Mid-Day Report: Dollar Consolidates, a Short Term Top in Place?

Market Overview | Written by ActionForex.com | Aug 12 08 13:09 GMT |


Dollar's intraday momentum against major currencies continues to diminish and it looks like a short term top is finally around the corner. In particular, Gold seems to be supported at 800 key psychological report and recovers on profit taking. Oil is set to test $115 minor support too. Though a break of intraday support/resistance levels in major pairs is still needed to confirm. Otherwise, consolidation could be brief and more upside might be seen in the greenback before a noticeable correction.

On the data front, dollar has little reaction to much narrower than expected trade deficit on -56.8b in Jun. Canadian trade surplus came in narrower than expected at 5.76b in Jun. Sterling received little support from inflation data today with headline CPI surging to record high of 4.4% yoy in Jul, far above expectation of 4.1%. Core CPI also climbed more than expected to 1.9% yoy. Markets will turn attention to tomorrow's BoE quarterly inflation report.
USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.0628; (P) 1.0672; (R1) 1.0732; More.

USD/CAD retreats again after edging higher to 1.0727 earlier today. With 4 hours MACD dragged below signal line, an intraday top should be in place and some more sideway trading could now be seen. Nevertheless, consolidation should be relatively brief as long as 1.0538 minor support holds. Above 1.0727 will indicate recent rise has resumed for mentioned 1.0791/98 cluster resistance. Below 1.0538 will indicate that a short term top is in place and bring correction to 4 hours 55 EMA (now at 1.0469) or lower. But downside should be contained above 1.0273 support and bring rally resumption.

In the bigger picture, break of 1.0378 confirms that medium term rise from 0.9056 has resumed and is now set to test cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) first. Sustained break of 1.0791/98 will argue that rise from 0.9056 is probably more than just a correction in the long term down trend and will set the stage to test key long term resistance at 1.1874. On the downside, a break below 0.9974 support is needed to confirm that rise from 0.9056 has completed. Otherwise, further rally is still expected even in case of a deep pull back.



Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:01 GBP U.K. RICS house prices Jul -83.90% -90.00% -88.00%
23:01 GBP U.K. BRC retail sales Jul -0.90% N/A -0.40%
23:50 JPY Japan Domestic CGPI M/M Jul 2.00% 0.80% 0.80% 0.90%
23:50 JPY Japan Domestic CGPI Y/Y Jul 7.10% 5.70% 5.60% 5.70%
01:30 AUD Australia NAB business confidence Jul -9 N/A -9
04:30 JPY Japan Industrial prod'n M/M Jul -2.20% -2.00% -2.00%
04:30 JPY Japan Industrial prod'n Y/Y Jul 0.00% -0.20% -0.20%
04:30 JPY Japan Capacity utilisation Jul -1.70% N/A 2.20%
05:00 JPY Japan Consumer confidence Jul 31.4 N/A 32.9
08:30 GBP U.K. CPI M/M Jul 0.00% -0.20% 0.70%
08:30 GBP U.K. CPI Y/Y Jul 4.40% 4.20% 3.80%
08:30 GBP U.K. CPI core Y/Y Jul 1.90% 1.70% 1.60%
08:30 GBP U.K. RPI M/M Jul -0.10% -0.30% 0.80%
08:30 GBP U.K. RPI Y/Y Jul 5.00% 4.90% 4.60%
08:30 GBP U.K. RPI - X M/M Jul -0.20% -0.50% 0.80%
08:30 GBP U.K. RPI - X Y/Y Jul 5.30% 5.20% 4.80%
08:30 GBP U.K. DCLG house prices Y/Y Jun 0.60% 1.50% 3.70% 3%
12:30 CAD Canada Trade balance (cad) Jun 5.76B 5.80B 5.54B
12:30 CAD Canada Imports Jun 43.2B N/A 36.57B
12:30 CAD Canada Exports Jun 37.4B N/A 42.11B
12:30 USD U.S. Trade balance (usd) Jun -56.8B -61.0B -59.8B
18:00 USD U.S. Fed budget Jul -68.6B -36.45B