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Mid-Day Report: Dollar Sent Lower by Bernanke but Drawing Support from ISM

admin — Fri, 27 Jul 2007 02:22:12 +0000

Action Insight | Written by ActionForex.com | Jun 05 07 14:19 GMT |
Forex Mid-Day Technical Report Dollar Sent Lower by Bernanke but Drawing Support from ISM

Dollar’s sell off resumes in early US session after comments from Bernanke which said that housing market’s drag on the economy could persist somewhat longer than expected even though the slump has not spilled over into other parts of the economy yet. He said in his speech “http://www.federalreserve.gov/boarddocs/speeches/2007/20070605/default.htm in the International Monetary Conference in South Africa via satellite that tighter standard is now required by investors and creditors will no doubt restrain housing demand in the subprime market and some near-prime borrowers may also be shut out. Regarding inflation, though, Bernanke still believes that risk is to the upside and economy will grow at near trend rate.

Dollar additionally pressured by speculation that the United Arab Emirates may be the next Middle Eastern country to end the dollar peg. Syria and Kuwait had recent announced that they would dump the dollar peg to curb rising import costs and inflation that was pushed up by rising costs of imports from Asia and Europe. However, much stronger than expected ISM non-manufacturing index, which rose to 59.7 in May versus expectation of 55.3, is providing some support to the greenback.

Euro, on the other hand was supported by solid Services PMI in May and IMF’s raising of its forecast for the growth in the Eurozone economy from 2.3% in 2007 to around 2.5%. IMF also expects that the expansion will “continue apace” next year. Though, Apr retail sales missed expectation by growing 0.2% mom, 1.6% yoy only.

The Aussie remains firm too and took out this year high of 0.8390, reaching as high as 0.8406 so far, highest since Aug 90. Though RBA is widely expected to keep rate unchanged at 6.25% in the coming Asian session, expectation is still firm on another rate hike, probably in near term. Also, Aussie continues to draw support from carry trade. Q1 GDP will also be closely watched in the coming Asia session too and is expected to grow 1.0% qoq, 2.9% yoy. EUR/USD

Daily Pivots: (S1) 1.3445; (P) 1.3472; (R1) 1.3515; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD rise from 1.3391 extends further to as high as 1.3553 in early US session, breaking short term falling trend line resistance (now at 1.3513) as expected. At this point, intraday bias will remain on the upside as long as 1.3487 holds and further rise is expected to be seen to 1.3609 resistance. Touching of 1.3487 will turn intraday outlook consolidative first.

As discussed before, corrective fall from 1.3681 has completed with three waves down to 1.3391 already. Bullish convergence condition in 4 hours MACD and RSI as well as nearly meeting of 100% projection target of 1.3681 to 1.3461 from 1.3609 at 1.3389 are both supporting this case. Sustained trading above the trend line resistance will add more weight to this case. Meanwhile, in case of pull back, sustained trading below 1.3364 cluster support is needed to confirm underlying bearishness. Otherwise, the corrective fall from 1.3681 is still considered either ended or to be ended soon. That is, another strong rebound is likely to follow.

In the bigger picture, with 1.3364 cluster support (38.2% retracement of 1.2865 to 1.3681 at 1.3369) remains intact, the rise from 1.2865 is still expected to resume to above 1.3681. However, risk of medium term reversal is still high. As discussed before, medium term up trend from 1.1639 is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 is treated as resumption of the whole up trend from 1.1639. With such interpretation, we’d expect risk of medium term reversal to increase significantly after EUR/USD met resistance zone between 1.3668 and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822. Hence, focus is now on reversal signals.

On the downside, decisive break of 1.3364 cluster support (38.2% retracement of 1.2865 to 1.3681 at 1.3369) is needed to confirm a medium term top is made. More importantly, with bearish divergence condition in daily MACD and RSI, this will warn that the whole rally from 1.2483 has also completed, and, so is the whole up trend from 1.1639. Focus will then be back to medium term rising channel support (now at 1.3049).

GBP/USD

Daily Pivots: (S1) 1.9841; (P) 1.9882; (R1) 1.9952; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable’s rise from 1.9733 extends to as high as 1.9968 in early US session, meeting mentioned target of 1.9956/58 cluster resistance (61.8% retracement of 2.0132 to 1.9676 at 1.9958 and 100% projection of 1.9676 to 1.9899 from 1.9733 at 1.9956) as expected. At this point, intraday bias will remain on the upside as long as 1.9891 minor support holds. Sustained trading above 1.9956/58 will encourage further rise to retest 2.0132 high.

On the downside, touching of 1.9891 will turn intraday outlook consolidative first and bring pull back. But downside should be contained by 1.9819 resistance turned support and bring another rally. Break of 1.9819 is needed to signal rise from 1.9733 has completed and turn focus back to this support.

In the bigger picture, risk of medium term reversal remains high even though a retest of 2.0132 high could now be seen. Firstly, the whole up trend from 1.7047 is not clearly impulsive. One interpretation is that rally from 1.7047 ended with three waves up to 1.9024. Subsequent correction ended at 1.8090. Rally from 1.8090 has already met mentioned target of 100% projection of 1.7047 to 1.9024 from 1.8090 at 2.0067. Secondly, regardless of the larger trend, rise from 1.8090 can be interpreted as being a five wave sequence with first wave ended at 1.9142, second at 1.8517, third at 1.9913 and fourth at 1.9183. The channeling property supports this interpretation too. In such case, the fifth wave rally from 1.9183 has also met target of 61.8% projection of 1.8517 to 1.9913 from 1.9183 at 2.0046 too. With bearish divergence condition remains in weekly MACD and RSI, as well as Daily MACD and key 2.0106 resistance (92 high) not decisively taken out, 2.0132 could be the important medium term top already.

On the downside, break of 1.9733 support is needed to revive the case that fall from 2.0132 is still in progress first. Firm break of the medium term rising channel support (now at 1.9634) will indicate that the whole rally from 1.8090 has completed and add much credence to the case that an important medium term top is already formed and put focus to 1.9183 low. However, sustained trading above mentioned 2.0106 resistance will dampen the above interpretation and indicates that underlying bullishness in cable is much stronger then we thought. Further medium term rally should then be seen towards 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677.

USD/CHF

Daily Pivots: (S1) 1.2198; (P) 1.2251; (R1) 1.2289; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.

USD/CHF’s fall extends further to as low as 1.2161 in early US session after taking out 1.2198 support. At this point, further decline is expected to follow as long as 1.2241 resistance holds. Next downside target will be 1.2124 cluster support (61.8% retracement of 1.1993 to 1.2331 at 1.2122).

As discussed before, Sustained trading below the short term rising trend line (now at 1.2259) indicates the rise from 1.1993 has made a top at 1.2331 already. But with 1.2124 cluster support (61.8% retracement of 1.1993 to 1.2331 at 1.2122) remains intact, USD/CHF could be developing into sideway consolidation only. Firm break of 1.2124 is needed to confirm rally from 1.1993 has already completed and bring retest of this low. Above 1.2241 will suggest fall from 1.2327 has ended and bring recovery.

In the bigger picture, previous break of 1.2282 cluster resistance (50% retracement of 1.2571 to 1.1993 at 1.2282) confirms that fall from 1.2571 has already completed at 1.1993 with bullish convergence condition in daily MACD and RSI. More importantly, this will increase the chance that USD/CHF is about to complete a medium term head and shoulder bottom formation (ls: 1.1919, h: 1.1878, rs: 1.1993). Sustained break of 61.8% retracement at 1.2350 and neckline resistance (1.2768 to 1.2571, now at 1.2334) will add more weight to this case. Stronger rally should then be seen to 1.2571 first and then 1.2768.

However, below 1.2124 cluster support (61.8% retracement of 1.1993 to 1.2331 at 1.2122) will indicate that rebound from 1.1993 has possible completed and save the case that recent choppy price actions could merely be part of a medium term triangle consolidation. And, down trend from 1.3283 should still resume after completing this consolidation in such case.

USD/JPY

Daily Pivots: (S1) 121.50; (P) 121.80; (R1) 122.06; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY dipped to as long as 121.11 in early US session but failed to sustain below inner rising trend line (now at 121.41) and rebounds strongly. Since a short term top has likely formed at 122.13 after breakout from triangle consolidation (which is usually terminal) was limited by 122.17 key resistance and with bearish divergence condition remains in 4 hours MACD and RSI. Further decline is still expected as long as 121.93 resistance holds and next downside target will be 120.83 support. Above 1.21293 will indicate fall from 122.13 has completed and bring retest of this high. But sustained break of 122.17 key resistance is needed to confirm rally from 117.60 has resumed again.

In the bigger picture, since the current rally from 115.13 is not clearly impulsive, it’s being treated as part of a consolidation pattern that started at 122.17. Having said that, upside of this rise will likely be limited by 122.17 and bring another fall to retest 115.13 low before finishing the consolidation. But still, a break of 119.86 resistance turned support is needed to confirm rise from 115.13 has completed first. Otherwise further rally could still follow.

However, strong break of 122.17 resistance will indicate that the correction from 122.17 is already completed at 115.13. That is, the current rise from there represents resumption of the whole up trend from 108.99. In such case, the up trend is expected to extend further to 61.8% projection of 108.99 to 122.17 from 115.13 at 123.28 first.

EUR/JPY

Daily Pivots: (S1) 163.97; (P) 164.15; (R1) 164.44; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/JPY retreats mildly after reaching as high as 164.59 earlier today, just inches below mentioned 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64. Outlook remains unchanged. At this point, further rally could still be seen as long as 162.94 support holds. However, upside momentum remains unconvincing, in particular with bearish divergence condition staying in 4 hours MACD and RSI and with daily MACD remains below signal line. Risk of short term reversal is still high. EUR/JPY could now be in formation of a diagonal triangle to conclude the rally from 150.75. Hence, even though another rise could still be seen, upside will likely be limited by 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 on further loss of momentum and bring reversal. On the downside, break of 162.94 support will be the first warning that a top is formed. Further break of 162.18 will indicate that the diagonal triangle mentioned has likely completed. Deeper decline should then be seen to 161.05 support and then 159.60.

In the bigger picture, EUR/JPY’s previous break above medium term rising channel resistance suggests that strength of the rally from 150.75 is stronger than we originally thought. But still, interpretation of rally from 130.60 remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure, targeting 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 and could terminate there. But sustained break of this projection level will indicate another strong medium term rally is just at its beginning towards 100% projection of 137.16 to 159.63 from 150.75 at 173.22

On the downside, rise from 150.75 could still resume as long as 159.60 support holds. However, sustained trading below 159.60 will warn that prior break of medium term rising channel resistance was merely a throw-over. Also, this will give a serious warning signal that the whole rise rise from 130.60 has ended. EUR/JPY should set to test the medium channel support (now at 154.12) in such case.

Forex News Digest

http://www.bloomberg.com/apps/news?pid=20601087&sid=arrtELA4A_gc&refer=home

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWbq8Mv2ON38&refer=home

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaohAgfrIrBQ&refer=home

http://www.bloomberg.com/apps/news?pid=20601083&sid=aj05.EhwCpx8&refer=currency

http://c.moreover.com/click/here.pl?r963847241
Tue, 5 Jun 2007 09:19:00 GMT from AP via MSN Money

http://c.moreover.com/click/here.pl?r963835926
Tue, 5 Jun 2007 09:06:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r963825950
Tue, 5 Jun 2007 08:55:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r963820412
Tue, 5 Jun 2007 08:50:00 GMT from Street Insider

http://c.moreover.com/click/here.pl?r963819223
Tue, 5 Jun 2007 08:49:00 GMT from The Australian

http://c.moreover.com/click/here.pl?r963817640
Tue, 5 Jun 2007 08:48:00 GMT from Reuters South Africa

http://c.moreover.com/click/here.pl?r963813381
Tue, 5 Jun 2007 08:44:00 GMT from Forbes.com

http://c.moreover.com/click/here.pl?r963809303
Tue, 5 Jun 2007 08:41:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r963799971
Tue, 5 Jun 2007 08:32:00 GMT from Bloomberg

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
01:30 AUD Australia Current account (aud) Q1 -15.4B -14.7 B -15.1 B -15.5B
07:55 EUR Germany Services PMI May 57.5 57.9 57.8
08:00 EUR Eurozone Services PMI May 57.3 57.1 57
08:30 GBP U.K. Services PMI May 57.2 57 57.2
09:00 EUR Eurozone Retail sales M/M Apr 0.20% 0.50% 0.50% 0.40%
09:00 EUR Eurozone Retail sales Y/Y Apr 1.60% 2.00% 2.60% 2.20%
12:15 Bernanke Fukui Trichet Speak to Conference in South Africa
14:00 USD U.S. ISM non-manufacturing May 59.7 55.3 56
15:00 USD Fed Warch speaks
15:40 USD US Treasury Paulson Speaks

http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/

ECB Defies Opposition and Hikes Rates

admin — Fri, 27 Jul 2007 02:21:59 +0000

The European Central Bank (ECB) today raised the benchmark European lending rate to 4%, its highest level in six years. The move came amid fierce opposition by European politicians who rightfully fear that higher interest rates will only send the Euro higher against other industrialized currencies and crimp the European economy. The Euro is hovering around record levels against the USD, Japanese Yen, and Chinese Yuan, even though its economy is probably the weakest of the bunch. However, the nature of the European Union means the interests of all member countries need to be looked after; while many of the traditional European powerhouse economies are struggling, Eastern Europe, for example, is thriving. Taking matters into his own hand, Frances new president, Nicolas Sarkozy, is threatening to legislate a forced decline in the Euro, and many analysts think he may succeed. The Telegraph reports:

Sarkozy and Prodi are not going to let go of this. There’s a groundswell of feeling that Europe is being taken for a ride by the rest of the world, and they’re not going to put up with it any more.

Daily Report: Focus on New Homes Sales and Durables, Kiwi Tumbles after RBNZ Hike

admin — Thu, 26 Jul 2007 23:11:55 +0000

Action Insight | Written by ActionForex.com | Jul 26 07 08:09 GMT |
Forex Daily Technical Report Focus on New Homes Sales and Durables, Kiwi Tumbles after RBNZ Hike

Dollar is generally firm and sets to continue the current recovery as markets are turning focus to today’s new home sales and durable goods orders data. As pointed out before, the greenback was in extremely oversold condition and the current correction is inevitable. Even if today’s data disappoints, reaction could be muted as the more important Q2 GDP is on the card for release tomorrow. Though, Euro should also be provided some support by stronger than expected M3 growth which reaccelerated to Mar’s peak of 10.9%. Germany Ifo dropped to 106.4, slightly below expectation of 106.5 but remains health.

Overnight, RBNZ raised OCR again by 25bps to 8.25%. In the accompanying statement, Governor Bollard pointed to the recent strength in the economy and growing capacity constraints to justify today’s move. Also, he once again mentioned the overvalued Kiwi currency. Conditionally, RBNZ believed that this would be the last rate hike in their cycle if no surprises come in with the next round of data. Kiwi tumbled after the news as markets believe that RBNZ will at least be on hold to assess the impact of the prior successive rate hikes before making another move. EUR/USD

Daily Pivots: (S1) 1.3667; (P) 1.3749; (R1) 1.3803; «www.actionforex.com»

EUR/USD’s correction from 1.3851 is still in progress today. Outlook remains unchanged. A short term top is likely in place at 1.3851, with bearish divergence condition in 4 hours MACD and RSI, and after failing to sustain above 1.3822 projection target. Intraday bias is currently still on the downside and further decline should be seen towards support zone of 1.3567 to 1.3658, with 38.2% retracement of 1.3262 to 1.3851 at 1.3626. On the upside, above 1.3711 will turn intraday outlook consolidative first and could probably bring recovery to 4 hours 55 EMA (now at 1.3770). But sustained break of 1.3851 is needed to confirm recent rally has resumed. Otherwise, risk remains on the downside.

In the bigger picture, the current development dampened the original view that rise from 1.3262 is the last advance in a five wave structure that started at 1.2483. Firstly, the current momentum of the rise from 1.3262 is seen stronger than the prior rally from 1.2865 to 1.3681. Secondly, the falling trend line in both daily MACD and RSI were broken, negating the bearish divergence conditions. In other words, the underlying bullishness in EUR/USD could be much stronger than we originally thought.

Focus remains on 1.3822 resistance. Sustained trading above this level will add much weight to the case that whole medium term rally from 1.1639 is indeed resumption of multi-year up trend from 0.8223 (00 low). That is, further rise should be seen in medium term towards 95 high of 1.4523 with much chance to extend further to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004.

On the downside, as long as 1.3481 cluster support (61.8% retracement of 1.3262 to 1.3851 at 1.3487) holds, any pull back will still be treated as correction to rally from 1.3262 only and another rise is still in expected after completion. However, break will put 1.3262 low into focus. And break will indicate that medium term rally from 1.1639 has likely completed after being limited by 1.3822 resistance as originally expected.

GBP/USD

Daily Pivots: (S1) 2.0470; (P) 2.0550; (R1) 2.0615; «www.actionforex.com»

Cable’s correction from 2.0652 is still in progress and continues to press 4 hours 55 EMA (now at 2.0485). As discussed before, a short term top is in likely place at 2.0652, with bearish divergence condition in 4 hours MACD and RSI. Intraday bias is still on the downside and further decline is expected to be seen to short term rising trend line (now at 2.0400). On the upside, above 2.0652 will indicate an intraday low is formed. But sustained break of 2.0677 fibo resistance is needed to confirm recent rally has resumed. Otherwise, risk remains on the downside.

In the bigger picture, the sustained break of 2.0207 projection target confirms underlying upside momentum is still strong. Also, it added much credence to the case that whole up trend from 1.7047 is resumption of multi-year up trend from 1.3680. In such case, further rally should then be seen to 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 first. Sustained trading above 2.0677 will target 2.1 psychological resistance.

On the downside, in case of a pull back, downside should be contained by support zone between 2.0056 and 2.0206 and bring another rally. Break of 2.0056 will suggest that lengthier consolidation will come first with the prospect of another test the medium term rising trend line (now at 1.9823) But medium term outlook will be neutral at worst at long as 1.9621 support remains intact.

USD/CHF

Daily Pivots: (S1) 1.2048; (P) 1.2107; (R1) 1.2192; «www.actionforex.com».

USD/CHF’s correction from 1.1960 is still in progress today. Intraday bias remains on the upside as long as 1.2114 minor support holds and further rebound should still be seen. On the downside, below 1.2114 will turn intraday outlook consolidative fist. Also, since a short term bottom is in place at 1.1960 with bullish convergence conditions in 4 hours MACD and RSI, firm break of 1.1960 is needed to confirm fall from 1.2467 has resumed. Otherwise, consolidation could still extend further.

In the bigger picture, USD/CHF has likely completed a medium term triangle consolidation already, which started at 1.1919 with five waves to 1.2467. Firm break of 1.1993 will confirm this case. 1.1878 (06 low) will be the initial target. And since, in such case, fall from 1.2467 is viewed as resumption of medium term down trend from 1.3283, further weakness should be seen to 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404, with much chance to extend to retest 1.1288 (04 low).

On the upside, break of 1.2232 resistance will mess up the short term picture a little bit. In such case, chance is swung to the case that the triangle consolidation indeed started at 1.1878. In other words, the overall outlook didn’t change and just that another rally should be seen before completion. Hence, even in such case, upside should be limited below 1.2467 high and bring another medium term decline.

USD/JPY

Daily Pivots: (S1) 119.99; (P) 120.31; (R1) 120.81; «www.actionforex.com»

4 hours MACD’s cross above signal line suggest that a short term low is possibly in place at 119.76. But still, break above 190.95 resistance is needed to confirm. Otherwise, intraday bias remains on the downside and further decline is still in favor towards 118.35/57 cluster support zone (38.2% retracement of 108.99 to 124.13 at 118.35 and 61.8% retracement of 115.13 to 124.13 at 118.57).

On the upside, above 120.95 will indicate a short term bottom is formed and turn into consolidation. But a break above 120.60 resistance is still needed to indicate fall from 124.13 has completed. Otherwise, risk remains on the downside after finishing recovery.

In the bigger picture, rise from 115.13 has made a top at 124.13 and turned into consolidation since then. But still, rally from 108.99, which is treated as resumption of whole up trend from 101.66, is in progress. Even in case of a deeper correction, downside is expected to be contained by 118.35/57 cluster support zone (38.2% retracement of 108.99 to 124.13 at 118.35 and 61.8% retracement of 115.13 to 124.13 at 118.57) and bring rally resumption. Next medium term upside target will be resistance zone of 100% projection of 101.65 to 121.38 from 108.99 at 128.72 and 100% projection of 108.99 to 122.17 from 115.13 at 128.31.

However, break of 118.35/57 cluster support argue that rise from 108.99 has possibly completed and put 115.13 low into focus.

EUR/JPY

Daily Pivots: (S1) 164.57; (P) 165.44; (R1) 166.18; «www.actionforex.com»

EUR/JPY turns sideway after reaching as low as 164.70. At this point, correction 168.93 is still in progress and intraday bias remains on the downside as long as 166.18 minor resistance holds. Next downside target will be 164.23 cluster support (61.8% retracement of 161.49 to 168.95 at 164.34). On the upside, above 166.19 will indicate a temporary low is formed and bring consolidation, probably with recovery to 4 hours 55 EMA (now at . But break of 167.32 resistance is needed to indicate fall from 168.93 has completed. Otherwise, risk remains on the downside even in case of recovery.

In the bigger picture, break of the short term rising trend line suggest that rally from 150.75 has possibly completed with bearish divergence condition in daily MACD and RSI. Deeper correction could not be seen to 161.49 support first. And break will confirm that a medium term top is in place at 168.93 and bring deeper correction, possibly with a retest of medium term trend line support (now at 155.67

However, with medium term trend line remains intact, whole medium term rally from 130.60 is still treated as in progress and the interpretation remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure. With 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 taken out decisively, next medium term upside target will be 100% projection of 137.16 to 159.63 from 150.75 at 173.22.

Forex News Digest

«www.bloomberg.com»

«c.moreover.com»
Thu, 26 Jul 2007 03:18:00 GMT from Daily Telegraph Australia

«c.moreover.com»
Thu, 26 Jul 2007 02:45:00 GMT from Nine MSN

«c.moreover.com»
Thu, 26 Jul 2007 02:38:00 GMT from Bloomberg

«c.moreover.com»
Thu, 26 Jul 2007 02:38:00 GMT from Sympatico MSN Finance

«c.moreover.com»
Thu, 26 Jul 2007 01:27:00 GMT from Bloomberg

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
21:00 NZD RBNZ’s rate decision 8.25% 8.25% 8.00%
23:50 JPY Japan CSPI Y/Y Jun 1.40% 1.40% -0.30%
6:00 GBP U.K. N’wide hse prices M/M Jul 0.10% 0.50% 1.10%
6:00 GBP U.K. N’wide hse prices Y/Y Jul 9.90% 10.60% 11.10%
8:00 EUR Euro-Zone M3 sa Y/Y Jun 10.9% 10.70% 10.70%
8:00 EUR Euro-Zone M3 sa 3 Mth Jun 10.60% 10.70%
8:00 EUR Germany IFO index Jul 106.4 106.5 107.0
12:30 USD U.S. Durable goods orders Jun 1.80% -2.40%
12:30 USD ex. defence Jun 1.00% -2.80%
12:30 USD ex. transportation Jun 0.50% -0.40%
12:30 USD U.S. Jobless claims 310 K 301 K
14:00 USD U.S. New home sales Jun 895 K 915 K
14:00 USD U.S. New home sales M/M Jun -1.60% -1.60%

«www.actionforex.com»

Mid-Day Report: Dollar Still Firm after BoE Hike, ECB’s “Vigilance” & Weak Trade Data

admin — Thu, 26 Jul 2007 23:11:49 +0000

Action Insight | Written by ActionForex.com | May 10 07 13:38 GMT |
Forex Mid-Day Technical Report Dollar Still Firm after BoE Hike, ECB’s “Vigilance” & Weak Trade Data

Dollar managed to head higher in early US session despite ECB’s signal for a June hike, BoE’s rate hike as well as worse than expected trade deficit in Mar. Trade deficit widened more than expected by 10.4% in Mar, caused by increased energy prices and reaches $-63.9b despite revision of Fed’s deficit from $-58.4b to $-57.8b. Both exports and imports increased, while imports increased more than exports. Though, the goods deficit with China, however, narrowed 6.4% to $17.2 billion. Import Price Index increased 1.3% in Apr., led by a 6.5% increase in petroleum prices. Export prices rose 0.3%. Jobless claims unexpectedly fell to 297k, much below expectation of 315k

ECB left rates unchanged at 3.75% today and Trichet said in the following press conference that “strong vigilance is of the essence to ensure that risks to price stability in the medium term do not materialize,” as there are clear upside risks to price stability. The word “vigilance is taken as a signal that ECB will raise rates again by 25bps in Jun to 4.00%. However, this provided little support to the Euro. In addition, in responding to a question over EUR/USD’s recent strength, Trichet seemed talking down the Euro by twice referring to US Treasury Paulson’s comments that a strong dollar is in US interest. This put additional pressure to the common currency.

BoE raised benchmark rates by 25bps to 5.50% as widely expected. After last month’s surprisingly high CPI of 3.1%, BoE still expects that “CPI inflation is likely to fall back to around the 2% target in the course of this year”. However, BoE notes that with narrowing capacity constraints and enhanced producer pricing power, risk is ’tilted’ to the upside. After all, the tone of the accompanying statement was non-committal, and focus will turn to May 16’s Inflation Report for the latest inflation and output projections for hints on the how much more is needed from BoE to realistically bring inflation down to it’s 2% target. Meeting minutes on May 23 will also be closely watched on the split of votes and views of the MPC members.

Sterling has been under pressure pre BoE announcement after weaker than expected data. Trade deficit widened to -7.05B while industrial production rose 0.3% mom, and dropped -0.2% yoy, below expectation of 0.4% mom rise and 0.0% yoy. BoE’s non-committal statement and UK Prime Minister Tony Blair ’s much-anticipated announcement that he will step down on Jun 27 offered little help to the pound. EUR/USD

Daily Pivots: (S1) 1.3508; (P) 1.3537; (R1) 1.3555; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD’s fall from 1.3681 resumes again in early US session by breaking below 1.3514 support. At this point, intraday bias will remain on the downside as long as EUR/USD stays below 1.3566 resistance and further decline is expected to follow. As discussed before, previous break of the short term rising channel warns that the whole rally from 1.2865 has already completed at 1.3681 on bearish divergence condition in 4 hours MACD and RSI. Hence, the current decline is expected to extend further towards 1.3406/10 support. However, a strong rebound to above 1.3566 resistance will suggest that the current fall has possibly completed and will put focus back to 1.3627 resistance.

In the bigger picture, with 1.3668 target met, risk of medium term reversal is also increasing. As discussed before, medium term up trend from 1.1639 is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 is treated as resumption of the whole up trend from 1.1639. With such interpretation we’d expect risk of medium term reversal to increase significantly as EUR/USD enter into resistance zone between 1.3668 and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822. Hence, focus is now on reversal signals.

On the downside, break of the short term rising channel support is already a warning that the rise from 1.2865 has likely completed. Decisive break of 1.3406/10 support, with 55 days EMA (now at 1.3410) taken out too, will confirm such case. More importantly, with bearish divergence condition in daily MACD and RSI, this will be the first warning that the rise rally from 1.2483 has also completed, and thus, so is the whole up trend from 1.1639. Focus will then be back to medium term rising channel support (now at 1.3010).

GBP/USD

Daily Pivots: (S1) 1.9879; (P) 1.9938; (R1) 1.9995; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable’s rebound from 1.9841 was limited at 1.9999 and reversed by falling sharply since then. Break of 1.9824 resistance turned support indicates that the whole decline from 2.0132 should have resumed for 55 days EMA (now at 1.9772) first. As discussed before, rise from 1.9183 has completed at 2.0132 already after breaking through short term channel support. Break of the EMA will put medium term rising channel support (now at 1.9501) into focus. Meanwhile, above 1.9925 will turn short term outlook neutral again and suggests that fall from 1.999 has likely finished.

In the bigger picture, we’d like maintain that risk of medium term reversal remains high and is increasing. Firstly, the whole up trend from 1.7047 is not clearly impulsive. One interpretation is that rally from 1.7047 ended with three waves up to 1.9024. Subsequent correction ended at 1.8090. Rally from 1.8090 has already met mentioned target of 100% projection of 1.7047 to 1.9024 from 1.8090 at 2.0067. Secondly, regardless of the larger trend, rise from 1.8090 can be interpreted as being a five wave sequence with first wave ended at 1.9142, second at 1.8517, third at 1.9913 and fourth at 1.9183. The channeling property supports this interpretation too. In such case, the fifth wave rally from 1.9183 has also met target of 61.8% projection of 1.8517 to 1.9913 from 1.9183 at 2.0046 too. With bearish divergence condition remains in weekly RSI and Daily MACD and key 2.0106 resistance (92 high) not decisively taken out, cable could be forming a top at the current price level.

On the downside, firm break of the medium term rising channel support (now at 1.9501) will indicate that the whole rally from 1.8090 has completed and add much credence to the case that an important medium term top is already formed and put focus to 1.9183 low. However, sustained trading above mentioned 2.0106 resistance will dampen the above interpretation and indicates that underlying bullishness in cable is much stronger then we thought. Further medium term rally should then be seen towards 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677.

USD/CHF

Daily Pivots: (S1) 1.2153; (P) 1.2173; (R1) 1.2206; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/CHF’s rally resumes by breaking above 1.2194 resistance, reaching as high as 1.2211 so far. At this point, intraday bias remains on the upside as long as USD/CHF stays above 1.2157 support. As discussed before, with bullish convergence condition in 4 hours MACD and RSI as well as daily MACD and RSI, 1.1993 should at least be a short term bottom. Hence, further rally is still is expected to be seen towards 1.2282 cluster resistance (50% retracement of 1.2571 to 1.1993 at 1.2282). But below 1.2157 support again will turn short term outlook neutral.

In the bigger picture, firstly, note that weekly MACD remains below signal line and USD/CHF is still trading comfortably below 55 weeks EMA (now at 1.2358), medium term risk remains on the downside and the current rebound from 1.1993 could merely be part of a sideway consolidation to the whole fall from 1.2571. The original case is still in favor as long as 1.2282 cluster resistance holds. That is the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Break of 1.1993 low will add more credence to this case and bring further decline to 1.1878 low.

However, strong break of 1.2282 cluster resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.

USD/JPY

Daily Pivots: (S1) 119.75; (P) 119.94; (R1) 120.25; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY’s rally from 119.52 extends further by breaking above 120.45 resistance. At this point, further rally is still expected to follow as long as USD/JPY stays above 119.93 support. Next upside target will be trend line resistance (now at 120.75) and 78.6% retracement of 122.17 to 115.13 at 120.66. However, below 119.93 will turn short term outlook neutral again.

In the bigger picture, previous break of medium term rising channel support (108.99, 114.41, 117.87) indicates the whole medium term rally from 108.99 has completed at 122.17. However, firm break of falling trend line resistance (122.05 to 121.61) and sustained trading above 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) indicates price actions from 122.17 are probably developing into sideway consolidation to rise from 108.99 only, instead of a sharp reversal. Hence, a retest of 122.17 high could be seen. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best and risk of another remains.

On the downside, a firm break below 117.60 support will confirm that rebound from 115.13 has completed and deeper fall should then be seen to retest this low and probably further towards 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02). But firm break of this support zone is needed to confirm the underlying medium term bearishness and shift favors back to the case that fall from 122.17 is the third leg of a wide range consolidation that started at 121.38 (first leg completed at 108.99, second at 122.17). Otherwise, as discussed before, price actions from 122.17 could merely be developing into sideway consolidation only and further medium term rally could still be seen.

EUR/JPY

Daily Pivots: (S1) 162.14; (P) 162.36; (R1) 162.65; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/JPY’s recovery from 161.90 continues to day. As discussed before, with 4 hours MACD staying above signal line, further recovery is still in favor. But still, note that sustained break of the short term rising channel support warns that the whole rise from 150.75 has completed with bearish divergence condition in 4 hours MACD and RSI. Hence, further decline is still expected as long as the current recovery is limited by 163.40 resistance. Below 161.90 again will encourage deeper decline towards 159.60 support. However, above 163.40 will turn focus back to 163.59 high.

In the bigger picture, EUR/JPY’s previous break above medium term rising channel resistance (now at 162.46) suggests that strength of the rally from 150.75 could be much stronger than we thought. But still, interpretation of rally from 130.60 remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure, targeting 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 and could terminate there.

On the downside, break of the short term channel support indicates that rise from 150.75 has completed and deeper correction should then be seen towards 55 days EMA (now at 159.54). Also, this will give a serious warning signal that the whole rise rise from 130.60 has ended. EUR/JPY should set to channel the medium channel support (now at 153.33) in case this EMA is taken out decisively. However, strong rebound from there will suggest that another rise should be seen towards mentioned 164.64 projection target before making a medium term top.

Forex News Digest

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6QFlN38wiAE&refer=home

http://www.bloomberg.com/apps/news?pid=20601087&sid=akcpNSv.nIFs&refer=home

http://www.bloomberg.com/apps/news?pid=20601083&sid=alVPtXmAwfwk&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=aTCt7DvrfW3M&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=aKqaVL5j2XGw&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=avbvqzuWcXjs&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=aQtWDc2Evyso&refer=currency

http://www.bloomberg.com/apps/news?pid=20601087&sid=amrFRWOu.iu4&refer=home

http://c.moreover.com/click/here.pl?r927639367
Thu, 10 May 2007 08:47:00 GMT from Reuters UK

http://c.moreover.com/click/here.pl?r927616051
Thu, 10 May 2007 08:31:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r927613404
Thu, 10 May 2007 08:29:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r927565153
Thu, 10 May 2007 07:52:00 GMT from Reuters South Africa

http://c.moreover.com/click/here.pl?r927510350
Thu, 10 May 2007 07:14:00 GMT from Reuters South Africa

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
Previous Revised
3.80% 3.80% 3.70%
4.40% 4.50% 4.50%
7.20% N/A 9.70%
0.80% 0.70% 0.50%
2.90% 2.80% 3.10%
49.7 N/A 50.8
0.30% 0.40% -0.20%
-0.20% 0.00% 0.30%
0.60% 0.50% -0.60%
0.90% 0.90% 1.20%
-7.05B -6.68 B -6.79 B
5.50% 5.50% 5.25%
3.75% 3.75% 3.75%
4.6B 5.5 B 4.8 B 5.2B
297K 315 K 305 K 306K
-63.9B -60.0 B -58.4 B -57.8B
136.7B 118.84B

http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/

Weekly Outlook: Euro Broke Key Support, Will Sterling and Swissy Follow?

admin — Thu, 26 Jul 2007 20:02:09 +0000

Action Insight | Written by ActionForex.com | Jun 09 07 21:44 GMT |
Forex Weekly Review and Outlook Euro Broke Key Support, Will Sterling and Swissy Follow?

Dollar staged a strong rebound last week after a massive sell off in the bond market which pushed 10 year bond yields back to a five year high above 5%. Such sell off is believed to be triggered by RBNZ’s surprised rate hike that raised concern that other central banks will follow suits. Stock markets also corrected with S&P 500 and Dow Jones industrials both retreated 2.7% on the week, while the Nasdaq dipped 2.3%. The net result is that dollar surged against European currencies after market priced out of a rate cut from Fed this year, Aussie and Kiwi surged across the board on rate expectations, the Japanese yen rebounded against Euro and Sterling yen on risk aversion.

Technically speaking, last week’s could prove to be a defining week for some pairs. EUR/USD’s break of 1.3364 support is an indication that an important medium term top is possibly in place at 1.3681 already. Meanwhile, both GBP/USD and USD/CHF are now pressing important levels which will confirm medium term reversal in both pairs. EUR/JPY should also at least made a short term top at 164.59, which could also be a medium term top, after completing a terminal pattern inches below projection target. Meanwhile USD/JPY, though less clear due to dollar’s strength, could have also ended a multi month high ahead of 122.17 key resistance.

The coming week will feature handful of important economic data but focus will likely be on the development of both the bond markets as well as how the technical patterns play out.
Prev Week’s High Prev Week’s Low Prev Week’s Close Last Week’s High Last Week’s Low Last Week’s Close Change (pips) Change (%)
EURUSD 1.3518 1.3392 1.3448 1.3552 1.3319 1.3370 -78 -0.58%
GBPUSD 1.9898 1.9732 1.9822 1.9964 1.9621 1.9697 -125 -0.63%
USDCHF 1.2328 1.2197 1.2297 1.2364 1.2145 1.2350 53 0.43%
USDJPY 122.13 121.18 122.06 122.10 120.75 121.71 -35 -0.29%
USDCAD 1.0834 1.0595 1.0607 1.0711 1.0548 1.0606 -1 -0.01%
AUDUSD 0.8330 0.8162 0.8330 0.8476 0.8308 0.8447 117 1.40%
NZDUSD 0.7452 0.7247 0.7448 0.7637 0.7437 0.7634 186 2.50%
EURJPY 164.27 162.95 164.14 164.59 161.75 162.76 -138 -0.84%
EURGBP 0.6809 0.6767 0.6783 0.6806 0.6768 0.6786 3 0.04%
EURCHF 1.6539 1.6442 1.6536 1.6548 1.6418 1.6515 -21 -0.13%
GBPJPY 242.06 239.75 241.99 242.97 237.64 239.75 -224 -0.93%
GBPCHF 2.4437 2.4190 2.4361 2.4397 2.4149 2.4331 -30 -0.12%
AUDJPY 101.68 99.09 101.68 102.85 101.21 102.82 114 1.12%

Data from US were generally solid with ISM non-manufacturing index rose surprisingly strongly to 59.7 in May comparing to expectation of 55.3. Q1 labor costs were revised much higher to from 0.6% to 1.8% vs consensus of 1.2% though productivity was revised lower than expected to 1.0%. Apr trade deficit unexpectedly improved to -58.5b thanks to thanks to 2.6% rise in exports and -1.1% fall in imports. Though, dollar was pressured during the week after after comments from Bernanke which said that housing market’s drag on the economy could persist somewhat longer than expected even though the slump has not spilled over into other parts of the economy yet. Also, there was speculation that United Arab Emirates may be the next Middle Eastern country to end the dollar peg after Syria and Kuwait had recent announced that they would dump the dollar peg to curb rising import costs and inflation.

ECB raised rates by 25bps to 4.00% as widely expected. In the press conference, Trichet, to the contrast of some analysts, still described rates as “on the accommodative side.” Financing condition was still described as favorable. Risk to inflation is still on the upside and “acting in a firm and timely manner to ensure price stability in the medium term is warranted.” The staff projections on inflation and growth confirmed to be upwardly revised. 07 CPI to 1.8-2.2% up from 1.5-2.1% previously and 08 still 1.4-2.6%. 07 GDP is seen at 2.3-2.9% from 2.1-2.9% with 08 1.8-2.8% from 1.9-2.9%. Though the press conference wasn’t anything dovish, it seemed that markets were dissatisfied with ECB’s keeping 08 inflation forecasts unchanged with mid-point at 2.0% which didn’t give any guidance to the monetary policy in 08. After all, another hike in Sep is still widely expected by the markets.

BoE held interest rates unchanged at 5.50% last week. From the market actions, it seemed like the expected no change from BoE was indeed quite unexpected to part of the markets which bid up GBP/USD to as high as 1.9968 earlier last week. Sterling tumbled since then, with additional pressure from dollar and yen. Mixed industrial production and manufacturing production data was unable to provide any help to the Pound.

Data from Japan saw Q1 capital spending rising more than expected by 13.6% versus consensus of 9.6%. However, Apr machine orders fell short of expectation by rising 2.2% in Apr only. There were some jitters on the yen after news report that North Korea fired several short-range missiles off its west coast. But, the yen still ended the week higher against dollar and euro as important resistance played the effect and as EUR/JPY carry trade unwinding continued.

RBA kept rates unchanged at 6.25% as widely expected. Though, the Aussie was boosted by much stronger than expected Q1 GDP which grew 1.6% qoq, 3.8% yoy comparing to consensus of 1.2%, 3.1%. Unemployment rate unexpectedly fell from 4.4% to 4.2% in May, which is a 32 years low, thanks to a net increase of 39,400 jobs over the month. Persistent strength in the Aussie economy is continuing to increase the chance that RBA will restart the tightening sooner than originally thought. AUD/USD strengthened to 17 year high of 0.8476 before consolidating towards the end of the week.

Kiwi soared to a 22 year high after surprised rate hike from RBNZ by 25bps, for the third time this year, that brought overnight cash rate to 8.00%, which was an unexpected move to most analysts. The accompanying statement was very hawkish with RBNZ focusing almost solely on upside risks and that a “sustained period of slower growth in domestic activity will be required to alleviate inflation pressures.” This is raising the expectation that RBNZ is not yet done and at least one more rate hike could be seen in Q3.

Canadian dollar turned sideway after reaching new 30 year high of 1.0547. Mixed data saw Ivey PMI at 62.7, building permits dropped -8.4%, missing expectation. Unemployment rate remained at 6.1% while housing starts rose to 229.7k and trade surplus widened to 5.76b.