Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our Daily FX Report. Yesterday Israel’s Prime Minister Netanyahu tried to put the spotlight back to Iran and warned the United Nations that a nuclear-armed Tehran would be a greater threat than Islamic State. He described Iran, Islamic State and the militant group Hamas as part of a single team and compared them all to Germany’s Nazis.
However, we wish you a much luck in trading today!
Market Review – Fundamental Perspective
Yesterday the Dow Jones index of shares declined 0.2 percent and the Standard & Poor’s index fell 0.3 percent. Based on speculation Britain’s interest rates will rise relative to those of its neighbors boosted the allure of U.K. assets and push the GBP to a sixth monthly gain versus the EUR. Not since 2000 has the GBP had such a run of advance against its 18-nation counterpart.The EUR/GBP was little changed at 0.7811 after tumbling 1.3 percent this month. The GBP/USD traded at 1.6240.
The USD appreciated to a six-month high against emerging-market currencies as signals the U.S. economy is improving bolstered the case for the Federal Reserve to raise interest rates for the first time since 2006. Yesterday the U.S.Commerce Department said that that consumer spending rallied 0.5 percent last month after being unchanged in July. The growth in August was just slightly above the median forecast. Furthermore data yesterday also showed that personal income gained 0.3 percent in August. But the housing sector remains an exception, because a separate report showed that Americans signed fewer contracts in August to purchase previously owned homes. Beyond that the European Commission said that economic sentinment in the euro zone dropped to 99.9 this month from 100.6 in August. The market had estimated a decrease to 100.0. This index was weighed down by less optimistic consumers, retailers and industry. The decreasing optimism was mirrowed by a drop in the business climate indicator which was at 0.07 this month, the lowest level sicne October 2013. The only sector where sentiment improved slightly in September were services and construction. The EUR/USD was nearly unchanged at 1.2685 and the EUR/JPY traded at 138.83. The USD bought 109.40 JPY.
Daily Technical Analysis
EUR/JPY (4 Hours)
We can see that the EUR/JPY moved out of its bullish trend channel last week and touched a support level around 138.40. We can also recognize a head and shoulders pattern which might be a signal of an trend reversal with more losses for the pair. The Demarker is also pointing downwards.
Support & Resistance (4 Hour)
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