Pulse of the Market
· Greenback slips as risk aversion cools and NFPs are pulling investors forward
· Single Currency puts in for a modest bounce ahead of an important ECB decision
· Swiss Franc retracement and volatility tame despite SNB removing all the stops
· Australian Dollar struggles to leverage the sentiment rebound after weak data
The Greenback ended yesterday’s trading session on a mixed note a day after President Obama signed the debt relief bill into law. The measure gave the Treasury Department breathing room and will cut the deficit by more than $2T over the next decade. While a strong step in the right direction, the bill falls short of what ratings agencies Moody's, Fitch and S&P were looking for. As such, their negative outlook for the U.S's AAA credit rating remains in place. The deal was a compromise on both sides of the passageway with the Democrats giving up their push for an increase in Federal tax revenues and the Republicans gaining far smaller cuts to government spending than initially sought. It is far from ideal from any perspective, but it does put an end to the so called "debt crisis" and avoids an imminent default. As such, investors' attention has shifted back towards the larger theme of a slowing global economy. ISM manufacturing disappointed earlier this week as the measure showed the sector that had led the economic recovery through much of 2010 slowing by more than expected. Yesterday’s, ISM non-manufacturing also showed a decline, registering 52.7, down from 53.3 in June. The Euro traded in a wide range yesterday, but has pulled back from its recent weekly highs. The Single Currency gained, supported as the primary alternative to the Dollar, as fears remain that the U.S may face a credit downgraded despite the recent debt deal. However, the Euro's upside has been limited ahead of a key ECB meeting today at which the Bank is unlikely to raise interest rates. British Pound was higher yesterday supported by an unexpectedly positive PMI services report and as investors turn away from both the U.S and Euro Zone. U.K services unexpectedly grew at the fastest pace in four months, led by demand at business services and tech companies. A decline had been expected, and as such, the positive reading has translated into a boost for the Cable. The Japanese Yen gained yet again, inching back towards its all time highs in the low 76.00. Japanese Finance Minister Noda told reporters yesterday that the BoJ would aim for "maximum effect" in any intervention to weaken the Yen. The Commodity Currencies traded lower yesterday with the Canadian Dollar, Australian Dollar and New Zealand Dollar all weakening.
Time(GMT)
|
Economic Release
|
IMP
|
Actual
|
Forecast
|
Prior
|
Bank of Japan Rate Decision
|
High
|
0.10%
| |||
11:00
|
BOE Asset Purchase Target (AUG)
|
High
|
200B
|
200B
| |
11:00
|
Bank of England Rate Decision
|
High
|
0.50%
|
0.50%
| |
11:45
|
European Central Bank Rate Decision
|
High
|
1.50%
|
1.50%
| |
12:30
|
U.S Continuing Claims (JUL 23)
|
Low
|
3700K
|
3703K
| |
12:30
|
U.S Initial Jobless Claims (JUL 30)
|
Low
|
405K
|
398K
| |
23:50
|
Japan Official Reserve Assets (JUL)
|
Low
|
$1137.8B
|
Euro
The Single Currency enjoyed a rally in the European trading session after being under pressure most of the week. EUR/CHF was the main source of strength up over 2% on Swiss intervention via its central bank. July PMI services slipped to 51.4 vs. 53.7 previously. Overall, the EUR/USD traded with a low of 1.4142 and a high of 1.4343 before closing the day around 1.4319 in the New York session.
Yen
The Japanese Yen surged in the Asian trading session today as the MOF confirmed intervention and the BOJ ended it's rate meeting one day early. EUR/JPY and AUD/JPY surged with the USD/JPY which itself moved from 77.00 Yen to 79.00 Yen. Overall, the USD/JPY traded with a low of 76.77 and a high of 77.39 before closing the day around 77.05 in the New York session.
British Pound
The British Pound tracked the stocks and Euro higher supported on stronger than expected PMI data. July Services PMI jumped to 55.4 vs. 53.9 previously. GBP/CHF surged with the Swiss intervention while GBP/JPY soared with Japanese intervention. Overall, the GBP/USD traded with a low of 1.6250 and a high of 1.6430 before closing the day at 1.6424 in the New York session.
Canadian Dollar
The Canadian Dollar touched the lowest level in three weeks in yesterday’s trading session as crude oil dropped and U.S service industries grew at the slowest pace since February 2010, adding to concern Canada’s largest trading partner is faltering. Overall, USD/CAD traded with a low of 0.9566 and a high of 0.9645 before closing the day at 0.9621 in the New York session.
Australian Dollar
The Australian Dollar found support under 1.0700 after falling when local economic data missed expectations. June Retail Sales fell -0.1% vs. +0.3% forecast m/m. AUD/JPY reacted to the USD/JPY intervention in Asia but the AUD/USD is struggling. Overall, the AUD/USD traded with a low of 1.0777 and a high of 1.0787 before closing the day at 1.0740 in the New York session.
Euro-Yen
EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The RSI is above 52 and lies above the neutral zone. Overall, the cross has gained 0.77%.
Sterling-Yen
Currently GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is also indicating a bullish stance. The RSI is above 59 reading and lies above the neutral zone. The pair has gained 0.69%.
Aussie-Yen
Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 48 reading and lies below the neutral region. The pair has lost 0.32%.
Euro-Sterling
This cross is trading above below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 37 reading and lies below the neutral region. The pair has lost 0.07%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is indicating a bearish tone. The RSI is above 35 and lies below the neutral region. The pair has gained 1.75%.
Appendix
Daily Pivot Points
| |||||||
Trading Range
| |||||||
Contract
|
S3
|
S2
|
S1
|
Pivot
|
R1
|
R2
|
R3
|
EUR/USD
|
1.3992
|
1.4067
|
1.4193
|
1.4268
|
1.4394
|
1.4469
|
1.4595
|
USD/JPY
|
76.13
|
76.45
|
76.75
|
77.07
|
77.37
|
77.69
|
77.99
|
GBP/USD
|
1.6126
|
1.6188
|
1.6306
|
1.6368
|
1.6486
|
1.6548
|
1.6666
|
USD/CHF
|
0.7431
|
0.7520
|
0.7609
|
0.7698
|
0.7787
|
0.7876
|
0.7965
|
USD/CAD
|
0.9497
|
0.9532
|
0.9576
|
0.9611
|
0.9655
|
0.9690
|
0.9734
|
EUR/JPY
|
107.87
|
108.46
|
109.40
|
109.99
|
110.93
|
111.52
|
112.46
|
GBP/JPY
|
124.33
|
124.79
|
125.68
|
126.14
|
127.03
|
127.49
|
128.38
|
CHF/JPY
|
96.86
|
97.99
|
99.02
|
100.15
|
101.18
|
102.31
|
103.34
|
AUD/JPY
|
80.78
|
81.41
|
82.14
|
82.77
|
83.50
|
84.13
|
84.86
|
EUR/GBP
|
0.8625
|
0.8659
|
0.8688
|
0.8722
|
0.8751
|
0.8785
|
0.8814
|
EUR/CHF
|
1.0478
|
1.0637
|
1.0830
|
1.0989
|
1.1182
|
1.1341
|
1.1534
|
GBP/CHF
|
1.2076
|
1.2238
|
1.2441
|
1.2603
|
1.2806
|
1.2968
|
1.3171
|
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
