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| Action Insight Market Overview | Markets Snapshot |
Daily Report: EUR/CHF Jumped as Markets Believe Draghi Will DeliverEuro remains firm but stays in tight range against dollar and yen as markets are awaiting for ECB's post meeting conference today. Some information was leaked this week and so far, investors seemed to be pleased with the limited details obtained. The new bond program, under the framework called "Monetary Outright Transactions" would involve unlimited purchases of government debt that will be sterilized (like under the SMP). Yet, the central bank would refrain from setting a public cap on yields and will target short-dated maturities of up to about three years. Also, ECB could be prepared to eliminate the seniority status on bonds. That means, ECB won't have the right the be paid back first, and private investors won't be pushed down the the creditor pecking order. Regarding interest rates, markets are split on whether ECB would cut the key interest rate by 25bps to another record low at 0.50%. Meanwhile, markets are also uncertain on how the central bank would handle the deposit rate, which is usually 75bps below the key interest rate and is currently at zero. |
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| Featured Technical Report | |
EUR/JPY Daily OutlookDaily Pivots: (S1) 98.20; (P) 98.55; (R1) 99.13; More Intraday bias in EUR/JPY remains neutral and consolidation from 99.18 might extend. But again, the cross is staying comfortably inside a near term rising channel and thus, further rally is still expected. Above 99.18 will target 38.2% retracement of 111.43 to 94.11 at 110.72 next. On the downside, break of the channel support (now at 98.00), however, will indicate that such rebound has completed and will flip bias back to the downside for 95.71 support for confirmation |
| Special Reports |
BOC Leaves Policy Rate at 1%, Reaffirming the Next Monetary Decision Would be Rate HikeAs expected the BOC left the policy rate unchanged at 1% in September. Moreover, policymakers indicated for the 4th time that some sort of stimulus may be withdrawn if "the economic expansion continues and the current excess supply in the economy is gradually absorbed". Few surprises were delivered in the accompanying statement despite some disappointments in the central bank's assessment on the domestic economic developments. Policymakers described inflation as "softer than expected in recent months" while growth is "decelerating somewhat more quickly than expected". Investors Awaiting Details For ECB Bond Purchase Program Likely DisappointedThe market was thrilled after news reported that ECB President Draghi has told the European Parliament that the central bank could buy government bonds with maturities of up to 3 years from debt-ridden countries in the Eurozone such that their borrowing costs would be lower. The news also drove expectations that more details of the asset purchase program would be announced after the ECB meeting due on September 6. Given further deterioration in economic outlook in the Eurozone, we expect policymakers would lower the main refinancing rate by -25 bps and revise down projections of the economic outlook. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: Although the single currency bounced again today in European opening, indicated offers at 1.2630 capped upside so far and mixture of offers (from European sovereign names) and stops remains at 1.2630-40 which is still in focus, more sizeable stops are tipped above 1.2650 option barrier and fresh sell orders should emerge ahead of next barrier at 1.2700. On the downside, some bids by short-term specs are raised to 1.2580-90 with some stops placed below 1.2570 but buying interests from Asian and Middle East names are tipped at 1.2540-50 with stops building up below 1.2530 as well as 1.2500, more sell stop orders are located below 1.2490, 1.2480 and also 1.2470-75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: USD/CHF – Hold long entered at 0.9535Although the greenback retreated after yesterday’s brief rise to 0.9607, if our view that a temporary low formed at 0.9504 is correct, downside should be limited and minor support at 0.9530 should hold, bring another rebound later, above said resistance at 0.9607 would bring test of previous resistance at 0.9617 but reckon last week’s high of 0.9635 would hold on first testing. Trade Idea: EUR/USD – Hold short entered at 1.2595Despite intra-day brief rise to 1.2629,as this indicated resistance has held, retaining our view that further consolidation below last week’s high of 1.2637 would take place and mild downside bias remains, break of the Ichimoku cloud top (now at 1.2576) would suggest top is possibly formed but break of the lower Kumo (now at 1.2560) is needed to confirm, bring subsequent weakness to 1.2530, then towards support at 1.2503 but reckon previous support at 1.2487 would limit downside 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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