Daily Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD The Euro enters near-term corrective action after bears find temporary support at 1.2834, just above 200 day MA at 1.2824. As gains were limited by 20 day EMA at 1.2900 zone, with indicators on lower timeframes still holding in the negative territory, not much of recovery to be expected, unless break above trendline resistance at 1.2924, also near Fib 38.2% of 1.3047/1.2834 occurs. Regain of key near-term barrier at 1.2970, 25 Sep high / Fib 61.8%, is required to signal near-term bottom and provide relief. Conversely, any reversal below here would signal a lower top and fresh leg lower, with near-term targets at 1.2824, 200 day MA and 1.2780, bull trendline off 1.2254 being in focus. Res: 1.2900, 1.2911, 1.2924, 1.2940 Sup: 1.2865, 1.2834, 1.2824, 1.2800

GBP/USD Cable finds near-term support at 1.6136, as subsequent bounce regains initial 1.6200 barrier. Improved hourly conditions see scope for fresh recovery, however, clearance of 1.6220/30 breakpoint, trendline resistance and 50% of 1.6308/1.6136, is required to confirm recovery and turn near-term focus higher. Otherwise, risk of lower top and fresh weakness will exist, as 4h chart studies remain weak. Res: 1.6204, 1.6222, 1.6231, 1.6265 Sup: 1.6175, 1.6148, 1.6136, 1.6100 USD/JPY The pair’s near-term structure remains weak, despite bounce of yesterday’s low at 77.58, provided temporary relief, with gains being capped at initial 77.90 barrier. Overall negative sentiment does not see much potential for stronger recovery, unless clear break above 78.00 occurs. On the downside, loss of 77.58 support, will focus our near-term targets at 77.12/00. Res: 77.75, 77.90, 78.00, 78.27 Sup: 77.62, 77.58, 77.45, 77.12 USD/CHF The pair eases lower following attack and brief break above important 0.9400 zone. As expected, the barrier proved to be tough for the first attempt break. Dips have so bar been contained at 0.9360 zone, 20 day EMA, however, weakening hourly studies do not rule out further extension, with reversal ideally to occur above .0.9326, 25 Sep higher low, otherwise, near-term bulls would be delayed in favor of stronger correction. Res: 0.9400, 0.9416, 0.9432, 0.9447 Sup: 0.9379, 0.9360, 0.9340, 0.9326

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Daily Market Commentary: (Evening Report)

London Market Report

Back in the blue ... just

Market Movers
techMARK 2,115.78 +0.24%
FTSE 100 5,779.42 +0.20%
FTSE 250 11,754.40 +0.14%

Having briefly broken above 5800 shortly after the start of trading, on the back of news of stimulus measures in China, the top share index move into negative territory in the afternoon session, before rallying near the close.

Mixed macro data

Second quarter gross domestic product contracted at a 0.4% quarter-on-quarter rate of change, a revision to the previous estimate of a 0.5% decline. The market had been expecting no change to the previous estimate.

The news was less good on the UK trade front, with the current account deficit widening to an unprecedented £20.8bn in the second quarter from £15.4bn in the previous three month period.

There has been no news yet on Spain's austerity budget. It was scheduled to be unveiled at lunch-time, but a Cabinet meeting overran.

China lends a hand
Miners were back in fashion today, after China's central bank pumped record amounts of liquidity into the banking system this week. Rio Tinto, Xstrata and Anglo American were among the big gainers.


Europe Market Report 

European Markets Finished With Modest Gains Ahead Of Spanish Budget

The European markets ended Thursday's session with modest gains, as investors await the Spanish budget for the year. The release of the budget was delayed until this evening, but it is expected to include further economic reforms. Weak economic data from China fueled expectations of further stimulus measures in the world's second largest economy. The economic data out of the U.S. was also largely negative, with a downward revision to second quarter GDP and a larger than expected decrease in new orders for durable goods.

Chinese industrial firms' profits dropped for a fifth successive month in August, official data showed, signaling that the economic slowdown probably extended into the third quarter. Industrial profits fell 6.2 percent year-on-year to 381.2 billion yuan in August, the National Bureau of Statistics said. This was faster than the 5.4 percent drop in July.

Investor concerns over Greece and Spain continued to linger in the background Thursday. Spain is presenting its draft budget for 2013 later today, which is expected to include more economic reforms, including further cutbacks, pension reform and new taxes on greenhouse emissions. Protests continued in Madrid against the expected austerity measures, which may pave the way for an official aid request.

Italy witnessed yet another decline in borrowing costs at an auction of its five and ten-year bonds on Thursday as investors took a favorable view on the country over Spain. Meanwhile, the lingering uncertainty regarding a bailout request from Spain continued to push the country's borrowing costs higher today.

The Italian Treasury sold EUR 6.6 billion of bonds at today's sale, which was close to the EUR 7 billion maximum target set for the auction. The yield on the 10-year bond due November 2022 fell to 5.24 percent from 5.82 percent in the previous sale on August 30.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.33 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.34 percent.

The DAX of Germany climbed by 0.19 percent and the CAC 40 of France gained 0.72 percent. The FTSE 100 of the U.K. rose by 0.20 percent and the SMI of Switzerland advanced by 0.08 percent.

US Market Report

Stocks Moving Higher On Chinese Stimulus Hopes Stocks remain mostly positive in mid-day trading on Thursday, regaining some ground after trending lower in recent sessions. Buying interest has remained somewhat subdued, however. The major averages have moved to the upside in the past few minutes, with the Nasdaq and the S&P 500 reaching new highs. While the Dow is up 37.47 points or 0.3 percent at 13,450.98, the Nasdaq is up 25.07 points or 0.8 percent at 3,118.77 and the S&P 500 is up 8.27 points or 0.6 percent at 1,441.59. The strength on Wall Street is partly due to optimism about the possibility of further stimulus from China, with reports suggesting that the China Securities Regulatory Commission will take steps to prop up the domestic equity market. The rumors out of China contributed to a late-day rally by the Shanghai Composite Index, which surged up by 2.6 percent on the day. Buying interest has also been generated by a report from the Labor Department showing a much bigger than expected drop in weekly jobless claims. The report showed that jobless claims fell to 359,000 in the week ended September 22nd from the previous week's revised figure of 385,000. Economists had expected jobless claims to drop to 376,000 from the 382,000 originally reported for the previous week. With the bigger than expected drop, jobless claims fell to their lowest level since coming in at 357,000 in the week ended July 21st. On the other hand, traders are also digesting disappointing Commerce Department reports on durable goods orders and second quarter GDP. A report from the Commerce Department showed that durable goods orders plummeted by 13.2 percent in August amid a sharp drop in orders for transportation equipment, while a separate report showed that GDP grew by less than previously estimated in the second quarter. Traders have mostly focused on the upbeat jobs data, as the reports from the Commerce Department are largely backward-looking and are seen as providing further support for the Federal Reserve's decision to enact a third round of quantitative easing.