Daily Report: Dollar Recovers Further in Quiet Start of the Week

Market Overview | Written by ActionForex.com | Jul 07 08 06:39 GMT |

Dollar recovers further in a rather quiet Asian session as the week opens. Some interests will be on industrial production data from Germany and UK to be released in the European session today. Both industrial and manufacturing production in UK recovered modestly in April but are expected to give back some of the gains in May by falling -0.1% mom and -0.2% mom respectively. Moreover, both are expected to show first negative annualized growth of -0.8% and -0.1% yoy respectively. Though, reactions to the data could be mild as long as dollar's broad based recovery continues.

Germany's industrial production is expected to recover mildly by showing 0.4% mom growth but with yoy rate slowed from 4.8% to 3.2%. Euro continues to be relatively soft since Trichet's dovish comments last week and could remains so in case the data show further weakness in the German economy.

The three days G8 meeting starts today in Japan and is expected to focus on energy and good inflations. it's to be seen whether currency rates will be a topic. Just released in European session, Swiss unemployment rated dropped from 2.4% to 2.3% in Jun as expected. Canadian building permits is expected to fall -5.8% in May. No US data will be scheduled today and focus will be on Fed Yellen's speech on US Economic Outlook.

USD/CHF Daily Outlook

Daily Pivots: (S1) 1.0228; (P) 1.0253; (R1) 1.0274; More

USD/CHF's rebound extends further to as high as 1.0318 today and at this point, intraday bias remains mildly on the upside as long as 1.0231 minor support holds. Further rebound could still be seen. Nevertheless, upside should be limited below 61.8% of 1.0539 to 1.0111 at 1.0376 and bring another fall. As discussed before, prior break of short term rising trend line support with daily MACD staying in negative region argues that medium term rebound from 0.9634 is already completed at 1.0623. Sustained break of 1.0147 support will add more credence to this case and bring deeper fall to 0.9995 support. Also, note that short term risk remains on the downside as long as 1.0539 resistance holds even in case of a stronger than expected rebound.

In the bigger picture, a medium term bottom is in place at 0.9634. Subsequent rally from there is still treated as correction to whole medium term down trend only. Break of 1.0147 support will be another signal that such correction has completed. Further break of 0.9995 support will confirm this case and turn short term outlook bearish for 0.9634 low. However, strong rebound from 0.9995/1.0147 support zone will argue that rebound from 0.9634 is not completed yet and will put focus back to 1.0623 resistance.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
05:45	CHF	Swiss Unemployment rate Jun	2.30%	2.30%	2.40%
08:30	GBP	U.K. Industrial prod'n M/M May		-0.10%	0.20%
08:30	GBP	U.K. Industrial prod'n Y/Y May		-0.80%	0.20%
08:30	GBP	U.K. Manufacturing prod'n M/M May		-0.10%	0.10%
08:30	GBP	U.K. Manufacturing prod'n Y/Y May		-0.20%	0.10%
	GBP	U.K. Halifax hse prices 3m Y/Y		-5.90%	-3.80%
10:00	EUR	Germany Industrial prod'n M/M May		0.40%	-0.80%
10:00	EUR	Germany Industrial prod'n Y/Y May		3.20%	4.80%
1230	CAD	Canada Building permits May		-5.80%	14.50%
14:30	CAD	BOC Business Outlook Survey
15:00	USD	Fed's Yellen speaks