USD Declination In Assian Session

Forex Market Overview 22 August 2008


The Usd continued to decline in the Asian session as worries over the US financial markets and surging crude prices weighed on the Dollar sentiment. The EurUsd climbed to the 1.4900 levels, before retracing slightly to 1.4876, while the UsdJpy declined and is now trading at 108.90. Crude rose across the board, with wti moving up $5.00, above $120.00bll. With concerns of a production cut swirling around the September 9th OPEC's meeting and Wednesday’s inventories lower than expected still lingering, crude has picked up a bullish tone. And given the high level of the Usd this commodity will be the prime driver in currency pricing today. In addition, 5-year swap spreads are now hoving around 100bp, the widest level since the Bear Stern disaster and before that you would have to go to 2001 and the equity market collapse to find spreads this wide. A gloomy sign if ever was one. Outside Bernanke’s scheduled speech in Wyoming (given the uncertainty surrounding the financial market, traders will be on a heightened state of alert) the market will be without any real events or data releases, so traders should be particularly aware of price-action in other assets classes.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8735
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 162.07
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4082
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Weaker USD In Majors

Forex Market Overview 21 August 2008

The Usd was weaker across the board in the Asian session, as continued concerns over Fannie and Freddie weight on sentiment. The EurUsd climbed from 1.4741 to 1.4812, while the UsdJpy fell sharply from 109.90 to 108.79. The GbpUsd traded in a 1.8620 to 1.8669 range, before breaking out in late session trading. The Jpy fueled carry trades continued to come under selling pressure, as risk aversion has crept back, with the EurJpy trading down to 161.07 and the AudJpy to 95.06. Wall Street closed in the black, but Asian regional indexes have been unable to hold on to the positive momentum, with loses across the board. European stock indexes are all pointing to a lower opening, with the exception of the FTSE. Crude & Gold continued to gain ground (pressuring Usd) with wti trading at $116.83bll and gold up 0.93% to $821.28oz.

The Japanese trade balance was only 91.1bn vs. 234.9bn exp, as import value grew (18.2% y/y) driven by oil related-price increases. It's interesting to note that exports to Asia grew, while US and Europe destined exports remained weak. Machine Tool Orders dropped -8.9% vs.
-8.9% prior reading.

On the continent, the market will be watching Eurozone's PMI surveys for continued evidence of deteriorating business activity. Should the figures come in line with market expectations, this will suggest that the region is in the midst of a technical recession. Sharp declines were printed in July for both manufacturing and service PMI for the second consecutive month.

In the UK, the market will be focused on Retail Sales. With CBI's falling off the map to lows not seen since 1983 and with the BRC's measure that also fell, we expected retail sales to follow…however not to dire levels.

Daily Forex Pivot Point
AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8750
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 161.04
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4102
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

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Consumer Sentiment

Expect some volatility on the markets today as consumer sentiment will be released. The expectation is 62% and if the actual value released is greater than the 62% expectation then that will normally indicate strength for the Dollar.

Euro had a minimal intra day bounce before it's downtrend continuation but a further continuation or a reversal could pend on today's consumer sentiment.

We took another position on the AUDJPY with 80 pips in profit zone and managing the trade. It is unlikely we will hold this position over the weekend.

Below are today's daily pivot points.

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Currencies Risk Manager

Currencies Risk Manager 13-08-2008

EurUsd Market dropped to 1.4816 low on Tuesday following Friday break below 1.5304 former strong support from 13th June. Further weakness below 1.5000 will put the focus on 1.4779 26th February low. Strong support holds 1.4685 22nd January low. On the upside, only a return over 1.5500 will release actual pressure and put key initial resistance 1.6000 into focus. A break up there would open the way to Trendline resistance 1.6200.

GbpUsd Cable hit 2.0158 high 4-weeks ago and 1.8953 low yesterday. Key level holds 2.0100 resistance. On the downside, Friday break below on 1.9337 January low support lead to market below 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Former support 1.9363 holds strong resistance. Initial support holds 1.8953 yesterday low.

UsdJpy Last 3-weeks recovery pushed the market up to 110.40 high on Friday. The last break of 108.59 former resistance put focus on 110.10 strong resistance (Trendline). Further advance would open the way toward 111.92 early January high. On the downside, a return below 108.59 former resistance will undermine the current advance. Profit taking might bring back down to 105 level and may open the way toward 102.73 support and 100 pivot point. Initial support holds 108.53 today low.

UsdChf Recent Dollar strength pushed over 1.0500 last week and hit 1.0926 high yesterday. Market broke up resistance of the 3-months upper trendline at 1.0766 last week. Initial support holds 1.0500 key level. Renewed weakness below 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.

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Forex Market Overview

Forex Market Overview 31 July 2008

The Usd traded sideways in Asian session, after the stronger ADP figures and rally on Wall Street pushed the greenback higher. The EurUsd traded in a 1.5525 to 1.5602 range, while the UsdJpy traded between 107.80 and 108.34. US stocks gained, as ADP pointed to a 9k gain vs. -60k, giving hope that Friday's NFP will prove stronger then the -75k expected. The S&P gained 1.7% and 2 year Ts dropped by 2.6%. Crude rallied to $126.88brl, but with global demand slowing we expected upside to be limited.

Yesterday's decision by the Turkish Constitutional Court not to close the AKP was clearly seen as positive for markets, with Try and equities gaining on the report (with a positive gap at the open today). While the verdict has not ended all domestic concerns, it will go a long way to ease investors concerns.

The Japanese Industrial production fell by -2.0% m/m vs. -1.7% exp. The government has already cut forecasts for industrial output, as surveys point to further weakness ahead.

The European Session will be focused on Eurozone's July flash CPI. The market is expecting a new record high of 4.1% and there is little evidence to suggest otherwise. This figure, combined with the sharp drop in key Economic Sentiment Indicator, will mean at some point soon the ECB will have to make a tough choice. Inflation or Growth.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9637
R 2: 0.9590
R 1: 0.9528
CURRENT: 0.9438
S 1: 0.9404
S 2: 0.9328
S 3: 0.9276

EURJPY
R 3: 171.81
R 2: 171.07
R 1: 169.97
CURRENT: 168.27
S 1: 167.50
S 2: 166.01
S 3: 165.33

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3717
CURRENT: 1.3685
S 1: 1.3606
S 2: 1.3567
S 3: 1.3501

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Forex Market Overview

Forex Market Overview 04 July 2008

FX markets were relatively stable in Asian session as yesterday’s volatility seem to have driven more then just the US participant to start their weekend early. EurUsd climbed tentatively back above the psychological 1.5700 level while UsdJpy bounced around 106.60 / 106.80 levels. Carry trades picked up a slight intraday upwards trend with EurJpy moving from 167.25 to 167.84 and AudJpy found support on the 10d-ma, rallying to 102.75. With a light calendar and the US 4th of July holiday we would expect trading to be subdued.

Oil prices were stable with Dubai trading at 145.13bll while gold slipped slightly to 934.35oz. US stock markets for the most part were able to shrug off the negative payroll data and close slightly higher however Asian markets were lower with only the Shanghai Composite trading up 1.95% higher today. European index futures are trading higher before the open US markets are closed.

As we had expected the ECB raised rates by 25bp to 4.25% yesterday while the accompanying press conference was more dovish then we had anticipated. In fact during the Q&A portion, Trichet said, “I have no bias” in regards to future rate decisions. A comment he has never uttered before and clearly illustrates that the ECB now has a neutral bias. At this point we have a slight bias towards an additional hike in September due primary to Euro zone inflation which is expect to print at 4.1% for August. A large worrying figure and one that will provide Trichet with many sleepless nights, especially considering growth has now increased the pace of downwards deterioration. We don’t expect EurUsd to pick up any noticeable trend until data from both countries starts giving us real signals as to the direction of monetary policy.

We will however be watching the UK and Gbp for selling opportunities. While the recent trading pattern of Gbp strength has been based on the markets renewed focus on inflation over growth we expect given the rapid decline of the domestic economy an eventual shift will occur. We expect a choppy move back to the 1.9300 lvls mid term.

Yesterday Sweden’s Riksbank hiked rates 25bp to 4.50%, following the lead of the Norges Bank in a move that was widely expected. CPI inflation has recently jumped to 4.0% and rate expectations have followed suit putting the offensive. In addition, the bank signaled that the market could see two more rate hikes in order to slow the economy and contain inflation pressures.

In Australia trade deficit printed at $965m in May in line with expectations. However, there were large revisions of around $1.0bn to April, as higher contract prices for commodities were passed through.


10:00gmt - ECB's Trichet speaks
10:00gmt - ECB's Gonzales-Paramo speaks

Daily Forex Pivot Point
AUDUSD
R 3: 0.9827
R 2: 0.9700
R 1: 0.9670
CURRENT: 0.9625
S 1: 0.9580
S 2: 0.9536
S 3: 0.9515

EURJPY
R 3: 170.00
R 2: 169.45
R 1: 169.15
CURRENT: 167.87
S 1: 167.25
S 2: 166.10
S 3: 166.00

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3611
S 1: 1.3565
S 2: 1.3505
S 3: 1.3470

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