Pulse
of the Market
·
Greenback on boundary with deficit time limit
and ISM report added fuel to volatility
·
Euro haggard in the middle of Dollar
volatility, EU trouble and upcoming ECB decision
·
British Pound tumbles with risk and helped
along by manufacturing contraction
·
Japanese Yen give the impression of being at
volatility as intervention oratory heats up
The
Greenback ended yesterday’s trading session higher against the basket of major
currencies. The early gains in the currency and equities were wiped away in a
perfect reflection of the prevailing sentiment in the markets yesterday. News
that lawmakers in Washington reached a deal over the weekend to raise the debt
ceiling triggered widespread enthusiasm in the Asian and early European trading
sessions. However this enthusiasm evaporated quickly once the U.S stock market
opened for trading and investors received another piece of disappointing
economic data. Even though the possibility of losing its prized AAA rating is
the greatest risk for the U.S Dollar right now, the lack of a reasonable
alternative to the Dollar suggests that a AA rating won’t stop investors from
seeking safety in the Greenback. However, restoring investor confidence
is a function of getting their fiscal house in order and that seems to be the
U.S government's top. Although the troubles are coming out of the U.S, risk
aversion has overtaken the market and high beta currencies such as the Euro,
British Pound, Australian and Canadian Dollars have suffered as a result. Euro
ended the session sharply lower against the U.S Dollar following risk aversion
which drove high yielding currencies lower but the Euro was also pressured by
renewed concerns about contagion. Rising credit default swap spreads for Italy
and Spain has turned the focus to the Euro Zone’s third largest nation.
European sovereign debt troubles have played second contrivance to the U.S
problems but when the votes are cast and rating agencies have made their
decisions about downgrading U.S debt, investors will shift their focus back to
fundamentals. In this case, the attractiveness of the Euro will depend on how
the German and French economies fare compared to the U.S. The British Pound
strengthened against the Euro but weakened against the Greenback as U.K
manufacturing unexpectedly shrank the most in more than two years in July.
Factories also cut jobs and domestic demand weakened further. Operating conditions
deteriorated for the first time in two years during July, a report by Market
Economics and the Chartered Institute of Purchasing and Supply showed. The
Japanese Yen strengthened against all the major currencies with the exception
of the Swiss Franc and commodity currencies as investors seek out safe haven
assets. The Yen continued to strengthen as investors further speculated that
President Barack Obama and congressional leaders plan to prevent a default and
lower the deficit will slow growth in the U.S.
|
Time(GMT)
|
Economic Release
|
IMP
|
Actual
|
Forecast
|
Prior
|
|
07:15
|
Switzerland Retail Sales (Real) (YoY) (JUN)
|
Medium
|
|
|
-4.1%
|
|
07:30
|
Switzerland SVME-Purchasing Managers Index (JUL)
|
Medium
|
|
52.5
|
53.4
|
|
08:30
|
U.K Purchasing Manager Index Construction (JUL)
|
Medium
|
|
53.1
|
53.6
|
|
09:00
|
Euro Zone Producer Price Index (MoM) (JUN)
|
Medium
|
|
0.1%
|
-0.2%
|
|
12:30
|
U.S Personal Spending (JUN)
|
Medium
|
|
0.2%
|
0.0%
|
|
16:00
|
U.S Senate Votes on Debt-Limit Bill
|
High
|
|
|
|
Euro
The
Single Currency traded sharply lower against the U.S Dollar in yesterday’s
trading session. The positive mood from Asia waned in Europe and turned to
heavy selling in both stocks and the EUR/USD. June EU Unemployment remained at
9.9%. Italian Debt is in focus after the downgrade of some investments and the
EUR/USD tumbled with U.S stocks to 1.4200. The EUR/USD traded with a low
of 1.4184 and a high of 1.4452 before closing the day around 1.4249 in the New
York session.
Yen
The
Japanese Yen rallied sharply in Asian trading session to above 78.00 Yen before
reversing aggressively to fresh multi month lows on EUR/JPY selling and U.S
debt downgrade concerns. Intervention threats at these levels are growing
louder and the shorts are careful. Overall, the USD/JPY traded with a low of
76.28 and a high of 78.03 before closing the day around 77.16 in the New York
session.
British
Pound
The
British Pound rallied in Asia before falling back to opening levels and finding
support under 1.6300. EUR/GBP fell as the Pound outperformed relative to the
troubled Euro. GBP/JPY was extremely volatile falling from 128.00 Yen to 124.00
Yen as the USD/JPY turned wildly. UK Factory PMI slipped into contractionary levels
for the first time in 2 years. Overall, the GBP/USD traded with a low of 1.6236
and a high of 1.6474 before closing the day at 1.6294 in the New York session.
Canadian Dollar
The
Canadian Dollar weakened on concern that the U.S economy, the main destination
for Canadian exports, is losing momentum amid political stalemate delays to
raising the U.S debt ceiling. Statistics Canada report showed that the Canadian
economy unexpectedly contracted in May by the most in two years. Overall, USD/CAD
traded with a low of 0.9489 and a high of 0.9603 before closing the day at 0.9569
in the New York session.
Australian Dollar
The Australian
Dollar soared above 1.1000 on the strong AUD/JPY rally in Asian session but
could not hold onto the gains and reversed to fresh day lows in the U.S trading
session as stock markets slumped. The outlook is mixed with buyers cautious of
being caught long if the debt deal fails. Overall, the AUD/USD traded with a
low of 1.0921 and a high of 1.1064 before closing the day at 1.0969 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 34 and lies below the neutral zone. Overall,
the cross has lost 0.55%.
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 0.48%.
Aussie-Yen
Currently, the cross is trading below
14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is
also indicating a bullish stance. The RSI is above 47 reading and lies above the
neutral region. The pair has gained 0.13%.
Euro-Sterling
This cross is trading above 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 38 reading and lies below
the neutral region. The pair has lost 0.07%.
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 26 and lies below the neutral
region. The pair has lost 1.22%.
Appendix
|
Daily Pivot Points
|
|||||||
|
|
Trading Range
|
|
|||||
|
Contract
|
S3
|
S2
|
S1
|
Pivot
|
R1
|
R2
|
R3
|
|
EUR/USD
|
1.3870
|
1.4027
|
1.4138
|
1.4295
|
1.4406
|
1.4563
|
1.4674
|
|
USD/JPY
|
74.53
|
75.41
|
76.28
|
77.16
|
78.03
|
78.91
|
79.78
|
|
GBP/USD
|
1.5957
|
1.6097
|
1.6195
|
1.6335
|
1.6433
|
1.6573
|
1.6671
|
|
USD/CHF
|
0.7501
|
0.7615
|
0.7724
|
0.7838
|
0.7947
|
0.8061
|
0.8170
|
|
USD/CAD
|
0.9390
|
0.9440
|
0.9504
|
0.9554
|
0.9618
|
0.9668
|
0.9732
|
|
EUR/JPY
|
104.82
|
106.76
|
108.36
|
110.30
|
111.90
|
113.84
|
115.44
|
|
GBP/JPY
|
119.44
|
121.81
|
123.77
|
126.14
|
128.10
|
130.47
|
132.43
|
|
CHF/JPY
|
96.00
|
96.75
|
97.62
|
98.37
|
99.24
|
99.99
|
100.86
|
|
AUD/JPY
|
81.13
|
82.43
|
83.54
|
84.84
|
85.95
|
87.25
|
88.36
|
|
EUR/GBP
|
0.8626
|
0.8673
|
0.8709
|
0.8756
|
0.8792
|
0.8839
|
0.8875
|
|
EUR/CHF
|
1.0551
|
1.0788
|
1.0975
|
1.1212
|
1.1399
|
1.1636
|
1.1823
|
|
GBP/CHF
|
1.2024
|
1.2303
|
1.2533
|
1.2812
|
1.3042
|
1.3321
|
1.3551
|
Sources: News, Charts & Quotes (Courtesy: Reuters,
US Department Of Treasury)
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