Euro/Japanese Yen pair remains neutral for the moment despite intraday bias. With an intact138.02, lower decline is still mildly in favor of a key support level of 135.50. A decisive break carries larger bearish implications. Nevertheless, a 138.02 break indicated a near reversal term and a bullish turn outlook bullish making a stronger rebound returning to 139.27 resistances.
Looking at a wider picture, it is losing the upside momentum seen in bearish divergence condition in the weekly MACD. So far, EUR/JPY is steadily held above 135.50 key supports. However, there is no confirmation of trend reversal yet. A 145.68 break will extend uptrend move from 94.11 to a 76.4% retracement of 169.96 towards 94.11 at 152.59 before going above.
The EUR/JPY finished the week lower. Selling pressure hit the Euro early after bearish comments from ECB President Mario Draghi and it was continued all week. A low reading of Euro Zone inflation contributed to the weakness. Fueled by the escalation of tensions between Ukraine and Russia, JPY received some support from flight to safety buying.
The same trading week will be expected until Thursday when the Bank of Japan and the European Central Bank will release their latest monetary policy statements. However, the ECB exerts the most influence on the market.
The Ukraine and Russia situation this week remains as the wildcard. Japanese yen will be firmer if there is increased military action. This could neutralize any counter-trend buying in the Euro.
The Australian dollar abated together with the Japanese yen while investors remained focus on the Ukraine and markets in the US and Canada were closed for Labour Day.
The USD/JPY currency pair traded at 104.13. This was an increase of 0.05 percent while the AUD/USD pair changed hands at 0.9334.
The US is working with the EU for to potential sanctions against Russia.
European Council head Herman Van Rompuy commented the bloc will not outline criteria for launching new restrictions. However, he stated that there was resolve to make sure that Russia is penalized for causing more tensions.
In Australia, there is a risk that the manufacturing will tighten barely one month after it expanded to 50.7 within eight months.
Business inventories for the second quarter are due with an expected gain of 0.2 percent followed by the commodity index of Reserve Bank of Australia.
Market stakeholders are also waiting for fiscal policy announcements from the central banks of the United Kingdom, Australia, Japan, and Canada.
This week’s economic spot is again on the European Central Bank as President Mario Draghi is facing the bank’s fight against the threat of inflation.
There are divided conjectures of analysts on whether the ECB will start its launching measures this month, or just a operated up the big talk. President Draghi awakened expectations that the ECB would initiate its own system of calculable easing after his speech at Jackson Hole this month.
However, some believed it will remained, in particular for ECB has not yet launched its latest package of €400bn that is long-term loans, known as TLTROs.
The Bank of England is assumed to hold its interest rates even if the August’s minutes of the meeting showed that two policymakers have voted to raise rates to from 0.5 pc, from 0.75pc.
Expected to be out this week are the key survey data for the manufacturing, construction and services sector. Meanwhile, the revised official data is expected to show that the UK did not even come close to 2012 double-dip recession.
Majority of Asian stocks soared following the cut of regional benchmark for its first monthly drop after four months. Investors are assessing whether policy makers in China will provide incentive afters after reports indicated slower growth rates in manufacturing.
Meanwhile, the MXAP or MSCI Asia Pacific Index put in 0.2 percent to 148.19 in Tokyo, Japan with five shares going forward for three that decreased. The gauge plunged 0.6 percent last month which was the first monthly decline since April.
On the other hand, EU member-nations concurred on the imposition of new prohibitions on Moscow in case the dispute in the Ukraine deteriorates. The Union asked the European Commission to give suggestions targeting the energy and finance sectors of Russia.
Many investors think that China may bring in additional stimulus as economic data wanes. However, negative effects to international economy will probably be minimal, according to these market players.
The PMI in China was recorded at 51.1 last month.
China Enterprises Index of mainland shares traded in Hong Kong dropped 0.6 percent after data publication before quashing losses to climb 0.1 percent.