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Daily FX Commentary: (Morning Report)
EUR/USD
The single currency steadies above 1.2900, on a move from Asian session lows at 1.2875 and break above triangle resistance. The latest rally shows more positive tone in the near-term movements, however, failure to regain initial barrier at 1.2970 zone, could be a signal for further consolidation, as the downside remains well supported by 200 day MA and 1.2800 figure support. From the other side, 4h chart studies are still more in sideways mode, with lack of momentum delaying push through 1.2970/1.3000 barriers, break of which to confirm positive sentiment and shift near-term focus towards the upside barriers.
Res: 1.2932, 1.2937, 1.2958, 1.2970
Sup: 1.2900, 1.2890, 1.2875, 1.2837
GBP/USD
The pair’s near-term price action remains in a rather sideways mode, as initial barrier at 1.6175, reinforced by bear-trendline off 1.6308 high, continues to cap upside attempts. With hourly studies in neutral mode and dominating negative tone on 4h chart, risk of re-visiting near-term base at 1.6100 support zone, also Fib 38.2% of 1.5769/1.6308, remains high, as break below the latter would signal further corrective easing from 1.6308 and open 1.6074 and 1.6033 next. Bearish 20/55 day EMA’s crossover at 1.6170, keeps the pair under increased pressure. Conversely, lift above 1.6170/1.6200, would be signaling near-term base at 1.6100, with regain of 1.6270 double-top, required to confirm.
Res: 1.6168, 1.6175, 1.6200, 1.6216
Sup: 1.6130, 1.6120, 1.6107, 1.6100
USD/JPY
Series of marginally higher highs and higher lows keep the near-term bulls off 77.42 in play, with the latest session high posted at 78.21. As the pair breaks above initial Fibonacci barrier (38.2%) at 78.10 and near-term studies keeping positive tone, upside remains favored for now, with Fibonacci levels at 78.31/53 (50% / 61.8%) and the first one being reinforced by descending 55 day MA, seen as initial targets, along with 90 day MA at 78.80. Key near-term barriers lie at 79.00/30 zone and only break here would be a signal for stronger recovery. On the downside, initial support lies at 78.00, ahead of 77.80, break of which would sideline near-term bulls.
Res: 78.14, 78.21, 78.31, 78.53
Sup: 78.00, 77.78, 77.68, 77.42
USD/CHF
The pair’s near-term structure weakens further, as the price penetrates trendline support and 4h Ichimoku cloud top at 0.9350, on a slide from yesterday’s high at 0.9436, where near-term gains stalled. As hourly studies turn negative and 0.9330 zone support, previous lows / 50% of 0.9237/0.9436 ascend, comes under pressure, downside risk increases. Loss of 0.9330 and 0.9300 will bring bears back in play and signal lower top at 0.9436. Regain of minimum 0.9400, 200 day MA, is required to prevent the pair from fresh losses.
Res: 0.9387, 0.9400, 0.9416, 0.9436
Sup: 0.9334, 0.9326, 0.9313, 0.9300
Daily Market Commentary: (Evening Report)
London close: Spanish concerns dampen stocks
Market Movers
- techMARK 2,138.36 +0.12%
- FTSE 100 5,809.45 -0.19%
- FTSE 250 11,894.41 +0.23%
- Moody's to reveal Spanish review this month
- Banks provide a drag on the Footsie
- Bumi and Bank of Georgia are big movers on FTSE 250
After a morning rally into the blue, the Footsie had dropped back into negative territory by the close of trade on Tuesday with uncertainty surrounding Spain continuing to weigh on investors' minds.
Markets were reacting this afternoon to news that Moody's expects to announce the decision of its review of Spain's sovereign debt rating at some point this month. The ratings agency downgraded its rating on Spain from 'A3' to 'Baa3' in June.
"Moody's review of Spain's rating is continuing to assess a number of factors, including Spanish banks' capital needs, the nature and size of support mechanisms, the recently released 2013 budget plan and the consequences for the euro area's crisis management framework of the further advancement of a banking union," a Moody's spokeswoman said today.
Spain is reportedly ready to move ahead with its bailout request to the Eurozone though Germany is now asking the government to hold off due to internal political pressure. On Friday, the southern European country received a long-awaited report noting that its financial sector needs €59.3bn in additional capital.
Australian stocks surged overnight after the Royal Bank of Australia surprised many with a rate cut, slashing its key interest rate by 25 basis points to 3.25%. Whilst highlighting concerns over the outlook for the global economy, Governor Glenn Stevens also said that investment in the mining sector next year "may be at a lower level than earlier expected".
In domestic news, the UK economy came out of recession in the third quarter, according to the British Chambers of Commerce (BCC). Its survey of 7,593 UK firms showed the economy grew by 0.5% between July and September, following three consecutive quarters of contraction.
Meanwhile, the UK construction sector purchasing managers' index for the month of September has come in at 49.5 points, up from the previous month's reading of 49 but below the consensus estimate of 49.8.
- Banks provide a drag on the Footsie
- Bumi and Bank of Georgia are big movers on FTSE 250
After a morning rally into the blue, the Footsie had dropped back into negative territory by the close of trade on Tuesday with uncertainty surrounding Spain continuing to weigh on investors' minds.
Markets were reacting this afternoon to news that Moody's expects to announce the decision of its review of Spain's sovereign debt rating at some point this month. The ratings agency downgraded its rating on Spain from 'A3' to 'Baa3' in June.
"Moody's review of Spain's rating is continuing to assess a number of factors, including Spanish banks' capital needs, the nature and size of support mechanisms, the recently released 2013 budget plan and the consequences for the euro area's crisis management framework of the further advancement of a banking union," a Moody's spokeswoman said today.
Spain is reportedly ready to move ahead with its bailout request to the Eurozone though Germany is now asking the government to hold off due to internal political pressure. On Friday, the southern European country received a long-awaited report noting that its financial sector needs €59.3bn in additional capital.
Australian stocks surged overnight after the Royal Bank of Australia surprised many with a rate cut, slashing its key interest rate by 25 basis points to 3.25%. Whilst highlighting concerns over the outlook for the global economy, Governor Glenn Stevens also said that investment in the mining sector next year "may be at a lower level than earlier expected".
In domestic news, the UK economy came out of recession in the third quarter, according to the British Chambers of Commerce (BCC). Its survey of 7,593 UK firms showed the economy grew by 0.5% between July and September, following three consecutive quarters of contraction.
Meanwhile, the UK construction sector purchasing managers' index for the month of September has come in at 49.5 points, up from the previous month's reading of 49 but below the consensus estimate of 49.8.
Europe Market Report
European Markets Finished Mostly Higher After Volatile Trading Session
The majority of the European markets closed in positive territory Tuesday. The markets struggled to find direction ahead of the meeting of German Chancellor Angela Merkel and ECB President Mario Draghi in Berlin. The stronger than expected U.S. consumer confidence number and the positive home price index result provided a boost to the European markets in the afternoon.
Rating agency Standard & Poor's cut Eurozone's economic forecasts for this year and next on Tuesday, saying the 17-nation economy is entering a new period of recession.
The firm expects the euro area economy to shrink 0.8 percent this year, which is worse than the 0.7 percent contraction forecast in July. For 2013, S&P sees flat growth in the single currency bloc, compared to 0.3 percent forecast in July.
Germany cannot decouple from Europe and the global economy, Chancellor Angela Merkel said Tuesday. Germany is not an island, but a strong exporting nation, she said at a conference organized by the German Industry Association in Berlin.
She observed that there is a lack of confidence in financial markets about the ability of the governments to repay its debt. It would have been better if the European Court of Justice had been granted powers to monitor the fiscal pact, Merkel noted.
Spanish short-term borrowing costs increased at a debt auction on Tuesday as it remains uncertain if the embattled country would seek a bailout for its economy. The Spanish Treasury raised nearly EUR 4 billion from the sale of its 3 and 6 month bills. The target set for the sale was between EUR 3 billion and EUR 4 billion.
The yield on the three-month paper rose to 1.203 percent from 0.946 percent on August 28. The bid-to-cover ratio, which shows demand, dipped to 3.29 from 3.35. The 6-month treasury bill fetched a yield of 2.213 percent, up from 2.026 percent on August 28.
Italy saw its two-year borrowing costs decline at an auction on Tuesday. The Italian Treasury raised EUR 3.937 billion from the sale of its zero coupon bonds known as CTZ, which was close to the top target of EUR 4 billion set for the sale. The yield on the zero-interest bearing security fell to 2.53 percent from 3.064 percent in the previous sale on August 28.
The euro Stoxx 50 index of eurozone bluechip stocks increased by 0.39 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.29 percent.
The DAX of Germany climbed by 0.16 percent and the CAC 40 of France advanced by 0.47 percent.
The FTSE 100 of the U.K. rose by 0.36 percent and the SMI of Switzerland gained 0.25 percent.
US Market Report
US pre-open: Firm start expected as market waits for Spain
US markets are set to open higher as hopes rise - not for the first time - that a bailout request from Spain is imminent.
However, Spanish press agency Europa Press cited the country's Prime Minister, Mariano Rajoy, as having said that he will not call for a rescue this weekend. Be that as it may, many market commentators seem to be of the opinion that Spain must ask for aid quickly if it wishes to retain access to capital markets.
Spread betting quotes suggest that the Dow Jones will open around 20 points up from last night's close of 13,515 while the broader based S&P 500 is tipped to start four points firmer.
Banks could be in focus early on after Credit Suisse turned bullish on the sector. US banking giant JP Morgan Chase, meanwhile, has been hit with a lawsuit by the New York Attorney General for allegedly defrauding investors of more than 20 billion dollars through mortgage-backed securities sold by Bear Stearns.
JP Morgan, which bought ailing investment bank Bear Stearns in March 2008, said it would contest the allegations, which are based on deals done between 2005 and 2007.
It said the civil action related entirely to Bear Stearns, which it acquired "over the course of a weekend at the behest of the US government".
Mortgage-backed securities were the financial products that were at the heart of the global financial crisis
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