Pulse of the Market
·
U.S government pushed through a budget
solution just before the U.S found itself in a technical default
·
Euro’s slide relatively calmed while credit
default swap rates on France, Italy and Spain hit record highs
·
British Pound countenance an additional
potential economic beat in service sector data
·
Japanese Yen has been rising speedy in recent
days and that has set alarm bells ringing
The
Greenback traded higher yesterday, gaining against a majority of its peers as
it appears the government will successfully raise the debt ceiling. After weeks
of intense bipartisan divide, the House of Representatives passed through a
plan to raise the debt ceiling and cut government spending by a wide margin. However,
with the debt debate in the rear view mirror, investors have turned to more
pressing matters in the U.S like sluggish economic growth, a worsening
manufacturing sector, falling retail sales and eroding consumer and business
confidence. Nevertheless, the U.S Dollar remains on firm ground as its
historical role as a "safe haven" asset will likely remain intact with
no imminent default on debt looming. The Euro consolidated towards the bottom
end of its ranges yesterday as Euro Zone debt came back into focus. Much of the
region's problems had fallen out of focus over the past two weeks with
investors watching U.S struggles with the debt ceiling. A report yesterday
showed that Euro Zone PPI unexpectedly slowed to 5.9% from 6.2% in the previous
month, likely reducing the scope for further ECB tightening. Investors have
begun to fear that Euro Zone officials were so focused on Greece during their
series of emergency meetings in July, that the EFSF did not sufficiently
address the potential for a Spanish or Italian bailout. On the other hand,
concern that the U.S government may still lose its AAA credit rating will
provide support for the Euro as the primary alternative to the U.S Dollar in
the near term. British Pound remains towards the bottom of its recent
ranges yesterday after weak manufacturing and construction data. A gauge of
construction fell from 53.6 in June to 53.5 in July and manufacturing tumbled
from 51.4 to 49.1, the lowest reading in more than two years. The Confederation
of British Industry cut its growth forecast for the U.K economy yesterday after
GDP hardly grew in second quarter. The Japanese Yen has eased from its
recent highs, but still remains well supported in the low 77.00 Yen. A Japanese
newspaper reported that in recent talks between Japanese and U.S officials, the
Japanese expressed their intent to intervene and weaken the Yen. Investors are
also speculating that Japanese officials may amplify the effects of the
intervention by easing monetary policy as well. The Commodity Currencies were
weaker in yesterday’s trading session as slowing global economic growth dampens
demand for the high yielding currencies.
|
Time(GMT)
|
Economic Release
|
IMP
|
Actual
|
Forecast
|
Prior
|
|
07:55
|
German Purchasing Manager Index Services (JUL)
|
Medium
|
|
52.9
|
52.9
|
|
08:00
|
Euro Zone Purchasing Manager Index Services (JUL)
|
Medium
|
|
51.4
|
51.4
|
|
08:30
|
U.K Purchasing Manager Index Services (JUL)
|
Medium
|
|
53.2
|
53.9
|
|
09:00
|
Euro Zone Retail Sales (MoM) (JUN)
|
Medium
|
|
0.5%
|
-1.3%
|
|
12:15
|
U.S ADP Employment Change (JUL)
|
Medium
|
|
100K
|
157K
|
|
14:00
|
U.S Factory Orders (JUN)
|
Medium
|
|
-0.8%
|
0.8%
|
|
14:00
|
U.S ISM Non-Manufacturing Composite (JUL)
|
Medium
|
|
53.5
|
53.3
|
Euro
The
Single Currency ended yesterday’s trading session lower against the U.S Dollar.
Italian debt was in focus amid the yield on 10 yr bonds continuing to surge
higher with investors fleeing the potential next domino to fall. The U.S stock
weakness added pressure on EUR/CHF and EUR/JPY and the EUR/USD slipped towards
1.4150. Overall, the EUR/USD traded with a low of 1.4150 and a high of 1.4282
before closing the day around 1.4196 in the New York session.
Yen
The
Japanese Yen was well supported with USD/JPY falling towards 77.00 Yen and
AUD/JPY crashing lower on risk aversion and the 200 point fall in U.S stocks.
The outlook is for more losses with the market testing the BOJ about
intervention threats and the lack of support for the U.S Dollar as a safe
haven. Overall, the USD/JPY traded with a low of 76.94 and a high of 77.82 before
closing the day around 77.12 in the New York session.
British
Pound
The
British Pound was under pressure against the safe havens but losses were
contained with plenty of support under 1.6300. GBP/CHF slipped with EUR/CHF to
all time lows but EUR/GBP fell back to 0.8700 as the Euro concerns continued.
Overall, the GBP/USD traded with a low of 1.6223 and a high of 1.6328 before
closing the day at 1.6297 in the New York session.
Canadian Dollar
The
Canadian Dollar fell in yesterday’s trading session, on renewed concerns that
slowing growth in the U.S would crimp domestic growth, on a day when the U.S
Senate approved a hike in debt ceiling. The Canadian Dollar began its trading
week on a weaker note and slid further as personal spending data in the U.S,
which consumes nearly 80% of Canada's exports, came in below expectations. Overall,
USD/CAD traded with a low of 0.9546 and a high of 0.9616 before closing the day
at 0.9611 in the New York session.
Australian Dollar
The Australian
Dollar was under heavy selling pressure falling over two big figures on a
combination of risk aversion and a dovish RBA statement after the RBA held at
4.75%. Concerns about global growth and market stability trumped the high
inflation readings and this pared back investors' expectations for rate hikes
later this year. Overall, the AUD/USD traded with a low of 1.0777 and a high of
1.1006 before closing the day at 1.0779 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 32 and lies below the neutral zone. Overall,
the cross has lost 0.44%.
Sterling-Yen
Currently GBP/JPY is trading below 14,
50 and 100 days moving average. Fast stochastic is issuing bearish and MACD is
also indicating a bearish stance. The RSI is above 34 reading and lies below the
neutral zone. The pair has lost 0.04%.
Aussie-Yen
Currently, the cross is trading below
14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is
also indicating a bearish stance. The RSI is above 36 reading and lies below the
neutral region. The pair has lost 1.78%.
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 0.39%.
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 23 and lies below the neutral
region. The pair has lost 2.64%.
Appendix
|
Daily Pivot Points
|
|||||||
|
|
Trading Range
|
|
|||||
|
Contract
|
S3
|
S2
|
S1
|
Pivot
|
R1
|
R2
|
R3
|
|
EUR/USD
|
1.4005
|
1.4077
|
1.4137
|
1.4209
|
1.4269
|
1.4341
|
1.4401
|
|
USD/JPY
|
75.89
|
76.41
|
76.77
|
77.29
|
77.65
|
78.17
|
78.53
|
|
GBP/USD
|
1.6132
|
1.6178
|
1.6237
|
1.6283
|
1.6342
|
1.6388
|
1.6447
|
|
USD/CHF
|
0.7313
|
0.7467
|
0.7546
|
0.7700
|
0.7779
|
0.7933
|
0.8012
|
|
USD/CAD
|
0.9496
|
0.9521
|
0.9566
|
0.9591
|
0.9636
|
0.9661
|
0.9706
|
|
EUR/JPY
|
106.96
|
108.08
|
108.78
|
109.90
|
110.60
|
111.72
|
112.42
|
|
GBP/JPY
|
123.32
|
124.30
|
125.00
|
125.98
|
126.68
|
127.66
|
128.36
|
|
CHF/JPY
|
96.66
|
97.56
|
99.35
|
100.25
|
102.04
|
102.94
|
104.73
|
|
AUD/JPY
|
79.78
|
81.43
|
82.28
|
83.93
|
84.78
|
86.43
|
87.28
|
|
EUR/GBP
|
0.8613
|
0.8655
|
0.8683
|
0.8725
|
0.8753
|
0.8795
|
0.8823
|
|
EUR/CHF
|
1.0310
|
1.0565
|
1.0694
|
1.0949
|
1.1078
|
1.1333
|
1.1462
|
|
GBP/CHF
|
1.1912
|
1.2167
|
1.2297
|
1.2552
|
1.2682
|
1.2937
|
1.3067
|
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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