MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
The USD has managed to regain some ground in the US session, with the currency finding across the board bids against all currencies, with the exception of the Yen. US producer prices were softer than expected, while housing starts and building permits were better. Industrial production came in slightly weaker and capacity utilization was in line. In Canada, labor productivity showed an impressive improvement from the previous month and was much better than expected. This however failed to bolster the Loonie which is the biggest underperformer on the day, despite the minor gains against the buck. Eur/Gbp price action was also noteworthy, with the cross once again sliding to fresh 2009 lows and towards figure support by 0.8400. Many traders are still digesting the overnight reaction from the news that Russia has been actively talking down the USD’s future status as the reserve currency of choice. However, this should really be taken with a grain of salt considering the flip-flopping that has been going on over the past several days. Elsewhere, Dr. Doom Nuriel Roubini calls for an end to the recession in the US in late 2009, but does not rule out the possibility for a double-dip recession starting in late 2010. ECB Draghi was also on the wires saying that the central bank will maintain its expansionary stance for now. US equities are slightly lower, while commodities remain well bid. Fed Warsh is slated to speak later in the day at 21:15GMT.
ANALYSIS OF SELECTED RATES
Usd/Jpy: The market has been in rally mode since basing out by 93.85 in Mid-May, putting in a series of higher highs and higher lows. A fresh higher low is now sought out above the June 1, 94.45 low, to be confirmed on a break back above 98.90 over the coming sessions. Today’s sharp intraday pullback leaves hourly studies oversold, and with the daily ATR (Average True Range) already well exceeded, and the market testing rising trend-line support, the risks from here are for renewed strength and as such, we have acted accordingly. Position: LONG @96.35 FOR AN OPEN OBJECTIVE, STOP @95.25.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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Monday-Friday (between 5:30am-6:30am EST)
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“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
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“Midday Snapshot” – A Midday Fundamental Update, along with Technical Analysis of Selected Rates.
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