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| Action Insight Market Overview | Markets Snapshot |
Daily Report: Sentiments Improve But Face Test of Spain Auction and Bernanke TestimonyA couple of developments gave markets a overnight which led to strong rally in DOW for as much as 286 pts, or 2.37%. Firstly, there were talks that Germany and EU officials are looking at resolutions to Spain's banking crisis even though assistance is not yet sought by Spain. Intensive contingency planning is believed to be carried out in Berlin and Brussels that could involve giving Spain access to EFSF or ESM without having to impose tough reforms like Greece, Portugal and Ireland. Secondly, ECB President's message as the press conference was seen as leaving doors open to further easing even though ECB just stand pat for the moment. Thirdly, Fed's Vice Chairman Yellen urged to provide further policy accommodations either through "forward guidance" or "additional balance-sheet actions". Positive sentiments then carried on in Asian session as China will delay the new tougher bank capital rules to 2013. Positive employment data from Australia also helped. |
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| Featured Technical Report | |
GBP/JPY Daily OutlookDaily Pivots: (S1) 121.40; (P) 122.17; (R1) 123.47; More... GBP/JPY's rebound form 118.82 is still in progress and further rally might be seen. But after all, such rebound is viewed as a correction only. Thus, upside should be limited by 124.64 resistance and bring fall resumption eventually. Below 121.33 minor support should flip bias to the downside and send GBP/JPY through 118.82 to 116.83/117.29 support zone next. |
| Special Reports |
ECB Left Interest Rates Unchanged, Draghi Questioned the Effectiveness of Monetary Policies on CrisisAs expected, the ECB left the main refinancing rate unchanged at 1% although sovereign debt crisis in the Eurozone intensified. At the press conference, President Draghi unveiled that the decision was made by consensus and indicated "a few members" favored further rate cut. Yet, Draghi also downplayed the effectiveness of additional easing to the economic and financial environment. BOC Left Interest Rates Unchanged, Statement Not as Dovish as AnticipatedThe Bank of Canada left the policy rate unchanged at 1%. Policymakers acknowledged worsening in global economic outlook and increasing risks going forward. Yet, it retained the stance that the next move of the central bank would be a rate hike, rather than a cut. This should be attributed to the relatively stable domestic recovery. Concerning exchange rate, the BOC retained the rhetoric that persistent appreciation would be detrimental to growth despite the recent decline. RBA Eases For A Second Consecutive MonthAs expected the RBA lowered the cash rate by -25 bps, following a -50 bps cut in May, to 3.5% in June. Deterioration in the sovereign debt crisis in the Eurozone and moderation in the Chinese economic growth were reasons triggering the reduction. Moreover, cautiousness of business and household spending which might continue in the near-term also contributed to the need for further easing. After the rate cut, policymakers believed that borrowing costs have dropped to be a 'little below their medium-term averages'. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchGBP: Although the British pound rebounded overnight on back of euro's rally, cross-selling in sterling against euro capped cable's upside and price has retreated again after faltering below yesterday's high of 1.5516. At the moment, bids from short-term specs and Asian names are still noted at 1.5430-40 and demand from Millde East names should emerge around 1.5390-00 with stops building up below 1.5370 and 1.5320 (large). On the upside, offers from model funds remain at 1.5510-20 and although stops are reported at 1.5530, more selling interests are tipped at 1.5540-50. Expect range trading ahead of BOE rate decision later today at 11:00GMT. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: GBP/USD – Hold short entered at 1.5480Despite yesterday’s brief rise to 1.5516, the subsequent retreat suggests a top is possibly formed there (with a shooting star on the hourly chart) and consolidation with mild downside bias remains for test of the Ichimoku cloud (now at 1.5378-90), however, break there is needed to add credence to this view and bring weakness to 1.5360, then towards this week’s low at 1.5322 Trade Idea: USD/JPY – Buy at 78.75As the greenback has maintained a firm undertone after this week’s rally, confirming a temporary low has been formed at 77.65 last week and bullishness remains for the rise from 77.65 to bring a stronger retracement of recent decline and gain to 79.60 and possibly 79.83 resistance would be seen, however, still reckon upside would be limited to psychological resistance at 80.00 Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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