Daily Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD The pair loses traction after repeated failure to clear 1.2636 barrier, as signaled by overbought hourly conditions. Downside acceleration through 1.2600 and 1.2580 brings focus to key near-term support and breakpoint at 1.2560, break of which will confirm temporary top and allow for further retracement towards 1.2543, Fib 61.8, possibly psychological 1.2500 support. Weakening hourly studies see the downside at increased risk. However, ability to hold above 1.2550/60, would still keep alive hopes of fresh attempt higher. Res: 1.2600, 1.2626, 1.2636, 1.2650 Sup: 1.2560, 1.2543, 1.2520, 1.2500

GBP/USD Cable eases below 1.5900, following brief break higher that stalled on approach to pivotal barrier at 1.5911. As the hourly studies continue to point lower and 4h chart indicators move in a sideways mode, this may suggest that the latest upleg from 1.5753 is running out of steam. Break below 1.5850 would be the first signal of weakness, with loss of trendline support at 1.5820 and round figure at 1.5800, expected to turn focus towards key near-term support and higher base at 1.5750 zone. Alternatively, lift above 1.5911 will bring bulls fully in play. Res: 1.5907, 1.5911, 1.5931, 1.5950 Sup: 1.5865, 1.5850, 1.5820, 1.5800 USD/JPY Maintains near-term positive tone, as initial barrier at 78.40 zone, previous range floor, is dented. Hourly studies remain supportive, however, regain of minimum 78.60, range’s mid-point and Fib 61.8% of 78.80/78.17 downleg, is required to avert the downside risk and activate key near-term barriers at 78.80/79.00. Immediate supports lie at 78.30/20, loss of which to turn focus lower. Res: 78.46, 78.55, 78.60, 78.83 Sup: 78.31, 78.20, 78.15, 78.00 USD/CHF Near-term price action regains momentum, as bounce off dangerous 0.9500 zone tests initial barrier and breakpoint at 0.9550/60 area. Sustained break here would open way for further recovery and expose next hurdles at 0.9600/15, regain of which to signal near-term double bottom and provide temporary relief. Otherwise, failure under 0.9615 would risk lower top and fresh weakness, as larger picture bears remain fully in play. Res: 0.9590, 0.9600, 0.9615, 0.9634 Sup: 0.9533, 0.9507, 0.9500, 0.9461

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Footsie drops 1.5 per cent as nerves take over
Market Movers

• techMARK 2,081.36 -1.23%
• FTSE 100 5,672.01 -1.50%
• FTSE 250 11,428.84 -0.65%

- US manufacturing data disappoints
- Markets nervous ahead of ECB meeting
- Broker downgrades take down ARM, Vodafone, Land Secs...

Disappointing manufacturing data from the US and skittishness ahead of a European Central Bank (ECB) monetary policy decision on Thursday sparked a sell-off on global stock markets on Tuesday.

"Today's market price action in Europe highlights perfectly the uncertainty gripping investors ahead of this week's key ECB rate meeting and press conference. Having seen fairly good gains yesterday in fairly light volume, these have been pretty much wiped out today as nervousness returns in the wake of continued bickering amongst policymakers in Europe," said market analyst Michael Hewson from CMC Markets this afternoon.

ECB President Mario Draghi is widely expected to unveil plans on Thursday for buying sovereign debt in order to bring down bond yields in peripheral nations.

Stocks fell early on as investors reacted to the news that credit ratings agency Moody's last night lowered its outlook for the European Union from 'stable' to 'negative' to reflect "the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget."

Losses were extended after the ISM's US manufacturing purchasing managers' index (PMI) came in at 49.6 points in August, down from a reading of 49.8 in July. Consensus expectations were for a 50.0 level, indicating neither contraction or expansion.

Meanwhile, domestic economic data came in mixed: the UK's services PMI rose from 51 to 53.7, above the 51.1 expected by analysts; however the construction PMI fell from 50.9 to 49 in the same month, below the 50 forecast.

Europe Market Report 

he Swiss Stock Market Pulled Back Ahead Of ECB Meeting

The Swiss stock market finished Tuesday's session with a pretty significant loss. The losses piled up gradually over the course of the trading day, after a slightly positive open. Uncertainty was running high among investors, ahead of the upcoming meeting of the European Central Bank. The negativity was further compounded by the weak economic data from the U.S. in the afternoon.

Investors seem to be positioning themselves for a possible disappointment from the upcoming ECB meeting, in case no concrete steps toward buying bonds are announced. However, according to reports, during a closed-door meeting of the lawmakers, Mario Draghi defended a number of measures introduced by the ECB, including the controversial bond-purchase plan, and indicated that the central bank is not averse to buying government bonds of up to 3-year maturities on the secondary market.

The Swiss Market Index fell by 1.16 percent Tuesday and closed at 6,362.82. The Swiss Leader Index declined by 1.14 percent and the Swiss Performance Index lost 1.09 percent.

US Market Report

US open: ISM input prices shoot higher on drought -Moody's says outlook for US banking system remains negative -Ford says Q3 production slightly below guidance -GM US vehicle sales rose 10.1% in August; Forecast: 3% Dow Jones: -0.76% Nasdaq Comp.: -0.60% S&P 500: -0.56% The main New York equity benchmarks are now registering moderate falls following the release of a slightly weaker than expected ISM manufacturing survey.