Archive for May, 2008
May 28th, 2008 at 06:03am
Under Daily Forex Commentary
Forex Market Commentary for May 28, 2008 Forex Rates Today
Forex Rates Today Daily Market Commentary
The dollar rallied on Tuesday as the crude oil slumped about 2.5%, and the upmove was remarkable given the soft US data. The US currency should attempt another upmove today if the oil inventory report doesn’t surprise with a decline.
Euro/dollar
The euro/dollar had an outside day but sank to a near one-week low and my model went short. Following another decline today, the medium-term upmove should resume.
Key support remains at 1.5655. A close below this level would signal a sustained decline and the next level would become 1.5610. This is followed by 1.5570 and 1.5460.
Initial resistance is now seen at 1.5740. The next level is 1.5811. Above 1.5865, euro/dollar has distant resistance at 1.6020.
Oscillators are mixed.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen rallied on Tuesday, but remained stuck in an inside range. My model went long. Expect another attempt on the upside today.
Immediate resistance is now at 104.38, which is the top of the inside range. Strong resistance follows at 104.50 from a 50-point pivot, which targets 104.00 and 105.00.
Below 103.80, key support is at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. A bid support is seen at 102.30 from another 50-point pivot, which targets 101.80 and 102.80.
Oscillators are rising.
NEAR-TERM: Mixed with upside risk
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar failed its aggressive decline and reduced losses on the close on Tuesday. My model remains long, but the risk is on the downside.
Immediate support is at 1.9760. This is followed by 1.9645. Only a break below 1.9545 would jeopardize the cable’s recovery.
Initial resistance remains at 1.9850. Above it, there is further resistance at 1.9910. Distant resistance is at 2.0030.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss rallied on Tuesday, but my model remains barely short. The immediate outlook is bullish.
Initial resistance now comes at 1.0370. If 1.0410 gives way, expect a test of 1.0510 and even of the distant resistance at 1.0623.
Immediate support is now seen at 1.0305. This is followed by 1.0200, 1.0130 and 1.0105.
Oscillators are rising.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish
By admin
May 28th, 2008 at 01:19am
Under Daily Forex Analyses
Data both sides of the Atlantic continue to be erratic
Releases from Europe:
Forecast Actual
April Swiss UBS Consumption Indicator 2.249 (prior) 2.179
May Italian Business Confidence 86.9 89.6
Poor consumer numbers have spread Europe-wide while business confidence is mixed. However, the core requirement for business confidence is a freely spending consumer. Hence we can dismiss business confidence as flying in the face of reality.
ECB officials are, at last, admitting that growth is suffering (cue another GDP downward revision) and Weber says he “wouldn’t expect these spreads to come down to pre-summer 2007 levels any time soon.”
Given the confrontational stance by central banks in calling for rate hikes should workers try and recover their lost earnings to the oil & food coffers there seems more chance that the coming 12-18 months will be long hard fought battles in which the only loser will be the stability of the underlying economies.
He also spoke rather patronizingly about the market which he said “have understood that we do not like disorderly developments in currency markets and that we think that high volatility on Forex markets is counterproductive. What we have seen in recent months demonstrates that.”
However, he calmly ignores the fact that markets react to events and central bank actions. This is a fundamental error in misunderstanding the core mechanism of markets by expecting mass psychology to bow down and obey the “rules” set by central bankers. It could, in the long run, contribute to a greater deterioration in the underlying economy.
Releases from the States:
April Forecast Actual
New Home Sales (MoM) +0.1% +3.3%
New Home Sales 527K 526K
May
Consumer Confidence 60.1 57.2
Richmond Fed Manufacturing Index 0.0 - 3.0
Dallas Fed Manufacturing Index - 23.4 (prior) - 10.2
Stateside the new home sales number looked spectacular at +3.3% MoM but given the annual pace at 526K it hides the equally drastic revision lower by 17K in March. Net the figure was about as expected.
The Richmond manufacturing index saw a dip to -3.0 while the Dallas Fed saw a solid rise to -10.2. One positive number was the rise in CAPEX in Dallas and the better outlook.
As I’ve said in the past, we are probably seeing a basing effect in the economy which will bring volatile numbers and slowly this will create a modest improvement. However, given the continued softness in consumer confidence a “modest improvement” is all we can probably expect.
Equally Europe is also going through a period of volatile numbers but officials are less attentive to the abnormal background events. As the ECB slowly squeeze the life out of its own economy there differential will gradually turn to favor the Dollar.
So the net impact of yesterday’s figures was a higher Dollar again. We should be expecting a significant Dollar low very soon. I am not convinced that we have seen it just yet and suspect that we will continue to see the market favor the Euro for now once we have seen the end of the current correction.
There’s not a great deal of critical data out today and this should therefore stall the Dollar’s recovery today and maintain the recent trading range for a little while longer before a final dip to new lows can be expected.
More later once the daily analysis has been done…
The following releases are due from Asia due today:
Australia
Q1 Construction Work Done +2.3%
March Westpac Leading Index
May DEWR Skilled Vacancies
Japan
May Small Business Confidence
See Also
By admin
Continue Reading Asian Morning Update 28th May 2008
May 27th, 2008 at 06:46pm
Under Daily Forex Commentary
Forex Market Commentary for May 27, 2008 Forex Rates Today
Forex Rates Today Daily Market Commentary
The dollar drifted aimlessly during the Memorial Day weekend. Trading should return to normal today, but probably slowly. Expect an attempt to recover before the dollar turns lower.
Euro/dollar
The euro/dollar closed virtually unchanged on Friday and Monday, so the positive outlook remains in place. The interim inversed head-and-shoulders remains in place and my model remains long. Following some profit taking, the upmove should resume.
Initial resistance is seen at 1.5811. Above 1.5865, euro/dollar has distant resistance at 1.6020.
Immediate support remains at 1.5726. The next level remains at 1.5685. This is followed by 1.5460.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen is alternating up and down days, and Friday was a down day and Monday a non-existing day. The pair remains stuck in an inside range, so expect consolidation today. My model remains short.
Key support is at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. A bid support is seen at 102.30 from another 50-point pivot, which targets 101.80 and 102.80.
Immediate resistance is now at 103.90. Strong resistance follows at 104.50 from a 50-point pivot, which targets 104.00 and 105.00.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar struggled higher on Monday but remained in an inside range. My model remains long and the interim inversed head-and-shoulders pattern is still in good shape.
Initial resistance remains at 1.9850. Above it, there is further resistance at 1.9910. Distant resistance is at 2.0030.
Immediate support is at 1.9760. This is followed by 1.9645. Only a break below 1.9545 would jeopardize the cable’s recovery.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss sank to a one-month low of Friday and then remained near the bottom of the range on Monday. This weakness bodes well for my short model. The immediate outlook is bearish after forming a double top that targets 1.0130.
Immediate support remains at 1.0200. This is followed by 1.0130 and 1.0105. Distant support is now pegged at .9877.
Initial resistance comes at 1.0295. The next level is perched at 1.0352. If 1.0390 gives way, expect a test of the distant resistance at .1.0623.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish
By admin
May 27th, 2008 at 09:24am
Under Daily Forex Analyses
Early European data forces the market to rethink its Dollar bearish view
Releases from Europe:
Q1 Forecast Actual
German GDP (F) (QoQ) +1.5% +1.5%
German GDP (F) (YoY) +2.6% +2.6%
April
Swiss Trade Balance CHF 1.25bn (prior) 1.56bn
May
French Business Confidence Indicator 105.0 102.0
French Production Outlook Indicator - 10.0 - 15.0
June
German GfK Consumer Confidence 5.70 4.90
Q1 GDP may well have been buoyant in Germany but consumers are currently giving a resound thumbs-down in response to rising fuel and food prices. The GfK commented, “Growing pressure of inflation and fears of further price increases are currently preventing the consumer climate from recovering.”
“Only if consumers expect their incomes to increase in real terms this year - and as long as fears of inflation are also allayed - will they then be keen to loosen their purse strings once again.”
Well, that says it all… The chances of incomes growing in real terms is very unlikely and the stance of the central banks in threatening to raise interest rates if wage settlements are too high will raise a more confrontational element to the situation.
And France is clearly suffering the same lack of confidence which should ring some bells in the minds of ECB officials but they may just interpret the bells in a different way. Business confidence is low, consumer confidence is low and confrontation is being heightened between workers and central bankers while cash strapped business look on with horror…
Not good signs…
The following economic releases are due today:
April
Swiss UBS Consumption Indicator
U.S. New Home Sales (MoM) +0.1%
U.S. New Home Sales 527K
May
Italian Business Confidence 86.9
German IFO Business Climate Survey
U.S. Consumer Confidence 60.1
U.S. Richmond Fed Manufacturing Index 0.0
Following Friday’s disappointing European Services PMI the U.K’s Confederation of British Industry’s quarterly survey reporting a continuing rocky services sector.
Services firms saw business volumes fall at rates similar to those seen in 2001 while costs accelerate rapidly. Professional services such as lawyers, accountants and architects also saw substantially lower business volumes.
Very clearly cost cutting by both consumers and businesses are being seen in areas that are considered non-essential represent the first signs of a drive to control costs and this looks likely to continue over the coming months.
And this is likely to be this week’s theme – confidence, or lack thereof…
Already the German GfK consumer confidence suffered a sharp decline to 4.9 and we have plenty more to see from France, Italy, U.K., Japan and the States. These will also come along with consumer price data from the States, Germany and Japan.
The IMF took an uncompromising stance in stating that central banks must stand firm against any increased wage demands at a time when union unrest is simmering in France and U.K. while globally consumers are tightening financial belts.
As I have said before, they may just get through this year without any sizeable fallout, but the consumer in a further weakened position next year will raise the risk of a much stronger confrontation.
Early numbers today have weakened the European currencies and this may lead to a little more downside. However, over the week expect the market to remain confused over the direction of the Dollar. This promises a rather volatile week but still, I feel with overall Dollar weakness but should find a significant low for the coming weeks.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 104.70-33 1.5894-10 1.0353-72 1.9978-00
Res: 104.10-15 1.5805-15 1.0275-00 1.9908-14
Spt: 102.72-05 1.5713-35 1.0203-14 1.9750-75
Spt: 101.94-18 1.5630-72 1.0126-34 1.9650-96
See Also
By admin
Continue Reading European Mid Morning Update 27th May 2008
May 27th, 2008 at 07:15am
Under Daily Forex Analyses
Asia remains quiet following the long holiday weekend
Releases from Japan:
Forecast Actual
April Domestic Corporate Service Prices (YoY) +0.6% +0.5%
Corporate service prices were more-or-less as forecast, falling short by only 0.1% in registering a 17th consecutive month of YoY increases. Higher costs of transportation and real estate services fueled the increase.
The only other piece of news out this morning came from the U.K. which saw the U.K.’s Confederation of British Industry’s quarterly survey reporting a continuing rocky services sector that sees neither consumer nor business services firms being positive about business expansion over the coming year.
Services firms saw business volumes fall at rates similar to those seen in 2001 while costs accelerate rapidly. Professional services such as lawyers, accountants and architects also saw substantially lower business volumes.
Very clearly cost cutting by both consumers and businesses are being seen in areas that are considered non-essential represent the first signs of a drive to control costs and this looks likely to continue over the coming months.
The following economic releases are due today:
Q1
German GDP (F) (QoQ) +1.5%
German GDP (F) (YoY) +2.6%
April
Swiss Trade Balance CHF
Swiss UBS Consumption Indicator
U.S. New Home Sales (MoM) +0.1%
U.S. New Home Sales 527K
May
French Business Confidence Indicator 105.0
French Production Outlook Indicator - 10.0
Italian Business Confidence 86.9
German IFO Business Climate Survey
U.S. Consumer Confidence 60.1
U.S. Richmond Fed Manufacturing Index 0.0
June
German GfK Consumer Confidence 5.70
Friday didn’t bring the additional Dollar gains as expected but lost ground again though the long weekend in the States and U.K. has taken the steam out of the Dollar losses overall. I do still expect further losses in the Dollar but where I have uncertainty is in whether this will occur directly or whether we’ll see the pullback recycle. The slowing of momentum over the last two days tends to cloud the true underlying picture and provides a few short term alternatives.
I’m therefore going to have to be rather conservative with today’s movements and base most views off of break levels. I have suspicions that the recycling of the correction may well be the result.
To bring a different perspective where I feel the wave structure does seem to provide a clearer picture I can see the Pound still underpinned and should therefore make some gains. We should be aware that these could again be quite sharp. The 1.9909-14 area is one resistance but this could get blown away and if so the next targets will be around 2.0031 and possibly as high as 2.01.
We should also note that Dollar-Yen saw a deep pullback lower and this is beginning to sway in favor of additional losses but I suspect this is unlikely to be direct. It does seem to have the look of providing some short term range trading first.
The risk though to watch for is still Euro-Yen and while this has continued to creep higher my longer term expectations are still for stronger losses and at the moment this would favor a weak Dollar-Yen rather than the Euro. That should change in the not too distant future but for now it does seem to be putting more pressure on Dollar-Yen.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 104.37-70 1.5894-10 1.0353-72 1.9978-00
Res: 103.86-15 1.5805-15 1.0275-00 1.9908-14
Spt: 102.72-05 1.5740-56 1.0203-14 1.9750-75
Spt: 101.94-18 1.5672-92 1.0126-34 1.9650-96
See Also
By admin
Continue Reading European Morning Update 27th May 2008
May 27th, 2008 at 01:13am
Under Daily Forex Analyses
Subdued trading likely following the long weekend
Very clearly with the U.K. and the States on holiday yesterday there is virtually no news to speak of, most coming from Friday.
The stats out on Friday provided mixed readings all round. Europe’s manufacturing still appears to be hanging on reasonably well but services are showing rather concerning slides which provide an unsettling background to the economy. Definitely still weakening, not drastically but with a soft underbelly.
The IMF piled on the pressure for the BOE by saying there was no room for interest rate cuts while the signs are for higher wage settlements. It’s a text book reaction but reality lies in people and emotions which adds spice to the mix when consumers’ futures are at stake. Indeed, the IMF suggested that the screws should be tightened “at the earliest clear signs of emergent nominal wage inflation.”
This should keep the Pound firm for a little while longer but the long term will see risks rising for a stronger slowdown and that will mean that recession is not a word that can be ignored…
From the U.S. the existing home sales failed to meet the pessimistic forecasts and provided a slightly better reading. No one is going to suggest that things are beginning to turn round but it does look as if the slide is taking a shallower gradient.
Finally from Japan yesterday the BOJ’s chief economist is expecting slower growth for the economy under the weight of high energy and raw materials costs. This will mean the CB will need to watch carefully the balance between slowing global demand and inflation. He also cautioned on the weakening consumer spending and deteriorating sentiment.
After a quiet start the rest of the week doesn’t look as if it will heat up that much. The main theme of the week appears to be consumer confidence and consumer prices. It seems more likely these will push the market back into a shroud of uncertainty over the near term.
The Dollar is still a little under pressure but the long weekend has taken the steam out of the losses seen over the past two weeks. It does still seem to be the underlying sentiment but what should be the last leg of this corrective decline could well prove to be more erratic.
We are still seeing mixed numbers from both sides of the Atlantic which doesn’t really generate enthusiasm for buying Dollars nor buying the Euro. The recovery in the Euro was partly founded on the renewed belief that the ECB may well hike rates but the PMI numbers are not really supporting this.
In the absence of any clear direction the Pound is more likely to be the recipient of more trading interest with the IMF’s comments likely to provide it with a boost back above 2.0.
More later once the daily analysis has been done…
The following releases are due from Asia due today:
Japan April Domestic Corporate Service Prices (YoY) +0.6%
See Also
By admin
Continue Reading Asian Morning Update 27th May 2008
May 24th, 2008 at 01:32pm
Under Daily Forex Commentary
Forex Market Commentary for May 26, 2008 Forex Rates Today
Forex Rates Today Daily Market Commentary
The dollar fell on Friday versus the yen and the franc, but only consolidated against the euro and the pound. Given the long weekend, trading should remain nominal.
Euro/dollar
The euro/dollar closed virtually unchanged on Friday, and the positive outlook is in force. The interim inversed head-and-shoulders remains in place and my model remains long. Following some profit taking, the upmove should resume.
Initial resistance is now seen at 1.5811. Above 1.5865, euro/dollar has distant resistance at 1.6020.
Immediate support remains at 1.5726. The next level remains at 1.5685. This is followed by 1.5460.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen is alternating up and down days, and Friday was a down day. The pair was stuck in an inside range. My model remains short. Expect consolidation today.
Key level is at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. A bid support is seen at 102.30 from another 50-point pivot, which targets 101.80 and 102.80.
Immediate resistance is now at 103.90. Strong resistance follows at 104.50 from a 50-point pivot, which targets 104.00 and 105.00.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar consolidated in a tight range and closed flat on Friday. My model remains long and the interim inversed head-and-shoulders pattern is still in good shape.
Initial resistance remains at 1.9850. Above it, there is further resistance at 1.9910. Distant resistance is at 2.0030.
Immediate support is at 1.9760. This is followed by 1.9645. Only a break below 1.9545 would jeopardize the cable’s recovery.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss sank to a one-month low of Friday and this bodes well for my short model. The immediate outlook is bearish after forming a double top that targets 1.0130.
Immediate support is now seen at 1.0200. This is followed by 1.0130 and 1.0105. Distant support is now pegged at .9877.
Initial resistance now comes at 1.0295. The next level is perched at 1.0352. If 1.0390 gives way, expect a test of the distant resistance at .1.0623.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish
By admin
May 23rd, 2008 at 02:22pm
Under Daily Forex Commentary
Forex Market Commentary for May 23, 2008 Forex Rates Today
Forex Rates Today Daily Market Commentary
The dollar made a mild recovery versus the euro and the franc, a more impressive rally against the yen, but melted away versus the pound. Better-than-forecast UK retail sales forced more short covering. My model remains short dollars across the board, but the US currency should attempt another mild recovery before the long weekend. Only the existing homes sales report is due in the US today.
Euro/dollar
The euro/dollar slipped on profit taking on Thursday, but not enough to jeopardize the positive outlook. The interim inversed head-and-shoulders remains in place and my model remains long. Following some profit taking, the upmove should resume.
Immediate support is now seen at 1.5726. The next level remains at 1.5685. This is followed by 1.5460.
Initial resistance is now seen at 1.57957. Above 1.5865, euro/dollar has distant resistance at 1.6020.
Oscillators are mixed.
NEAR-TERM: Mixed t
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen rallied on Thursday to regain half of the losses made since May 14. My model is on the verge of turning long. Expect another attempt to advance today as well.
Immediate resistance is now at 104.50 from a 50-point pivot, which targets 104.00 and 105.00. Then, there are pivot highs at 105.43 and 105.69.
Initial support is at 103.80. Strong support follows at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. The next big level is 102.30 from another 50-point pivot, which targets 101.80 and 102.80.
Oscillators are now advancing.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar surged to a new three-week high on Thursday following some better than expected UK retail sales data, which suggests that the BoE is done cutting rates. My model remains long and the interim inversed head-and-shoulders pattern is in good shape.
Initial resistance now is still seen at 1.9850. Above it, there is further resistance at 1.9910. Distant resistance is at 2.0030.
Immediate support remains at 1.97605. This is followed by 1.9645. Only a break below 1.9545 would now jeopardize the cable’s recovery.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss recovered on Thursday, but not enough to reverse my short model. The immediate outlook is bearish after forming a double top that targets 1.0130 and after the rising medium-term channel was pierced on a closing basis.
Immediate support is now seen at 1.0257. This is followed by 1.0200, 1.0130 and 1.0105. Distant support is now pegged at .9877.
Initial resistance now comes at 1.0352. If 1.0390 gives way, expect a test of the distant resistance at .1.0623.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish
By admin
May 23rd, 2008 at 09:44am
Under Daily Forex Analyses
Market mixed on today’s numbers as we move into a long U.S. weekend
Releases from Europe:
April Forecast Actual
French Consumer Spending (MoM) +0.5% - 0.8%
French Consumer Spending (YoY) +2.0% +0.4%
May
French Manufacturing PMI 51.0 51.3
French Services PMI 52.9 50.7
German Manufacturing PMI 53.2 53.5
German Services PMI 54.0 53.7
Yesterday saw Italian retail sales slump in March and today we have French consumer spending following that lead. We do have to take into account an upward revision of +0.7% in the prior month but overall the figures are disappointing and this is highlighted by the larger shortfall against forecasts in the YoY number.
Very clearly consumers are watching their budgets. From these French numbers are notable declines in textiles and cars. Is it really wise to bet against this trend continuing? Probably so - with no let up in both producer and consumer prices…
And further evidence that the slowdown in Europe is maintaining a steady pace came through the French and German PMI releases. Manufacturing still appears to be holding up although perhaps not as strongly as the German ZEW and IFO surveys suggest.
Where there is a more clear indication of softness is through the services components both of which fell short of consensus forecast. In particular the French services PMI was significantly short of forecast and this will be a concern. Still all figures are still above 50 which indicates an expanding economy but that pace is decelerating each month.
The following economic releases are due today:
Q1
U.K. GDP (QoQ) +0.4%
U.K. GDP (YoY) +2.5%
Italian GDP (P) (QoQ) +0.2%
Italian GDP (P) (YoY) +0.4%
April
Italian Trade Balance Non-EU EUR -1810K
U.S. Existing Home Sales (MoM) - 1.6%
U.S. Existing Home Sales 4.85mn
May
Euro-zone Manufacturing PMI 50.5
Euro-zone Services PMI 51.7
Euro-zone Composite PMI 51.5
Another quiet day in Asia and this may set the tone for the rest of the day as market players square up before the long U.S. weekend.
On the slate today are a few numbers that could throw spanners into the works though the most likely outcome will be a neutral, range trading day. Of note are the European manufacturing and services PMI, French consumer spending and U.S. existing home sales.
Already the French numbers are out together with the German PMI’s and the results will not provide the market with much to buy the Euro or even sell the Dollar. There is little doubt that following the burst of optimism following the German ZEW and IFO releases that the ECB will find it tough to hike rates. On this basis the current status quo should remain.
Some market commentators are suggesting the Dollar can drift lower again on profit taking from yesterday’s modest Dollar recovery while others feel that Paulson’s positive comments will provide more two-way trading.
The basic message is that traders are fairly neutral in the short term though this week’s Dollar weakness will probably stretch into next week.
Technically there still is a little room on the upside in this correction and that raises the chances of a quiet drift into the end of the week.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 105.43-68 1.5894-10 1.0428-74 1.9909-40
Res: 104.77-05 1.5752-84 1.0372-02 1.9847-74
Spt: 103.75-90 1.5661-92 1.0261-94 1.9730-50
Spt: 103.10-15 1.5586-30 1.0203-32 1.9650-96
See Also
By admin
Continue Reading European Mid Morning Update 23rd May 2008
May 23rd, 2008 at 07:22am
Under Daily Forex Analyses
Asia sees Dollar trading in a tight range
News from Japan:
The market opened its eyes only briefly during sleepy Asian trading to glance at the BOJ monetary policy minutes of the 8th-9th April and promptly returned into a state of slumber.
Well, to be honest there were a couple of interesting snippets from the report which unsurprisingly highlighted heightened concern over the downside risks to the Japanese economy and the rising pace of inflation which they felt “warranted attention.”
On shift from the previous meeting was the removal of the reference to the need for normalizing interest rates to reflect economic fundamentals and prices. Risk factors, they claimed, “had been increasing both at home and abroad.”
They also noted that Japanese businesses are seeing earnings under pressure from higher raw material prices and a strengthening Yen.
Dollar-Yen remained locked in a tight trading range over the day.
The following economic releases are due today:
Q1
U.K. GDP (QoQ) +0.4%
U.K. GDP (YoY) +2.5%
Italian GDP (P) (QoQ) +0.2%
Italian GDP (P) (YoY) +0.4%
April
Swiss Trade Balance CHF
French Consumer Spending (MoM) +0.5%
French Consumer Spending (YoY) +2.0%
Italian Trade Balance Non-EU EUR -1810K
U.S. Existing Home Sales (MoM) - 1.6%
U.S. Existing Home Sales 4.85mn
May
French Manufacturing PMI 51.0
French Services PMI 52.9
German Manufacturing PMI 53.2
German Services PMI 54.0
Euro-zone Manufacturing PMI 50.5
Euro-zone Services PMI 51.7
Euro-zone Composite PMI 51.5
Yesterday saw the Dollar decline slow down a bit, held back by the bullish divergences. The exception was of course Cable which pushed directly through the 1.9757 resistance and moved all the way to 1.9847. I have mentioned before that Cable could be a decent indicator for the end of the entire Dollar downturn and yesterday’s continued gains has brought it closer to the next target at 1.9909.
Indeed, the pullback from 1.9847 is very nearly complete and should make the next leg higher to 1.9909 over the course of today but from there we should see a further correction that should last over the long U.S. weekend. This will leave Tuesday-Friday for it to reach the 2.0192 target again.
Thus as a broad indicator for the European currencies we can expect something similar. The only uncertainty is whether the current correction lasts through Monday or whether we’ll see an earlier resumption of the Dollar’s decline. I suspect the former which really does make for a potentially dull day today.
It would be well to point out the Aussie here too as this appears to be turning into a rather major topping pattern. Bearish divergences exists across the board and while 0.9500-10 supports there is suggestion of one more rally rather similar to the European currencies.
Where I do have some doubts in my mind is over Dollar-Yen. I have maintained an ideal daily retracement to 106.82. If this does continue then we could come to the point where Dollar-Europe will be bullish while the implication of my Yen call would be Dollar bearish. Well, there are no rules to say they two areas should be correlated but at this point I can’t see any reason why they should be 100% uncorrelated… This will be something I shall be observing over the coming week.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 105.43-68 1.5894-10 1.0428-74 1.9909-40
Res: 104.77-05 1.5752-84 1.0372-02 1.9847-74
Spt: 103.75-90 1.5692-20 1.0261-94 1.9750-64
Spt: 103.10-15 1.5586-30 1.0203-32 1.9650-96
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Continue Reading European Morning Update 23rd May 2008
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