The USD continued to move within a consolidated mode on Monday as a general lack of direction from the equities brought about a cautious market place. After nearly two weeks of gains on Wall Street, investors may be reaching a point where they are asking themselves if the market has gotten too far out in front of the economic data. New Home Sales did provide a better number yesterday of 384K compared to the estimate of 353K. However this positive number is still far below anything that will spur on a belief that the housing market has turned around quite yet. Today the CB Consumer Confidence survey will be published and it carries an expectation of 49.1. The S&P/CS Composite-20 HPI is on cue too and it is forecasted to show a modest improvement to minus -17.8%. Investors will also keep their eyes on Washington. The American and Chinese government began a Strategic and Economic Dialogue yesterday and today a press conference will be held in which Treasury Secretary Geithner will speak.
Tomorrow the U.S. will release Core Durable Goods figures, Thursday is scheduled to have weekly Unemployment Claims, and Friday the Advance GDP results will be brought forth for the second quarter. All of this data has the potential to turn the focus of investors to the �real economy� and away from the speculative. Also weighing in on sentiment could be any statements coming from the American-Sino summit happening in the States. The U.S. and China share an important relationship. Consumers in the United States have been one of the crucial elements for Chinese industrial and manufacturing growth and the Chinese government is now the largest purchaser of U.S. debt. The USD has had a rather quiet two days of trading as it has languished near the weaker part of its range against the EUR and GBP, however it has shown signs of resilience and traders may be looking for the greenback to pick up some strength if equities should waver.
EUR:
The EUR held its ground against the USD again on Monday and has held stubbornly onto its gains made the past two weeks of trading. The German GfK Consumer Climate survey was released yesterday and produced a result of 3.5, better than the estimated figure of 2.9. Today the European Union will not release any major data and tomorrow the German Prelim CPI is the only piece of major economic figures on the schedule. The EUR has been the recipient of a good run within its bourses, there will be some important quarterly earnings reports from Europe today, but the equities markets have shown that they are largely dependent on the results from Wall Street for direction. Yesterday the IMF and Latvia agreed to a new fiscal plan in order to help the Baltic nation fight off a devastatingly strong recession, which basically addressed tax policy changes. Economic data from Europe will remain quiet for the remainder of the week, on Thursday the German Unemployment Change numbers are due, which means that the EUR will likely continue to move in a dollar centric fashion.
GBP:
The Sterling found itself in a rather tight range on Monday managing to maintain its rather impressive strength against the USD garnered from previous trading sessions. The U.K. did not release any major data yesterday. Today the CBI Realized Sales will be published and the expected reading is minus -12. Tomorrow the Net Lending to Individuals numbers and Mortgage Approvals will be brought forth. On Thursday the Nationwide HPI statistics are on the schedule. The U.K. economy like the U.S. has heard plenty of speculation about the possibility of a recovery sometime in the mid-term but investors are likely to begin looking for proof in the pudding. The GBP has been a good performer this year after showing some weakness at the height of the financial crisis. Since then it has consistently fought for better value.
JPY:
The JPY lost a bit of ground to the USD in what largely consisted of range trading as international equity markets that did not show the same exuberance they had the past week. The JPY has persistently traded within a consolidated manner against the USD much of this year as the ebb and flow of risk appetite has flowed. Japanese economic conditions remain challenging but the hallmark of the JPY has been its so-called nomenclature as a safe haven.
Technical Analysis
EUR/USD:
This pair is still showing positive momentum and the Oscillators are also positively sloped indicating further bullish movement. The next target price will be at 1.3300 and if this level is breached then we could see some sharper bullish movement. The preferred strategy today will still be a long position.
GBP/USD:
This pair breached the 1.4300 level and then eased off. It will now once again target the 1.4300 mark and the daily chart supports the notion that this pair will push on from there. The preffered strategy today will be to buy on dips.
USD/JPY:
There is a very nice bullish channel appearing on the daily chart. The Momentum and RSI also have a positive slope and support further bullish movement. The next target price will be at 89.90. The preferred long term trade will still be a long position.
USD/CHF:
This pair is now nearing the bottom barrier of a very wide horizontal channel on the daily chart. If this pair breaches the bottom barrier which is located at the 1.1350 mark then we could see another sharper downward move. A short position seems to be the correct strategy today.
The Wild Card
Gold
The gold is now floating with no distinct direction. Both the Daily RSI and the Slow Stochastic are floating in neutral territory. The preferred strategy today will be to wait for clearer signal before taking any position.