Daily Forex Bullteins and Market News Analysis: Forex Market Bulletin, July 25, 2011

Pulse of the Market

· Greenback unpredictability assured, course lacking until debit discuss determined

· Single Currency come across no impetus in EU’s enormous crisis resolution effort

· British Pound may finally take control over its own activity or at least temporarily

· Australian Dollar wavered on rate expectations as CPI readings come within reach

The Greenback ended Friday’s trading session higher against the basket of major currencies. If lawmakers in Washington do not get their act together and do something big or small, the U.S government will officially run out of money on Tuesday August 2nd. If the Senate fails to raise the debt ceiling either temporarily or permanently, panic selling of U.S Dollars could drive the Greenback to fresh lows against all of the major currencies. For the time being, a downgrade or default remains a realistic risk for the U.S economy. This week’s economic reports include second quarter GDP but regardless of the importance of this data and other releases, the focus will remain on the U.S debt talks. If the U.S government manages to raise the debt ceiling and pass a deficit reduction plan by August 2nd, the U.S Dollar should rally. If the debt ceiling is not raised by August 2nd, the U.S government would effectively run out of money and rating agencies would be forced to strip the U.S of its prized AAA rating. The Euro traded lower against the U.S Dollar. Based on the price action Thursday, investors reacted very well to the European Union’s second bailout plan for Greece. However weaker economic data, profit taking and a rating agency action prevented the currency pair from extending its gains on Friday. Fitch became the first rating agency to assign a restricted default rating to Greece which almost immediately stripped the Euro of its earlier gains. Fitch added that it could raise the country’s debt rating back up to junk levels if Greece manages to issue new replacement bonds which could take only days. Downgrades in general will sour the mood in the Euro and the prospect of more rating actions explains why the EUR/USD has weakened on Friday. The British Pound traded higher against the Euro while lower against the U.S Dollar. Although the currency has strengthened in recent days, its domestic economy has been hitting a soft patch. With second quarter GDP scheduled for release tomorrow, there have been many discouraging signs for the recovery. The Japanese Yen strengthened against all the major currencies with the exception of the Australian and New Zealand Dollars as the market oscillated between high and low risk appetites. No economic data was released on Friday causing the markets to take their cue from the Euro Zone and U.S debt news flows. The Canadian Dollar weakened against the Greenback while the Australian and New Zealand Dollars continued to trade higher. Friday’s economic reports from Canada were mixed.

Time(GMT)	Economic Release	IMP	Actual	Forecast	Prior
01:30	Australia Producer Price Index QoQ (2Q)	Medium	0.8%	0.8%	1.2%
08:30	U.K BBA Loans for House Purchase (JUN)	Medium		31000	30509
12:30	U.S Chicago Fed Nat Activity Index (JUN)	Medium		-0.40	-0.37
14:30	U.S Dallas Fed Manufacturing Activity (JUL)	Medium		-7.2	-17.5
23:50	Japan Corporate Service Price (YoY) (JUN)	Low		-0.9%	-0.9%

Euro

The Single Currency broke below 1.4400 but found support and finished close to the figure even as rating agencies looked over the Greece debt deal to decide whether it was a default or not. German IFO fell back to 112.9 vs. 114.5 previously on global growth concerns. Overall, the EUR/USD traded with a low of 1.4323 and a high of 1.4437 before closing the day around 1.4363 in the New York session.

Yen

The Japanese Yen remained under pressure with the Yen and Franc the preferred safe havens in light of the U.S debt worries. Earlier today the USD/JPY traded new lows on news over the weekend that no debt deal had been agreed. These levels are bringing daily comments from BOJ and MOF officials concerns about the strength of the Yen. Overall, the USD/JPY traded with a low of 78.21 and a high of 78.71 before closing the day around 78.43 in the New York session.

British Pound

The British Pound was very quiet in Friday’s trading session pivoting the 1.6300 level consolidating the rally on Thursday. EUR/GBP fell back to test 0.8800 but is grinding higher on the post Greece deal enthusiasm for the Single Currency. Overall, the GBP/USD traded with a low of 1.6263 and a high of 1.6333 before closing the day at 1.6297 in the New York session.

Canadian Dollar

The Canadian Dollar closed lower against its U.S counterpart Friday as investors took in data showing a slower pace of price inflation, which tamped down the urgency to raise interest rates. Statistics Canada said the annual inflation rate was 3.1 percent in June, sliding from 3.7 percent in May. Overall, USD/CAD traded with a low of 0.9421 and a high of 0.9491 before closing the day at 0.9431 in the New York session.

Australian Dollar

The Australian Dollar dealt mixed in Friday’s trading session testing higher in Europe but falling back to opening levels as U.S stocks fell into the close on debt ceiling concerns. Crosses are more interesting with AUD/NZD and AUD/JPY providing plenty of movement. Overall, the AUD/USD traded with a low of 1.0819 and a high of 1.0873 before closing the day at 1.0847 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 42 and lies below the neutral zone. Overall, the cross has lost 0.23%.

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 43 reading and lies below the neutral zone. The pair has lost 0.02%.

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 0.25%.

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 47 reading and lies below the neutral region. The pair has lost 0.23%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 40 and lies below the neutral region. The pair has gained 0.16%.

Appendix

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.4198	1.4260	1.4312	1.4374	1.4426	1.4488	1.4540
USD/JPY	77.69	77.95	78.19	78.45	78.69	78.95	79.19
GBP/USD	1.6192	1.6228	1.6262	1.6298	1.6332	1.6368	1.6402
USD/CHF	0.8024	0.8082	0.8130	0.8188	0.8236	0.8294	0.8342
USD/CAD	0.9331	0.9378	0.9434	0.9481	0.9537	0.9584	0.9640
EUR/JPY	110.77	111.51	112.08	112.82	113.39	114.13	114.70
GBP/JPY	126.45	126.95	127.39	127.89	128.33	128.83	129.27
CHF/JPY	94.50	94.93	95.40	95.83	96.30	96.73	97.20
AUD/JPY	84.22	84.50	84.78	85.06	85.34	85.62	85.90
EUR/GBP	0.8730	0.8763	0.8787	0.8820	0.8844	0.8877	0.8901
EUR/CHF	1.1465	1.1578	1.1663	1.1776	1.1861	1.1974	1.2059
GBP/CHF	1.3092	1.3184	1.3256	1.3348	1.3420	1.3512	1.3584