Daily Morning Report & Daily Technical Levels 13/08/2015

Daily Morning Report 13.08.2015

The Australian dollar rose in Asia as China’s recent currency turmoil seemed to wane on Thursday. AUD/USD rose 0.17% to 0.7390 with the Aussie watched as a proxy on sentiment because of the country’s deep trade relationship to China. USD/JPY changed hands at 124.30, up 0.07%. The Chinese yuan inched toward stability on Thursday since a surprise sharp weakening earlier this week led to market volatility, opening flat against Wednesday’s close and even slightly stronger than the morning central parity fixing. On Wednesday, the yuan opened trade at 6.4300, sharply lower than Tuesday’s close of 6.3231, following something of a pattern in the two days since the PBOC announced its new central parity fixing method, opening sharply lower to match the drop in the central parity and then hovering around that opening price for the rest of the day. Thursday’s opening price, which failed to match the drop in the fixing, may indicate that the yuan is on its way back to stability. Ma Jun, the chief economist of the PBOC’s research bureau, again played down talk of depreciation in state media on Thursday morning, arguing that the currency is near its equilibrium level. He said the PBOC is more than capable of stabilizing the exchange rate. The PBOC set the yuan central parity at 6.4010 Thursday, down another 1.1% against Wednesday’s fixing, following Wednesday’s 1.6% and Tuesday’s 1.86% devaluations. In Japan core machinery orders for June fell 7.9%, more than the drop of 5.6% expected month-on-month, but the year-on-year pace rose 16.6%, better than of a gain of 16.4% seen. Australia’s MI inflation expectations rose to 3.7%, compared to the previous survey showing trimmed mean expectations at 3.4% year-on-year and and the weighted mean at 2.7%, above the previous 2.6%. Later in the day RBA Assistant Governor Guy Kent speaks. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.12% to 96.40. Overnight, the dollar tumbled over 1% to one-month lows against the other major currencies on Wednesday, as markets were still digesting news that China devalued its currency for the second consecutive day. The yuan dropped to a four-year low against the dollar after the People’s Bank of China set the yuan’s midpoint rate weaker than at Tuesday’s closing. China devalued its currency by 2% in a surprise move on Tuesday to make its exports more competitive and shore up growth in the flagging economy. The PBOC has described the move as a “one-off depreciation”, based on a new way of managing the exchange rate that better-reflected market forces. On Wednesday, after Greece agreed on the framework of a multi-year €86 billion bailout, members of Parliament prepared to debate the provisions of the stimulus package during Thursday night’s emergency session. While Greece prime minister was forced to accept key concessions on pension and spending cuts, as well as a reduction in early retirement benefits as part of the accord, the Greek Parliament is still expected to approve the deal. If ratified, the deal could be finalized in time for Greece to meet a €3.2 billion obligation to the European Central Bank on August 20. Elsewhere, Federal Reserve of New York president William Dudley cautioned on Wednesday that the currency interventions by the People’s Bank of China this week could have widespread ramifications on the global economy. Speaking at the Rochester Business Alliance in Western New York, Dudley indicated that the PBOC’s 1.9% devaluation of the Yuan might have “huge implications,” on economic growth worldwide while emphasizing it is still “very early to judge the full impact” of the monetary policy decision. Separately, Dudley echoed the sentiments of several of his colleagues on the timing of the Fed’s first interest rate hike since 2006. Although Dudley said Wednesday that the Federal Open Market Committee is moving closer to raising short-term rates he would not confirm whether it will occur during its two-day monetary policy meeting beginning on September 17.

 

13.08.2015 – 08:25 GMT+3

Daily Technical Levels

EUR/USD

GBP/USD

USD/JPY

AUD/USD

USD/CAD

USD/CHF

R3:

1,1211

1,5693

125,20

0,7452

1,3052

0,9842

R2:

1,1176

1,5658

124,85

0,7417

1,3017

0,9807

R1:

1,1151

1,5633

124,60

0,7392

1,2992

0,9782

S1:

1,1121

1,5603

124,30

0,7362

1,2962

0,9752

S2:

1,1096

1,5578

124,05

0,7337

1,2937

0,9727

S3:

1,1061

1,5543

123,70

0,7302

1,2902

0,9692