michael Hewson from CMC Markets thinks that Bernanke is unlikely to announce a new raft of easing measures, especially ahead of next week's key jobs report and manufacturing data.

"The likely outcome will probably be a reiteration of the latest minutes of the FOMC [Federal Open Market Committee], just over a week ago, which states that the Fed remains prepared to act and 'that additional action would likely be warranted fairly soon', but without saying when 'soon' would be. As such any imminent action would appear to be unlikely," he said.

Today's robust economic data Stateside may have also eased the Fed's concerns about the economy, weighing down hopes of near-term easing. Initial jobless claims were unchanged last week while consumer spending was in line with expectations in July.

Economic data elsewhere was a touch gloomier: German unemployment increased for a fifth consecutive month in August, Japanese retail sales came in below expectations and South Korean manufacturers' confidence remained near its post-crisis low.

Meanwhile, European Central Bank (ECB) President Mario Draghi is being forced to miss the Jackson Hole conference due to "a heavy workload", increasing speculation that he could be putting the finishing touches to plans for strong action ahead of an ECB meeting on September 6th.

According to analysts at UniCredit this afternoon, these meetings, along with the German Constitutional Court ruling on the European Stability Mechanism on September 12th, are the important "risk" events that could potentially lead to significant volatility on markets in the next couple of weeks. "In this environment, investors are likely to adopt a cautious approach and wait for more clarity from central banks and politicians in the near term."

Europe Market Report 

European Markets Pulled Back On Weak Economic Data

The European markets declined on Thursday, after several weaker than expected economic reports from around the globe. Japanese retails sales fell more than expected overnight, which was followed up by a decline in Eurozone economic sentiment. German unemployment increased and U.S. weekly jobless claims came in higher than expected.

Investors continued to be cautious Thursday as they watch for any clues regarding further economic stimulus in the United States. The highly anticipated speech by Federal Reserve Chairman Ben Bernanke will take place tomorrow at the Kansas City Federal Reserve Bank's annual symposium in Jackson Hole, Wyoming.

Italy had a successful auction on Thursday as it sold its five- and 10-year debt at lower yields as investors remained hopeful that the European Central Bank may resume its bond-buying to help lower the borrowing costs of troubledeuro area countries.

The Italian Treasury raised a total EUR 7.29 billion from today's auction, close to the maximum target set for the sale. The latest auction follows two successful sales yesterday and the day before, which raked in proceeds totaling nearly EUR 13 billion.

Today the agency sold EUR 4 billion of the new benchmark bond due November 2022, matching the top end of its target range. The yield on the 10-year debt dropped to 5.82 percent from 5.96 percent paid on July 30 for a security of similar maturity. The country also placed EUR 2.5 billion of its June 2017 bond to yield 4.73 percent, which was far less than the 5.29 percent paid in the previous sale on July 30.

The euro Stoxx 50 index of eurozone bluechip stocks declined by 1.03 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.62 percent.
The DAX of Germany dropped by 1.45 percent and the CAC 40 of France fell by 1.02 percent. The FTSE 100 of the U.K. decreased by 0.33 percent and the SMI of Switzerland finished down by 0.68 percent.

US Market Report

US pre-open: Futures down as investors look for a 'Bernanke boost' Stock futures were pointing to a weak start on Wall Street on Thursday as equities tracked their Eurozone counterparts lower with investors cautious ahead of the Jackson Hole symposium which starts today. The main focus of the meeting of central bankers in Wyoming is on Federal Reserve Chairman Ben Bernanke's speech tomorrow. "There has been a lot of build up to this speech by the Fed Chairman all week, raising hopes that he'll drop hints about whether the Fed will announce QE3 next month," said analyst Craig Erlam from Alpari. However, some analysts are speculating whether robust economic figures – jobs, retail sales and other data – in recent months have eased the Fed's concerns about the economy. In economic news today, initial jobless claims were unchanged at 374,000 last week, according to the Labor Department, after claims for the week before were revised up by 2,000. Meanwhile, US consumer spending rose by 0.4% month-on-month in July, the biggest rise since February, according to the Commerce Department. European stocks declined in morning trade after German unemployment increased for a fifth consecutive month in August, Japanese retail sales came in below expectations and South Korean manufacturers' confidence remained near its post-crisis low.