Daily Market Commentary - Fundamental & Technical Outlook

Daily Forex Fundamentals | Written by GCI Financial | Jun 25 08 16:38 GMT |
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The euro came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5535 level and was capped around the $1.5615 level. Most traders expect the Federal Open Market Committee will keep the overnight call rate unchanged at 2.00% today and signal that inflation poses more of a threat than a slowdown in economic growth. Some traders believe the FOMC will move rates higher this year while others believe the Fed will take a wait-and-see approach before adjusting borrowing costs. The Fed is also expected to acknowledge the beleaguered U.S. housing sector, ongoing credit market dislocations, and weakness in the employment sector. Data released in the U.S. today May durable goods orders unchanged m/m and off 0.1% y/y while the ex-transportation component was of 0.9% m/m. Also, May building permits were revised to -0.4% from -1.3% and May new home sales were off 2.5% to a 512,000 unit annualized pace. In eurozone news, the European Central Bank announced it will hold a press conference after its 7 August Governing Council meeting. The ECB traditionally holds a telephone conference after some summer rate-setting meetings and this has led to speculation that the presumed +25bps rate hike to 4.25% in July will not be a one-off move. ECB's Wellink reported Dutch inflation may top 3% in Q3 while ECB President Trichet reiterated he does not "envisage a series of increases (in official interest rates)." ECB's Noyer reported "Issuance of credit remains dynamic and there is no concrete threat of a (further) credit crunch." Data released in the eurozone today saw EMU-15 April factory orders up 2.5% m/m and 11.7% y/y, the fastest growth pace in six months. Euro bids are cited around the $1.5230 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥108.05 level and was supported around the ¥107.65 level. Traders continued to buy U.S. dollars ahead of today's interest rate decision from the Federal Open Market Committee. Technically, today's intraday low was right around the 38.2% retracement of the move from ¥108.55 to ¥107.10. Data released in Japan today saw the May merchandise trade surplus shrink for the third consecutive month, printing at ¥365.61 billion and off 7.6% y/y. Traders are curious to see how these data impact the April - June GDP data that are due in early August. Other data released last night saw the May corporate services price index climb +0.2% m/m and 0.6% y/y, the eighteenth consecutive monthly increase. The Nikkei 225 stock index lost 0.14% to close at ¥13,829.92. Dollar bids are cited around the ¥103.00/ 101.35 levels. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥168.45 level and was supported around the ¥167.60 level. The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥213.20 and ¥103.95 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8653 in the over-the-counter market, down from CNY 6.8699 and the pair's lowest close since the yuan revaluation of July 2005. It was reported that China's foreign reserves totaled US$ 1.76 trillion at the end of April.

₤

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9660 level and was capped around the $1.9745 level. Sterling could not maintain intraday gains notched after it was reported that the CBI June retail sales survey found 39% of respondents said H1 June sales were lower than one year ago while 30% indicated they improved, for an ensuing net balance of -9% - up from -14% in May and better than expected. These data suggest retail sales remain relatively weak. Bank of England Deputy Governor Gieve reported he expects a "downturn in economic activity over the rest of the year." On the political front, London's High Court rejected a legal move to force the British government to hold a referendum on the European Union's Lisbon Treaty. Cable bids are cited around the US$ 1.9360/ 1.9100 levels. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7920 level and was supported around the ₤0.7890 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0435 level and was supported around the CHF 1.0375 level. U.S. dollar bids are cited around the CHF 1.0250 level. The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.6235 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 2.0470 level.

GCI Financial
http://www.gcitrading.com

DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Daily Forex Technicals | Written by Global Forex Trading | Jun 25 08 01:42 GMT |

The dollar plummeted on Tuesday on news the Conference Board's consumer confidence index collapsed to a 16-year low in June, but it reduced losses on the day. The FOMC will leave rates unchanged on Wednesday, and probably for the rest of the year, but look for what they have to say. Keep an eye on the volatile durable goods orders and the new homes sales; the data should be bad but it’s probably discounted and the dollar should attempt to bounce.

Euro/dollar

The euro/dollar has been alternating up and down days, and Tuesday should be the down day. My model went long and the pair must break out of an inside range before the direction becomes clearer.

Good support is seen at 1.5510. Below 1.5470, the next levels are 1.5430,1.5380 and 1.5305.

Strong resistance is at 1.5620. Above 1.5650, euro/dollar sees additional resistance at 1.5727.

Oscillators are rising.

NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen attempted breaks both ways on Tuesday, but when the dust settled, it remained around the 107.95 50-point pivot, which targets 107.45 and 108.45. My model remains short, but sideways trading is likely

Initial support is at 107.45. Strong support is at 106.75 from another 50-point pivot, which targets 106.25 and 107.25. Distant support is at 105.60.

Above 108.45, further resistance is pegged at 109.15 from a 50-point pivot, which targets 109.65 and 108.65.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Mixed

Sterling/dollar

Sterling/dollar made a mild recovery on Tuesday, but got stuck in an inside range. I expect only choppy trading on Wednesday with a bias on the downside.

Immediate support is now seen at 1.9650. Below 1.9605, the next level is 1.9560. This is followed by 1.9500.

Initial resistance now comes at 1.9720. Above 1.9760, further resistance comes at 1.9800, 1.9890 and 1.9940.

Oscillators are mixed.

NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Mixed
LONG-TERM: Mixed

Dollar/Swiss franc

Dollar/Swiss is still alternating up and down days, and Wednesday should be an up day, if this silly pattern continues. My model remains long.

Initial resistance remains at 1.0490. Above 1.0540, resistance is at 1.0622.

Immediate support is still seen at 1.0400. Below 1.0336, further support comes at 1.0290.

Oscillators are mixed.

NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Mixed
LONG-TERM: Bullish

Cornelius Luca
Global Forex Trading
http://www.gftforex.com

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