Mid-Day Report: Dollar Plunges as Oil Hits New Record High

Market Overview | Written by ActionForex.com | Jul 11 08 12:37 GMT |

Volatile prices actions are seen leading into US session. On the one hand, the greenback is hit hard as oil high near record high neat $146 a barrel on worries that Israel may attack Iran, renewed militant activities in Nigeria and a strike in Brazil next week. Yen and Swissy are boost propelled higher on risk aversion on falling European stock markets and an expected sharp lower open in US stock markets. The technical development so far is in line with the view that dollar's recovery has already completed earlier and further weakness is expected across the board except versus the Canadian dollar. Aussie continues to lead the way and made new 25 years high at 0.9677

The Loonie, on the other hand, is sold off after disappointing employment report which showed the job markets shrank by -5k in Jun versus expectation of 10k growth. Unemployment rate also unexpectedly climbed from 6.1% to 6.2%. While BoC is widely expected to leave rates unchanged at 3.00% next week, today's report raises some speculations that if the job market deteriorates further, BoC may opt to resume it's policy easing sooner or later.

Other data released in US session saw US trade deficit in Jun narrower than expected at -59.8b. Import price index rose 2.0% mom, while export price index rose 1.0% mom in May. Canadian housing price index was flat in May. Trader surplus came in wider than expected at 5.54b in May. U of Michigan survey will be released later and is expected to hit 28 year low of 55.5 in Jul.

Released earlier, Japanese industrial production rose 2.8% mom, 1.1% yoy. capacity utilization rose 2.2% in May. Consumer confidence dropped less than expected to 32.9 in Jun. Germany wholesale price index climbed 0.9% mom, 8.9% in June, inline with consensus.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.5718; (P) 1.5759; (R1) 1.5829;

EUR/USD's rally extends further as expected and reaches as high as 1.5868 so far. With correction from 1.5908 completed at 1.5611, rise from there is expected to continue further to retest 1.5908 high first. Break will confirm that rally from 1.5302 has resumed for retesting 1.6019 record high. On the downside, though, below 1.5763 will turn intraday outlook neutral first. But another rally is sitll expected as long as downside is contained by 1.5611 support.

In the bigger picture, a medium term top is in place at 1.6019 after meeting 1.6 psychological resistance. As mentioned before, break of 1.5843 indicates that such consolidation has likely completed at 1.5302 already. Further decisive break of 1.6019 will confirm this case and bring rise to 61.8% projection of 1.4309 to 1.6019 from 1.5284 at 1.6341 first. On the downside, however, below 1.5468 support will mix up the picture by firstly suggesting that rise from 1.5302 has completed. Secondly, it will revive the case that consolidation from 1.6019 is still in progress. Retest of 1.5302 support could be seen in such case.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
04:30	JPY	Japan Industrial prod'n M/M May	2.80%	2.90%	2.90%
04:30	JPY	Japan Industrial prod'n Y/Y May	1.10%	N/A	1.20%
04:30	JPY	Japan Capacity utilisation May	2.20%	N/A	-0.70%
05:00	JPY	Japan Consumer confidence Jun	32.9	31.5	34.1
06:00	EUR	Germany WPI M/M Jun	0.90%	0.90%	1.40%
06:00	EUR	Germany WPI Y/Y Jun	8.90%	8.90%	8.10%
11:00	CAD	Canada Unemployment rate Jun	6.20%	6.10%	6.10%
11:00	CAD	Canada Employment change Jun	-5K	10k	8.4k
12:30	CAD	Canada New housing price index May	0.00%	0.10%	0.00%
12:30	CAD	Canada Trade balance (cad) May	5.54B	5.2B	5.11B
12:30	USD	U.S. Trade balance (usd) May	-59.8B	-62.1B	-60.9B	-60.5B
12:30	USD	U.S. Import price index M/M Jun	2.00%	2.00%	2.30%	2.60%
12:30	USD	U.S. Export price index Y/Y Jun	1.00%	0.40%	0.30%
14:00	USD	U.S. U. Michigan survey Prel. Jul		55.5	56.4
18:00	USD	U.S. Fed budget		33.0B	27.48B