[ul]
[li]US Dollar Falls Despite Better than Expected Consumer Sentiment [/li][li]Euro Bulls Make Another Attempt to Bring Down 1.42 [/li][/ul]
[B]Dollar Falls Despite Better than Expected Consumer Sentiment[/B]
This Friday, the US dollar lost ground against the world’s most heavily traded currencies despite the release of better than expect data for personal income and consumer confidence. Personal Income for May came in at 1.4 percent from 0.7 percent in the previous month and the University of Michigan Consumer Confidence indicator came in at 70.8, higher than expected. Foreign exchange traders were not particularly excited in these numbers and the euro appreciated 80 pips against the dollar to trade as high as 1.4180 from 1.3986 on Thursday. Also, the USDJPY lost more than 70 pips to trade as low as 95.04 yen. This has been a particularly volatile week for currency trading which makes it even more difficult to identify the fundamental triggers behind such moves in exchange rates. Nevertheless, several months of quantitative easing combined with expectations for a record high budget deficit are beginning to weigh on the US dollar exchange rate. Earlier in the day, Chinese officials reiterated their call to replace the U.S. dollar with a new global reserve currency and many countries are becoming increasingly concerned about their investments in US treasuries. Moreover, this week we learned that the Federal Reserve will continue to provide support to mortgage lending and housing markets by purchasing a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. However, the US dollar is likely to remain under heavy selling pressure until the US Federal Reserve presents a clear exit strategy for quantitative easing.
[B]
Euro Bulls Make Another Attempt to Bring Down 1.42[/B]
A change in investor’s sentiment towards more risk taking has been helping the euro to demolish the safe-haven status of the US dollar. Today, the EUR/USD gained 71 pips in few hours but one has to look at a longer term chart to really understand the magnitude of the EUR/USD up trend. The euro rallied more than 1700 pips since January trading from a low of 1.2544 in March to as high as 1.4337 in June. Having said that, the euro starts looking very expensive, in particularly for European exporters who have to compete against American companies for a share in global trade. Looking ahead, we expect a considerable deterioration of the euro zone economy which could lead to a significant shift of interest rate differentials in favor of the U.S. dollar.
[B]Currency[/B]
[B]GMT[/B]
[B]Release[/B]
[B]Survey[/B]
[B]Previous[/B]
[B]Comments[/B]
NZD
22:45
Trade Balance (New Zealand dollars) (MAY)
250.0M
276.0M
Trade Balance Surplus to rise for the third consecutive month while narrowing on the year-to-date.
NZD
22:45
Balance (YTD) (New Zealand dollars) (MAY)
-3637
-4108
NZD
22:45
Imports (New Zealand dollars) (MAY)
3.42B
3.37B
Trade figures expected to post slight increases as global trade improves amid signs of recovery.
NZD
22:45
Exports (New Zealand dollars) (MAY)
3.70B
3.65B
NZD
22:45
Building Permits (MoM) (MAY)
11.2%
Permits have trended cyclical in past several months.
GBP
23:01
Hometrack Housing Survey (MoM) (JUN)
0.0%
Housing survey posted no change in June following 19 consecutive monthly declines while YoY contraction narrowed.
GBP
23:01
Hometrack Housing Survey (YoY) (JUN)
-9.6%
JPY
23:50
Industrial Production (MoM) (MAY P)
7.0%
5.9%
Production is expected to set record high expansion for the second month while annualized figure improves.
JPY
23:50
Industrial Production (YoY) (MAY P)
-28.8%
-30.7%
JPY
23:50
Retail Trade s.a. (MoM) (MAY)
0.0%
0.7%
Retail trade to post no change following first gain in seven months. Annualized contraction expected to narrow for the third time while large retailers' decline to cool for second month.
JPY
23:50
Retail Trade (YoY) (MAY)
-2.6%
-2.8%
JPY
23:50
Large Retailers' Sales (MAY)
-6.2%
-6.7%
NZD
3:00
Money Supply M3 (YoY) (MAY)
6.9%
Growth in money supply has remaining within a range of six to ten percent in the past year.
JPY
4:00
Vehicle Production (YoY) (MAY)
-47.1%
Contraction has narrowed in the past two months.
EUR
8:00
Bloomberg Italian Retail Purchasing Manager Index (JUN)
46.5
Retail PMI in Euro-Zone has improved recently despite posting contraction in past twelve months. Specifically, the French PMI came in the strongest of continental Europe's three largest economies while Germany showed the most weakness.
EUR
8:00
Bloomberg German Retail Purchasing Manager Index (JUN)
46.3
EUR
8:00
Bloomberg French Retail Purchasing Manager Index (JUN)
48.3
EUR
8:00
Bloomberg Euro-Zone Retail Purchasing Manager Index (JUN)
47.1
GBP
8:30
Mortgage Approvals (MAY)
46.0K
43.2K
Approvals to rise to highest level since April 2008.
GBP
8:30
Net Consumer Credit (MAY)
0.3B
0.3B
Lending remains constricted as consumers continue to lower debt and increase savings.
GBP
8:30
Net Lending Sec. on Dwellings (MAY)
1.0B
1.0B
GBP
8:30
M4 Money Supply (MoM) (MAY F)
0.2%
Money supply growth has slowed to a 0.2% pace for the past three months while YoY rise remains relatively high.
GBP
8:30
M4 Money Supply (YoY) (MAY F)
16.6%
EUR
9:00
Euro-Zone Economic Confidence (JUN)
71.0
69.3
Economic confidence and business climate indicators are expected to improve for the third month.
EUR
9:00
Euro-Zone Business Climate Indicator (JUN)
-3.00
-3.17
EUR
9:00
Euro-Zone Consumer Confidence (JUN)
-30
-31
Confidence to improve slightly from March -34.0 record low.
EUR
9:00
Euro-Zone Industrial Confidence (JUN)
-32
-34
Industrial confidence expected to rise for third month.
EUR
9:00
Euro-Zone Services Confidence (JUN)
-23
-23
Services sector is not expected to see significant improvement.
USD
12:30
Chicago Fed National Activity Index (MAY)
-2.06
National activity index has improved to best level since August.
USD
14:30
Dallas Fed Manufacturing Activity (JUN)
-21.5%
Dallas manufacturing remain weak but has improved to best levels since August.
[B]Currency[/B]
[B]GMT[/B]
[B]Upcoming Events & Speeches[/B]
USD
13:30
Fed's Rosengren Speaks at Risk Capital Conference in Brussels
[B]SUPPORT AND RESISTANCE LEVELS[/B]
[B]CLASSIC SUPPORT AND RESISTANCE - MAJORS 20:00 GMT[/B]
[B]Currency[/B]
[B]EUR/USD[/B]
[B]GBP/USD[/B]
[B]USD/JPY[/B]
[B]USD/CHF[/B]
[B]USD/CAD[/B]
[B]AUD/USD[/B]
[B]NZD/USD[/B]
Resistance 2
1.4616
1.6800
103.75
1.2250
1.1780
0.8500
0.6675
Resistance 1
1.4564
1.6500
102.50
1.2056
1.1500
0.8200
0.6600
[B]Spot[/B]
[B]1.4098 [/B]
[B]1.6547 [/B]
[B]95.16 [/B]
[B]1.0812 [/B]
[B]1.1487 [/B]
[B]0.8083 [/B]
[B]0.6465 [/B]
Support 1
1.2500
1.3695
86.50
1.0550
1.0800
0.6248
0.4831
Support 2
1.2329
1.3500
86.00
1.0400
1.0500
0.5868
0.4500
CLASSIC SUPPORT AND RESISTANCE – EMERGING MARKETS 20:00 GMT
[B]Currency[/B]
[B]USD/MXN[/B]
[B]USD/TRY[/B]
[B]USD/ZAR[/B]
[B]USD/HKD[/B]
[B]USD/SGD[/B]
Resistance 2
14.0000
1.6500
8.7800
7.7900
1.5060
Resistance 1
13.6000
1.5773
8.2700
7.7850
1.4750
[B]Spot[/B]
[B]13.2275[/B]
[B]1.5349[/B]
[B]7.8655[/B]
[B]7.75003[/B]
[B]1.45345[/B]
Support 1
12.3500
1.5196
7.7506
7.7450
1.4400
Support 2
11.8212
1.5000
7.6500
7.7400
1.4170
INTRA-DAY PIVOT POINTS 20:00 GMT
[B]Currency[/B]
[B]EUR/USD[/B]
[B]GBP/USD[/B]
[B]USD/JPY[/B]
[B]USD/CHF[/B]
[B]USD/CAD[/B]
[B]AUD/USD[/B]
[B]NZD/USD[/B]
Resistance 2
1.4202
1.6685
96.42
1.1002
1.1617
0.8127
0.6521
Resistance 1
1.4150
1.6616
95.79
1.0907
1.1552
0.8105
0.6493
[B]Pivot[/B]
[B]1.4066 [/B]
[B]1.6491 [/B]
[B]95.42 [/B]
[B]1.0852 [/B]
[B]1.1499 [/B]
[B]0.8065 [/B]
[B]0.6451 [/B]
Support 1
1.4015
1.6422
94.79
1.0757
1.1434
0.8043
0.6423
Support 2
1.3931
1.6298
94.42
1.0701
1.1381
0.8002
0.6382
INTRA-DAY PROBABILITY BANDS 20:00 GMT
[B][/B]
[B]Currency[/B]
[B]EUR/USD[/B]
[B]GBP/USD[/B]
[B]USD/JPY[/B]
[B]USD/CHF[/B]
[B]USD/CAD[/B]
[B]AUD/USD[/B]
[B]NZD/USD[/B]
Resistance 3
1.4299
1.6804
96.63
1.0960
1.1669
0.8244
0.6605
Resistance 2
1.4249
1.6739
96.26
1.0923
1.1624
0.8203
0.6570
Resistance 1
1.4199
1.6675
95.89
1.0886
1.1578
0.8163
0.6535
[B]Spot[/B]
[B]1.4098[/B]
[B]1.6547[/B]
[B]95.16[/B]
[B]1.0812[/B]
[B]1.1487[/B]
[B]0.8083[/B]
[B]0.6465[/B]
Support 1
1.3998
1.6418
94.43
1.0738
1.1395
0.8002
0.6395
Support 2
1.3948
1.6354
94.06
1.0701
1.1349
0.7962
0.6360
Support 3
1.3898
1.6290
93.70
1.0664
1.1304
0.7922
0.6325