Sterling extended losses to mark a five-month low of $1.6441

Good Morning,

- The dollar remains near at 14-month highs early on Wednesday, supported by upbeat U.S. data on Tuesday and by a selloff in yen and sterling.

- Asian shares: Japan's Nikkei 0.38%, Hong Kong's Hang Seng 2.05% (07:04 GMT), Korea's Kospi -0.02%, Australia's ASX 200 -0.04% and China's Shanghai 1.00%.

- Sterling extended losses to mark a five-month low of $1.6441, after a new poll showed growing support for the "yes" vote in the referendum.

- Italy’s PM Renzi: Italy not planning any one-off measures to cut debt, govt will cut public spending by EUR 20 bln in 2015, does not need additional budget measures this year.

- Commerzbank on EUR/USD: The pair is expected to stabilize around the 1.3105 September 2013 low before reaching the psychological 1.3000 region, notes Commerzbank. "On the hourly and daily charts we can see positive divergence which, together with the loss of downside momentum over the past few days, increases the chances of a minor bounce towards the 1.3200 region being seen," CB projects. "Resistance comes in along the downtrend channel resistance line at 1.3155 and the 1.3222 August 28 high where the currency pair is likely to be capped. Further resistance can be seen along the three month downtrend line at 1.3369. While trading below here, downside pressure should be maintained," CB adds. In line with this view, CB maintains a long EUR/USD position as a trade recommendation from 1.3120, with a revised stop 1.3080, and a revised target at 1.3220.

- U.S. construction spending rebounded strongly to hit its highest level in more than 5-1/2 years in July as private construction increased and state and local government outlays surged, in a further sign of vigor in the economy. Construction spending increased 1.8 percent to an annual rate of $981.31 billion, the highest level since December 2008, data showed on Tuesday.

- Also US Manufacturing expanded in August at the fastest pace in three years as orders grew by the most in a decade. The ISM index unexpectedly climbed to 59, the highest level since March 2011, data showed yesterday.

- The U.S. two-year Treasury yield jumped to a one-month high and the benchmark 10-year yield posted its biggest daily rise in a month yesterday.

- The dollar traded near an eight-month high of 105.28 yen. Level at 105.45 yen would take the dollar to a high not seen since October 2008. The sell-off in the yen coincided with renewed hopes about a highly anticipated portfolio change in Japan's behemoth Government Pension Investment Fund (GPIF).

- Business activity in Japan’s service sector worsened from a previous month of growth in August, although at a fractional pace. Total new orders, however, remained in growth territory for the third month in a row. The headline seasonally adjusted Business Activity Index posted at 49.9.

- Australia’s economy expanded at a slower pace in the three months through June, underscoring the central bank’s bias to keep interest rates at a record low to boost domestic demand. Second-quarter gross domestic product advanced 0.5 percent from the previous three months, when it rose 1.1 percent. The result compared with a median forecast for a 0.4 percent gain from a survey by Bloomberg.

- HSBC China Composite PMI™ data (which covers both manufacturing and services) signaled a fourth successive monthly increase of Chinese business activity during August. The Index posted at 52.8, up from 51.6 in July, and signaled a robust rise in activity levels. Furthermore, it was the strongest expansion of business activity in 17 months.

- Brent crude oil futures fell to their lowest level in 16 months on Tuesday.

- Watch today: EU retail sales, US chain stores & factory orders.

Have a nice Day!