NIKKEI
6 July 2007 10:15:51
Expected Range : 18040 - 18150
Support : 18040 / 18000 / 17960
Resistance : 18150 / 18205 / 18250
Recommendation : Sell 18140
TP 18040, SL 18190
KOSPI
6 July 2007 06:51:40
(john@tg)
Expected Range : 234.40 - 237.00
Support : 234.40 / 234.00 / 233.50
Resistance : 237.00 / 237.50 / 238.25
Recommendation : Sell 236.80
TP 235.80 / SL 237.30
HANGSENG
6 July 2007 08:53:33
(john@tg)
Expected Range 22100 - 22250
Support : 22100 / 22050 / 22000
Resistance : 22250 / 22300 / 22350
Recommendation : Sell 22250
TP 22150 , SL 22300
GBP / USD
6 July 2007 04:33:18
Closed:2.0119
Expected Range : 2.0070 - 2.0192
Support : 2.0103 / 2.0084 / 2.0060
Resistance : 2.0140 / 2.0177 / 2.0192
Recommendation : Sell 2.0150 TP 2.0080 SL 2.0200
EUR/USD
6 July 2007 04:34:41
Closed:1.3600
Expected Range : 1.3550 - 1.3656
Support : 1.3580 / 1.3571 / 1.3542
Resistance : 1.3636 / 1.3654 / 1.3682
Recommendation : Sell 1.3620 TP 1.2580 SL 1.3650
Buy 1.3580 TP 1.3630 SL 1.3550
USD / JPY
6 July 2007 04:34:06
Closed:122.87
Expected Range : 122.34 - 123.55
Support : 122.50 / 122.28 / 122.09
Resistance : 123.00 / 123.28 / 123.55
Recommendation : Buy 122.75 TP 123.20 SL 122.50
Sell 123.00 TP 122.40 SL 123.55
USD/CHF
6 July 2007 04:32:40
CLOSED:1.2169
Expected Range : 1.2120 - 1.2250
Support : 1.2144/ 1.2109 / 1.2092
Resistance : 1.2200 / 1.2243 / 1.2281
Recommendation : Buy 1.2145 TP 1.2193 TP 1.2100
Sell 1.2200 TP 1.2230 SL 1.2250
FOREX SYGNALS SYSTEM
Friday, July 6, 2007
Forex Fundamental Analysis Reports
Forex Exchange Morning Report
New Zealand Dollar: Up and down for NZD
Another light data day yesterday resulted in stagnant trading for the NZD sitting in a 14pt range between 0.7808 and 0.7822. Overnight the NZD was bought from the outset, initially struggling to get over the 0.7850 barrier, before surging through a number of stop losses in the market and peaking at a fresh 25 year high of 0.7880. Stronger than expected US data helped ease concerns in the market that the Fed may look to cut interest rates by year end. This saw investors quickly turn on the NZD, selling it from 0.7880 down to 0.7818, just under the close of yesterday's local session.
Australian Dollar: Roundabout day for AUD
A quiet day in the local markets yesterday saw the AUD trade between 0.8568 and 0.8584 throughout. During the off-shore session, the AUD was bought by yield hungry investors who pushed it through 0.8600 for the first time in 18 years before it peaked at 0.8610. Like the rest of its major counterparts, stronger than expected US data overnight signalled the turning point for the AUD with investors selling the currency for the remainder of the off-shore session seeing it close at around 0.8560.
Major Currencies: Favourable US data eases interest rate cut concerns.
An unexpected rise in the ISM's non-manufacturing index for June helped push the USD higher overnight, easing concerns that the Federal Reserve may have to cut interest rates later this year. Further supporting the move and sentiment was the additional release of another report which showed a higher gain in private sector jobs, boosting expectations that tonight's payrolls data may also be stronger than expected. As expected the ECB kept interest rates on hold, however governor Trichet gave little away as to clues about potential future hikes, saying that he did not intend to sway the market's expectations about the future path of monetary tightening in the eurozone. The BoE did raise interest rates as expected, which saw the GBP maintain its recent bullish tone, with the BoE commenting that risks in the medium-term continued to lie to the upside and that most measures of pricing pressure remained elevated.
Overnight News
US ISM non manufacturing rises to 60.7 in June. The services and construction headline unexpectedly rose further in June, suggesting that favourable weather and flattering seasonals weren't the only factors lifting this index of business confidence earlier in Q2. However, the detail in the report was less impressive, with orders slowing a little and jobs barely changed. That suggests that the headline might not sustain its recent strength heading into Q3. The detail in the report also showed that construction was the best performing industry, followed by real estate, which is a little surprising given the malaise in the housing sector. The other twelve sectors all reported gains as well.
US labour market data overnight kicked off with the ADP estimate of private payrolls. ADP 'got it right' back in April but under-estimated strength in the official report in March and May. ADP's 150k estimate for June suggest a strong payrolls report tomorrow but it could also be that it is correcting for that weakness in March/May. So we aren't changing our 130k forecast for tonight's headline payrolls gain. Initial jobless claims rose 2k to 318k but there was a very steep jump in continuing claims in the prior week, which could be a signal of rising unemployment. It could also just be volatility.
The European Central Bank left the repo rate unchanged at 4.0%. ECB chief Trichet reiterated that the ECB was 'closely monitoring' the situation, which is a vague signal that rates might eventually go higher.
The Bank of England lifted the repo rate 25bps to 5.75%, the fifth hike since August last year. The statement noted that 'output growth has remained firm and appears to be evolving in line with the Committee's most recent projections'. Those projections in May had inflation back at the 2% target on the 2 year forecast horizon, based on one further rate rise (which was then market pricing), so that would seem to indicate that there is not a strong body of opinion on the committee seeking further immediate tightening.
Canadian data strong. A strong rise in the Ivey PMI to 67.4 in June and a 21.4% surge in May building permits.
Events Today
Date Country Release Last Forecast
6 Jul US Jun Non Farm Payrolls chg 157k 130k
Jun Unemployment Rate 4.5% 4.4%
Fedspeak: Yellen
UK May Industrial Production 0.3% 0.3%
Can Jun Employment Chg 9k 25k
G7 OECD Leading Index 105.3 n/f
9 Jul Aus Jun ANZ Job Ads 10.3% n/f
US May Consumer Credit $bn 2.6 8.0
Ger May industrial production –2.3% 1.0%
Westpac Institutional Bank
New Zealand Dollar: Up and down for NZD
Another light data day yesterday resulted in stagnant trading for the NZD sitting in a 14pt range between 0.7808 and 0.7822. Overnight the NZD was bought from the outset, initially struggling to get over the 0.7850 barrier, before surging through a number of stop losses in the market and peaking at a fresh 25 year high of 0.7880. Stronger than expected US data helped ease concerns in the market that the Fed may look to cut interest rates by year end. This saw investors quickly turn on the NZD, selling it from 0.7880 down to 0.7818, just under the close of yesterday's local session.
Australian Dollar: Roundabout day for AUD
A quiet day in the local markets yesterday saw the AUD trade between 0.8568 and 0.8584 throughout. During the off-shore session, the AUD was bought by yield hungry investors who pushed it through 0.8600 for the first time in 18 years before it peaked at 0.8610. Like the rest of its major counterparts, stronger than expected US data overnight signalled the turning point for the AUD with investors selling the currency for the remainder of the off-shore session seeing it close at around 0.8560.
Major Currencies: Favourable US data eases interest rate cut concerns.
An unexpected rise in the ISM's non-manufacturing index for June helped push the USD higher overnight, easing concerns that the Federal Reserve may have to cut interest rates later this year. Further supporting the move and sentiment was the additional release of another report which showed a higher gain in private sector jobs, boosting expectations that tonight's payrolls data may also be stronger than expected. As expected the ECB kept interest rates on hold, however governor Trichet gave little away as to clues about potential future hikes, saying that he did not intend to sway the market's expectations about the future path of monetary tightening in the eurozone. The BoE did raise interest rates as expected, which saw the GBP maintain its recent bullish tone, with the BoE commenting that risks in the medium-term continued to lie to the upside and that most measures of pricing pressure remained elevated.
Overnight News
US ISM non manufacturing rises to 60.7 in June. The services and construction headline unexpectedly rose further in June, suggesting that favourable weather and flattering seasonals weren't the only factors lifting this index of business confidence earlier in Q2. However, the detail in the report was less impressive, with orders slowing a little and jobs barely changed. That suggests that the headline might not sustain its recent strength heading into Q3. The detail in the report also showed that construction was the best performing industry, followed by real estate, which is a little surprising given the malaise in the housing sector. The other twelve sectors all reported gains as well.
US labour market data overnight kicked off with the ADP estimate of private payrolls. ADP 'got it right' back in April but under-estimated strength in the official report in March and May. ADP's 150k estimate for June suggest a strong payrolls report tomorrow but it could also be that it is correcting for that weakness in March/May. So we aren't changing our 130k forecast for tonight's headline payrolls gain. Initial jobless claims rose 2k to 318k but there was a very steep jump in continuing claims in the prior week, which could be a signal of rising unemployment. It could also just be volatility.
The European Central Bank left the repo rate unchanged at 4.0%. ECB chief Trichet reiterated that the ECB was 'closely monitoring' the situation, which is a vague signal that rates might eventually go higher.
The Bank of England lifted the repo rate 25bps to 5.75%, the fifth hike since August last year. The statement noted that 'output growth has remained firm and appears to be evolving in line with the Committee's most recent projections'. Those projections in May had inflation back at the 2% target on the 2 year forecast horizon, based on one further rate rise (which was then market pricing), so that would seem to indicate that there is not a strong body of opinion on the committee seeking further immediate tightening.
Canadian data strong. A strong rise in the Ivey PMI to 67.4 in June and a 21.4% surge in May building permits.
Events Today
Date Country Release Last Forecast
6 Jul US Jun Non Farm Payrolls chg 157k 130k
Jun Unemployment Rate 4.5% 4.4%
Fedspeak: Yellen
UK May Industrial Production 0.3% 0.3%
Can Jun Employment Chg 9k 25k
G7 OECD Leading Index 105.3 n/f
9 Jul Aus Jun ANZ Job Ads 10.3% n/f
US May Consumer Credit $bn 2.6 8.0
Ger May industrial production –2.3% 1.0%
Westpac Institutional Bank
Thursday, July 5, 2007
This Signal design just for currency GBP/US, EU,CHF
Great British Pound(GBP)
The British pound moved towards the upside to hit the key resistance level at 2.0215, then dropped down again to the opening level, this move reflected by the low momentum since the pound got in an overbought area. Today the pound might drop down slightly to cover some of the bullish move.
The trading range for today might be between the key resistance level at 2.0250 and the key support level at 2.0100. The general trend is up as far as 1.9475 and 1.9360 remains intact targets now at 2.0100 and 2.0240
Recommendation : We expect selling sterling below 2.0185 with a target at 2.0100, stop loss above 2.0250
(EURO)
The European currency was a bit neutral yesterday since it lacked momentum by which the euro consolidated at top of the bullish wave that the euro formed last week. Meantime the euro still finds tendency towards the upside.
The trading range for today might be between the key resistance level at 1.3660 and the key support level at 1.3580. The general trend is up as far as 1.3235 remains intact targets now at 1.3700 and 1.3840
SWISS Frank(CHF)
Since the dollar against the SWISS Frank moved towards the upside slightly to progress the projection move that it preferred to make from the bottom at 1.2100 support level. The upcoming move might be towards the upside too.
The trading range for today will be between the key resistance at 1.2200 and the key support at 1.2130. The general trend is down as far as 1.2540 remains intact, targets at 1.1875 and 1.1665.
Recommendation : We expect buying USD/CHF above 1.2150 with a target at 1.2200, stop loss below 1.2100.
The British pound moved towards the upside to hit the key resistance level at 2.0215, then dropped down again to the opening level, this move reflected by the low momentum since the pound got in an overbought area. Today the pound might drop down slightly to cover some of the bullish move.
The trading range for today might be between the key resistance level at 2.0250 and the key support level at 2.0100. The general trend is up as far as 1.9475 and 1.9360 remains intact targets now at 2.0100 and 2.0240
Recommendation : We expect selling sterling below 2.0185 with a target at 2.0100, stop loss above 2.0250
(EURO)
The European currency was a bit neutral yesterday since it lacked momentum by which the euro consolidated at top of the bullish wave that the euro formed last week. Meantime the euro still finds tendency towards the upside.
The trading range for today might be between the key resistance level at 1.3660 and the key support level at 1.3580. The general trend is up as far as 1.3235 remains intact targets now at 1.3700 and 1.3840
SWISS Frank(CHF)
Since the dollar against the SWISS Frank moved towards the upside slightly to progress the projection move that it preferred to make from the bottom at 1.2100 support level. The upcoming move might be towards the upside too.
The trading range for today will be between the key resistance at 1.2200 and the key support at 1.2130. The general trend is down as far as 1.2540 remains intact, targets at 1.1875 and 1.1665.
Recommendation : We expect buying USD/CHF above 1.2150 with a target at 1.2200, stop loss below 1.2100.
Forex Daily Technical Report
Euro Resumes Rally. BoE, ECB, ADP and ISM Awaited
While Sterling traders are still holding their breath ahead of BoE rate decision, Euro traders led the way by resuming recent rally against dollar in early European session ahead of ECB announcement and press conference. EUR/JPY also broke to new record high of 167.27. Strength is also apparent in EUR/GBP as the cross is now pressing last week's high of 0.6768. Much volatility is anticipated today as in addition to the mentioned central bank announcements, ADP employment report and ISM non-manufacturing index will be featured.
The mostly watched event of the day will be BoE rate decision. Sterling has been strong, supported by expectation that BoE will hike 25bps to 5.75% today. The expectation was triggered by minutes of last month's tight 5-4 vote to keep rates unchanged, with Governor Mervyn King voted for a hike indeed, along with John Gieve, Tim Besley, and Andrew Sentance. Later in the Testimony to Treasury Committee, King continued to emphasize the upside risks to inflation. Besley said that by moving immediately, the bank would be better able to cope with the inflation created by the expansion of demand. John Gieve also reiterated rates were not rising fast enough to contain credit growth. Looking at the economic picture, house prices continued to growth strongly with credit demand only showed little sign of easing. That will provide the hawks with bullets to convince for an immediate hike. However, headline inflation has softened a lot from March's peak of 3.1% to 2.5% while factory gate inflation is at a reasonable level. That will continue to provide the support for the doves to continue their wait-and-see for more data stance. The decision today will be a tight a difficult one and could flip either way with a tight margin. Technically speaking, GBP/USD is now met an important upside target of 2.0207 and turned sideway since then. Further upside is still in favor as long as 2.0130 minor support holds. However, a drop below would likely trigger profit taking and a deeper pull back before building the base for another rally.
ECB is widely expected to keep rates unchanged at 4.0% today. Focus will be on Trichet's press conference again. Note that Trichet still described monetary policy as "still on the accommodative side" last month which suggested that ECB is still having a tightening bias. The coming meeting in August will be carried out over the phone instead of meeting in person in Frankfurt. And, in its entire history, the ECB has never agreed on rate changes at a summer phone conference. So, there shouldn't be any signal for rate hike, and no mentioning of the magic word "vigilance" in today's press conference. Instead, markets are expecting a Sep hike. Today's focus will actually be on hints of monetary policy movements beyond September.
Out of US, two market moving economic data will be featured. The ADP employment report, which is usually used as a preview to Non-Farm Payroll, is expected to show improvement in job growth from 87k to 100k in Jun. Surprise in this data will likely change the expectation on tomorrow's NFP which is expected to show 129k job growth in the same month. Meanwhile, ISM non-manufacturing index is expected to drop slightly from 59.7 to 58.0 in Jun. Price Paid index is expected to moderate from 66.4 to 64.0, which will be consistent with the ISM manufacturing price index which showed easing in pipeline inflation pressure.
USD/CAD spiked to a new 30 year low last Friday but turned into choppy consolidation after disappointing GDP data. Technically speaking, the consolidative nature of this week's price moments suggest that 1.0468 is not an important bottom yet and further downside is still expected to follow. Markets will be closely watching today's Ivey PMI, which is expected to rise from 62.7 to 63.0 in Jun and that could be the trigger for resumption of fall in USD/CAD.
EUR/USD
Daily Pivots: (S1) 1.3601; (P) 1.3616; (R1) 1.3626
EUR/USD's recent rally resumes in early European session by breaking above 1.3637 and reaches as high as 1.3645 so far. At this point, intraday bias remains on the upside as long as EUR?USD stays above 1.3603 minor support. Further rise is expected to be seen to retest 1.3681 high. Touching of 1.3603 will suggest that a short term top is formed, possibly with bearish divergence conditions in 4 hours MACD and RSI. In such case, deeper pull back could be seen towards 4 hours 55 EMA (now at 1.3528) before staging another rally.
In the bigger picture, break of mentioned 1.3553 resistance confirms that fall from 1.3681 is corrective in nature, completed with three waves down to 1.3262, just meeting 100% projection of 1.3681 to 1.3391 from 1.3553 at 1.3263. In other words, with whole up trend from 1.1639 is still in progress, also considering that medium term rising channel remains intact. Further rally is expected to be seen towards 61.8% projection of 1.2865 to 1.1.3681 from 1.3262 at 1.3766.
However, we maintain that risk of medium term reversal remains high. Upside momentum continues to diminish with bearish divergence condition in daily MACD and RSI. As discussed before, whole medium term up trend from 1.1639 is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483, which is treated as resumption of up trend from 1.1639. Such up trend is now is expected to terminate between 61.8% projection of 1.2865 to 1.1.3681 from 1.3262 at 1.3766 and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822.
But still, even though a break below 1.3421 support will turn short term outlook bearish again, sustained trading below medium term rising channel support (now at 1.3129) is needed to confirm whole up trend from 1.1639 has completed. Otherwise, another high could still be seen before EUR/USD finally make an important top.
GBP/USD
Daily Pivots: (S1) 2.0140; (P) 2.0171; (R1) 2.0193
Cable continues to consolidate below 2.0206 high today. But after all downside is still contained by 2.0130 minor support. Consolidation would still likely be brief as long as this minor support holds. And sustained break of 2.0206 high will further confirm underlying medium term strength in cable and bring another powerful rally.
However, note that an important medium term target of 61.8% projection of 1.9183 to 2.0132 from 1.9621 at 2.0207 is met. Break of 2.0130 support, with 4 hours MACD staying below signal line, will suggest that at least a short term top is formed and bring deeper pull back to 4 hours 55 EMA (now at 2.0065) or lower.
In the bigger picture, the completion of the fall from 2.0132 in a corrective 3 wave manner and the holding of the medium term rising channel indicates that rise from 1.8090 is still in progress, so is the whole up trend from 1.7047. There are various interpretation of the rally from 1.7047 but none is really convincing yet. Also, medium term upside momentum remains unconvincing with bearish divergence conditions staying in weekly MACD and RSI as well as daily MACD and RSI.
Focus should now be on 2.0207 projection target. Sustained break of this level will add much credence to the case that whole up trend from 1.7047 is resumption of multi-year up trend from 1.3680. In such case, further rally should then be seen to 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 first. On the other hand, failure of taking out this projection target and sustained trading below medium term rising channel (now at 1.9744) will argue that whole rise from 1.7047 has completed and put 1.9183 support into focus.
USD/CHF
Daily Pivots: (S1) 1.2148; (P) 1.2158; (R1) 1.2172
USD/CHF's recovery from 1.2089 is limited at 1.2176, below 38.2% retracement of 1.2339 to 1.2089 at 1.2185 and falls sharply in early European session today. The strength of the current fall suggest that consolidation could have completed. 1.2089 low is now is focus and break will confirm that recent sharp decline from 1.2467 has resumed for 1.1993 low. However, above 1.2176 again will indicate consolidation is still in progress for 1.2185 fibo resistance or above. But still, upside should be limited below 1.2258 support turned resistance and bring another fall.
In the bigger picture, break of 1.2146 support confirmed that rise from 1.1993 has completed with three waves up to 1.2467. Such development revived the case that price actions from 1.1919 is merely a medium term triangle consolidation and could have already completed at 1.2467. Sustained break of 1.1993 low will confirm such case and indicate that whole medium term down trend form 1.3283 has finally resumed for next downside target of 1.1878 low first.
However, note that USD/CHF is still kept inside established range of 1.1878 and 1.2571. Above 1.2239 resistance will indicate that current fall from 1.2467 has completed and turn short term outlook mixed again as consolidation continue to extend inside mentioned range.
USD/JPY
Daily Pivots: (S1) 122.37; (P) 122.54; (R1) 122.87
USD/JPY's corrective fall from 124.13 was contained at 1.2208, supported by mentioned 122.01/05 cluster support (61.8% retracement of 120.76 to 124.13 at 122.05 and 23.6% retracement of 115.13 to 124.13 at 122.01). Subsequent recovery has pushed USD/JPY briefly above 122.72 minor resistance, with both 4 hours MACD and RSI breaking their down trend. A short term bottom is likely formed at 122.08 already. Despite the pull back in early European session, further rally is in favor towards 123.55 resistance. And break will confirm that correction from 124.13 has completed and bring retest of this high.
In the bigger picture rise from 115.13 is still in progress with 122.01/05 cluster support (61.8% retracement of 120.76 to 124.13 at 122.05 and 23.6% retracement of 115.13 to 124.13 at 122.01) remains intact. Such rally is treated as resumption of the rise from 108.99, which in turn, is the resumption of whole up trend from 101.66 after interim correction has completed with three waves down from 121.38 to 108.99. Further rally is expected to be seen to next medium term target of resistance zone of 100% projection of 101.65 to 121.38 from 108.99 at 128.72 and 100% projection of 108.99 to 122.17 from 115.13 at 128.31.
However, break of 122.01/05 cluster support will indicate rise from 115.13 has completed and bring deeper correction to next cluster support of 120.76 (38.2% retracement of 115.13 to 124.13 at 120.69). But still, rise from 108.99 is still in force as long as pull back is contained well above 115.13 low.
Also, note that USD/JPY is staying comfortably above the long term falling trend line (147.68 to 135.20). Multi-year consolidation pattern that started from 147.60 should have already completed. But, whether current rise from 101.65 represents the resumption of whole up trend from 79.75 remains to be seen. Note that above mentioned medium term projection target of 100% projection of 108.99 to 122.17 from 115.13 at 128.31 and 100% projection of 101.65 to 121.38 from 108.99 at 128.72 are in proximity to 78.6% of 135.20 to 101.65 at 127.95. This cluster resistance zone will be important to determine the long term trend.
EUR/JPY
Daily Pivots: (S1) 166.55; (P) 166.82; (R1) 167.29
EUR/JPY's rally resumes today by breaking to new record high of 167.27 so far. As discussed before, rise from 164.23 is treated as resumption of rally from 161.49. At this point, intraday bias remains on the upside as long as 166.19 support holds and current rally is expected to extend to 61.8% projection of 161.49 to 166.94 from 164.23 at 167.60 first.
However, below 166.19 will argue that the rise from 164.23 has completed and is indeed part of a lengthier consolidation that started at 166.94. In such case, another fall to retest 164.23 low could be seen before finishing the consolidation. But downside is expected to be contained above 61.8% retracement of 161.49 to 166.94 at 163.57 and bring another rally.
In the bigger picture, whole medium term rally from 130.60 is still in progress and the interpretation remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure. With 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 taken out decisively, next upside target will be 100% projection of 137.16 to 159.63 from 150.75 at 173.22.
On the downside, it will take a break of 161.49 support to indicate rise from 150.75 has completed. Otherwise, further rally is still in favor even in case of pull back
While Sterling traders are still holding their breath ahead of BoE rate decision, Euro traders led the way by resuming recent rally against dollar in early European session ahead of ECB announcement and press conference. EUR/JPY also broke to new record high of 167.27. Strength is also apparent in EUR/GBP as the cross is now pressing last week's high of 0.6768. Much volatility is anticipated today as in addition to the mentioned central bank announcements, ADP employment report and ISM non-manufacturing index will be featured.
The mostly watched event of the day will be BoE rate decision. Sterling has been strong, supported by expectation that BoE will hike 25bps to 5.75% today. The expectation was triggered by minutes of last month's tight 5-4 vote to keep rates unchanged, with Governor Mervyn King voted for a hike indeed, along with John Gieve, Tim Besley, and Andrew Sentance. Later in the Testimony to Treasury Committee, King continued to emphasize the upside risks to inflation. Besley said that by moving immediately, the bank would be better able to cope with the inflation created by the expansion of demand. John Gieve also reiterated rates were not rising fast enough to contain credit growth. Looking at the economic picture, house prices continued to growth strongly with credit demand only showed little sign of easing. That will provide the hawks with bullets to convince for an immediate hike. However, headline inflation has softened a lot from March's peak of 3.1% to 2.5% while factory gate inflation is at a reasonable level. That will continue to provide the support for the doves to continue their wait-and-see for more data stance. The decision today will be a tight a difficult one and could flip either way with a tight margin. Technically speaking, GBP/USD is now met an important upside target of 2.0207 and turned sideway since then. Further upside is still in favor as long as 2.0130 minor support holds. However, a drop below would likely trigger profit taking and a deeper pull back before building the base for another rally.
ECB is widely expected to keep rates unchanged at 4.0% today. Focus will be on Trichet's press conference again. Note that Trichet still described monetary policy as "still on the accommodative side" last month which suggested that ECB is still having a tightening bias. The coming meeting in August will be carried out over the phone instead of meeting in person in Frankfurt. And, in its entire history, the ECB has never agreed on rate changes at a summer phone conference. So, there shouldn't be any signal for rate hike, and no mentioning of the magic word "vigilance" in today's press conference. Instead, markets are expecting a Sep hike. Today's focus will actually be on hints of monetary policy movements beyond September.
Out of US, two market moving economic data will be featured. The ADP employment report, which is usually used as a preview to Non-Farm Payroll, is expected to show improvement in job growth from 87k to 100k in Jun. Surprise in this data will likely change the expectation on tomorrow's NFP which is expected to show 129k job growth in the same month. Meanwhile, ISM non-manufacturing index is expected to drop slightly from 59.7 to 58.0 in Jun. Price Paid index is expected to moderate from 66.4 to 64.0, which will be consistent with the ISM manufacturing price index which showed easing in pipeline inflation pressure.
USD/CAD spiked to a new 30 year low last Friday but turned into choppy consolidation after disappointing GDP data. Technically speaking, the consolidative nature of this week's price moments suggest that 1.0468 is not an important bottom yet and further downside is still expected to follow. Markets will be closely watching today's Ivey PMI, which is expected to rise from 62.7 to 63.0 in Jun and that could be the trigger for resumption of fall in USD/CAD.
EUR/USD
Daily Pivots: (S1) 1.3601; (P) 1.3616; (R1) 1.3626
EUR/USD's recent rally resumes in early European session by breaking above 1.3637 and reaches as high as 1.3645 so far. At this point, intraday bias remains on the upside as long as EUR?USD stays above 1.3603 minor support. Further rise is expected to be seen to retest 1.3681 high. Touching of 1.3603 will suggest that a short term top is formed, possibly with bearish divergence conditions in 4 hours MACD and RSI. In such case, deeper pull back could be seen towards 4 hours 55 EMA (now at 1.3528) before staging another rally.
In the bigger picture, break of mentioned 1.3553 resistance confirms that fall from 1.3681 is corrective in nature, completed with three waves down to 1.3262, just meeting 100% projection of 1.3681 to 1.3391 from 1.3553 at 1.3263. In other words, with whole up trend from 1.1639 is still in progress, also considering that medium term rising channel remains intact. Further rally is expected to be seen towards 61.8% projection of 1.2865 to 1.1.3681 from 1.3262 at 1.3766.
However, we maintain that risk of medium term reversal remains high. Upside momentum continues to diminish with bearish divergence condition in daily MACD and RSI. As discussed before, whole medium term up trend from 1.1639 is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483, which is treated as resumption of up trend from 1.1639. Such up trend is now is expected to terminate between 61.8% projection of 1.2865 to 1.1.3681 from 1.3262 at 1.3766 and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822.
But still, even though a break below 1.3421 support will turn short term outlook bearish again, sustained trading below medium term rising channel support (now at 1.3129) is needed to confirm whole up trend from 1.1639 has completed. Otherwise, another high could still be seen before EUR/USD finally make an important top.
GBP/USD
Daily Pivots: (S1) 2.0140; (P) 2.0171; (R1) 2.0193
Cable continues to consolidate below 2.0206 high today. But after all downside is still contained by 2.0130 minor support. Consolidation would still likely be brief as long as this minor support holds. And sustained break of 2.0206 high will further confirm underlying medium term strength in cable and bring another powerful rally.
However, note that an important medium term target of 61.8% projection of 1.9183 to 2.0132 from 1.9621 at 2.0207 is met. Break of 2.0130 support, with 4 hours MACD staying below signal line, will suggest that at least a short term top is formed and bring deeper pull back to 4 hours 55 EMA (now at 2.0065) or lower.
In the bigger picture, the completion of the fall from 2.0132 in a corrective 3 wave manner and the holding of the medium term rising channel indicates that rise from 1.8090 is still in progress, so is the whole up trend from 1.7047. There are various interpretation of the rally from 1.7047 but none is really convincing yet. Also, medium term upside momentum remains unconvincing with bearish divergence conditions staying in weekly MACD and RSI as well as daily MACD and RSI.
Focus should now be on 2.0207 projection target. Sustained break of this level will add much credence to the case that whole up trend from 1.7047 is resumption of multi-year up trend from 1.3680. In such case, further rally should then be seen to 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 first. On the other hand, failure of taking out this projection target and sustained trading below medium term rising channel (now at 1.9744) will argue that whole rise from 1.7047 has completed and put 1.9183 support into focus.
USD/CHF
Daily Pivots: (S1) 1.2148; (P) 1.2158; (R1) 1.2172
USD/CHF's recovery from 1.2089 is limited at 1.2176, below 38.2% retracement of 1.2339 to 1.2089 at 1.2185 and falls sharply in early European session today. The strength of the current fall suggest that consolidation could have completed. 1.2089 low is now is focus and break will confirm that recent sharp decline from 1.2467 has resumed for 1.1993 low. However, above 1.2176 again will indicate consolidation is still in progress for 1.2185 fibo resistance or above. But still, upside should be limited below 1.2258 support turned resistance and bring another fall.
In the bigger picture, break of 1.2146 support confirmed that rise from 1.1993 has completed with three waves up to 1.2467. Such development revived the case that price actions from 1.1919 is merely a medium term triangle consolidation and could have already completed at 1.2467. Sustained break of 1.1993 low will confirm such case and indicate that whole medium term down trend form 1.3283 has finally resumed for next downside target of 1.1878 low first.
However, note that USD/CHF is still kept inside established range of 1.1878 and 1.2571. Above 1.2239 resistance will indicate that current fall from 1.2467 has completed and turn short term outlook mixed again as consolidation continue to extend inside mentioned range.
USD/JPY
Daily Pivots: (S1) 122.37; (P) 122.54; (R1) 122.87
USD/JPY's corrective fall from 124.13 was contained at 1.2208, supported by mentioned 122.01/05 cluster support (61.8% retracement of 120.76 to 124.13 at 122.05 and 23.6% retracement of 115.13 to 124.13 at 122.01). Subsequent recovery has pushed USD/JPY briefly above 122.72 minor resistance, with both 4 hours MACD and RSI breaking their down trend. A short term bottom is likely formed at 122.08 already. Despite the pull back in early European session, further rally is in favor towards 123.55 resistance. And break will confirm that correction from 124.13 has completed and bring retest of this high.
In the bigger picture rise from 115.13 is still in progress with 122.01/05 cluster support (61.8% retracement of 120.76 to 124.13 at 122.05 and 23.6% retracement of 115.13 to 124.13 at 122.01) remains intact. Such rally is treated as resumption of the rise from 108.99, which in turn, is the resumption of whole up trend from 101.66 after interim correction has completed with three waves down from 121.38 to 108.99. Further rally is expected to be seen to next medium term target of resistance zone of 100% projection of 101.65 to 121.38 from 108.99 at 128.72 and 100% projection of 108.99 to 122.17 from 115.13 at 128.31.
However, break of 122.01/05 cluster support will indicate rise from 115.13 has completed and bring deeper correction to next cluster support of 120.76 (38.2% retracement of 115.13 to 124.13 at 120.69). But still, rise from 108.99 is still in force as long as pull back is contained well above 115.13 low.
Also, note that USD/JPY is staying comfortably above the long term falling trend line (147.68 to 135.20). Multi-year consolidation pattern that started from 147.60 should have already completed. But, whether current rise from 101.65 represents the resumption of whole up trend from 79.75 remains to be seen. Note that above mentioned medium term projection target of 100% projection of 108.99 to 122.17 from 115.13 at 128.31 and 100% projection of 101.65 to 121.38 from 108.99 at 128.72 are in proximity to 78.6% of 135.20 to 101.65 at 127.95. This cluster resistance zone will be important to determine the long term trend.
EUR/JPY
Daily Pivots: (S1) 166.55; (P) 166.82; (R1) 167.29
EUR/JPY's rally resumes today by breaking to new record high of 167.27 so far. As discussed before, rise from 164.23 is treated as resumption of rally from 161.49. At this point, intraday bias remains on the upside as long as 166.19 support holds and current rally is expected to extend to 61.8% projection of 161.49 to 166.94 from 164.23 at 167.60 first.
However, below 166.19 will argue that the rise from 164.23 has completed and is indeed part of a lengthier consolidation that started at 166.94. In such case, another fall to retest 164.23 low could be seen before finishing the consolidation. But downside is expected to be contained above 61.8% retracement of 161.49 to 166.94 at 163.57 and bring another rally.
In the bigger picture, whole medium term rally from 130.60 is still in progress and the interpretation remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure. With 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 taken out decisively, next upside target will be 100% projection of 137.16 to 159.63 from 150.75 at 173.22.
On the downside, it will take a break of 161.49 support to indicate rise from 150.75 has completed. Otherwise, further rally is still in favor even in case of pull back
OUR RECOMMENDATION
GBP / USD
5 July 2007 13:44:11
Price ; 2.0159
Expected Range : 2.0206 - 2.0087
Support : 2.0138 / 2.0115 / 2.0081
Resistance : 2.0195 / 2.0229 / 2.0252
Recommendation : sell 2.0130, Sl 2.0180, TP 2.0080
buy 2.0210, SL 2.0160, TP 2.0260
EUR/USD
5 July 2007 13:57:51
Price ; 1.3614
Expected Range : 1.3680 - 1.3535
Support : 1.3601 / 1.3590 / 1.3575
Resistance : 1.3627 / 1.3642 / 1.3653
Recommendation : sell 1.3600, SL 1.3650, TP 1.3550
buy 1.3535-40, SL 1.3485, TP 1.3585
USD / JPY
5 July 2007 14:20:48
Price ; 122.78
Expected Range : 122.65 / 122.36 / 122.03
Support : 122.65 / 122.36 / 122.03
Resistance : 122.86 / 123.03 / 123.36
Recommendation : buy 122.90, SL 122.40, TP 123.40
sell 122.60, SL 123.10, TP 122.10
USD/CHF
5 July 2007 14:43:54
Price ; 1.2156
Expected Range : 1.2259 - 1.2091
Support : 1.2149 / 1.2135 / 1.2126
Resistance : 1.2172 / 1.2181 / 1.2195
Recommendation : sell 1.2140, SL 1.2190, TP 1.2090
buy 1.2170, SL 1.2120, TP 1.2220
5 July 2007 13:44:11
Price ; 2.0159
Expected Range : 2.0206 - 2.0087
Support : 2.0138 / 2.0115 / 2.0081
Resistance : 2.0195 / 2.0229 / 2.0252
Recommendation : sell 2.0130, Sl 2.0180, TP 2.0080
buy 2.0210, SL 2.0160, TP 2.0260
EUR/USD
5 July 2007 13:57:51
Price ; 1.3614
Expected Range : 1.3680 - 1.3535
Support : 1.3601 / 1.3590 / 1.3575
Resistance : 1.3627 / 1.3642 / 1.3653
Recommendation : sell 1.3600, SL 1.3650, TP 1.3550
buy 1.3535-40, SL 1.3485, TP 1.3585
USD / JPY
5 July 2007 14:20:48
Price ; 122.78
Expected Range : 122.65 / 122.36 / 122.03
Support : 122.65 / 122.36 / 122.03
Resistance : 122.86 / 123.03 / 123.36
Recommendation : buy 122.90, SL 122.40, TP 123.40
sell 122.60, SL 123.10, TP 122.10
USD/CHF
5 July 2007 14:43:54
Price ; 1.2156
Expected Range : 1.2259 - 1.2091
Support : 1.2149 / 1.2135 / 1.2126
Resistance : 1.2172 / 1.2181 / 1.2195
Recommendation : sell 1.2140, SL 1.2190, TP 1.2090
buy 1.2170, SL 1.2120, TP 1.2220
OUR RECOMMENDATION
NIKKEI
5 July 2007 07:15:08
Expected Range 18150 - 18285
Support 18150 / 18080 / 18000
Resistance 18275 / 18320 / 18350
Recommendation Sell 18285
TP 18185, SL 18335
KOSPI
5 July 2007 07:16:30
Expected Range 233.50 - 236.00
Support 233.50 / 233.00 / 232.50
Resistance 236.00 / 236.50 / 237.00
Recommendation Sell 236.00
TP 235.00 / SL 236.50
GBP / USD
5 July 2007 00:21:17
Closed:2.0154
Expected Range 2.0200 - 2.0130
Support 2.0141 / 2.0102 / 2.0084
Resistance 2.0191 / 2.0203 / 2.0240
Recommendation Buy 2.0130 TP 2.0200 SL 2.0086
Sell 2.0193 SL 2.0120 SL 2.0205
EUR/USD
5 July 2007 00:13:28
Closed;1.3623
Expected Range 1.3580 - 1.3693
Support 1.3604/ 1.3582 / 1.3543
Resistance 1.3640 / 1.3686 / 1.3703
Recommendation Buy 1.3610 TP 1.3686 SL 1.3580
Sell 1.3650 TP 1.3580 SL 1.3680
USD / JPY
5 July 2007 00:16:55
Closed:122.61
Expected Range 121.70 - 122.92
Support 122.34 / 122.00 / 121.66
Resistance 122.92 / 123.18 / 123.64
Recommendation Sell 122.80 TP 122.05 SL 123.00
USD/CHF
5 July 2007 00:23:30
Closed:1.2163
Expected Range 1.2080 - 1.2180
Support 1.2140 / 1.2105 / 1.2084
Resistance 1.2184 / 1.2203 / 1.2230
Recommendation Sell 1.2185 TP 1.2110 SL 1.2200
5 July 2007 07:15:08
Expected Range 18150 - 18285
Support 18150 / 18080 / 18000
Resistance 18275 / 18320 / 18350
Recommendation Sell 18285
TP 18185, SL 18335
KOSPI
5 July 2007 07:16:30
Expected Range 233.50 - 236.00
Support 233.50 / 233.00 / 232.50
Resistance 236.00 / 236.50 / 237.00
Recommendation Sell 236.00
TP 235.00 / SL 236.50
GBP / USD
5 July 2007 00:21:17
Closed:2.0154
Expected Range 2.0200 - 2.0130
Support 2.0141 / 2.0102 / 2.0084
Resistance 2.0191 / 2.0203 / 2.0240
Recommendation Buy 2.0130 TP 2.0200 SL 2.0086
Sell 2.0193 SL 2.0120 SL 2.0205
EUR/USD
5 July 2007 00:13:28
Closed;1.3623
Expected Range 1.3580 - 1.3693
Support 1.3604/ 1.3582 / 1.3543
Resistance 1.3640 / 1.3686 / 1.3703
Recommendation Buy 1.3610 TP 1.3686 SL 1.3580
Sell 1.3650 TP 1.3580 SL 1.3680
USD / JPY
5 July 2007 00:16:55
Closed:122.61
Expected Range 121.70 - 122.92
Support 122.34 / 122.00 / 121.66
Resistance 122.92 / 123.18 / 123.64
Recommendation Sell 122.80 TP 122.05 SL 123.00
USD/CHF
5 July 2007 00:23:30
Closed:1.2163
Expected Range 1.2080 - 1.2180
Support 1.2140 / 1.2105 / 1.2084
Resistance 1.2184 / 1.2203 / 1.2230
Recommendation Sell 1.2185 TP 1.2110 SL 1.2200
Forex Fundamental Analysis Reports
Forex Exchange Morning Report
New Zealand Dollar: NZD takes a break
The NZD traded in a tight 20pt range during our local session with no data to drive it and the market watching anxiously for signs of any RBNZ intervention. With the US celebrating their Independence Day holiday overnight the trend continued, a lack of liquidity in the market seeing the NZD trade in a narrow range of between 0.7809 and 0.7830.
Australian Dollar: AUD gets slight lift from data
The RBA left interest rates unchanged yesterday, a move widely expected by the market which as a result offered little reaction to the news. Australia's trade deficit in May managed to provide a surprise for the market, narrowing in May to AUD $807 million, beating market expectations of $1.2 billion. The AUD rallied following the release, rising from 0.8551 to print an intraday high of 0.8578. The AUD couldn't continue this momentum overnight as a lack of market liquidity saw it range bound between 0.8569 and 0.8586 throughout the off-shore session.
Major Currencies: All eyes on Central Banks tonight
The US Independence Day holiday ensured the USD remained confined to narrow ranges yesterday and overnight, with the only currency movement of note being Sterling; this saw the GBP rally to its third consecutive daily 26-year high in anticipation of an interest rate hike by the Bank of England tonight. The euro also consolidated within a tight range ahead of an interest rate announcement tonight, however rates are expected to remain unchanged.
Overnight News
No US data to report. Independence Day holiday.
Europe services PMI unrevised. The services PMI was unrevised from the flash estimate nearly two weeks ago, but the composite was revised up by 0.1 pt to 57.8 due to Monday's modest upward revision to the flash estimate of the manufacturing PMI. The stronger PMI survey message for June contrasts with some of the other surveys (such as Germany's IFO and ZEW) which were less strong last month.
Euroland retail sales were revised from +0.2% to a modest fall in April, and fell further in May. This points to a sluggish household spending recovery in Q2. Recall that Q1 household spending posted its first decline for more than five years, because of the drag from the German VAT hike in January.
UK services PMI rose to 57.7 in June, arresting its recent downtrend by rising to its highest since January this year. The new business index was particularly strong, and services firms' pricing power seems to have improved. With the construction PMI also much stronger last month, there seems to have been something of a UK economic growth spurt late in Q2 outside of the factory sector (whose PMI was down a little). Bank of England officials will take note of this at their policy meeting today and tonight, although the remainder of today's data was a little less impressive.
Other UK data. The HBoS house price index showed a more modest 0.4% gain in the month than the Nationwide index which jumped 1.1% in June, although the annual growth rates for both are similar, at 11.1% (N'wide) and 10.7% (HBoS). Still on the housing market, the BoE revised down its estimate of housing equity withdrawal in Q4 last year from £14.6bn to £13.3bn and in Q1 it eased to £13.2bn. The other surveys today showed lower consumer confidence and still subdued price inflation on the high street.
Events Today
Country Release Last Forecast
NZ Jun ANZ Commodity Prices NZD 2.7% n/f
US Jun Corporate Layoff Announcements 71k n/f
Jun ADP Private Payrolls chg 97k 103k
Initial Jobless Claims w/e 30/6 313k 310k
Jun ISM Non-Manufacturing 59.7 58.0
Eur ECB Repo Rate Decision 4.0% 4.0%
Ger May Factory Orders –1.2% 1.0%
UK BoE Base Rate Decision 5.50% 5.50%
Can May Building Permits –8.4% 5.6%
Jun Ivey PMI 62.7 63.0
Westpac Institutional Bank
New Zealand Dollar: NZD takes a break
The NZD traded in a tight 20pt range during our local session with no data to drive it and the market watching anxiously for signs of any RBNZ intervention. With the US celebrating their Independence Day holiday overnight the trend continued, a lack of liquidity in the market seeing the NZD trade in a narrow range of between 0.7809 and 0.7830.
Australian Dollar: AUD gets slight lift from data
The RBA left interest rates unchanged yesterday, a move widely expected by the market which as a result offered little reaction to the news. Australia's trade deficit in May managed to provide a surprise for the market, narrowing in May to AUD $807 million, beating market expectations of $1.2 billion. The AUD rallied following the release, rising from 0.8551 to print an intraday high of 0.8578. The AUD couldn't continue this momentum overnight as a lack of market liquidity saw it range bound between 0.8569 and 0.8586 throughout the off-shore session.
Major Currencies: All eyes on Central Banks tonight
The US Independence Day holiday ensured the USD remained confined to narrow ranges yesterday and overnight, with the only currency movement of note being Sterling; this saw the GBP rally to its third consecutive daily 26-year high in anticipation of an interest rate hike by the Bank of England tonight. The euro also consolidated within a tight range ahead of an interest rate announcement tonight, however rates are expected to remain unchanged.
Overnight News
No US data to report. Independence Day holiday.
Europe services PMI unrevised. The services PMI was unrevised from the flash estimate nearly two weeks ago, but the composite was revised up by 0.1 pt to 57.8 due to Monday's modest upward revision to the flash estimate of the manufacturing PMI. The stronger PMI survey message for June contrasts with some of the other surveys (such as Germany's IFO and ZEW) which were less strong last month.
Euroland retail sales were revised from +0.2% to a modest fall in April, and fell further in May. This points to a sluggish household spending recovery in Q2. Recall that Q1 household spending posted its first decline for more than five years, because of the drag from the German VAT hike in January.
UK services PMI rose to 57.7 in June, arresting its recent downtrend by rising to its highest since January this year. The new business index was particularly strong, and services firms' pricing power seems to have improved. With the construction PMI also much stronger last month, there seems to have been something of a UK economic growth spurt late in Q2 outside of the factory sector (whose PMI was down a little). Bank of England officials will take note of this at their policy meeting today and tonight, although the remainder of today's data was a little less impressive.
Other UK data. The HBoS house price index showed a more modest 0.4% gain in the month than the Nationwide index which jumped 1.1% in June, although the annual growth rates for both are similar, at 11.1% (N'wide) and 10.7% (HBoS). Still on the housing market, the BoE revised down its estimate of housing equity withdrawal in Q4 last year from £14.6bn to £13.3bn and in Q1 it eased to £13.2bn. The other surveys today showed lower consumer confidence and still subdued price inflation on the high street.
Events Today
Country Release Last Forecast
NZ Jun ANZ Commodity Prices NZD 2.7% n/f
US Jun Corporate Layoff Announcements 71k n/f
Jun ADP Private Payrolls chg 97k 103k
Initial Jobless Claims w/e 30/6 313k 310k
Jun ISM Non-Manufacturing 59.7 58.0
Eur ECB Repo Rate Decision 4.0% 4.0%
Ger May Factory Orders –1.2% 1.0%
UK BoE Base Rate Decision 5.50% 5.50%
Can May Building Permits –8.4% 5.6%
Jun Ivey PMI 62.7 63.0
Westpac Institutional Bank
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