Pulse of the Market
· Greenback took no notice of budget movement, earnings and suffers for risk rally
· Euro unpredictably steady in spite of Portugal surprise slit and rising Greece uncertainty
· BoE rate decision has been a non-event for the Sterling for a number of months now
· Australian Dollar ragged among a rally in capital markets and dovish turn from RBA
The U.S Dollar ended yesterday’s trading session on a mixed note. With only 2 more days until President Obama’s deadline, lawmakers in Washington are working quickly to reach a deal that would avoid driving the U.S Dollar to fresh lows and trigger sharp volatility across the financial market. Yesterday Moody’s placed 5 out of 15 Aaa states on review for downgrade, reminding everyone about the susceptibility of the U.S sovereign debt rating. Meanwhile the latest U.S economic reports modestly contributed to the rally. Housing starts jumped 14.6 percent last month while building permits rose 2.5 percent. As in recent months, these housing markets numbers have been extremely volatile, yet the rebound is however encouraging especially when investors are taking a break from the selling. Existing home sales are scheduled for release today and a rebound is also expected after the sharp decline in May. The Single Currency traded slightly higher yesterday. Unfortunately continued concerns about the European sovereign debt crisis have prevented the EUR/USD from enjoying the same gains as other high yielding currencies. Euro failed to hold onto all of its gains after German Chancellor Merkel told investors not to get their hopes up for a spectacular solution to the European sovereign debt crisis tomorrow. The IMF also threw cold water on the EUR/USD rally by warning about the danger of contamination and the consequences of a default. There is no question that the European sovereign debt crisis is a tough one to solve and the chance of it going away anytime soon. The economic sentiment portion of the German ZEW survey fell from -9 to -15 while the current situation component increased to 90.6 from 87.6. The British Pound strengthened against the U.S Dollar and Euro as risk flows returned to the market. There was no U.K economic data from the U.K yesterday but the Bank of England will release the minutes from their most recent monetary policy meeting today. Also on the docket today is nationwide consumer confidence. The market expects a 51 reading following 55 from May as consumer are feeling the squeeze from inflation. The Japanese Yen weakened against all the majors except for the Swiss Franc. With debt talks on both sides of the Atlantic seemingly reach closer to resolution, investors picked up risky asset putting downward pressure on the Yen.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| 05:00 | Japan Leading Index (MAY) | Medium | | | 99.8 |
| 06:00 | German Producer Prices (MoM) (JUN) | Low | | 0.0% | 0.0% |
| 08:30 | Bank of England Minutes | High | | | |
| 14:00 | Euro Zone Consumer Confidence (JUL) | Medium | | -10.2 | -9.8 |
| 14:00 | U.S Existing Home Sales (JUN) | Medium | | 4.90M | 4.81M |
| 14:30 | Canada Monetary Policy Report | High | | | |
| 23:01 | U.K Nationwide Consumer Confidence | Medium | | 49 | 55 |
Euro
The Single Currency gained to the 1.4200 level in yesterday’s trading session on the back of the positive sentiment change and some progress on the second Greece Bailout plan ahead of tomorrow’s EU Summit. German ZEW was poor falling to -15.1 against -9 previously. Overall, the EUR/USD traded with a low of 1.4068 and a high of 1.4216 before closing the day around 1.4150 in the New York session.
Yen
The Japanese Yen found support under 79.00 Yen and finished near the highs of the recent range on strong cross buying. AUD/JPY reclaimed the 85.00 Yen level with the 200 point gain in the Dow Jones providing the fuel for the rise. Overall, the USD/JPY traded with a low of 78.81 and a high of 79.26 before closing the day around 79.17 in the New York session.
British Pound
The British Pound rallied with the rest of the risk currencies but found resistance at last week’s high near 1.6180. The market is volatile with news coming from both directions lately and providing plenty of trading opportunities between 1.5900-1.6200. Overall, the GBP/USD traded with a low of 1.6040 and a high of 1.6176 before closing the day at 1.6122 in the New York session.
Canadian Dollar
The Canadian Dollar strengthened to its highest level against the U.S Dollar in two and a half months yesterday after the Bank of Canada indicated more firmly than before that it was closer to raising interest rates with the domestic economy seen growing at a healthy pace. Overall, USD/CAD traded with a low of 0.9480 and a high of 0.9600 before closing the day at 0.9499 in the New York session.
Australian Dollar
The Australian shrugged off weakness in Asian session on the back of neutral RBA minutes to track the stock markets and break back above 1.0735. The RBA has dropped the need to raise rates at some stage from their minutes this month with a more balanced view of the economy which had shown some signs of slowing in recent months. Overall, the AUD/USD traded with a low of 1.0598 and a high of 1.0740 before closing the day at 1.0731 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 issuing a bearish stance. The RSI is above 38 and lies below the neutral zone. Overall, the cross has gained 0.44%.
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 41 reading and lies below the neutral zone. The pair has gained 0.60%.
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 46 reading and lies below the neutral region. The pair has gained 1.35%.
Euro-Sterling
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is issuing a bearish signal. The RSI is above 41 reading and lies below the neutral region. The pair has lost 0.16%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bearish tone. The RSI is above 41 and lies below the neutral region. The pair has gained 1.23%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.3925 | 1.3997 | 1.4073 | 1.4145 | 1.4221 | 1.4293 | 1.4369 |
| USD/JPY | 78.45 | 78.63 | 78.90 | 79.08 | 79.35 | 79.53 | 79.80 |
| GBP/USD | 1.5913 | 1.5977 | 1.6049 | 1.6113 | 1.6185 | 1.6249 | 1.6321 |
| USD/CHF | 0.8041 | 0.8096 | 0.8168 | 0.8223 | 0.8295 | 0.8350 | 0.8422 |
| USD/CAD | 0.9333 | 0.9406 | 0.9453 | 0.9526 | 0.9573 | 0.9646 | 0.9693 |
| EUR/JPY | 110.20 | 110.67 | 111.35 | 111.82 | 112.50 | 112.97 | 113.65 |
| GBP/JPY | 125.95 | 126.37 | 127.01 | 127.43 | 128.07 | 128.49 | 129.13 |
| CHF/JPY | 94.36 | 95.04 | 95.54 | 96.22 | 96.72 | 97.40 | 97.90 |
| AUD/JPY | 82.88 | 83.31 | 84.13 | 84.56 | 85.38 | 85.81 | 86.63 |
| EUR/GBP | 0.8698 | 0.8727 | 0.8750 | 0.8779 | 0.8802 | 0.8831 | 0.8854 |
| EUR/CHF | 1.1382 | 1.1448 | 1.1555 | 1.1621 | 1.1728 | 1.1794 | 1.1901 |
| GBP/CHF | 1.2911 | 1.3005 | 1.3147 | 1.3241 | 1.3383 | 1.3477 | 1.3619 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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