FX market Dollar fears receded after Oil slide and Wells Fargo results

Daily Forex Fundamentals | Written by AC-Markets | Jul 17 08 09:40 GMT |

Forex Market Issues and Risks News and Events: The Dollar rose on Wednesday, moving further from a record low against the Euro, as a slide in Oil prices and surprisingly strong earnings at Wells Fargo & Co reduced fears about the US economy and financial sector. US stocks also rallied, while the Dollar got an added boost after minutes from the Federal Reserve's June meeting showed officials believed inflation pressures meant the next interest rate move was likely to be an increase. With separate data showing US consumer prices rose last month at their fastest rate since the aftermath of Hurricane Katrina in 2005, analysts said FX investors were increasingly certain of at least one Fed rate hike before the year is out. US short-term interest rate futures are pricing in a 76% chance that the Fed raises interest rates from their current 2% by December. EurUsd was down 0.58% at 1.5825 as North American trade wound down, well off a record high 1.6039 set a day ago. UsdJpy was up 0.32% at 105.10 and UsdChf was up 0.85% at 1.1077. GbpUsd fell 0.3% to 1.9996. Investor attention remains focused on the US financial sector particularly after the US government was forced to come up with a rescue plan for mortgage finance giants Fannie Mae and Freddie Mac, just as one of the country's biggest mortgage banks, Indy Mac, collapsed. The turmoil around Fannie and Freddie and fears about more credit losses at regional banks drove the Dollar sharply lower a day ago, with the Euro hitting a record high at 1.6037. But concerns about the US financial sector receded a bit on Wednesday after Wells Fargo, the fifth-largest US bank, raised its dividend despite a 23% decline in profit caused by bad loans. Federal Reserve Chairman Ben Bernanke reiterated to a House of Representatives panel on Wednesday that the risks to US growth have increased along with upside inflation risks, mirroring remarks he made a day earlier before the Senate. Today Key Issues: 09:00 CHF July ZEW Investor sentiment vs -63.8 in June 12:30 USD June Building permits 960k vs 978k 12:30 USD June Housing starts 960k vs 975k 12:30 USD weekly Initial claims 380k vs 346k 12:30 CAD May Securities Transactions C$3.7B vs C$9.75B 13:10 USD Fed's Kroszner debates depository institutions 14:00 USD July Philadelphia Fed business index -15 vs -17.1 13:00 USD May Net L-T flows $85B vs $115.1B 13:15 USD June Capacity utilization 79.3% vs 79.4% 13:15 USD June Industrial output 0% vs -0.2% (MoM) 14:30 CAD Bank of Canada Monetary Policy Report 17:00 USD July NAHB housing market index 18 vs 18 The Risk Today: EurUsd Market hit 1.6039 high on Tuesday. This marks initial resistance over 1.6000 Pivot point resistance. A break there would open the way to key resistance 1.6200. On the downtrend, return below 1.5800 will undermine the recent uptrend. Any weakness may bring back 1.5400 - 1.5800 consolidation range. Below, strong support holds 1.5304 13th June low. GbpUsd Cable is getting over trading range 1.9400 - 2.0000. It hit 2.0158 high on Tuesday. Key level holds again 2.0100. On the downside, only a return below 1.9649 might bring again focus on 1.9337 January low and 1.9105 (50% retracement of 1.7049 - 2.1162 advance). Initial support holds 1.9649 July 7th low. Strong support holds 1.9363 20th February and 14th May low. UsdJpy Last 3-month up-trend has been ended as market broke down 105 level. Further profit taking would push the market into 100 - 104 consolidation trading range and toward 100 level. Renewed advance over 105 would put mid-June 108.59 resistance and 110.10 strong resistance (Trendline) into focus ahead of 111.92 early January high. UsdChf Market hit 1.0013 low on Tuesday. Further weakness below 1.0000 may open the way toward 0.9637 17th March low. Renewed strength over 1.0200 would reopen the 1.0200 - 1.0600 consolidation range. Initial resistance holds 1.0353 9th July high. EURUSD GBPUSD USDJPY USDCHF 1.6200 T 2.1162 S 111.92 K 1.1191 K 1.6039 M 2.0158 M 110.10 T 1.0625 T 1.6000 K 2.0100 K 105.66 M 1.0353 S 1.5865 2.0010 105.35 1.0155 1.5800 M 2.0000 S 103.92 M 1.0013 M 1.5304 S 1.9649 S 102.73 S 1.0000 P 1.5000 K 1.9337 T 100.00 P 0.9637 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.