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| Action Insight | Candlesticks Trades | Markets Summary | Action Bias | Top Movers | Daily Technicals |
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| Action Insight Market Overview | Markets Snapshot |
Daily Report: Aussie Tumbles on Economic Data, Risk Sentiments Firm on Stimulus ExpectationsAussie tumbles sharply in Asia today in response to poor Australia and China economic data. Australia retail sales unexpectedly dropped -0.8% mom in July, comparing to expectation of 0.2% mom rise. That was indeed also the biggest fall since October 2010. In particular, sales in departments otters dropped a steep -10.2%, the biggest fall in seven years. Another piece of data also showed that job advertisements dropped -2.3% in August, the fifth consecutive month of detail, which indicate continuation in softening in the job market. The TD Securities inflation expectation jumped 0.6% mom in August, much higher than prior month's 0.2% mom, but over the year, the gauge was at 2.2%, which is towards the lower end of the 2-3% target range. RBA will announce rate decision and is widely expected to keep rates unchanged at 3.50% for the third straight month. However, the odds of additional rate cut is increasing and markets are fully pricing in a cut to 3.25% in November. Meanwhile, overnight indexed swaps suggest that there could be at least 2 more cuts in the next 12 months. |
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| Featured Technical Report | |
AUD/USD Daily OutlookDaily Pivots: (S1) 1.0285; (P) 1.0320; (R1) 1.0361; More... AUD/USD's drops further to as low as 1.0239 so far today and intraday bias remains on the downside for 1.0176 support. Break there will target 0.9968 and below. Nonetheless, as fall from 1.0612 is viewed as a leg inside the medium term consolidation pattern, we'd expect support below 0.9968 to bring rebound. Meanwhile, break of 1.0410 resistance is needed to signal completion of the fall from 1.0612. Otherwise, we'll stay bear term bearish even in case of recovery. |
| Special Reports |
Bernanke Signals QE3 is LikelyThe uplift in market sentiment indicated that investors very much welcomed Fed Chairman Ben Bernanke's speech at the Jackson Hole Symposium. While not signaling any particular action on any particular date, Bernanke's comments sent a strong signal that further quantitative easing is on the way. During his speech, Bernanke defended the use of unconventional easing as "effective" with evidence that balance sheet expansion have supported the economic recovery. While evaluating costs and benefits of quantitative easing, the Chairman stated that costs remained manageable and the Fed would "not rule out the further use of such policies if economic conditions warrant". While the speech appeared to have pushed the timing of QE3 closer, we think the likely timing would be either September or December, instead of October as election approaches. RBA Easing Justified Later In The Year, Though Not In SeptemberWe reiterate our view that the RBA would lower the cash rate by -25 bps in the fourth quarter. While Australia's economy is expected to grow around trend and current monetary policy is appropriate, risks remained to the downside and a significant pickup in the unemployment rate would trigger policymakers to ease further. Meanwhile, market reduced expectations for further RBA rate cut in the next 12 months as the RBA's recent comments signaled no bias for further easing while recent data has shown that the funding conditions have improved in Australia. Australian dollar has dropped to a 1-month low due to concerns over slowdown in China and deterioration in Eurozone's situation. Yet, the RBA would remain caution about the Aussie's outlook.
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: The single currency retreated after surging to 1.2637 on Friday in part due to profit-taking, however, buy orders from various parties are reported from 1.2560 down to 1.2540 with some stops placed below 1.2540 but fresh demand from Asian and Middle East names should emerge around 1.2500-10. On the upside, offers are seen at 1.2600 and some buy stop orders tipped above 1.2610 but selling interests from funds are reported at 1.2640-50 (for protection of 1.2650 option barrier), followed by buy stop orders above there. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: USD/CHF – Sell at 0.9605Despite Friday’s selloff to 0.9504, the subsequent rebound suggests consolidation would be seen and test of the Ichimoku cloud bottom (now at 0.9585) cannot be ruled out, however, resistance at 0.9617 should limit upside and bring another decline later. A break of said support would extend recent fall from 0.9972 top to 0.9470, however, near term oversold condition should prevent sharp fall below there and reckon 0.9450 would hold from here. Trade Idea: EUR/USD – Buy at 1.2535Despite Friday’s rally to 1.2637 after breaking previous resistance at 1.2590, the subsequent retreat suggests consolidation below said resistance would take place and pullback to the Ichimoku cloud top (now at 1.2530) cannot be ruled out but the lower Kumo (now at 1.2517) should hold, bring another rise later. Above 1.2600 would suggest pullback has ended and bring retest of 1.2637, break there would confirm recent upmove has resumed for further gain to 1.2650, break would bring headway to 1.2670 Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fundamental Highlights
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