The Forex Market Overview

The Forex Market Overview 11 July 2008

The Usd was range bound in Asian Session after being sold-off in NY trading. EurUsd traded between 1.5760 - 1.5800 resistance while UsdJpy found slightly more direction trending upwards from 106.90 to 107.28. Rumors around Fannie & Freddie continue to distract the markets with risk appetite shaky and equity markets falling. While Paulson and Bernanke reiterated views that they were adequately capitalized the market are not so easily convinced.

In Japan consumer confidence dropped to a new record low as concerns over the domestic economy, inflation & employment all weighing on sentiment. The index slid to 32.6 in June (lowest level since Dec 01) from 33.9 in May. In addition, personal demand indicators for consumption include a -3.2% fall. Without support from the Japanese consumer, there is little chance we shall see the current pace of domestic deterioration slow in 2008. And expect the Jpy to depend on bouts of risk aversion rather then underlying fundamental for currency support.

The Gbp continues to struggle despite the MPC holding rates steady at 5.00% yesterday. The rational is that while inflation is a persistent problem, weakening domestic data, highlighted by the housing sector, suggest that there is a higher probability that next rate move will be down. While rising inflation will keep the BoE vigilant near term the fear of sliding into a full recession will keep the Bank for hiking and pressure on the Gbp.

In the US, University of Michigan’s consumer confidence index will be released today. There has not been much to be positive about, with falling home prices, surging energy costs and unemployment rising we expect there is little chance that the index will improve. In addition, the US trade deficit is expected to widen as the higher energy cost start to have a profound effect. This round of gloomy economic data, on this light calendar week should weigh on the Usd today.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9670
R 2: 0.9642
R 1: 0.9618
CURRENT: 0.9611
S 1: 0.9545
S 2: 0.9477
S 3: 0.9459

EURJPY
R 3: 170.00
R 2: 169.75
R 1: 169.50
CURRENT: 169.17
S 1: 167.83
S 2: 167.13
S 3: 166.10

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3606
S 1: 1.3565
S 2: 1.3505
S 3: 1.3470

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