Daily FX & Market Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD The pair continues to consolidate above 1.2300, following yesterday’s upside rejection on approach to 1.2400 barrier. Near-term studies maintain neutral/positive mode, however, regain of 1.2400 is seen as a trigger to resume recovery towards key short-term scenario. Loss of 1.2300 support, seen as alternative scenario, to turn focus towards 1.2240, 10 Aug low, as larger picture remains bearish. Res: 1.2372, 1.2386, 1.2400, 1.2441 Sup: 1.2315, 1.2300, 1.2271, 1.2260

GBP/USD The near-term picture shows signals of weakness, as attempt to break above 200 day SMA at 1.5720 failed and price currently moves just above strong 1.5650 support zone. Increased risk of further reversal would be seen on a loss of 1.5650, to possibly test 1.5500 support. On the upside, strong resistance zone above 1.5700 continues to cap, with only break above range ceiling at 1.5770, to improve currently rather neutral larger picture outlook. Res: 1.5700, 1.5717, 1.5727, 1.5736 Sup: 1.5662, 1.5656, 1.5640, 1.5625 USD/JPY Break above short-term range top at 78.80, improves the near-term structure and opens way for possible extension above another important barriers, figure resistance at 79.00 and 200 day SMA at 79.16, to confirm short-term base for possible stretch towards 80.00. However, overextended hourly conditions may limit near-term price action, in favor of corrective pullback. Immediate supports lie at 78.67 and 78.50 zone, ahead of key one at 78.00. Res: 79.00, 79.16, 79.25, 79.50 Sup: 78.74, 78.67, 78.59, 78.45 USD/CHF Bounce off important 0.9700 support remains limited at initial 0.9750 resistance, where 55 day EMA caps the price. Rather weak near-term do not see much potential for further gains, as long as price holds below 0.9750, as larger picture bulls are losing traction and see potential of fresh extension of the short-term corrective pullback from 0.9970. Loss of 0.9700 is required to confirm and open key short-term support at 0.9654. Res: 0.9750, 0.9784, 0.9800, 0.9808 Sup: 0.9730, 0.9700, 0.9684, 0.9664

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Daily Market Commentary: (Evening Report)

London Market Report

Footsie down on mining weakness

Market Movers
techMARK 2,124.20 +0.03%
FTSE 100 5,833.04 -0.54%
FTSE 250 11,498.12 -0.05%

MPC hints at further QE
UK jobless rate improves in July
ENRC leads miners lower

Stocks held on to early losses on Wednesday afternoon, meaning that the FTSE 100 was trading within a narrow range for most of today's session with heavy falls in the mining sector keeping the index firmly in the red.

Market analyst Michael Hewson from CMC Markets said this afternoon: "Markets have had a particularly negative bias today, not surprising given that they are close to four-month highs and economic data continues to point to a fairly uncertain outlook."

The Monetary Policy Committee (MPC) voted unanimously this month in favour of keeping the central bank's key interest rate at 0.5% and maintaining the asset purchase programme at £375bn. The central bank said it was waiting to see what impact its Funding for Lending Scheme (FLS) - aimed at boosting bank credit - would have on the economy.

"For most members, the decision this month was relatively straightforward," the minutes said. However, for others, "the decision was nevertheless more finely balanced, since a good case could be made at this meeting for more asset purchases."

"Our central view is that the MPC will give the green light for another £50bn of QE, most likely when the current programme expires in November," said analysts at Investec.

Meanwhile, the UK unemployment rate fell to 8.0% in July from 8.1% in June, versus economists' expectations of no change. The number of people claiming Job-seeker's Allowance eased by by 5,900 to 1.59m in July, while the number of people out of work dropped 46,000 to 2.56m in the three months to June.

Across the pond, markets opened tentatively as investors had to sift through a barrage of mixed US economic data. The Empire State manufacturing index and consumer price index both came in below expectations, while industrial output figures grew more than forecast.

Europe Market Report 

Market movers
CAC 40: -1 at 3,449
DAX: -28 at 6,947
IBEX 35: +4 at 7,129
MIB: Closed It was a largely inconclusive day for European stocks, with mixed data from the US leaving investors confused.  In the US, the Empire State manufacturing index fell to -5.9 this month, well down from 7.4 in July. Consensus forecasts were for a more modest fall to 7.0.

If that outcome was disappointing, there was better news from the US factory floor, with industrial output increasing by 0.6% in July, slightly ahead of the 0.5% growth expected.

Mining stocks had a bad day. An official at Brazilian iron ore miner Vale put mining bulls in a bad mood when he suggested that China's "golden years" as the engine of global growth are behind it.

US Market Report

tocks Continue To Show A Lack Of Direction Stocks continue to show a lack of direction in mid-day trading on Wednesday, extending the sideways move seen over the past week. A mixed batch of U.S. economic data is contributing to the lackluster performance on Wall Street. The major averages are currently turning in a mixed performance, with the Dow down 1.74 points or less than a tenth of a percent at 13,170.40, while the Nasdaq is up 12.24 points or 0.4 percent at 3,029.22 and the S&P 500 is up 1.49 points or 0.1 percent at 1,405.42. The choppy trading comes as traders continue to express uncertainty about the near-term outlook for the markets following the release of several key U.S. economic reports. While the New York Federal Reserve released a report showing an unexpected contraction in regional manufacturing activity, separate reports showed a bigger than expected increase in industrial production and an unexpected improvement in homebuilder confidence. The New York Fed said its general business conditions index dropped to a negative 5.9 in August from a positive 7.4 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show a much more modest decrease to 7.0. Meanwhile, the Federal Reserve said industrial production increased by 0.6 percent in July compared to economist estimates for an increase of about 0.5 percent. The growth reflected increased output in each of the manufacturing, mining, and utilities sectors. A separate report released by the National Association of Home Builders showed that its index of homebuilder confidence climbed to 37 in August from 35 in July. The increase came as a surprise to economists, who had expected the index to come in unchanged compared to the previous month. With the unexpected increase, the homebuilder confidence index rose to its highest level since coming in at 39 in February of 2007. The Labor Department also released a report showing that consumer prices unexpectedly came in unchanged for the second consecutive month in July.