Pulse of the Market
·
Greenback rallied and S&P 500 tumbled hit
by immediate fundamental headwinds
·
Euro stumbled after another Greece downgrade
and Schaeuble casts doubt on EFSF
·
British Pound investors ignore BoE’s miles and
troubled CBI factory economic data
·
Australian Dollar sustained its upbeat
prejudice in spite of risk aversion
The U.S
Dollar ended yesterday’s trading session higher against the basket of major
currencies. Lawmakers defended their proposals and actions throughout the day,
but their efforts have yielded little in terms of cooperation. Discussions in
the markets yesterday centered on the question What if the U.S government
defaulted on its debt? And what if the U.S credit rating was downgraded? A
default would be 10 times worse than a downgrade but also far less likely. In
the opinion, a debt deal will be reached by August 2nd because the consequences
of not doing so would just be far too severe and when the announcement is made,
the Greenback will rally. Fiscal and monetary policies in the U.S do not
support the Dollar and the only reason why the U.S Dollar has rallied at all is
because of its safe haven status. According to the Beige Book report, 8 out of the
12 Fed districts saw slower growth with the remaining 4 continuing to grow
modestly. Durable goods orders also fell 2.1 percent in the month of June,
which was much worse than the market had anticipated. The Euro weakened across
the board as the Dow plunged nearly 200 points. Although the foreign exchange
market will continue to take its cue from U.S. debt developments, Europe is not
without its own problems. Earlier yesterday Standard & Poor’s downgraded
Greece’s debt rating from CCC to CC with a negative outlook, adding that they
expect bondholders to recover only 30 to 50 percent of their principal. Given
the exposure of European banks to U.S debt, what is bad for the U.S will be bad
for Europe. However with that in mind, a downgrade or default in the U.S should
still be initially Dollar bearish and Euro positive. The latest economic
reports show consumer prices rising in the month of July which suggests that
rate hikes could still be on the minds of central bankers. The British Pound
strengthened against the Euro but weakened against the Dollar. As mixed
sentiments pervaded the market, investors sold off high beta currencies driving
GBP/USD lower from its one month high. The Japanese Yen strengthened against
all the major currencies with the exception of the Australian Dollar.
Time(GMT)
|
Economic Release
|
IMP
|
Actual
|
Forecast
|
Prior
|
07:55
|
German Unemployment Change (JUL)
|
High
|
-15K
|
-8K
|
|
09:00
|
Euro Zone Consumer Confidence (JUL)
|
Medium
|
-11.4
|
-11.4
|
|
10:00
|
U.K CBI Reported Sales (JUL)
|
Medium
|
2
|
-2
|
|
12:30
|
U.S Initial Jobless Claims (JUL 22)
|
Low
|
415K
|
418K
|
|
14:00
|
U.S Pending Home Sales (MoM) (JUN)
|
Low
|
-2.0%
|
8.2%
|
|
23:01
|
U.K GfK Consumer Confidence Survey (JUL)
|
Medium
|
-26
|
-25
|
|
23:15
|
Japan Nomura/JMMA Manufacturing Purchasing
Manager Index (JUL)
|
Medium
|
50.7
|
||
23:30
|
Japan Jobless Rate (JUN)
|
Medium
|
4.6%
|
4.5%
|
|
23:30
|
Japan Household Spending (YoY) (JUN)
|
Medium
|
-2.3%
|
-1.9%
|
Euro
The
Single Currency pulled back sharply in yesterday’s trading session with Cyprus
and Greece downgraded and comments from the German Fin min that the debt crisis
is not over. German CPI climbed 0.5% m/m but is not expected to remain at the
elevated levels. Overall, the EUR/USD traded with a low of 1.4338 and a high of
1.4535 before closing the day around 1.4365 in the New York session.
Yen
The
Japanese Yen grinded lower for most of the yesterday’s trading session until
the U.S Dollar found some bids and rebounded above 78.00 Yen. AUD/JPY was well
supported on the strong inflation data whilst the EUR/JPY was the weakest cross
falling under 112.00 Yen on risk aversion. Overall, the USD/JPY traded with a
low of 77.56 and a high of 78.15 before closing the day around 77.96 in the
New York session.
British
Pound
The
British Pound fell back to the lower 1.6300 region with market wide U.S Dollar
strength and heavy GBP/JPY selling pushing Cable lower. EUR/GBP fell below
0.8800 but is still inside the recent range. July CBI Industrial trends showed
a sharp slowdown to -10 against -2 previously. Overall, the GBP/USD traded with
a low of 1.6311 and a high of 1.6438 before closing the day at 1.6330 in the
New York session.
Canadian Dollar
The
Canadian Dollar declined as oil and other commodities fell after orders for U.S
durable goods declined in June, sparking concern about the strength of the
recovery in the world's largest economy. The Loonie advanced earlier to almost
the highest level since November 2007. Overall, USD/CAD traded with a low of
0.9408 and a high of 0.9504 before closing the day at 0.9495 in the New York
session.
Australian Dollar
The Australian
Dollar was the strongest currency in the market breaking to fresh all time
highs on the back of strong Q2 CPI figures at 0.9% vs. 0.7% forecast. The
market is bullish because the strong CPI numbers may lead to the RBA raising
interest rates further this year. Overall, the AUD/USD traded with a low of
1.0935 and a high of 1.1079 before closing the day at 1.1022 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 38 and lies below the neutral zone. Overall,
the cross has lost 0.86%.
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 40 reading and lies below the
neutral zone. The pair has lost 0.31%.
Aussie-Yen
Currently, the cross is trading above
14, 50 and 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 0.75%.
Euro-Sterling
This cross is trading above 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 43 reading and lies below
the neutral region. The pair has lost 0.53%.
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 35 and lies below the neutral
region. The pair has lost 0.40%.
Appendix
Daily Pivot Points
|
|||||||
Trading Range
|
|||||||
Contract
|
S3
|
S2
|
S1
|
Pivot
|
R1
|
R2
|
R3
|
EUR/USD
|
1.4093
|
1.4216
|
1.4290
|
1.4413
|
1.4487
|
1.4610
|
1.4684
|
USD/JPY
|
77.04
|
77.30
|
77.63
|
77.89
|
78.22
|
78.48
|
78.81
|
GBP/USD
|
1.6154
|
1.6233
|
1.6281
|
1.6360
|
1.6408
|
1.6487
|
1.6535
|
USD/CHF
|
0.7940
|
0.7968
|
0.7990
|
0.8018
|
0.8040
|
0.8068
|
0.8090
|
USD/CAD
|
0.9338
|
0.9373
|
0.9434
|
0.9469
|
0.9530
|
0.9565
|
0.9626
|
EUR/JPY
|
110.26
|
111.09
|
111.55
|
112.38
|
112.84
|
113.67
|
114.13
|
GBP/JPY
|
125.97
|
126.56
|
126.94
|
127.53
|
127.91
|
128.50
|
128.88
|
CHF/JPY
|
96.38
|
96.60
|
96.93
|
97.15
|
97.48
|
97.70
|
98.03
|
AUD/JPY
|
84.38
|
84.76
|
85.35
|
85.73
|
86.32
|
86.70
|
87.29
|
EUR/GBP
|
0.8688
|
0.8729
|
0.8763
|
0.8804
|
0.8838
|
0.8879
|
0.8913
|
EUR/CHF
|
1.1314
|
1.1406
|
1.1460
|
1.1552
|
1.1606
|
1.1698
|
1.1752
|
GBP/CHF
|
1.2932
|
1.3001
|
1.3045
|
1.3114
|
1.3158
|
1.3227
|
1.3271
|
Sources:News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
No comments:
Post a Comment