Daily Market Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD

The pair remains in a near-term corrective mode, retracing so far over 23.6% of two-day rally from 1.2294 to 1.2486, yesterday’s fresh seven-week peak. As overall picture maintains positive sentiment, upside targets at 1.2500 zone remain in focus, though still weakening near-term studies, see room for further easing, with good support seen at 1.2415/1.2390 zone. More action to be seen on today’s FOMC minutes and tomorrow’s EU top officials meetings.

Res: 1.2458, 1.2477, 1.2486, 1.2500
Sup: 1.2430, 1.2415, 1.2400, 1.2380


GBP/USD

Cable’s brief break above yesterday’s 1.5803 high, with 1.5816 seen so far, is seen as good signal for further extension, following yesterday’s break above strong med-term barrier at 1.5775 that now acts as support and keeps the near-term price action contained. Despite today’s gains being nearly fully retraced and hourly studies in a descending mode, the pair holds levels near 1.5800, with sustained break here to open 1.5847, ahead of 1.5900. Strong support on hourly chart at 1.5760/40 zone is seen as near-term breakpoint, loss of which would trigger stronger reversal.

Res: 1.5803, 1.5816, 1.5847, 1.5900
Sup: 1.5765, 1.5753, 1.5743, 1.5722


AUD/USD

Short-term reversal off 1.0519, yesterday’s high, has fully retraced the near-term 1.0409/1.0519 ascend. This brings immediate focus at strong support at 1.0400 zone, loss of which to open way for stronger correction of med-term 0.9579/1.0611 uptrend. Negative tone on 1 and 4h chart studies, keeps the downside favored, as slide under 1.0400, would expose static support at 1.0326 ahead of more significant 200 day SMA at 1.0300. Near-term bounce off today’s low at 1.0412, faces though barriers at 1.0450/60 zone, where Fib 38.2% and 50% levels lies, reinforced by descending 20 and 55 day EMA’s and only break here to avert immediate downside risk.

Res : 1.0450, 1.0465, 1.0478, 1.0500
Sup : 1.0409, 1.0400, 1.0326, 1.0300


USD/CAD

Bounce off yesterday’s low at 0.9840 that broke above initial barriers at 0.9900 and 0.9930, with gains retracing over 38.2% of 1.0083/0.9840 downleg at 0.9945, is still seen as corrective action of med-term strong downtrend from 1.0444, 04 June peak. Overextended hourly conditions signal reversal, with good support standing at 0.9900 zone, previous highs / Fib 38.2% of 0.9840/0.9945 ascend, reinforced by ascending 20 day EMA. Any stronger dips should ideally reverse at this area, to keep near-term bulls in play, as studies on 4h chart are still in positive territory, with regain of Fibonacci 61.8% at 0.9990 and parity level, seen as a trigger for stronger recovery.

Res: 0.9945, 0.9961, 0.9990, 1.0000
Sup: 0.9920, 0.9900, 0.9880, 0.9858 

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Daily Market Commentary: (Evening Report)

London Market Report

Stocks sink ahead of Fed minutes

Market Movers
techMARK 2,097.49 -1.44%
FTSE 100 5,774.20 -1.42%
FTSE 250 11,494.35 -1.25%

Concerns about Japan and Greece pressure stocks
FOMC minutes eyed
CBO warns about ‘fiscal cliff’

Following steep falls from the off, losses on the Footsie were cemented today after a poor start on Wall Street as global equity markets reacted poorly to economic data from Japan and ongoing issues in Greece, while awaiting for the minutes of the latest Federal Open Market Committee (FOMC) meeting in the US.

“The attention now turns to the Fed’s meeting minutes, due after the European close – the minutes will be under scrutiny given that US economic data over the past few weeks has improved, leading to a scale back in expectations of QE. Markets are looking for some insight over the Fed’s stance for upcoming policy meetings,” said market strategist Ishaq Siddiqi from ETX Capital.

Meanwhile, the Congressional Budget Office (CBO) warned today that the US economy could shrink in 2013 if the Bush-era tax cuts expire and automatic spending cuts take effect in January.

Back in London, mining stocks were among the worst performers as they were weighed down by the news that Japan swung to a trade deficit of 517.4bn yen (£4.14bn) in July, from a surplus of 60.3bn yen in July, on the back of slowing demand in Asia and the Eurozone crisis. Analysts were expecting a deficit of 270bn yen.

Markets were concerned today about the upcoming meetings between Greek Prime Minister Antonis Samaras and Eurozone leaders this week as he attempts to renegotiate the terms of the country’s bailout. He is widely expected to outline a plan aimed at cutting €13.5bn in expenditures over the next two years after coming to the conclusion that the original €11.5bn demanded by the Troika would lead to a €2bn shortfall. However, it is predicted that he will ask for a two-year extension to comply with the deficit target.

“All we want is a bit of 'air to breathe' to get the economy running and to increase state income. More time does not automatically mean more money," Samaras has said.


Europe Market Report 

Japan and Greece batter European markets

Japanese trade figures disappoint markets
Negotiations ongoing over revised Greek bailout
Heineken struggling with rising costs

FTSE 100: -1.42%
Dax 30: -1.01%
Stoxx 600: -1.16%
Cac 40: -1.47
Ibex 35: -2.7%
FTSE MIB: -1.1%

A widening Japanese trade deficit and concerns over the viability of Greece’s bailout saw most major European markets retreat on Wednesday.

Figures released by the Japanese Finance Ministry showed the country’s trade deficit running at 517.4bn yen in July (£4.14bn), market expectations had been for around 270bn yen (£2.16bn). For a country which has historically relied on exports for economic growth the figures are startling and give a sense of the scale of the global economic slowdown.

In Europe the focus has been on Greece, where Prime Minister Antonis Samaras is meeting the head of the “Eurogroup” of finance ministers, Jean-Claude Juncker of Luxembourg. Samaras is asking for a two-year extension to implement the reforms that Greece’s lenders have demanded.

It’s thought the Eurozone may be willing to make concessions if Samaras commits to the main points of the reform-for-aid plan.

US Market Report

Stocks Mostly Lower But Selling Pressure Relatively Subdued Stocks have moved mostly lower over the course of the trading day on Wednesday, extending the downward move seen over the course of the previous session. Selling pressure has remained relatively subdued, however, limiting the downside for the markets. The major averages have regained some ground in recent trading but currently remain in the red. The Dow is down 55.60 points or 0.4 percent at 13,147.98, the Nasdaq is down 3.50 points or 0.1 percent at 3,063.76 and the S&P 500 is down 3.56 points or 0.3 percent at 1,409.61. Troubling economic news from overseas has contributed to the weakness on Wall Street, with a report from Japan showing that the country swung to a trade deficit in July. The report from the Japanese Finance Ministry showed a trade deficit of 517.4 billion yen in July compared to a trade surplus of 60.3 billion yen in June. Japanese exports fell 8.1 percent year-over-year, while imports rose 2.1 percent. A negative reaction to quarterly results from Dell has also weighed on the markets, with the PC giant falling by 6.4 percent. After the close of trading on Tuesday, Dell reported second quarter adjusted earnings that exceeded analyst estimates but on weaker than expected sales. The company also lowered its full year earnings outlook and forecast a 2 to 5 percent sequential drop in third quarter revenues. Nonetheless, selling pressure has remained subdued, with traders reluctant to make any significant moves ahead of the release of the minutes of the Federal Reserve's latest monetary policy meeting later in the afternoon. Traders are likely to closely scrutinize the minutes, looking for indications regarding to the outlook for further monetary stimulus from the central bank. Meanwhile, shares of Sunrise Senior Living have moved sharply higher after the senior living services provider agreed to be acquired by Health Care REIT for about $845 million in cash. The deal values Sunrise Senior Living at $14.50 per share, representing a 62.4 percent premium to its closing price on Tuesday. Shares of Sunrise have jumped nearly 60 percent on the news.