European Open Briefing – August 26th

Asia Brief: New Zealand Trade Balance came in at NZ$-692 million vs NZ$-475 million expected. Exports fell to NZ$3.7 billion from NZ$4.19 billion previously. Israel launched new air strikes against Gaza. Putin to meet Poroshenko as Ukraine tensions escalate.

Global Markets: Nikkei closed 0.60 % lower, while the ASX gained 0.05 %. Shanghai Comp is currently down 0.70 %, while the Hang Seng lost 0.20 %. Commodities are slightly higher this morning with Gold at $1283, Silver at $19.50 and Crude Oil at $93.60. US 10 year yield stands at 2.38.

FX Overview: EUR/USD hit a low of 1.3178 at the Tokyo open, but eventually rose back to 1.32 as we saw broad USD weakness in the second half of the Asian session. Asia is mentioning offers from macro funds at 1.3220 up to 1.3240 and stops in the mix. To the downside, bids resting at 1.3175 and in front of the barrier option at 1.3150.

Similar picture in Cable, where it rallied from 1.6560 to a high of 1.6595. Still decent resistance in front of the big figure, but a breakout seems imminent. The Pound looks ripe for a bounce in the near-term. Meanwhile, USD/JPY dropped to 103.75 overnight, clearing some stops on the way down. Exporters and leveraged names were noted sellers. Bids are resting towards 103.50 and solid tech support seen at 103.20/30. To the topside, offers lined up in front of 104.20 and tech resistance lies at 104.50, 104.90 and 105.44 (post-Abenomics high).

The commodity currencies all managed to bounce shortly after Tokyo opened. AUD/USD is nearing the 0.93 level again, while Kiwi could test 0.8350 resistance soon. USD/CAD failed again to reach the 1.10 level amid option-related supply in front of the big figure.

Looking ahead, there are not tier 1 data releases in the European session, but we have US Durable Goods Orders at 1330 BST, House Price Index at 1400 BST and CB Consumer Confidence data at 1500 BST.

Good luck!

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