Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our Daily FX Report. Iranian Foreign Minister Zarif is optimistic after talks with European Union foreign policy chief Ashton yesterday about a nuclear agreement. Beyond that Ukrainian President Poroshenko accused Russia yesterday of direct and undisguised aggression. Ukraine’s military said it pulled back from defending a vital airport in the east of Ukraine, where troops have been fighting a Russian tank battalion.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
Yesterday the US market was closed due to labor day. Yesterday German Chancellor Angela Merkel said that Moscow’s behavior in Ukraine must not go unanswered, even if sanctions hurt the German economy, heavily dependent on imported Russian gas. So europeans could be barred from buying new Russian government bonds. Nevertheless yesterday data showed that euro zone manufacturing growth slowed more than estimated in August. The Purchasing Mangagers’ Index fell at 50.7 in the euro zone, which is the lowest in over a year and below July’s 51.8. Reading below the 50 line are indicating contraction. In France, which is europes second largest economy, manufacturing activity even dropped at the fastest speed in 15 months to 46.9. The factory PMI for Germany also decreased to an 11-month low of 51.4. Data yesterday also showed gross domestic product in Germany, Europe’s biggest economy, shrank 0.2 percent in the past quarter. The German Bundesbank has cast doubt on a second-half rebound and suggested its estimates may prove too optimistic. The EUR is 0.1 percent away from its lowest level in almost a year before data tomorrow might show weaker regional retail sales and services, boosting the case for additional monetary stimulus. Furthermore economists predicted that today data will show the producer price index in the euro zone weakened 0.1 percent in July. The EUR/USD was nearly unchanged at 1.3130. The EUR bought 137.02 JPY and the USD/JPY was at 104.35. Yesterday French President Hollande and ECB President Mario Draghi agreed that deflation and weak growth were threatening the European economy. Australia’s currency has been surpisingly resilient in light of disappointing surveys that showed growth in its largest trading partner, China may be faltering again. The AUD/USD traded at 0.9333.
Daily Technical Analysis
GBP/USD (Daily)
For nearly two months now the currency pair was trading in a bearish equidistant channel but the decreased has been recently stopped at the support level around 1.6533. The chart indicates a trend reversal by moving slightly out of the channel while the Demarker is on a very low level.
Support & Resistance (Daily)
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