Daily FX Commentary

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Daily FX Commentary: (Morning Report)

EUR/USD The Euro holds steady ahead of today’s Fed meeting, as bullish run continues to post fresh highs. Overnight’s brief pullback was contained just under 1.2900 and fresh gains look for retest of yesterday’s high and Fib 61.8% of 1.3485/1.2042 at 1.2935, the last barrier ahead of psychological 1.3000 level. Overextended studies on 4h chart and hourly indicators starting to point lower, may be a signal for correction, however, recent price action has not been significantly affected, as the rally was interrupted only by shallow dips so far. Initial supports lie at 1.2900/1.2870, ahead of 1.2830, 200 day MA / broken bear-trendline, with break here and 1.2800, seen as a trigger for stronger reversal. Res: 1.2935, 1.2950, 1.2978, 1.3000 Sup: 1.2900, 1.2870, 1.2830, 1.2815

GBP/USD Near-term price action gets congested under yesterday’s fresh high at 1.6130, with immediate risk of corrective action, seen on descending hourly indicators and 4h ones emerging from overbought territory. However, overall bullish picture and yesterday’s close above 1.6100 level, keeps the upside favored, with next target at 1.6200. Any dips should ideally been contained at/above 1.6060 higher platform / Fib 38.2% of 1.5958/1.6130 upleg, to keep bulls in play. Res: 1.6130, 1.6150, 1.6181, 1.6200 Sup: 1.6100, 1.6080, 1.6060, 1.6040 USD/JPY The pair remains under pressure, following yesterday’s brief recovery that was capped under initial 78.00 barrier and fresh slide under 77.65. With near-term indicators in the negative territory, fresh bear phase of a larger downtrend from 84.17 is likely, with 77.00 seen next. As 20 day EMA limits the upside at 78.00, break here and 78.30 barrier, is required to avert immediate downside risk. Res: 77.85, 78.00, 78.32, 78.50 Sup: 77.64, 77.50, 77.35, 77.00 USD/CHF The pair continues to trend lower, following break below significant 0.9400 support and 200 day MA. Fresh losses broke below our initial support at 0.9360 and tested the next one at 0.9330 zone, with brief consolidation being limited by descending 20 day EMA. Immediate focus lies at our near-term targets and supports at 0.9310, trendline support and 0.9300, round figure, while 0.9400 offers initial resistance. Only regain of 0.9480/0.9500 would improve near-term structure. Res: 0.9400, 0.9432, 0.9482, 0.9500 Sup: 0.9339, 0.9330, 0.9310, 0.9300

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Daily Market Commentary: (Evening Report)

London Market Report

Stocks surge on hopes for QE3

    Market Movers
    techMARK 2,135.85 +0.36%
    FTSE 100 5,819.92 +0.65%
    FTSE 250 11,846.53 +0.30%

Following a subdued start, UK stocks ended at their highest levels of the day with just an hour or so to go before the announcement of the Federal Reserve’s policy decision.

The Federal Open Market Committee (FOMC) brings its two-day policy meeting to a close this afternoon. Chairman Ben Bernanke’s comments leading up to this event – he has highlighted serious concerns about poor jobs growth and the unemployment rate – mean that markets are widely expecting him to announce a new round of quantitative easing (QE) or some sort of stimulus measures in the subsequent press conference.

Market analyst Craig Erlam from Alpari said today: “The Chairman appears to have been justifying the Fed’s decision before taking it, potentially in a bid to gauge the reaction to such a move. However there are a lot of people who are less than convinced by Bernanke’s calculations. He claimed that further QE could raise gross domestic product by almost 3%, way beyond some economists’ expectations. Despite this, the market appears convinced that it will happen.”

Some think more QE would be a game-changer, while critics say it will not actually provide any real benefits. Simon Furlong, a trader at Spreadex, said the fact that US unemployment figures were slightly worse than expected today added to speculation that QE3 will be announced this evening.

In other news, Thanos Catsambas, who is Greece’s representative on the IMF board, said today that the country may need a third bailout: “Greece will require additional financing, which may take the form either of Official Sector Involvement or of additional loans, hopefully on more favourable terms.”

US Market Report

Stocks Continue To Show A Lack Of Direction Stocks have turned in a lackluster performance over the course of morning trading on Thursday, as traders seem reluctant to make any significant moves ahead of the announcement of the Federal Reserve's latest monetary policy decision. The choppy trading on Wall Street comes as traders are largely staying on the sidelines ahead of the release of the Fed's monetary policy statement at about 12:30 pm ET. Many analysts expect the central bank to announce another round of quantitative easing as part of an effort to stimulate the sluggish economy, although others have predicted that the Fed will only extend its pledge to keep interest rates at exceptionally low levels. A lack of additional stimulus could lead to a sell-off on Wall Street, as stimulus hopes have helped to push the markets higher in recent weeks. Most of the major sectors are showing only modest moves on the day, contributing to the lack of direction being shown by the broader markets. Nonetheless, considerable weakness has emerged among housing stocks, as reflected by the 1.4 percent loss being posted by the Philadelphia Housing Sector Index. The loss by the index comes after it ended the previous session at its best closing level in well over four years. Oil service, brokerage, and transportation stocks have also moved to the downside on the day, while strength is visible among tobacco, utilities, and telecom stocks. The major averages have moved to the upside in recent trading and are currently posting modest gains. The Dow is up 20.29 points or 0.2 percent at 13,353.64, the Nasdaq is up 3.72 points or 0.1 percent at 3,118.03 and the S&P 500 is up 1.08 points or 0.1 percent at 1,437.64.