Daily Report: Sterling Maintains Post BoE Gains
ActionForex | Sep 11, 2015 02:34AM ET
US equities closed higher overnight with DJIA gained 76.83 pts or 0.47% at 16330.40 while S&P 500 rose 10.52 pts, or 0.53% to close at 1952.29. DJIA seemed to have some difficulty in sustaining above 16500 handle as markets focus are turning to next week's FOMC rate decision. Asian markets are mixed with Nikkei trading mildly lower at the time of writing. In bond markets, US 30 year yields extended recent rebound but lost momentum ahead of 3% handle. Gold is notably lower this week and is soft at around 1110 while Crude oil continues to consolidate between 44/46. In the currency markets, Australian dollar remains the strongest one this week as lifted by rebound in stocks, in particular in Asia. Sterling follows closely after BoE rate decision. Yen remains the weakest one.
Dollar index faced some resistance from 55 days EMA and weakened notably yesterday. The development puts focus back to 95.19 minor support. Break there will indicate completion of the rebound from 92.62 and would send the index back towards this support. Above 96.61 resistance will extend the rebound to 98.33/100.39 resistance zone. Overall, the index is staying in consolidation pattern from 100.39 and there is no clear momentum for a breakout yet.
Yesterday, Sterling strengthened after BoE kept interest rate unchanged at 0.50% and held asset purchase target at GBP 375b as widely expected. Ian McCafferty voted for a rate hike again but was beaten 8-1. The central bank acknowledged increased risk of sharper than expected slowdown in China and impact on global financial markets. But economic was kept unchanged. The statement noted that "global developments did not yet appear sufficient to alter materially the central outlook... but the greater downside risks to the global environment merited close monitoring for any impact on domestic economic activity."
On the data front, New Zealand business manufacturing index rose to 55 in August. Japan BSI large manufacturing rose sharply to 11 in Q3. Germany will release August CPI final in European session. US PPI and U of Michigan confidence will be featured in US session.
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