MORNING BRIEFING: China’s weekend announcement dominates market sentiment

[RTFX-Trading]

MORNING BRIEFING: China’s weekend announcement dominates market sentiment

What’s new:
China: China announces a de-pegging of the Yuan from the US Dollar, to allow more flexibility
Euro: Euro finds support as risk appetite buoys the markets
Asia: Main Equity indices trading higher this morning


Today:


Rates in Asia and Indices:
EURUSD: 1.2466 - 1.2368.
USDCHF: 1.1092- 1.1001.
GBPUSD: 1.4937 - 1.4807.
EURJPY: 113.14 – 112.09.
USDJPY: 90.95 – 90.29.
DowJones: 10'450.64 +0.16%
NASDAQ: 2'309.80 +0.11%
S & P 500: 1'117.51 +0.13%
Nikkei: 10’230.88 +2.36%
Shanghai: 2'565.27 +2.07%
Gold: $ 1'259.25
Crude Oil: $ 79.45

 
Comments:

Last Saturday Bank Of China announced it would de-peg its Yuan from the US Dollar. They announced a reform of the Exchange rate regime and its flexibility. It was also mentioned in their announcement that Chinese economy had experienced an ‘enhanced economic stability’. China also cautioned however that there should not be expectations for large scale appreciations.

As China’s announcement boosted the prospects of the global economic recovery, and helped ease political tensions with the United States - we have seen this morning that US Dollar and Japanese Yen weaken against most of the majors.

For the EURUSD pair the hourly & four hourly charts suggest an indicative 1.2500/1.2530 level to the upside and a 1.2350/1.2400 level to the downside. In the 5 minute charts price we see price is trading beyond the 100 & 200 moving average which is usually indicative of enough momentum to sustain further upside. Despite the probability of short term bullishness, the medium to long term outlook remain bearish.

The economic calendar is very quiet today, given the lack of data coming out sentiment will rule the markets – and with Asian Markets higher, it might be indicative of risk appetite accompanying trading today.

Good day,


Rudolf Muscat
Trading desk

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