Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Aug 08 08 04:27 GMT |

Greenback Comeback Gains Traction

Forex: The Asian forex market was driven by stops and real money funds returning to the USD assets. There is an emerging consensus that we are seeing a shift away from a focus on the U.S. to a more global problem, which means that the USD is getting a boost by default. The USD index has now closed above the 200day MA for the second straight day (above June 13 trend high at 74.31), and the currency has made some significant technical progress during today's Asian session.

EUR/USD moved from a high of 1.5335 to a low of 1.5196: The pair plummeted after stops below 1.5280 were triggered in the early part of the session. The pair even managed to move below the 200day MA at 1.5225. At the time of writing, EUR/USD has managed to stabilize around 1.5210, but the EUR looks vulnerable. Technical traders looking to sell EUR/USD could soon join the party, with mounting speculation that a double-top is in place. Ahead of the weekend, rallies should be confined to the breakdown level at 1.5280, traders say.

GBP/USD moved from a high of 1.9440 to a low of 1.9271: GBP/USD broke below the year's low at 1.9337, an extremely bearish development. The next level of support is found down at the March 2007 low around 1.9200.

USD/JPY moved from a low of 109.31 to a high of 109.78: Traders hear chatter of some very large stops above 110 in USD/JPY.

AUD/USD moved from a high of 0.9074 to a low of 0.8927: AUD/USD is the victim of a one-two punch, as real money accounts move out of commodities and into USD assets. There was some speculation in the Australian press that the Reserve Bank of Australia will cut interest rates by 50bps at the next meeting, as opposed to two consecutive 25bps cuts. There is some speculation that clever money will soon get out of short AUD positions, with some saying that that the easy money on the short AUD/USD trade has now been made.

Other notable currency moves: USD/CHF moved from a low of 1.0609 to a high of 1.0713, while NZD/USD moved from a high of 0.7152 to a low of 0.6984.

Japanese money supply increases less than expected in July: (JP July Money Stock M3 YoY: 0.8% v 1.0% expected, 0.9% prior; M2: 2.1% v 2.4% expected, 2.3% prior) Japan's money supply rose in July from a year earlier as quasi-money such as time deposits increased, the Bank of Japan (BoJ) said. The BoJ said investors seem to be shifting their money from investment trusts to more secured time deposits in the face of global financial turmoil.

Equities: At 0:10 Japan's Nikkei is +0.30%, the S&P/ASX200 is -0.03%, South Korea's KOSPI is +0.21%, Hong Kong's Hang Seng index is +0.08% and the Shanghai composite index is -0.53%. The S&P500 futures contract gained +0.23% since the U.S. close, last trading at 1,270.80. It is becoming clear that real money accounts are shifting back into USD assets, and it looks like some of these accounts are putting money into S&P500 futures. The gains seen on the S&P500 contract provided some support to Asian bourses, and most indices rebounded from early selling. The rising USD/JPY supported some of the Japanese exporters, while miners and banks dragged on the S&P/ASX200. Steelmakers and shipbuilding companies gained in Seoul, with Chinese stocks trading slightly lower ahead of the Olympic celebrations.

Commodities: Nymex crude oil lost -0.35% between 18:00 EDT and 0:09 EDT, last trading at $119.60/oz. Spot gold lost -0.53%, last trading at $877.20.

Trade The News Staff
Trade The News, Inc.

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