Daily FX 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 pair got boosted by Spanish auction and Fitch comments of US credit rating and emerged above 1.2500 barrier. Clearance of initial resistance at 1.2534, where stops were triggered, cracked the next barrier at 1.2560, last Friday’s spike high. Improved hourly conditions revive hopes of fresh attack at significant 1.2600 barrier, with break above near-term 1.2433/1.2560 congestion, required to confirm. Previous barrier at 1.2534, now offers support and keeps the downside protected, as 20/55 day EMA’s bullish crossover at 1.2510 zone, underpins. Res: 1.2588, 1.2600, 1.2620, 1.2650 Sup: 1.2534, 1.2512, 1.2500, 1.2464

GBP/USD Cable bounces higher in a basing attempt from today’s low at 1.5753, just above 1.5740/30 breakpoint and trendline support as well as 200 day MA. Initial barrier at 1.5800 is cracked, with clear break here to expose 1.5830 zone, yesterday’s high / 50% of 1.5911/1.5753 and signal higher low, as part of one-month rally from 1.5489. However, to confirm near-term bullish stance and turn focus higher, regain of 1.5850, also Fib 61.8%, is required. Res: 1.5813, 1.5830, 1.5850, 1.5868 Sup: 1.5775, 1.5766, 1.5753, 1.5740 USD/JPY The pair remains under pressure, as bounce of day’s low at 78.50 failed to break above initial 20 day EMA barrier at 78.70, bringing the price back to 78.50 zone. Weak hourly studies, keeps the downside vulnerable, with loss of 78.50/27 supports to re-expose key short-term support and base at 78.00. Only regain of 78.80 would provide near-term relief, with clearance of 79.00 required to turn near-term focus higher. Res: 78.70, 78.83, 78.96, 79.12 Sup: 78.44, 78.35, 78.27, 78.15 USD/CHF The near-term structure weakened, as reversal from today’s high at 0.9634, accelerated losses through 0.9590/80, trendline support / yesterday’s lows. Immediate focus turns towards last week’s low at 0.9537, with risk of extension of broader downtrend from 0.9970 peak, seen on a break lower, as 90 day EMA that underpinned near-term recovery action, is now lost. Res: 0.9634, 0.9655, 0.9679, 0.9700 Sup: 0.9651, 0.9537, 0.9500, 0.9461

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

Daily Market Commentary: (Evening Report)

London Market Report

Market Movers

• techMARK 2,097.89 -0.29%
• FTSE 100 5,775.71 -0.02%
• FTSE 250 11,375.24 -0.64%

- Markets await Jackson Hole symposium
- Miners lower on concerns over Japan
- Chemring drops after profit warning.

Concerns about global economic growth were weighing on sentiment on Tuesday, meaning that the FTSE 100 was little changed by the close despite some volatile swings between gains and losses throughout the session.

Meanwhile, speculation about quantitative easing (QE) measures from the US Federal Reserve was continuing to do the rounds. Market strategist Brenda Kelly from CMC Markets said: "The almost absolute certainty displayed in recent price action that the Fed would ease at Jackson Hole this weekend seems to have petered out, with the major European indices pulling back further from their recent highs and entering a consolidative mode."

The Japanese government reduced its assessment of the economy today, warning that a slowdown in economic growth overseas and the ongoing Eurozone debt crisis are key risks to the world's third-largest economy. JPMorgan Securities Japan and BNP Paribas are forecasting a 0.3% and 0.9% decline in third-quarter Japanese gross domestic product (GDP), respectively.

Japan's concerns about economic growth overseas will likely have been exacerbated after the release of some gloomy figures from China and Spain. It was a revealed yesterday that combined profits in the industrial sector in China, a major trade partner to Japan, dropped by a year-on-year rate of 5.4% in July, worse than the 1.7% decline seen the month before.

Meanwhile, Spanish GDP declined at a 1.3% annual rate in the second quarter, compared with the initial estimate of a 1% contraction, the country's national statistics office said. News that the Generalitat of Catalonia will request €5.023bn from the Spanish government's liquidity fund spooked markets today, dampening earlier optimism after a successful short-term bond auction which saw borrowing costs drop and demand improve.

Europe Market Report 

Europe close: Catalonia asks for help, Vestas surges
- Catalonia puts out begging bowl to Spanish government
- Huge gains for wind turbine giant Vestas on takeover rumours
- Japanese government pessimistic on growth

FTSE 100: -0.71%
Dax 30:-0.6%
Stoxx 600: -0.19%
Cac 40: -0.83%
Ibex 35: -0.97%
FTSE MIB: -0.13%

European stocks were mostly down on Tuesday as bad news from Japan and a request for aid from the Spanish region of Catalonia to the federal government unsettled markets.

The Japanese government reduced its outlook across a range of important measures, including industrial output and personal consumption, as the world's third largest economy reeled from global weakness in the second quarter.

Officials highlighted the risk to Japan's economy from a further weakening in world trade, a particular concern for a historically export-led economy.

In Spain, the government of Catalonia announced it would ask the already cash-strapped central government for a €5bn loan. The debt should be manageable following the creation of a fund specifically designed to help the regions back in July, nevertheless Tuesday's announcement was a reminder of the perilous state of the Spanish finances.

US Market Report

US pre-open: Stocks to start lower The main US equity benchmarks are being called to open lower by 0.2% on average today. That ahead of this next Friday's speech by US Federal Reserve President, Ben S.Bernanke. It is thought likely that he may give further hints on how he may proceed with a further round of quantitative easing. Nevertheless, it may be worth pointing out that some market commentary now seems to be questioning just how effective another round of stimulus will, or will not, be. Also weighing on market sentiment perhaps, Japan's Cabinet Office has today downgraded its assessment for the country's economy. Small rise in house prices The Conference Board will release its August consumer confidence survey data at 15:00. The S&P Case-Shiller 20 city house price index for the month of June has shown an 0.5% year-on-year rise (Consensus: -0.05%). Slight gains in bonds Front month West Texas crude futures are now rising by 0.42% to the 95.87 dollar per barrel level on the NYMEX. 10 year US Treasuries are now rising by 5/32 dollars, with yields at 1.63%.