Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | Jul 29 08 07:24 GMT |

Good morning from wonderful Hamburg and welcome to Varengold Bank's Daily FX Report. The market's main focus this week will be the release of the second-quarter US GDP on Thursday, and the US employment data on Friday, but investors will also look at US and several European housing and consumer confidence indexes later today. Markets review Japan's jobless rate rose to a 2-year high of 4.1% in June and the government also downgraded its view on job conditions. This data reinforces expectations that the BOJ will keep rates on hold for the upcoming months as the economy shows more signs of losing steam. Additionally, the BOJ Deputy Gov Nishimura said in an interview that Japan's economy may be heading for a recession, but a sharp downturn is unlikely. The USD/JPY reacted with a loss of 0.40%, ending up at 107.42. The number of new dwellings approved by New Zealand decreased 20.1% mth/mth in June. This is the lowest reading in 22 years. The data reflects the sharp slowdown in the economy and adds the worries that the economy is in a recession. The NZD/USD reacted at first with a gain, but has since plummeted, and is currently trading at 0.7416. The EUR/USD steadied at 1.5745, but held onto losses made the previous day on renewed concerns that losses at US financial firms could continue to grow. Merrill Lynch said it will take a $5.7 billion write-down in Q3 as it unloads huge amounts of risky debt. The news comes two weeks after the bank posted a $4.9 bln Q2 loss on write-downs. Also Lehman Brothers posted a loss in the third quarter and will take an additional $2.5 bln write-down on home loans. This news will further hurt the US economy and limit chances of Fed interest rate rise later in the year. Technical analysis GBP/CAD Since the middle of May, the GBP/CAD has been trading along a increasing tend line. In June the pair crossed the 2.02 level and jumped to the resistance at 2.04. After a subsequent fallback to the trend line, the GBP came back to the level in the last trading days. If the result of the second attempt is a break through the resistance, we will expect further price gains. AUD/USD Since the beginning of March, the AUD/USD has been trading in an upward trend channel. If the support level at 0.9501 is strong enough, the AUD will increase and cross the resistance at 1.9641. This development would fit the long-term trend. Pivot Points - Daily FX Support and Resistance Levels Daily Calendar & Key FX Events Varengold Bank IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.