USD Surges Despite Twin Deficit Data

by Korman Tam

The dollar sharply rallied against the euro and sterling, reversing yesterday’s losses and climbing to 1.39 versus the euro and 1.6242 against the sterling. The 10-year Treasury note edged up toward the 4% level, reflecting underlying fears of forthcoming rate hikes, while the major US equity bourses slid by nearly 1%.

Traders analyzed the US twin deficit data released earlier in the session. The April trade deficit was slightly higher than expectations, edging up to $29.16 billion, from an upwardly revised $28.5 billion from March. US exports slid to its lowest level in 3-years, falling by $2.2 billion to $121.1 billion, while imports fell by $2.2 billion to $150.3 billion. The US Treasury released the May budget deficit earlier, revealing a record $189.5 billion deficit – higher than forecast and up from a $165.93 billion budget deficit a year earlier. The 2009 fiscal deficit climbed closer to the $1 trillion at $991.95 billion.

The Federal Reserve’s Beige Book said economic conditions in the 12 Fed districts either remained weak or worsened through May. The report saw five districts acknowledging the downward trend beginning to show signs of moderating while some districts said there are nascent signs that job losses may be moderating. The Fed said districts mostly saw prices at all stages of production to be generally flat or falling, with the notable exception to downward pricing pressures is the widely reported increase in the price of oil. The Beige Book also noted that retail spending remained soft and that real estate markets continued to deteriorate in all districts.

The economic calendar for Thursday consists of May retail sales, weekly jobless claims, and business inventories. The upbeat consumer confidence survey from yesterday bodes well for retail sales with improved sentiment likely to result in increased consumer spending. The headline May retail sales report is expected to reverse a 0.4% decline in April to improve by 0.2%. The core retail sales figure is seen increasing by 0.3% in May, improving markedly from a 0.5% decline in the previous month. Weekly jobless claims are expected to improve to 615k, down slightly from a week earlier at 621k. Lastly, April business inventories are expected to post a 0.8% decline, improving marginally from a 1.0% decline in March.

Yen Slips ahead of GDP

In the coming session, Japan’s revised Q1 GDP will be released, with consensus estimates looking for a slightly improved 15% annualized decline from the previous figure of 15.2%. The quarterly figure is estimated to remain unchanged, revealing a Q1 economic contraction of 4.0% on the quarter. The data will reiterate current challenging economic conditions facing the world’s second largest economy. Also to be released on Thursday will be capacity utilization, industrial output and consumer confidence.

source : www.forexnews.com


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Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Jun 11 09 03:49 GMT |

EUR/USD closed lower on Wednesday and the low-range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain bearish signalling that sideways to lower prices is possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews this spring's rally, the 87% retracement level of the December-March decline crossing is the next upside target. USD/JPY closed lower on Wednesday and the low-range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends last week's decline, the reaction low crossing is the next downside target. Closes above the 20-day moving average crossing would confirm that a short-term low has been posted. GBP/USD closed slightly higher on Wednesday as it consolidated some of the decline off last week's high. The high-range close sets the stage for a steady to higher opening on Thursday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends the decline off last week's high, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would temper the near-term bearish outlook in the market. USD/CHF closed lower on Wednesday as it consolidated some of Tuesday's rally. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends the decline off last week's high, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would temper the near-term bearish outlook in the market. HY Markets http://www.hymarkets.com

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The Daily Forecaster: USDJPY

Daily Forex Technicals | Written by FX-Forecaster | Jun 11 09 03:55 GMT |

Price: 98.16 Bias: We need a swift move above 98.43 to maintain gains for 99.12 and 99.64 else expect a dip to 96.66-80 Daily Bullish We saw the decline down to 97.08 and from there a solid bounce that could have the structure to really press through to new highs. However, the 98.00-10 area does seem to be important support and must hold to retain a directly bullish stance. If so, a move back above the 98.43 high should spur price higher to retest the 98.87 high and while it could provide a brief pullback I feel the risk is higher to 99.22 at least. Take care here. If I have to state my preference then I feel that the 99.64-74 area is a more likely stalling point... Only above there extends to 100.42. Medium Term Bullish 10th June: The manner in which the move higher is developing does seem more corrective in nature and as such while I can see potential for a move to 99.64-74 I feel this may hold. Thus, only a break above here would open up 100.42-71 and maybe the 101.43 high... Daily Bearish The support between 96.80-97.10 held perfectly and we have seen a solid recovery but price seems reluctant to push higher. The 98.00-10 support looks crucial here and any breach of this support area would generate a deeper pullback at the very least. If seen then we should note the 97.70 pivot support, break of which would maintain the downside for 97.08 again but I feel then a dip to 96.66-80 is more likely. Take care if seen as this could hold. Only breach extends losses to around 96.02. Medium Term Bearish 10th June: I still see this decline as more corrective in nature and only a break of 96.02-13 would cause me to revert to a bearish stance for a move back to 95.02, maybe 94.44-56 en route 93.84 and below. Resistance 98.43 98.87 99.22 99.64 99.92 100.42 Support 98.00-10 97.70 97.49 97.08 96.66-80 96.13 I shall be presenting a seminar in Hong Kong on Saturday 27th June at the Excelsior Hotel in Causeway Bay. Please see http://www.earlthorn.com/ for details. Ian Copsey FX-Forecaster Legal disclaimer and risk disclosure The Daily Forecaster is an analytical tool only and is not intended to replace individual research. The service is offered as an opinion on the current state of the market with anticipated trading signals but not recommendations. The information provided in The Daily Forecaster should not be relied on as a substitute for extensive independent research before making your trading/investment decisions. Ian Copsey is merely providing this service for your general information. No representation is being made that any view or opinion will guarantee profits or not result in losses from trading. In addition any projections or views of the market provided may not prove to be accurate. The opinions are subject to change without notice. Opinions or views expressed in The Daily Forecaster are not meant to be either investment advice or a solicitation or recommendation to establish market positions. Ian Copsey will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this service. The information contained is private and may not be distributed or shared.

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