Pulse of the Market
· Greenback demonstrated mixed progress across majors as debt troubles persist
· Single Currency stabilizes as crises headlines recede, ECB reports no bond purchases
· Canadian Dollar investors will look to BoC pronouncement to direct rate outlook
· Australian Dollar stumbled after RBA minutes report restrained GDP outlook
The U.S Dollar ended yesterday’s trading session higher against all of the major currencies with the exception of the Japanese Yen against which it held steady for the second trading day in a row. The U.S debt confrontation may be front and center this week, but the desire for safety has still driven investors towards the Greenback. President Obama has given Congress until Friday to reach a deal on raising the debt ceiling. If lawmakers fail to agree on a deficit reduction package by that time, even the Greenback’s safe haven status may not be able to save the U.S Dollar. Rating agencies already warned that the U.S will lose its esteemed AAA rating if the debt ceiling is not increased. If the debt ceiling is increased by August 2nd, the U.S would avoid a downgrade by the top 3 rating agencies. The latest TIC report showed foreign investors selling Dollars for the first time in 11 months. Demand for U.S Dollars fell by $67.5B in May, which was the first negative print since June 2010 and the largest sale of U.S Dollars since July 2009. The Euro ended the session lower against the U.S Dollar. Even though the traded lower against the Greenback, the currency’s recovery during the second half of the trading session reflects a significant shift in sentiment. There was no clear driver for the twist in the market aside from the Greek Finance Minister’s comment that a European debt deal could be reached on Thursday. With the EU stress tests failing to stabilize the market, a special summit will be held on the 21st to come up with a new rescue plan for Greece and to take a big step towards ending the sovereign debt crisis. No major Euro Zone economic reports were released yesterday but the German ZEW survey and investor sentiment is due for release today. The British Pound traded lower against both the U.S Dollar and the Euro. According to the Right move House Price Index, asking prices in the U.K dropped by an average of 1.6 percent in July. With an inflation rate at more than double the Bank of England’s target, U.K economic recovery is losing momentum. With no economic data on the docket today, the movement of the British Pound would still hinge on the risk flow in the market. The Japanese Yen strengthened against all the major currencies as risk aversion drove investors to safer assets. The European sovereign debt crisis and possible U.S credit downgrade are big uncertainties in the market that could have devastating after-effects.
Euro
Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
01:30 | Australia Reserve Bank's Board July Minutes | High | |||
09:00 | German ZEW Survey (Economic Sentiment) (JUL) | High | -12.5 | -9.0 | |
09:00 | Euro Zone ZEW Survey (Economic Sentiment) (JUL) | Medium | -5.9 | ||
12:30 | Canada Leading Indicators (MoM) (JUN) | Medium | 0.8% | 1.0% | |
12:30 | U.S Building Permits (JUN) | Medium | 595K | 609K | |
12:30 | U.S Housing Starts (JUN) | Medium | 575K | 560K | |
13:00 | Bank of Canada Rate Decision (JUL 19) | High | 1.00% | 1.00% |
The Single Currency hit lows in yesterday’s European session before stock markets rebounded and hope grew an EU meeting on Thursday will announce an immediate package to support Greece. The market is still very cautious of a contamination in the Debt crisis with Spain/Italy still under pressure and Portugal/Ireland wanting more assistance. Overall, the EUR/USD traded with a low of 1.4013 and a high of 1.4130 before closing the day around 1.4113 in the New York session.
Yen
The Japanese Yen continued to do very little against the Dollar with most of the action on the crosses which are being sold on rallies in the risk averse environment. The levels are close to BOJ intervention after the Earthquake and could find more conduct or character that is right and virtuous from Japanese officials. Overall, the USD/JPY traded with a low of 78.94 and a high of 79.17 before closing the day around 79.02 in the New York session.
British Pound
The British Pound was a distinguished underperformer with EUR/GBP rebounding and British Pound dropping below the 1.6100 level after the recent rally ran out of steam. The outlook is very mixed with more range trading expected until the Bank of England's monetary policy outlook is more clearly outlined. Overall, the GBP/USD traded with a low of 1.6003 and a high of 1.6127 before closing the day at 1.6055 in the New York session.
Canadian Dollar
The Canadian Dollar weakened against its U.S counterpart yesterday as fears of sovereign debt default in Europe and the United States undercut commodity prices and the market awaited an interest rate announcement by the Bank of Canada today. The Loonie is associated with risky assets because of Canada’s heavy reliance on commodity exports for economic growth. Overall, USD/CAD traded with a low of 0.9538 and a high of 0.9634 before closing the day at 0.9593 in the New York session.
Australian Dollar
The Australian Dollar was pushed lower with the Euro in risk off trading in Asian and European session and rebounded aggressively with Gold breaking above $1600 and the U.S Dollar coming under pressure. AUD/NZD hit multi month lows as the New Zealand Dollar outperforms on strong Inflation and rate hike expectations. Overall, the AUD/USD traded with a low of 1.0559 and a high of 1.0653 before closing the day at 1.0606 in the New York session.
Euro-Yen
EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The RSI is above 35 and lies below the neutral zone. Overall, the cross has lost 0.28%.
Sterling-Yen
Currently GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 38 reading and lies below the neutral zone. The pair has lost 0.51%.
Aussie-Yen
Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 39 reading and lies below the neutral region. The pair has lost 0.36%.
Euro-Sterling
This cross is trading 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 41 reading and lies below the neutral region. The pair has gained 0.24%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The RSI is above 30 and lies below the neutral region. The pair has gained 0.10%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.3924 | 1.3968 | 1.4041 | 1.4085 | 1.4158 | 1.4202 | 1.4275 |
USD/JPY | 78.69 | 78.81 | 78.92 | 79.04 | 79.15 | 79.27 | 79.38 |
GBP/USD | 1.5872 | 1.5938 | 1.5996 | 1.6062 | 1.6120 | 1.6186 | 1.6244 |
USD/CHF | 0.8027 | 0.8064 | 0.8119 | 0.8156 | 0.8211 | 0.8248 | 0.8303 |
USD/CAD | 0.9447 | 0.9492 | 0.9543 | 0.9588 | 0.9639 | 0.9684 | 0.9735 |
EUR/JPY | 109.81 | 110.22 | 110.88 | 111.29 | 111.95 | 112.36 | 113.02 |
GBP/JPY | 125.71 | 126.18 | 126.53 | 127.00 | 127.35 | 127.82 | 128.17 |
CHF/JPY | 95.08 | 95.77 | 96.20 | 96.89 | 97.32 | 98.01 | 98.44 |
AUD/JPY | 82.75 | 83.13 | 83.47 | 83.85 | 84.19 | 84.57 | 84.91 |
EUR/GBP | 0.8639 | 0.8671 | 0.8730 | 0.8762 | 0.8821 | 0.8853 | 0.8912 |
EUR/CHF | 1.1301 | 1.1352 | 1.1445 | 1.1496 | 1.1589 | 1.1640 | 1.1733 |
GBP/CHF | 1.2926 | 1.2981 | 1.3054 | 1.3109 | 1.3182 | 1.3237 | 1.3310 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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