FED 'will act if necessary'!

  • Risk was put back in the market after better than expected US GDP and strong words of support from Fed Chief Bernanke at the Jackson Hole. Q2 GDP was revised lower to 1.6% vs. 2.4% initially released but was better than the 1.4% q/q expected. Fed Chief Bernanke reopened the door on additional monetary easing if the US economy was to further deteriorate.
  • The Euro (EUR) was well supported on USD weakness and comments from the ECB's Weber that Europe was on the verge of a self-sustaining recovery. Bigger moves were seen through the EUR/JPY which rallied near 200 pips. August German CPI fell 1.0% vs. 1.2% previously y/y. EUR/USD traded with a low of 1.2677 and a high of 1.2778 before closing at 1.2738.
  • The Japanese Yen (JPY) USD/JPY started moving higher in Asia on talk that the PM Kan would be holding a special press conference on the Yen strength. July Unemployment Rate is forecast at 5.2% vs. 5.3% previously. Overall the USDJPY traded with a low of 84.28 and a high of 85.49 before closing the day around 85.33 in the New York session.
  • The Sterling (GBP) Q2 GDP was upgraded to 1.2% vs. 1.1% initially released. GBP/USD was sold however at the start of the US session on reported comments from a UK opposition politician UK economy was about to be 'hit from a hurricane'. Overall the GBP/USD traded with a low of 1.5445 and a high of 1.5539 before closing the day at 1.5517 in the New York session.
  • Oil & Gold (XAU) was contained as USD weakness was met by reduced demand for the safe haven metal. Overall trading with a low of USD$1232 and high of USD $1242 before ending the New York session at USD$1238 an ounce. Oil surged back to the $75 a barrel level as shorts covered.

Currency to watch out for: EURUSD & GBPUSD

§  The EURUSD pivot point is at 1.2700 with a preference to enter into Long positions at 1.2710

§  The GBPUSD pivot point is at 1.5465 with a preference to enter Long positions at 1.5475

                           

Today’s calendar and market movers:

§  EZ Consumer Sentiment expected at -12

§  Us Personal Income expected at 0.3%

 

Equity Markets:

 

  • US equities closed positive on Friday with the DJIA and the SP500 closing 1.65% and 1.66% respectively.  The European bourses also rallied with the FTSE closing 0.89% the DAX and the CAC closing up at 0.93% and down 0.65%. The NIKKEI and the HSI at the time of writing is 1.65% and 0.71% respectively.