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| Action Insight Weekly Report | Markets Snapshot |
Markets Entering into a Crucial MonthAfter much anticipation, Fed Chairman Bernanke finally delivered his speech in the Jackson Hole Symposium. Did he disappoint? Judging from the reactions in the markets, he didn't. The biggest reactions were firstly found in treasuries where 10 year yield dived to close at the week's low at 1.562%, down from prior week's 1.678% and compared with August's high of 1.863%. 30 year yield also tumbled to close at 2.684%, also at the week's low. That compared to prior week's close of 2.792% and August's high of 2.984%. Secondly, gold rebounded strongly to close at 1687.6, comparing to intraweek low of 1647.1. Both are clear reflection of intensified expectation of additional quantitative easing from Fed. Stocks did rebound too but both DOW and S&P 500 were limited well below August's high, suggesting that investors might not be too convinced about the effect of another round of QE, and are hesitating ahead of an important month. In the currency markets, the weakness in USD/JPY was most apparent after Bernanke but Kiwi and Aussie were the weakest currency in the week as a whole. |
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| Featured Technical Report | |
USD/JPY Weekly OutlookUSD/JPY dropped to as low as 78.18 last week as fall from 79.65 extended. Initial bias remains on the downside this week for 77.90 support. Break will suggest that whole decline from 84.17 is resuming. In such case, further fall should be seen through 77.66 towards 75.56/76.02 support zone. On the upside, above 78.84 will bring another recovery to extend the consolidation pattern fro 77.66. But upside should be limited below 79.65 resistance and bring downside breakout eventually. |
| Special Reports | ||
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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The Week in Review and Outlook
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