The pair settled the session with decent gains after an influential think tank speculated that there will be a major intervention in the Spanish bond market once the official request is made. Apart from supporting the pair, this also resulted in a significant reduction in shorter-dated bond yields in Spain. There were also reports that Spain is to accelerate the bank bailout and is about to receive an emergency disbursement from the EUR 100bln bailout failed to support domestic bond market. However even though the EU said that there was no official request, this did little to depressed the risk on sentiment. In terms of technical levels, supports are seen at 1.2242, 1.2195 and then at 1.2167. On the other hand, resistance levels are seen at 1.2344/88 and then at 1.2402.
GBP outperformed its peers today, following the release of better than expected UK retail sales. UK retail sales for July showed a beat expectations for both the yearly and monthly figures, with upward revisions for June's reading as well. Retail sales were expected to decline for the month due to bad weather deterring shoppers, and also as people avoided London city centre during the Olympics, but the Office of National Statistics said that the Olympics did not affect retail sales. In terms of technical levels, supports are seen at the 200DMA line at 1.5718, 1.5578 and then at 1.5547. On the other hand, resistance levels are seen at 1.5750/68 and then at 1.5778.
USD/JPY benefited from bids from domestic accounts as market participants returned from Obon holidays. Also, ongoing speculation of policy easing by the ECB and the Fed, which may also result in a fresh announcement relating to bond purchases by the BoJ, supported riskier assets. In terms of technical levels, supports are seen at 78.92/75 and then at 78.60. On the other hand, resistance levels are seen at 79.41/62 and then at 79.97.