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Forex Market Update
Published: Aug. 09 2006, 13:07 GMT
USD Marginally weaker in Europe, but market still indecisive
EURUSD tested 1.2900 early in Europe on no major news. We may have to look for tomorrow's US trade balance before getting a more clear trend for the remainder of the week.
MAJOR HEADLINES â€“ PREVIOUS SESSION
â€¢ Sweden AMS unemployment rate July, out at 5.2% vs 5.3% exp.
â€¢ Norwegian Retail Sales (MoM) June, out at -1.1% vs -1.2% exp.
â€¢ Norwegian Unemployment rate (AKU) May, out at 4.6% vs 3.9% exp.
â€¢ UK Visible trade balance June, out at -6463 vs -6200 exp.
â€¢ US MBA Mortgage Applications Aug, out at 4.95 vs a prior reading of -1.2% exp.
â€¢ Canadian Housing starts July, out at 236.5k vs 225.0K expected.
From this morning:
â€¢ German Industrial Production (Jun) MoM -0.4% vs. 0.3% exp., YoY 4.6% vs. 5.3% exp.
â€¢ South African Manufacturing Prod. (Jun) MoM 1.7% vs. 2.0% prior, YoY 6.1% vs. 5.1% prior.
â€¢ US NonFarm Productivity (2Q P) 1.1% vs. 0.8% exp.
â€¢ US Unit Labor Cost (2Q P) 4.2% vs. 3.7% exp.
â€¢ Canadian Building Permits (Jun) MoM -1.4% vs. -2.0% exp.
â€¢ FOMC holds rates at 5.25%.
â€¢ US ABC Consumer Confidence (Aug) -12 vs -10 exp.
â€¢ Australian Homes Loans (Jun) 1.3% vs. 0.5% exp.
â€¢ Australian Investment Lending (Jun) 4.5% vs. 4.9% prior.
â€¢ Japan Machine Orders (Jun) MoM XX vs. 0.3% exp, YoY XX vs. 6.4% exp.
THEMES TO WATCH â€“ UPCOMING SESSION
From this morning:
Well at least yesterdays FOMC rate decision was notâ€™t boring. As expected the FOMC held rates at 5.25% forgoing an 18th straight increase. Bernanke and gangs seem to be content that moderating growth and past tightening will push inflation lower. The accompanying statement matched the last statement very closely except for a few minor yet critical differences. The FOMC did reiterate past language indicating that "inflation risks remain" and that "the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." However the FED failed to mention rising unit labor costs and the tone lacked any real signal on additional tightening in the near future. Overall the statement was non-committal and neutral providing the market with little direction. So its back to watching each and every economic indicator for signals.
Note: the support/resistance levels used in the matrixâ€™s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
EURUSD (1.2881 @ 13:07 GMT)
Wednesday: EURUSD selling-off post FOMC. As long as 1.2760 remain intact buy the dips with a tight stop for a 1.2830-40 target. look to stop reverse below 1.2760 for a test of 1.2720 and possibly 1.2660.
09 Aug 06
British Pound/US Dollar
GBPUSD (1.9084 @ 13:06 GMT)
Tuesday, Wednesday: GBPUSD remain supported after last weekâ€™s surprise rate hike. The target remains 1.9215 for the upside as long as 1.8855 support, remain intact. Look for a break of 1.9090 to challenge 1.9150 short term. Intra-day support is 1.9025-1.8990.
09 Aug 06
US Dollar/Japanese Yen
USDJPY (115.02 @ 13:07 GMT)
Wednesday: USDJPY continued higher in Asia and tested 115.80 resistance, but was unable to close above. The pair remain a buy on dips as long as 115.15-30 support holds. Look for a break of 115.80 today which would open up for a challenge of 116.25-40.
09 Aug 06
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