Daily Commentary

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Daily FX Commentary: (Morning Report)

AUD/USD
The pair attacks very strong support and range base at 1.0170 zone, following reversal from 1.0623, 14 Sep range top. The support has already been cracked by dip to 1.0150 so far, with daily studies well in the negative territory, keeping the larger picture’s bears in play. Brief recovery attempt on oversold hourly tools did not result any stronger correction so far, as gains stay capped by 20 day EMA at 1.0185, also previous low of 04 Oct. Bounce through 1.0200 handle, Fib 61.8% of 1.0270/1.0150 downleg and 55 day EMA, would give a signal for stronger correction, however, regain of minimum 1.0270, last Friday’s lower top, is required to confirm and open another important barriers at 1.0300, round figure / daily Ichimoku cloud base and 1.0330, 26 Sep low / Fib 38.2% of entire 1.0623/1.0150 descend. As bears dominate on all timeframes, break below 1.0150 is seen as likely scenario, with extension lower to signal an end of two-month cycle and expose 1.0100, 12 July low / 50% retracement, next.

Res : 1.0185, 1.0200, 1.0225, 1.0270
Sup : 1.0150, 1.0100, 1.0000, 0.9980

USD/CAD
The larger picture shows the pair under pressure, as a part of broader downtrend from 1.0444, 04 June high, interrupted by 0.9631/0.9883, 14 Sep / 03 Oct corrective phase, where gains were capped by descending daily 55 day MA. Bearish tone on daily chart is increased by double death-cross of 55 and 90 day MA’s over 200 day MA crossovers. Slight improvement is seen on hourly chart, as the price corrects off 0.9733, last Friday’s low, with indicators pointing higher, but gains being capped by descending 55 day EMA at 0.9800 zone for now. Firm break above 0.9800 to signal further recovery, however, any failure under 0.9870 peak, would risk a lower top and fresh weakness. Immediate support lies at 0.9769, ahead of key one at 0.9730, also Fib 61.8% of 0.9631/0.9870 and 19/21 Sep higher base.

Res: 0.9800, 0.9824, 0.9859, 0.9870
Sup: 0.9769, 0.9730, 0.9700, 0.9692

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Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks dampened by global growth concerns
Market Movers

• techMARK 2,145.98 -0.70%
• FTSE 100 5,841.74 -0.50%
• FTSE 250 11,974.63 -0.72%

- Miners fall on global growth concerns
- Supermarkets perform well after broker comments
- World Bank cuts Chinese growth forecasts

Cyclical stocks suffered falls on Monday as growing uncertainty about the Eurozone and concerns over global growth dampened the mood.

"Stocks traded lower today as investors risk appetite faded ahead of the US corporate earnings season," said market analyst Craig Erlam from Alpari. Aluminium giant Alcoa kicks off results announcement after the close this evening.

Erlam said: "There is also growing fears in the Eurozone that progress is not being made quickly enough to have any impact in the shorter term. Spain has still shown no signs of requesting a bailout and Greece look no closer to agreeing another round of cuts with the Troika in order to receive the next tranche of the bailout."

Eurozone Finance and Economic Ministers are meeting in Luxembourg today to discuss the region's top issues with Madrid and Athens at the top of the agenda. European Central Bank (ECB) governing council member Jorg Asmussen was cited over the weekend as saying that Greece cannot be given more time by the ECB to meet its commitments as that would amount to state financing.

A gloomy outlook from British Chancellor of the Exchequer George Osborne also helped to weigh on sentiment today. Speaking at the Conservative Party conference in Birmingham today, he said: "the future prosperity of our country the stability of Europe is in question in a way it has not been before in my lifetime."

The World Bank cut its 2012 growth estimate for China from 8.2% to 7.7%, saying that the economy has been hit by weak export demand and investment growth. "China's slowdown this year has been significant, and some fear it could still accelerate," the World Bank said.

This follows the leaked estimates of the International Monetary Fund (IMF) forecasts last week. The IMF is expected to announce tomorrow that it has revised down its global growth expectations for this year and the next.

Europe Market Report 

Weidmann (ECB): Monetary policy cannot address causes of debt crisis
-Buba´s Dombret believes IMF over-emphasizes role of monetary policy in crisis
-ECB says further major labour and product market reforms needed
-Asmussen (ECB): Calm on financial markets is deceptive
-Asmussen (ECB): Cannot give Greece more time
-Spanish 10 year bond yields up 3bp to 5.71%

FTSE-100: -0.50%
Dax-30: -1.44%
Cac-40: -1.46%
FTSE Mibtel: -1.98%
Ibex 35: -1.80%
Stoxx 600: -0.98%

Shares have finished at their worst levels of the day as investors keyed in on the prospects for economic growth and company profits world wide. Not to be missed in that regard, Alcoa will kick-off the US quarterly earnings season tomorrow.

Also contributing to the above is the fact that in its semi-annual World Economic Outlook (WEO) –which is slated for release tomorrow- the International Monetary Fund (IMF) is expected to cut its forecast for world growth. This as some observers worry that “global rebalancing” is proceeding too slowly.

In the same vein, much was made this morning of the fact that the World Bank has cut its growth forecast for economic growth in “developing East Asia” this year to 7.2% from 8.3% in 2011, its slowest pace since 2011 and below the 7.6% forecast in May. Although similar downwards revisions for growth in China were announced by the Asian Development Bank last Wednesday investors chose to focus on market commentary regarding the risks for a further slowing down in economic activity.

Of more immediate concern, investors were closely watching events in Greece and Spain. More specifically, European Central Bank (ECB) governing council member Jorg Asmussen was cited over the weekend as saying that Greece cannot be given more time –by the central bank- to meet its commitments, as that would amount to state financing (although Eurozone states do have that option at their disposal).

Meantime, Merkel’s chief spokesman, Steffen Seibert, reiterated that Greece must implement the measures agreed with the IMF and EU within the established timelines.

As if all of the above were not enough, the Financial Times´ Wolfgang Munchau wrote today that Spain may well follow in Greece´s footsteps as excessive austerity weighs on growth, creating a negative feed-back loop.

That comes before German Chancellor Angela Merkel visits Greece tomorrow.

German industrial production ahead of forecasts, but flat GDP expected

German industrial production fell by 0.5% month-on-month in August (Consensus: -0.6%). However, economists at Barclays Research had this to say: "Today’s release, despite being better than expected, mirrors the decrease in German factory orders in August as well as the current deterioration of sentiment at a global level. Data in the coming months will be crucial in order to access how well the German economy is able to weather the generalised slowdown in activity and trade expected in H2 12. We continue to forecast a flat reading for GDP in Q3."

The Sentix survey of Eurozone investors´ confidence has come in at -22.2 for November (Consensus: -20.9), versus -23.2 for the month before.

The Swiss consumer price index for the month of September has come in at -0.4% year-on-year, as expected, and above last month´s reading of -0.5%.

The French central bank´s business confidence index for the month of September has come in at 92 points, versus 93 for the previous month (Consensus: 91).

The German trade surplus for the month of August rose to €16.3bn; ahead of the €15.3bn forecast by the consensus, that on the back of a 2.4% month-on-month increase in exports (Consensus: -0.5%).

Germany´s current account surplus on the other hand fell back towards €11.1bn in August, versus the €11.7bn seen in July.

Swiss unemployment remained unchanged at 2.8% in September.

Slight retreat in the single currency

The euro/dollar is now down by 0.47% to 1.2972.

Front month Brent crude futures are falling by 0.313 dollars to the 111.67 dollar mark on the ICE.

US Market Report

S pre-open: Global growth fears to weigh Concerns about the global economy look set to weigh on US equities. The World Bank has cut its 2012 growth estimate for China from 8.2% to 7.7%, saying that the economy has been hit by weak export demand and investment growth. "China's slowdown this year has been significant, and some fear it could still accelerate," the World Bank said. This follows the leaked estimates of the International Monetary Fund (IMF) forecasts last week. The IMF is expected to announce tomorrow that it has revised down its global growth expectations for this year and the next.