Central Banks and G20 the focus

<p>Another quiet session overnight, with the only highlights being the BoJ meeting and Australian trade data. As expected the BoJ left policy unchanged and communicated […]</p>

Another quiet session overnight, with the only highlights being the BoJ meeting and Australian trade data. As expected the BoJ left policy unchanged and communicated their usual message that they expect the Japanese economy and inflation to recover moderately. The market seemed disappointed with the outcome and with yet another failure of the 100.00 level the European open has seen a squeeze on longs coming off 40 points from the highs.

AUD was under slight pressure following the release of Australian trade data that revealed a deficit of AUD765 million for July versus a consensus expectation of AUD100 million surplus.

Today we focus on the Central Bank meetings from the ECB and BoE and although no policy change is expected, the risk to GBP longs today could arise if the BoE issues a statement following the meeting threatening that the UK Central Bank may consider additional policy measures if the continuous rise in the yield curve starts to threaten the recent recovery in the UK economy. The ECB press conference is likely to provide few surprises as the members will no doubt remind us of the forward guidance announced in August yet refrain from targets like the Federal Reserve or the BoE’s unemployment target and I expect ECB President Draghi to emphasise that economic risk remains to the downside.

As US yields trade towards the psychological 3% level I expect the ADP report today to have a strong market influence ahead of tomorrow’s NFP’s. The G20 starts today so look for any comments on Syria, the US debt ceiling and of course potential US tapering effects on the global economy that could start this month.



Supports 1.3135 1.3100 1.3060 | Resistance 1.3225 1.3250 1.3300


Supports 99.50 99.10 98.50 | Resistance 100.00 100.30 100.90


Supports 1.5590 1.5520 1.5500 | Resistance 1.5685 1.5720 1.5750

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