The EURUSD traded to an intra-day low of 1.5441 yesterday as Bernanke pointed to no further rate cuts in the near term. The Australian dollar traded lower after the consumer sentiment index fell 5.6%. However, the market is pricing in a pair of 25bp rate increases by the end of Q4.
News and Events:
The EURUSD traded to an intra-day low of 1.5441 yesterday as Bernanke pointed to no further rate cuts in the near term. He continued in warning about inflationary pressures but that the US economic downturn has slowed. While energy prices have taken advantage of inflationary pressures and the falling dollar, further gains will find more resistance, particularly if the US dollar can begin a comeback. The EURUSD is still in a long term uptrend; however the risks to the downside, once again, are high.
The Australian dollar traded lower after the consumer sentiment index fell 5.6%. However, the market is pricing in a pair of 25bp rate increases by the end of Q4. Whether or not these hikes will be necessary remains to be seen as the direction of energy prices, for now, are unknown. The �comdols�, the Australian and New Zealand dollars particularly will be very much under pressure should commodities fall sharply in price.
Today’s Key Issues (time in GMT):
11:00 USD MBA Mortgage Applications (JUN 6)
11:00 USD Bloomberg Global Confidence (JUN)
12:30 CAD Capacity Utilization Rate (1Q) 81.0% vs 81.8%
12:30 CAD New Housing Price Index (MoM) (APR) 0.2% vs 0.2%
15:30 EUR ECB’s Stark Speaks at Boston Fed Conference
15:30 USD Kohn Speaks at Boston Fed Conference Panel on Inflation
16:15 USD Fed’s Kroszner, Pianalto Speak at Community Development Summit
17:00 USD St. Louis Fed’s Bullard to Speak at Macroeconomic Conference
17:30 USD Treasury’s Steel Speaks in New York on Regulatory Reform, Fed
18:00 USD Fed’s Beige Book (JUN)
18:00 USD Monthly Budget Statement (MAY) -$151.0B vs -$67.7B
The Risk Today:
EurUsd: targets 1.5366 and 1.5284. The pair remains short term bearish under 1.5657.
GbpUsd: strong resistance at 1.9801 keeps the pair down, targeting 1.9363.
UsdJpy: has tested 107.44 and will target 108.61 if broken. 106.40 holds as support.
UsdChf: bounced off the trend-line at 1.0440 with 1.0528 in sight. Major support level all the way down to 1.0150.
Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland