Daily Report: Dollar Softens Mildly but Still in Tight Range

Market Overview | Written by ActionForex.com | Jul 09 08 07:33 GMT |

The forex markets remains mixed without a clear direction today. Go-political risk was the main driver in the markets overnight. Dollar was sent lower after Iran's state television said the nation test-fired a long-range missile capable of reaching Israel. Swiss and oil spikes higher on worry that tensions between US and Iran will keep escalating. Though, the impact to the markets was brief with most majors still bounded in familiar ranges.

Data released today saw UK nationwide consumer confidence tumbled further from 69 to 63 in Jun, missing consensus of 65. Japan machine orders rose 10.4% mom, 5.1% yoy in May. Australia Westpac consumer confidence dropped -6.7% in Jul. Germany Trade surplus was at 14.6B in May, lower than expectation of 16.5B on sharper than expected drop in exports by -3.2% mom. Import rose 0.7% mom.

UK Trade balance will be released later today and is expected to show -4.1B deficit in May. Eurozone Q1 GDP is expected to be unrevised at 0.8% qoq, 2.2% yoy. Canadian housing starts is the major economic release in the US session and is expected to drop slightly from 221.3k to 218.0k.

USD/JPY Daily Outlook

Daily Pivots: (S1) 106.65; (P) 107.10; (R1) 107.94; More.

Intraday outlook in USD/JPY remains neutral as the pair continues to stay in tight range between 106.25 and 107.75. On the upside, further rally could not be ruled out but still, note that sustained break of 108.59 key medium term resistance is needed to confirm whole rebound from 95.77 has resumed. Otherwise, risk of another fall remains. On the downside, below 106.25 will argue that rebound from 104.98 has completed and will put focus back to 104.98 low.

In the bigger picture, USD/JPY has made a medium term bottom after down trend from 124.13 has just met 76.4% retracement of 79.75 to 147.68 at 95.78. Failure of 108.59 resistance was taken as the first signal that rebound from 95.77 has completed. Further break of 102.73 support will confirm this case.At this moment, it's premature to conclude whether rise from 95.77 represent whole correction pattern to fall from 124.13 or just part of it. But in either case, deeper fall should be seen to 61.8% retracement of 95.77 to 108.59 at 100.66. On the upside, while strong rebound could be seen, short term risks will remain on the downside as long as long 108.59 key medium term resistance holds.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
23:01	GBP	U.K. N'wide Consumer Confi. Jun	63	65	69
23:50	JPY	Japan Machine orders M/M May	10.40%	1.10%	5.50%
23:50	JPY	Japan Machine orders Y/Y May	5.10%	-3.70%	0.50%
0:30	AUD	Australia W'pac consumer confi. Jul	-6.70%	N/A	-5.60%
6:00	EUR	Germany Trade balance (euro) May	14.6B	16.5B	17.7B	17.8B
6:00	EUR	Germany Current account May	7.5B	12.5B	14.5B	15.5B
6:00	EUR	Germany Import M/M May	0.70%	1.40%	-2.30%
6:00	EUR	Germany Export M/M May	-3.20%	0.00%	1.10%
8:00	GBP	U.K. Trade balance (gbp) May		-4.1B	-4.3B
9:00	EUR	Eurozone GDP Q/Q Rev. Q1 F		0.80%	0.80%
9:00	EUR	Eurozone GDP Y/Y Rev. Q1 F		2.20%	2.20%
12:15	CAD	Canada Housing starts Jun		218.0K	221.3K