Pulse
of the Market
·
Greenback suffered from mixed signals on
economic data and budget debate
·
Single Currency ignores ECB Noyer’s hawkish
annotations and poor bond auctions
·
U.K’s 2Q GDP expectations were not fully
accounted for in the consensus forecast
·
Australian Dollar rush forward to post float
highs on strong CPI figures
The U.S
Dollar dropped to its lowest level ever against the New Zealand Dollar and
Swiss Franc while also slipping to a 3 year low against the Canadian Dollar and
a 1 month low against the British Pound. Another day has passed without any
progress on the U.S debt ceiling talks and this standoff has led to a great
loss of confidence in the U.S government, the U.S economy and the U.S Dollar.
The mighty Dollar is losing its luster very quickly with investors bailing out
of Greenbacks left and right. The Greenback traded at extreme levels against
all of the major currencies with the exception of the Euro and British Pound.
Yesterday's U.S economic reports left a lot to be desired. S&P reported an
increase in house prices but the rise was marginal. New home sales declined by
1.0 percent which was worse than the economists had expected but this was
tempered by an upward revision to the May report. The Euro traded higher
against the U.S Dollar following trouble in Washington which has driven the
Euro above 1.4500. There was little news out of Europe which is good news for
the Euro. German consumer confidence deteriorated slightly but confidence in
France improved. Comments from European Central Bank officials were mixed with
ECB member Bini-Smaghi saying the Euro Zone economy is not recovering very
strongly which is why the ECB is not committed to any specific rate path. The
Swiss Franc on the other hand continues to perform extremely well regardless of
a decline in the UBS Consumption indicator from 1.88 to 1.48. Since the
beginning of the year the Franc has been the best performing currency, rising
against all of the majors. The British Pound strengthened against the Greenback
but weakened against the Euro. The Cable rose to a six-week high against the
U.S Dollar after economic reports showed growth that matched expectations and
U.S lawmakers failed to agree on a debt plan, boosting the relative appeal of
British assets. The GDP report showed U.K economic output rising 0.2 percent in
second quarter which prompted a relief rally. The Japanese Yen weakened against
all the major currencies with the exception of the U.S Dollar. There was a
crazy spike in yesterday’s trading that sent USD/JPY soaring 70 pips range in
less than 5 minutes. However, this price rise was not caused by BOJ
intervention but rather by explosions in China which highlights the Yen’s
sensitivity to all things.
Time(GMT)
|
Economic Release
|
IMP
|
Actual
|
Forecast
|
Prior
|
German Consumer Price Index (MoM) (JUL)
|
Medium
|
0.3%
|
0.1%
|
||
01:30
|
Australia Consumer Prices Index (QoQ) (2Q)
|
Medium
|
0.9%
|
0.7%
|
1.6%
|
09:30
|
Switzerland KOF Swiss Leading Indicator (JUL)
|
Medium
|
2.11
|
2.23
|
|
12:30
|
U.S Durable Goods Orders (JUN)
|
High
|
0.3%
|
2.1%
|
|
14:30
|
DOE U.S. Crude Oil Inventories (JUL 22)
|
Low
|
-2000K
|
-3727K
|
|
18:00
|
U.S Fed's Beige Book
|
Medium
|
|||
23:50
|
Japan Large Retailers' Sales (JUN)
|
Medium
|
-0.4%
|
-2.5%
|
The
Single Currency was the main gainer from the U.S Debt issue and closed above
1.4500 in a strong technical break higher yesterday. Stock markets are under
pressure but the usual safe haven demand for the U.S Dollar is not there with
Swiss Franc and Japanese Yen in demand instead. Overall, the EUR/USD traded
with a low of 1.4356 and a high of 1.4524 before closing the day around 1.4509
in the New York session.
Yen
The
Japanese Yen was volatile in yesterday’s trading session testing support under 78.00
Yen before surging on intervention rumors to 78.70 in 15 minutes. The gains
were reversed almost as fast and fresh lows were seen in the U.S session as
Dollar weakness dominated. Overall, the USD/JPY traded with a low of 77.82 and
a high of 78.69 before closing the day around 77.86 in the New York session.
British
Pound
The
British Pound was one of the strongest currencies in the market yesterday with
the second quarter GDP impressing with the 0.2% in line with expectations but a
note from the statistics agency saying without Japan/Royal Wedding the number
would have been closer to 0.7%. Overall, the GBP/USD traded with a low of
1.6264 and a high of 1.6427 before closing the day at 1.6402 in the New York
session.
Canadian Dollar
The
Canadian Dollar jumped to its highest point since 2007 on Tuesday, becoming a
safe haven for investors as the U.S. greenback faltered and the political
impasse in Washington over raising the country’s debt ceiling continued. Canada’s
economic health is one reason why the Loonie is attractive to those seeking a
safe investment. Overall, USD/CAD traded with a low of 0.9404 and a high of
0.9473 before closing the day at 0.9436 in the New York session.
Australian Dollar
The Australian
Dollar tracked the Euro higher able to ignore the falls in the stock markets
with U.S Dollar weakness the main story. RBA Governor Steven's speech helped
lift as well with positive comments on the economic outlook ahead of today all
important CPI numbers. Overall, the AUD/USD traded with a low of 1.0820 and a
high of 1.0968 before closing the day at 1.0954 in the New York session.
Euro-Yen
EUR/JPY is trading above 14 and below
50, 100 days moving average. Fast stochastic is giving a bullish tone and MACD
is also issuing a bullish stance. The RSI is above 44 and lies below the neutral
zone. Overall, the cross has gained 0.41%.
Sterling-Yen
Currently GBP/JPY is trading above 14
and below 50, 100 days moving average. Fast stochastic is issuing bullish and
MACD is also indicating a bullish stance. The RSI is above 44 reading and lies
below the neutral zone. The pair has gained 0.27%.
Aussie-Yen
Currently, the cross is trading above
14 and below 50, 100 days moving average. Fast stochastic gives bullish and
MACD is also indicating a bullish stance. The RSI is above 54 reading and lies
above the neutral region. The pair has gained 0.51%.
Euro-Sterling
This cross is trading above 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 gained 0.14%.
Sterling-Swiss
This cross is trading above below 14,
50 and 100 days moving average. Fast stochastic is issuing a bearish stance and
MACD is indicating a bullish tone. The RSI is above 39 and lies below the neutral
region. The pair has gained 0.19%.
Appendix
Daily Pivot Points
|
|||||||
Trading Range
|
|||||||
Contract
|
S3
|
S2
|
S1
|
Pivot
|
R1
|
R2
|
R3
|
EUR/USD
|
1.4234
|
1.4295
|
1.4402
|
1.4463
|
1.4570
|
1.4631
|
1.4738
|
USD/JPY
|
76.69
|
77.25
|
77.56
|
78.12
|
78.43
|
78.99
|
79.30
|
GBP/USD
|
1.6139
|
1.6201
|
1.6302
|
1.6364
|
1.6465
|
1.6527
|
1.6628
|
USD/CHF
|
0.7911
|
0.7954
|
0.7982
|
0.8025
|
0.8053
|
0.8096
|
0.8124
|
USD/CAD
|
0.9333
|
0.9369
|
0.9402
|
0.9438
|
0.9471
|
0.9507
|
0.9540
|
EUR/JPY
|
111.00
|
111.62
|
112.30
|
112.92
|
113.60
|
114.22
|
114.90
|
GBP/JPY
|
125.75
|
126.39
|
127.06
|
127.70
|
128.37
|
129.01
|
129.68
|
CHF/JPY
|
95.88
|
96.43
|
96.81
|
97.36
|
97.74
|
98.29
|
98.67
|
AUD/JPY
|
83.61
|
84.06
|
84.68
|
85.13
|
85.75
|
86.20
|
86.82
|
EUR/GBP
|
0.8746
|
0.8781
|
0.8812
|
0.8847
|
0.8878
|
0.8913
|
0.8944
|
EUR/CHF
|
1.1432
|
1.1485
|
1.1554
|
1.1607
|
1.1676
|
1.1729
|
1.1798
|
GBP/CHF
|
1.2955
|
1.3009
|
1.3075
|
1.3129
|
1.3195
|
1.3249
|
1.3315
|
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
Bank of America Home Loans
ReplyDeleteThe gains were reversed almost as fast and fresh lows were seen in the U.S session as Dollar weakness dominated.