Risk appetite returned with a bang yesterday amid optimism over China. The stablization of the Chinese markets of the last few days, suggests possible state intervention to prop up the nations equities as we see a determined resolve to halt the slide.

Overnight in the US, the S&P500 closed up just over 2.5%, its 2nd biggest gain this year. The Dow Jones was also up 2.4%.

This morning in Asia, the positive mood has continued with the Nikkei up more than 6% on the day at time of writing. Consumer confidence in Japan also came in just now better than expected, 41.7 versus 40.6 expected, adding further encouragement to investors.

In FX, GBPUSD was the biggest winner yesterday, moving up over 120 points. This morning we are seeing mild USD strength which is expected perhaps following the improved risk appetite.

News wise today, watch out for manufacturing production data from the UK at 08:30 GMT. Later in the afternoon we have building permits and overnight rate announcement from Canada.

Trading quote of the day:

“The markets are unforgiving, and emotional trading always results in losses.”
– Alexander Elder

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EURUSD
Pivot: 1.115
Likely scenario: Long positions above 1.115 with targets @ 1.123 & 1.126 in extension.
Alternative scenario: Below 1.115 look for further downside with 1.1115 & 1.1085 as targets.
Comment: A support base at 1.115 has formed and has allowed for a temporary stabilisation.

GBPUSD
Pivot: 1.532
Likely scenario: Long positions above 1.532 with targets @ 1.544 & 1.5475 in extension.
Alternative scenario: Below 1.532 look for further downside with 1.529 & 1.5265 as targets.
Comment: The RSI lacks downward momentum.

AUDUSD
Pivot: 0.699
Likely scenario: Long positions above 0.699 with targets @ 0.7065 & 0.71 in extension.
Alternative scenario: Below 0.699 look for further downside with 0.695 & 0.69 as targets.
Comment: The RSI is bullish and calls for further upside.