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PBoC promises to fight slowdown The People's Bank of Chinar pledged to use multiple monetary policy tools to guide stable and appropriate growth in credit and money supply, to forge ahead with market-based interest rate reforms and to increase the flexibility of the yuan in order to resolve domestic economic problems. According to regulator's second-quarter monetary policy implementation report, the global economy may fall into recession again. The euro zone’s debt crisis is likely to worsen, while US economy still doesn’t have a necessary ground for a steady rebound. Photo: Bloomberg Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

Draghi’s press conference The ECB President Mario Draghi delivered almost nothing today: it seems by claiming that the ECB will do whatever needed to save euro Draghi simply delayed the inevitable slide of the single currency. The ECB governing council discussed rate cut, but concluded that the time for then isn’t right. Draghi: - “There was no mentioning of bond buying last week. I just gave the general philosophy of the ECB’s approach”. - The EFSF should buy the debt of the euro zone’s problem nations. As for the ECB, it may take further non-standard measures. The central bank’s going to discuss options of future action including unconventional policies and “there’s no need to specify them,” “the relevant committees should examine further measures.” - Monetary policy can’t solve all the problems of the euro area. Governments have to act. - Inflation should decline further to below 2% in 2013. Inflation expectations are firmly anchored. - Euro zone growth remains weak. - Heightened uncertainty is weighting on euro sentiment. Euro is irreversible. “It’s pointless to go short on euro. It will survive”. - Risk premium for some nations is exceptionally high. High yields are unacceptable. - “Any bond buying will be focused on the short part of the yield curve.” - “Current design of ESM does not allow it to be recognized as a suitable counterparty.” - “I am surprised by amount of attention ESM banking license has received.” EUR/USD spiked up to $1.2294 before plunging to $1.2173. Image by Getty Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

GBP/USD: technical comments GBP/USD surged to $1.5678 on ECB and Mario Draghi’s comments, but then slid back to $1.5500 levels. This week the pair declined for three consecutive days, showing the sharpest fall on Wednesday. The pair has been bouncing in a flat range since June after trading in a bearish channel in May. In our view, GBP/USD is likely to remain in a sideway channel in the nearest future because of the strong resistance levels concentrated in the $1.5735/85 area (200-day MA, 50% Fib. retracement from a May drop and the upper boundary of a daily Ichimoku cloud). A close above $1.5780 could open the way for a further rise to $1.5904. On a downside the next support for the pair out of the bounds of the sideways channel lies at $1.5392 (July 12 minimum) and at $1.5267/33 (June and 2012 minimums). According to analysts at Commerzbank, GBP/USD may fall to $1.5000 (two-year low) after it failed to overcome the $1.5735/85 resistance area. In their view, repeated failure to break through the resistance means the pair will depreciate in 1-3 month. Chart. Daily GBP/USD Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

Commerzbank: comments on EUR/GBP EUR/GBP strengthens for a third consecutive day on Thursday. Today the pair reached a 3-week high at $0.7905, but then slid below a psychological $0.7900 level. Analysts at Commerzbank expect the pair to push higher to $0.7905/50 in a near term (38.2% Fib. retracement from a May-June decline and the May minimum). After a short-term correction the pair is likely to resume a longer term downtrend. Chart. Daily EUR/GBP Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

USD/CHF: strong resistance ahead USD/CHF keeps moving up within a gently sloping gently sloping uptrend which started in May. On July 24 the greenback reached the maximal level since November 2010 around 0.9970. The pair’s currently trading around 0.9790. Note that this is only 250 pips below the 200-week MA at 1.0040. This level represents an extremely strong resistance as US dollar hasn’t been able to consolidate its position above this line since 2002. This is why we expect USD/CHF to stall below the parity. For now, it’s difficult to come up with a fundamental driver which could help US dollar overcome an immense resistance of the 200-week MA and bring it above this level on the sustainable basis. The Fed refrained from easing and may keep doing so until the Operation Twist is over late in December, while the US economic performance remains far from encouraging. Moreover, no need to explain what burden is US so-called fiscal cliff for US currency and these problems will be also at full sight as the year-end approaches. On H4 chart we see what may become a “head and shoulders” formation. If the pattern is completed and the neckline around 0.9750 breached, we will be looking forward to a decline to the 0.9570/50 area (January maximums). Chart. H4 USD/CHF Resistance: 0.9970 (July 24 maximum), 1.0000 (psychological level), 1.0040 (200-week MA). Support: 0.9750 (July 17 minimum), 0.9660 (June 8 and 29 maximums), 0.9580/70 (January maximums). Chart. Daily USD/CHF Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

BarCap: play on SNB’s selling euro This week the Swiss National Bank reported that the share of its euro holdings increased from 51% in Q1 to 60% in Q2. Analysts at Barclays Capital are sure that the SNB will have no choice, but to sell the single currency reducing its exposure to its depreciation. In their view, the central bank’s move will have the biggest impact on EUR/CAD and EUR/GBP, some of which has likely already happened in July. Aussie will be also supported by the SNB’s diversification flows. Idyllic Swiss countryside. Photo by alex_zbruew

Analysts: comments ahead of the BoE BARCLAYS: No policy easing is expected until November's MPC meeting. Today's ECB meeting is potentially likely to be a bigger driver of the pound, than the BoE meeting. MORGAN STANLEY: Recent weak economic data means markets might be looking for the BOE to take action but this is unlikely to happen yet. Ahead of the meeting, sterling could come under pressure although the currency could enjoy a rebound as the BOE disappoints investors hoping for a dovish outcome. CAPITAL ECONOMICS: We expect more asset purchases and a 25 b.p. rate cut, but not until November. IHS GLOBAL INSIGHT: A rate cut is off the cards for now as it would hit banks' profit margins and constrain their ability to lend. An additional 25 billion pounds of asset purchases is likely to happen in Q4. ROYAL BANK OF CANADA: We don’t expect any measures this week. However, the combination of last week's dismal growth data and a sharp fall in inflation means next week's inflation report could signal another 50 billion pounds increase in the bond-buying stimulus program in November. GOLDMAN SACHS: No change is expected in the BOE's stance this week. However, we think further 25 billion pounds easing is likely to be necessary in November, when the existing QE program runs out CITIGROUP: No change is expected as the BOE won’t react so quickly to last week's disappointing growth data. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

RBC: sell USD/JPY on rallies USD/JPY continues trading in its habitual patterns in the H1 chart: consolidation – move on the news – leveling up etc. Yesterday’s lack of easing on the Fed’s part brought the pair above 78.35, to the new higher range. Analysts at Societe Generale note that USD/JPY rallied on each central bank meeting day this year except on January 12 when the ECB and the BOE left their policies unchanged. RBC recommends selling US dollar on rallies as this is, in their view, exactly what domestic investors in Japan will do. The specialists remind that yen tends to appreciate in August due to by Japanese investors’ coupon receipts on US Treasuries holdings and unusually low liquidity in forex markets in the month. Support: 78.30/25 (recent resistance of the narrow sideways range, 50-period MA on H4 chart, MAs at H1 chart), 78.00, 77.90. Resistance: 78.55 (today’s maximum), 78.65, 78.80, 79.00, 79.20. Chart. H4 USD/JPY Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

AUD/USD: technical comments AUD/USD gains after yesterday’s drop on FOMC results. The pair slid from a four-month high at $1.5051 (August 1 maximum) below the important support at $1.0475 (April 27 maximum, beginning of a sharp May decline), but now is moving on the upside. The pair still trades close to the upper boundary of the upward channel existing since mid-June. On the daily and H4 chart the pair trades above the up-directed 200-, 100- and 50-period MAs. On Tuesday a shooting star candlestick formed on a daily chart. In our view, a medium-term uptrend looks rather resilient. The next strong resistance lies only at $1.0750/60 (Sep. and Oct. 2011 maximums) and at $1.0855 (2012 maximum), though there will probably be some hurdles around $1.0625 (March 20 maximum, February 14 minimum). Bulls have a clear advantage above $1.0475 (April 27 maximum, beginning of a sharp May decline). We concede a correction to $1.0400 (middle of the channel) and to $1.0280 (200-day MA). If you want to sell on corrective more, wait for a decline below $1.0435 and target $1.0300. Exit from the upward channel will pave the ground for a further decline to $1.0176 (July 25 minimum) and to $1.0100 (July 12 minimum). Chart. H4 AUD/USD Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

Key options expiring today Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT). Here are the key options expiring today: EUR/USD: $1.2150, $1.2200, $1.2220, $1.2250, $1.2260, $1.2300 USD/JPY: 77.50, 78.10, 78.45, 78.50, 79.00 GBP/USD: $1.5600, $1.5610, $1.5650, $1.5680 EUR/GBP: 0.7795 EUR/CHF: 1.2025 AUD/USD: $1.0525, $1.0585 Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

August 2: economy and currencies The greenback soared against its major counterparts after the FOMC meeting results were released on Wednesday (the Fed refrained from easing, but said it is ready to undertake measures if needed). However, after the first shock the market took its course. EUR/USD rose from American and Asian sessions’ minimum at $1.2217 where it fell due to the FOMC statement to the levels around $1.2255. The main events today are, with no doubts, the results of the ECB’s meeting at 11:45 GMT and Mario Draghi’s speech 45 minutes later which will either confirm or deny the pledge to “do whatever needed to save euro” which the central banker gave last week. While bracing yourself for the meeting, watch EU PPI at 09:00 GMT and Spanish 10-year bond auction in the afternoon. The nation’s 10-year yields were at 6.72% yesterday, down from the record maximum of 7.74% hit so far. Italian Prime Minister Mario Monti will meet Spanish PM Mariano Rajoy in Madrid – surely the leaders of the 2 troubled economies have much to discuss. AUD/USD strengthens after positive Australian retail sales data (+1.0% in June vs. previous +0.8% and a consensus + 0.6%) and trade balance (0.01B trade surplus vs. forecasted and previous deficit). Yesterday the pair slid below $1.0475. NZD/USD trades on the upside, consolidating around the $0.8080 area after yesterday’s drop. However, gains in the Aussie and kiwi are tempered ahead of the ECB: market players fear that any ECB measures announced on today’s meeting to be enough to resolve the region’s debt crisis. GBP/USD gains after yesterday’s sharp fall. On today’s meeting the BoE is not expected to do any monetary easing steps as the regulator waits to see if their stimulus expansion and new bank-funding plan will boost credit and help pull the UK out of a double-dip recession. The yen weakened against many of its counterparts after the IMF said it’s “moderately overvalued,” easing the way for Japan to try to weaken the currency to aid exporters. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

USD: Fed refrains from stimulus The long-awaited decision of US central bank is finally out. The Federal Reserve didn’t announce additional stimulus. The Fed said in a statement it will provide additional accommodation as needed amid a slowing economy. The policymakers kept the benchmark interest rate in the 0-0.25% range. As for other policies, Operation Twist remains in place till the year-end – the Fed is swapping $667 billion in short-term debt in its holdings for longer-term securities to cap borrowing costs. EUR/USD fell to the minimum in almost a week. USD/JPY jumped by about 40 pips. AUD/USD lost almost 70 pips dropping from 4-month maximum. BMO: “Anybody looking for even a mild outcome of monetary policy easing was disappointed. It continues to be like an absurdist play where we’re all waiting for the Fed to act on QE3 and it never arrives. Given the current state of the economy, there shouldn’t be an expectation the Fed is going to act on quantitative easing.” Still many players continue expecting more action from the Fed. RBS: “There’s more data coming that could give the Fed reason to act. This doesn’t necessarily take away from potential action in the future.” Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

USD: history repeats itself? Many analysts believe these anxious days the Fed is closer than ever to launch the third round of quantitative easing (QE3), a monetary measure where the government buys bonds for newly created money. The Fed Chairman Ben Bernanke has recently hinted the regulator could take further action if needed. We propose you to have a look at the Wall Street Journal Dollar index in order to draw a parallel between summer 2010 and summer 2012. The point is that in June 2010 the greenback hit a 15-month high as the euro zone’s crisis was arising. In August the index declined steadily after Bernanke said the Fed is considering a second round of bond purchases among other options to support the US economy. QE2 was formally announced only in November, but the greenback has already hit the bottom: the easing was already priced in by the markets. As for 2012, the index hit a 22-month high on July 24. It is plain that the situation in Europe has worsened in comparison to 2010. Bernanke has recently said that there are several options the Fed could consider taking if things get worse. One can expect the greenback the greenback to be sold off in anticipation of the program. However, if and when the program will be officially launched, the move will be priced in and the dollar will likely start a new uptrend. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

Big Mac index: currencies vs. US dollar The Big Mac Index is published by The Economist and is based on the theory of purchasing-power parity: in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different countries. The journal has chosen McDonald’s Big Mac to play the role of such basket – this product is sold in every country worth analyzing. In short, The Economist compares the Big Mac prices in different countries and derives exchange rates from these ratios. By comparing the obtained rates with the nominal exchange rates the economists conclude whether the currencies are at parity, undervalued or overvalued. Below you may see US dollar’s against a broad range of currencies. Note that the greenback is largely under-valued against the major currencies and over-valued against the emerging market currencies, with some notable exceptions. Remember that, according to market’s mechanisms, the undervalue currency will tend to appreciate and vice versa. From what we see now, one may expect the major currencies will have to depreciate against the emerging market currencies. Source: The Economist Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

ADP comes better than expected ADP employment report showed that US companies added 163K jobs in July (cons.: +121K, prev.: +176K). Economists often use ADP figures to adjust their expectations ahead of official non-farm payrolls report. According to the forecasts, NFP added 100K in July, while the unemployment rate remained at 8.2%. Note though that since April 2010 initial estimate has either overstated or understated the Labor Department’s initial reading on private payrolls by 72K on average. All eyes are now focused at the Fed’s decision due at 18:15 GMT. Captain America © Marvel Comics

ECB: Draghi vs. Weidmann It seems that nationalities have a great impact on the ECB’s policymakers. The central bank meets tomorrow, but Italian central banker Mario Draghi, the ECB President, and German Jens Weidmann who heads Bundesbank have quite different opinions on how the central bank should act in the current crisis. Draghi pledged last week that the ECB would “do whatever it takes to preserve the euro.” The market’s speculating that Draghi proposes the central bank to restart bond purchases in order to lower the borrowing costs for the troubled euro zone nations. Weidmann made clear he loathes such move as it, according to Bundesbank would risk violating the ECB charter's ban on central-bank funding of government debt. (Ansa) Of course, at first glance Weidmann is not a big force in the ECB's 23-member Governing council. However, WSJ experts say that But “boxing the Bundesbank into a corner could undermine Mr. Draghi's credibility” in Germany, the leading economy of the currency union. Weidmann has already opposed the ECB decisions for several times. At the same time, he doesn’t have any allies. Some ECB officials claim that Bundesbank’s discord undermines the central bank’s efforts to overcome the crisis as this way the region’s monetary authorities seem uncertain in their actions. For now, the compromise would be if on Thursday the ECB announces its intention to buy bonds and to take other measures, without yet implementing them. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

JP Morgan: scenarios for EUR Analysts at JP Morgan try to clarify the load of information and different factors we have in the euro area by distinguishing scenarios of euro’s potential future moves. According to the specialists, one may expect EUR/USD trading up and down around $1.2000 as the ECB and the Federal Reserve act. Down If the crisis in Europe escalates, EUR/USD will slide below $1.2000. The key elements of this scenario are: discussions of Greece’s exit from the EMU, Italy and/or Spain losing access to the debt markets, failure of Greek government, the end of Greece’s financing program if EU doesn’t reach consensus with Greek government, the rejection of ESM by German Constitutional Court, the election of anti-EMU party in the Netherlands. Up If the situation improves, EUR/USD will be able to return above $1.2500 in Q3. The key elements of this scenario are: the launch of QE3 by the Fed, the signal from EU parliaments about their intention to fast-track banking union and transfer costs of Spanish bank recapitalization to the region, the ECB’s restart of direct bond purchases or granting ESM a banking license with a higher lending ceiling, the focus on US fiscal cliff and the concerns about sovereign rating in run-up to US Presidential election. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

GBP/USD: technical comments GBP/USD declines for a third consecutive day after the pair reached a five-week high at $1.5767 on Friday. The pair has been bouncing in a flat range since June after trading in a bearish channel in May. Sterling tested the upper boundary of a sideways channel aligned with the 200-day MA, but now moves into the middle of the range. On the H4 chart GBP/USD trades above the 200-, 100- and 50-day MAs. In our view, GBP/USD is likely to remain in a sideway channel in the nearest future because of the strong resistance levels concentrated in the $1.5743/80 area. A close above $1.5780 could open the way for a further rise to $1.5904. On a downside the next support for the pair out of the bounds of the sideways channel lies at $1.5392 (July 12 minimum) and at $1.5267/33 (June and 2012 minimums). Chart. Daily GBP/USD Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

UBS: CAD will strengthen vs. USD Analysts at UBS expect USD/CAD to trade around the parity for some time and then go down below 1.0000 reaching 0.9800 within a month. In their view, loonie will be supported by the ongoing worldwide commodity demand. The specialists point out that Canada’s May GDP was slightly disappointing (only 0.1% increase) due to weaker manufacturing sector with the negative effects offset by mining, oil and gas extraction, which contributed most to the nation’s economic growth. Also note that the pair USD/CAD had so far breached an important support at 1.0050 – this level supported the prices late in 2011 and acted as resistance in February-May 2012. Chart. Daily USD/CAD Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

AUD's in demand as reserve and safe haven From a fundamental point of view, the Australian currency is supported on Wednesday ahead of the Fed meeting results. Most analysts believe any policy easing signals from US will sap demand for the greenback and lift the high-yielding currencies. Moreover, economists expect RBA to stay on hold in August and to post upbeat comments on the Australian economic conditions. According to specialists at OCBC, AUD/USD is likely to hold its ground in a short term. Increased risk appetite and expected demand for the Aussie as a reserve currency support the bullish forecasts. What is more, any monetary easing signals from central banks may also keep the pair supported. Analysts at RBS also expect AUD/USD to remain in a bullish trend as the Australian economy looks healthy compared with the other countries. In their view, weak major currency fundamental data are likely to increase sovereign and safe haven flow towards the Aussie. Photo: shutterstock.com Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

Key options expiring today Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT). Here are the key options expiring today: EUR/USD: $1.2200, $1.2220, $1.2300, $1.2350, $1.2400 (large); GBP/USD: $1.5850; USD/JPY: 78.40, 78.50, 79.00; AUD/USD: $1.0500; EUR/GBP: 0.7800; GBP/JPY: 122.50. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

USD/JPY: technical comments The bears pulled the greenback down to test 77.90, but then USD/JPY returned back above the key support of 78.00. So, what we see is a range trading inside the small 78.30/00 region. The broader technical picture remains negative (see the daily chart where the 50-day MA is going to dive under the 200-day one). Resistance: 78.30, 78.45 (July 20 minimum, 50-period MA on H4 chart), 78.80 (July 20 maximum), 78.65 (July 27 maximums, June 15 minimums), 79.00, 80.00. Support: 78.00, 77.95 (July 23 minimum), 77.65 (June minimum), 77.35 (February 15 minimum, January 6 and 19 maximums). Analysts at RBS recommend opening longs at the current levels as the Bank of Japan may surprise the markets next week. Chart. H4 USD/JPY Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

AUD/USD: technical comments AUD/USD strengthens for a sixth consecutive day, trading close to a new four-month high at $1.5037 (July 31 maximum). The pair trades close to the upper boundary of the upward channel existing since mid-June, but scruples breaking it. On the daily and H4 chart the pair trades above the up-directed 200-, 100- and 50-period MAs. In our view, a medium-term uptrend looks rather resilient: the next strong resistance lies only at $1.0750/60 (Sep. and Oct. 2011 maximums) and at $1.0855 (2012 maximum). Bulls have a clear advantage above $1.0475 (April 27 maximum, beginning of a sharp May decline). However, we concede a correction to $1.0400 (middle of the channel) and to $1.0280 (lower boundary and the 200-day MA). Yesterday a shooting star candlestick formed on a daily chart. Exit from the upward channel will pave the ground for a further decline to $1.0176 (July 25 minimum) and to $1.0100 (July 12 minimum). Chart. Daily AUD/USD Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

Analysts doubt the ECB’s resolve When the ECB President Mario Draghi pledged to do whatever it takes to preserve euro, the market’s reactions was very positive: we saw EUR/USD rising by more than 170 pips. The week hasn’t passed since Draghi’s comments, yet many experts have become skeptical doubting that the ECB is really able and willing to do enough to help the single currency survive the crisis. Bloomberg cites 2 unnamed central bank officials who said that Draghi’s proposal involves the EFSF buying government debt on the primary market together with ECB purchases on the secondary market, while further interest-rate cuts and long-term loans to banks are also possible. Image from http://blog.optionsclick.com Westpac: "The ECB meeting this Thursday might not be the huge event it’s being built up to be. What we see on Thursday is potentially going be a little bit lukewarm and a disappointment to the market. The euro rescue maneuvers will not necessarily give investors a reason to buy the common currency: if one of those moves is a rate cut, then it's not obvious that you want to be buying the euro on that decision.” Bank of Tokyo-Mitsubishi UFJ: “The euro could benefit momentarily if the ECB says it will buy bonds. But that will probably provide a good opportunity to sell the euro.” Commerzbank: “There’s a very high risk for disappointment. In the foreign-exchange market there’s a lot of expectations priced in already.” Even if the ECB acts on Thursday, many experts think the impact of its action will be temporary unless there is a sustainable economic recovery in southern Europe. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!

August 1: economy and currencies EUR/USD keeps trading on the upside in the range between $1.2250 and $1.2390 (23.6% and 38.2% Fibo retracement from 2012 decline). Spanish 10-year bond yield rose to 6.7% yesterday, while Italian – above 6%. There is some economic data released today in Europe, but not much: Spanish and Italian July PMIs and final euro zone manufacturing PMI (the revised figures will likely confirm the lowest reading since June 2009). Germany will sell up to 4 billion euro in 5-year notes at 06:00 GMT. US session is going to be more eventful with ADP at 12:15 GMT, US ISM manufacturing PMI at 14:00 GMT and the FOMC statement at 18:15 GMT. Demand for the greenback is broadly limited on the expectations that the pace of hiring in the US slowed (ADP private payrolls – cons.: +121K, prev.: +176K) and the Fed will signal additional stimulus. The MSCI Asia Pacific Index of stocks declined by 0.6%, demonstrating a first drop in a week. Demand for risky assets fell after reports today indicated a manufacturing slowdown in China (Manufacturing PMI declined to 50.1 in July vs. a 50.4 forecast and a previous reading 50.2, while HSBC Final Manufacturing PMI fell to 49.3). However, Aussie, kiwi and loonie remain strong as the influence of China’s data was offset by speculation the Fed may ease monetary policy on today’s meeting. According to analysts at Westpac, the Aussie will benefit a lot if the Fed goes ahead with QE. USD/JPY tempered morning drop with an upward movement, while GBP/USD declines for a third consecutive day. Have a profitable trade with FBS! If you have any questions to our analysts, you're welcome to ask or comments for this article!