The Euro saw little momentum, ranging in familiar territory above 1.46. The British Pound traded along the same boundaries it has seen over the past three days, oscillating around the 1.85 level. Japanese data surprised sharply to the downside overnight as Augusts’ Trade Balance saw the surplus fall deep into negative territory. Price action is likely to remain focused on the US Treasury’s rescue plan for financial markets in European trading with investors unwilling to commit to positions without knowing the implications of what lawmakers will decide.
[B][U]Key Overnight Developments[/U]
• Japanese Trade Balance falls into deficit as exports dwindle
• Euro, Pound flat-line as markets wait for news from the US Congress[/B]
[B][U]Critical Levels
[/U][/B]
The Euro saw little momentum, ranging in familiar territory above 1.46. Support is found at 1.4570, with resistance lined up at 1.4794. Sterling traded along the same boundaries it has seen over the past three days, oscillating around the 1.85 level. Support is seen at 1.8410, with resistance at 1.8658.
[B][U]Asia Session Highlights[/U][/B]
Japanese data surprised sharply to the downside as Augusts’ [B]Trade Balance[/B] saw the surplus fall into deep into negative territory. The drop came courtesy of a sharp decline in exports to the US, with shipments down -21.8%. Overall exports grew just 0.3% versus 8.0% in the preceding month. The export sector had been the key driver of growth in recent years, and stagnation here will certainly present a problem for the world’s second-largest economy as it slips formally into recession following a negative GDP reading in the second quarter. Newly appointed Finance Minister Shoichi Nakagawa announced the possibility of fiscal stimulus today to prop up the economy, saying the government will consider cutting taxes and increasing spending.
[B][U]Euro Session: What to Expect[/U][/B]
The calendar is noticeably bare in European trading, with Germany’s [B]GfK Consumer Confidence Survey[/B] the only notable item on the docket. Expectations call for a decline to 1.3 in October from 1.5 in the preceding month as consumers trim spending on fears of slowing economic growth. On balance, oil prices have held at lower levels for some time now may have altered consumer expectations substantially enough to see some optimism. Still, the metric has fallen a whopping 71.7% since June so it will be a long road back before markets see any meaningful improvement.
On balance, continued deliberations about the [B]US Treasury[/B] rescue plan have dominated attention and are likely to continue to do so until Congress reaches a final outcome. Trading has been lackluster across financial markets, with traders unwilling to commit to positions without knowing the implications of what lawmakers will decide.
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[I]To contact Ilya regarding this or other articles he has authored, please email him at <[email protected]>.
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