Greenback Flat Ahead of Important Data

Daily Forex Fundamentals | Written by CMS Forex | Jul 30 08 22:48 GMT |

The dollar traded near recent highs after a report showed private employers unexpectedly added jobs in July and the Federal Reserve said it will extend its emergency lending programs to financial institutions through January. The yen and Swiss franc were little changed, at significant support. The USD/CAD was unable to challenge the 1.03 resistance. The GBP/USD was higher, above the 1.98 support. The AUD/USD fell below the 0.95 support after a government report showed Australian home-building approvals unexpectedly dropped in June for a second month. The EUR/USD was little changed after falling below the 1.56-handle that is now resistance. The pair is modestly overbought. We expect it to trade between 1.54 and 1.56, but an unexpected GDP or employment data may push the EUR/USD outside this range. We expect a slightly better GDP than the consensus forecast tomorrow and a relatively weak US employment report Friday. Financial and Economic News and Comments US & Canada ADP and Macroeconomic Advisers forecast US private sector jobs rose 9,000 in July. This is much stronger than the consensus forecast. The ADP employment report provides a snapshot of the private sector job market ahead of Friday's official payrolls report. ADP's forecast has been too optimistic the previous months. The Federal Reserve said it is extending emergency lending to investment banks through January and expanding several other direct-loan programs created over the past year amid continued stress in credit markets. The Fed also boosted its swap line with the European Central Bank. Policy makers said markets are still “fragile.” President George Bush signed a massive housing bill intended to provide mortgage relief for 400,000 struggling US homeowners and stabilize financial markets and provide support to Fannie Mac and Freddie Mac. Europe European consumer confidence dropped the most since the 9/11 terrorist attacks as rising energy costs, continued credit crunch and slowing economic growth dimmed the outlook. The eurozone sentiment index fell a larger-than-expected 5.3 points to 89.5 in July, according to the European Commission. This is the latest weak data indicating a serious economic downturn. The June sentiment indicator was revised down from a provisional reading of 94.9. The services confidence indicator fell to 1 from 9, while the consumer confidence indicator declined to -20 from -17. Germany inflation held steady at a 3.3% annual rate in July, same as in June, according to preliminary data. The index rose a stronger-than-forecast 0.6% m/m in July, mainly driven by double-digit increases for holiday homes and package tours. Asia-Pacific Japan's industrial production fell a larger-than-expected 2.0% m/m in June after rising 2.8% m/m in May, the Trade Ministry said. The Trade Ministry lowered its assessment of industrial production, saying output is weakening after previously describing it as flat with signs of weakness. According to the survey, Japanese companies plan to cut production 0.2% m/m in July and 0.6% m/m in August. Australian approvals to build new homes unexpectedly fell 0.7% m/m in June, the Australian Bureau of Statistics said. Permits fell 7.8% y/y to 12,237 units in June. FX Strategy Update EUR/USD USD/JPY GBP/USD USD/CHF USD/CAD AUD/USD EUR/JPY Primary Trend Positive Negative Negative Negative Negative Positive Positive Secondary Trend Neutral Neutral Neutral Neutral Neutral Neutral Neutral Outlook Neutral Neutral Neutral Neutral Neutral Neutral Neutral Action None Sell Sell None None None None Current 1.5589 108.01 1.9831 1.0466 1.0232 0.9441 168.38 Original Position N/A 107.95 1.9790 N/A N/A N/A N/A Objective N/A N/A N/A N/A N/A N/A N/A Stop N/A 108.70 2.0135 N/A N/A N/A N/A Support 1.5580 1.5400 105.00 103.00 1.9780 1.9600 1.0200 0.9980 1.0000 0.9800 0.9300 0.9000 166.00 162.00 Resistance 1.5800 1.6020 108.20 110.00 2.0100 2.0300 1.0500 1.0600 1.0300 1.0400 0.9800 1.0000 170.00 172.00 Thursday's Economic Calendar Time (EDT) Region Data Period Change Our Forecast Median Forecast Last 2:00 Germany Unemployment rate Jun 7.8% 7.8% 5:00 EMU Unemployment rate Jun 7.2% 7.2% 8:30 Canada GDP May 0.2% 0.4% 8:30 US Initial jobless claims 7/26 -8K 34K 8:30 US Advance GDP 2Q 2.3% 1.0% 8:30 US Employment cost index 2Q 0.7% 9:45 US Chicago PMI Jul 51.0 49.6 Hans Nilsson Capital Market Services, L.L.C. www.cmsfx.com ©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. 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