Daily FX Report

Good morning from wonderful Hamburg. The chief of the Fed, Ben Bernanke, expects a recession, if the MPs don't agree to the $700 billion rescue plan for financial institutions. Bernanke said on Tuesday that the Congress must act urgently to stabilize the credit crisis. Otherweise it will have very serious consequences to the financial market and for the economy.

Markets review

On Tuesday the USD rose aginst the EUR after a deep fall in previous sessions. Lower oil prices and views that the government's $700 billion bailout plan might be not so negative for the currency as initially feared, pushed the EUR/USD by 0.7 % to a session low at 1.4621. According to some analysts, the strong boost in EUR/USD yetserday was clearly outsized and the market is in process of reversing that. The currency market outlook on the EUR is downbeat after weak factory data on Tuesday. Now analysts are watching the German Ifo business confidence for further hints of economic weakness in the euro zone.

Big Japanese manufactures were less pessimistic about business condition in the 3 months to Septemper compare to the previous quarter. The business survey index of sentiment was minus 10.0, whereas the index was minus 15.1 in April-June. But the JPY decreased against a number of currencies on the early Wednesday session. The news that Warren Buffet's Berkshire Hathaway will invest $5 billion in Goldman Sachs Group shot US equity futures up in after-hours trading, reducing some of the inflow that the Japanese currency had enjoyed when Wall Street fell the previous day. It is a vote of confidence when the world's best known investor spend money in a financially stricken sector said a money manager. The USD/JPY inches up 0.1 % to 105.65. The EUR/JPY climbs 0.3 % to 155.10 and the AUD/JPY gains 0.7 % to 88.55.

Technical analysis

NZD/USD

In August the NZD/USD broke through the lower line of the downward trend channel. This development established a new steeper downward trend channel. The NZD trades in a zigzag movement between both trend lines and is now remaining in the near of the resistance line. If the pair don't cross this level in the next trading days, it will rebound back and continue the short trend

GBP/JPY

Since the end of July, the GBP/JPY decrased from 216.05 down to 184.56. But afterwards the currency rebounded again and is now trading in the near of the 38.2 % Fibonacci Retracement level. In the last two days the market was quite neutral and developed two dojis. This might be a sign for a new trend impuls in the next days. We should pay attention, if the GBP cross the resiatnce level at 196.59

Pivot Points - Daily FX Support and Resistance Levels

Daily Calendar & Key FX Events

Varengold Bank

IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT

This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.