EUROPEAN session review: pound fell before Carney

Data released: 

06:00 Germany Import prices (July) Y/Y -2.6% -2.5% -2.2% 

08:00 Italy Retail sales (June) adjusted -0.2% 0.1% 0.1% 

08:00 Italy Retail sales (June) Y/Y unadjusted -3.0% - -1.2 (-1.1)% 

08:00 EU(17) M3 money supply (July) adjusted Y/Y 2.2% 2.2% 2.3% 

08:00 EU(17) M3 money supply (3 months to July) adjusted Y/Y 2.5% 2.6% 2.8% 

The key thing we are worried about regarding Syria, but also Egypt, is a sharp rise in oil prices and how it has a potential to be a bigger problem for emerging markets in particular and then, potentially the West. 

Washington said on Monday it believed Syrian President Bashar al-Assad was responsible for a chemical weapons attack on civilians last week in what U.S. Secretary of State John Kerry called a "moral obscenity." 

EURO 

Euro trades in flat despite of high volatility. 

EUR/USD holds below $1.3400 in a volatile session. Further rise may be capped by the resistance at $1.3450 (Aug 20 high) and $1.3520 (Feb 13 high) extending to $1.3540 (channel resistance line from Jul 10). Initial support comes at $1.3320 (daily lows) and $1.3200/90 (Feb 22 lows). 

POUND 

The pound stays under pressure amid os expectations BoE Marc Carney testimony in parlament. Carney’s strong turn to dovish monetary policy may weakens pound. 

It has been announced that parliament will be recalled from its summer break this Thursday to discuss/vote on action to be taken over the Syrian chemical weapons attack. 

GBP/USD remains within the downward channel from Aug 21, limited today by $1.5560 - $1.5430 (strong resistance and support respectively). Above $1.5560 resistance is near $1.5610/40 (Aug 26 and 23 respectively) and $1.5715 (Aug 21 high). Initial support comes at $1.5480 (daily lows) and below - at $1.5430 (channel line). 

YEN 

The yen strengthened for a second day against the dollar and euro as a slide in emerging-market currencies boosted demand for safer investments. 

USD/JPY could’t break below Y96.80 and came back to the levels above Y97.00. Breaking below Y96.50 would open the door to Y95.00/Y94.90 area. Breaking through Y97.80 would make possible testing of Y98.30. Key resistance is at Y99.00 (channel resistance from July,8). 

DATA AHEAD: 

At 11:45 GMT Mark Carney speaks at UK Parliament. 

US data include Jul Pending Home Sales at 14:00 GMT and EIA Crude Oil Stocks change at 14:30 GMT.

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