Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our latest Daily FX Report. The S&P 500 edged up to close at a record high on Monday as deal activity worth $100 billion offset concerns about overseas growth after Japan's economy slipped into recession. The Nasdaq closed lower, weighed down by Google, which fell 1.5 percent to $546.64, and Gilead, down 1.6 percent at $100.44. The Dow Jones industrial average rose 13.01 points, or 0.07 percent, to 17,647.75, the S&P 500 gained 1.5 points, or 0.07 percent, to 2,041.32, a record closing high.
However, we wish you a successful trading day!
Market Review – Fundamental Perspective
The Japanese yen steadied against the U.S. dollar, pulling back from a fresh seven-year low, as the economic data set the stage for Prime Minister Shinzo Abe to delay an unpopular sales tax hike and call an election two years before he has to. Japan's economy shrank an annualized 1.6 percent after a 7.3 percent slide in the second quarter, when a sales tax hike hit consumer spending. Analysts polled by Reuters had expected 2.1 percent growth in the third quarter, but consumption and exports remained weak, saddling companies with big inventories. The dollar was last at 116.45 yen, 0.15 percent higher, after earlier rising as high as 117.04 yen. The dollar also gained against the euro after an ECB executive board member said the bank could theoretically extend purchases to gold, shares, exchange-traded funds or other assets if more action is needed to stimulate the region's economy. The euro was last at $1.2451, down 0.56 percent. The Canadian dollar eased against its U.S. counterpart on Monday, tracking weaker oil prices, while the market awaited the midweek release of the minutes of the U.S. Federal Reserve Board's last policy meeting. The commodities-linked Canadian dollar has been pivoting around the C$1.13 level in recent sessions, often taking direction from the price of crude, a major Canadian export. Oil prices have dropped to four-year lows on concerns about an oil glut amid signs of slowing global growth. Brent and U.S. crude prices finished lower on Monday following news that Japan, the world's fourth-biggest crude importer, had slipped into recession. The Canadian dollar closed Monday's session at C$1.1296 to the U.S. dollar, or 88.53 U.S. cents, weaker than Friday's finish of C$1.1277, or 88.68 U.S. cents. Brent crude settled down 10 cents at $78.31 a barrel, after dipping as low as $77.94 earlier in the session. U.S. crude for December delivery settled down 18 cents at $75.64 a barrel.
Daily Technical Analysis
USD/JPY (Daily)
Since July the USD was able to appreciate versus the JPY and reached the resistance level at 109.80 where the pair silightly rebounded. Since then the currency pair was experiencing a downward movement untill it reached the second Fibonacci Fan line where it rebounded and rapidly climbed to a new high at 116.98. At the moment it seems that the JPY could regain some of its strength because the USD appears to be overbought. The indicators support this.
Support & Resistance (Daily)
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