Forex Market Overview

Forex Market Overview 28 July 2008

The Usd was stronger at the start of the trading week in the Asian session. The EurUsd traded around the 1.5700 levels, while the UsdJpy failed to hold above the 108.00 level, slipping down to 107.84 as the day progressed. The NZD was supported by heavy margin buying, according to the Tokyo Financial Exchange publicly released data last week. The UsdNzd was able to rally of the 0.7409 session low to 0.7439. The UsdMxn saw a massive gap on the open, spiking from 10.0200 to 10.1229, as the BANXICO announced the end of its daily selling net fx reserves from accumulated oil revenues. The Jpy fueled carry trades continued to perform well, as risk declined and Japanese economic fundamentals erode. The EurJpy continued to rally from Friday's sell off, which saw 167.50 lows to Asian session 169.70 highs. The Asian stock markets are following the US higher, with Shanghai up 1.78%. Commodities are slightly firmer with wti crude trading up 0.28% to $123.61brl.

Despite the sudden resurgence in the Nzd strength, due partially to the excessive buying of Japanese margin traders and low liquidity, we expect to Nzd to weaken considerable in the coming week. Trade balance narrowed with imports falling on slowing demand but exports grew unexpectedly. With a "normal" monetary policy rate round 6.00% - 6.25% levels and the RBNZ clearly signaling a shift to a growth focus, the interest rate differential long enjoyed by the kiwi will unravel.

No major events or economic data scheduled for release in the UK or Eurozone.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9795
R 2: 0.9675
R 1: 0.9637
CURRENT: 0.9555
S 1: 0.9525
S 2: 0.9477
S 3: 0.9450

EURJPY
R 3: 171.80
R 2: 171.07
R 1: 169.97
CURRENT: 169.13
S 1: 167.50
S 2: 166.00
S 3: 165.33

USDSGD
R 3: 1.3826
R 2: 1.3717
R 1: 1.3660
CURRENT: 1.3638
S 1: 1.3563
S 2: 1.3500
S 3: 1.3448

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