Market was volatile on the last day of the quarter and half-year, and analysts said corporate demand to buy and sell the dollar for last-minute book keeping purposes was driving broader currency movements. The Dollar steadied overnight, holding gains made the previous day after an unexpected fall in U.S. consumer morale cooled optimism about an economic recovery, prompting investors to seek the safety of the greenback. EURUSD has traded even lower this morning on the back of an FT article rehashing the UK�s bad GDP result yesterday. EURUSD traded in a range of 1.4000-1.4054 and USDJPY in a range of 96.17-96.99 as volatility continues to ease. The Yen edged down against the dollar after the news but the market’s reaction was subdued overall as investors decided that it offered no surprise. As the BOJ’s closely watched tankan survey has passed, investors now await the U.S. government’s high-profile monthly employment report.
[B]News and Events:
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The Canadian dollar fell against the U.S. currency on Tuesday as lower U.S. consumer confidence data for June dampened hopes for an early economic recovery, and pushed the market toward safer havens. Sterling reached an eight-month high against the dollar on Tuesday due to surprisingly strong UK house price data, but its gains fizzled out after a moderating decline in U.S. home prices which later boosted the U.S. currency. Market was volatile on the last day of the quarter and half-year, and analysts said corporate demand to buy and sell the dollar for last-minute book keeping purposes was driving broader currency movements. The Dollar steadied overnight, holding gains made the previous day after an unexpected fall in U.S. consumer morale cooled optimism about an economic recovery, prompting investors to seek the safety of the greenback. EURUSD has traded even lower this morning on the back of an FT article rehashing the UK�s bad GDP result yesterday. EURUSD traded in a range of 1.4000-1.4054 and USDJPY in a range of 96.17-96.99 as volatility continues to ease. The Yen edged down against the dollar after the news but the market’s reaction was subdued overall as investors decided that it offered no surprise. As the BOJ’s closely watched tankan survey has passed, investors now await the U.S. government’s high-profile monthly employment report. The New Zealand dollar was around 1 percent lower this morning as weaker stock markets and soft U.S. consumer data prompted investors to trim their exposure to risk and high yield currencies. Kiwi resumes local trading around $0.6450 level after retreating from a near one-month high of $0.6550 the previous day. With the ECB and payrolls out tomorrow, the market may choose to tread cautiously and we expect this to remain the dominant theme today.
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Today’s Key Issues (time in GMT):[/B]
09:30 GBP UK PMI Manufacturing JUN 46.4 vs. 45.4
12:00 USD MBA Mortgage Applications Jun-26 Prev. 6.60%
12:30 USD Challenger Job Cuts (YoY) JUN Prev. 7.40%
13:15 USD ADP Employment Change JUN -390K vs. -532K
15:00 USD ISM Manufacturing JUN 44.5 vs. 42.8
15:00 USD ISM Prices Paid JUN 47 vs. 43.5
15:00 USD Construction Spending (MoM) MAY -0.60% vs. 0.80%
15:00 USD Pending Home Sales (MoM) MAY 0.50% vs. 6.70%
15:00 USD Pending Home Sales (YoY) MAY Prev. 3.30%
[B]The Risk Today: [/B]
[B]EurUsd:[/B] The 1.3890 to 1.4180 range looks like holding into event risk tomorrow. A divergence signal on intraday charts implies limited upside over the next 24 hours and a chance for the market to unwind after its recent bullish sentiment extreme.
[B]GbpUsd:[/B] The breakout above 1.6600 yesterday was quickly overwhelmed by profit taking and disappointingly the market fell short of our 1.6830/1.6950 target zone for a top. Evidence of divergence on daily charts suggests a top is forming but the absence of other reversal signs.
[B]UsdJpy:[/B] USD/JPY has rallied out of its recent 95.15 to 96.70 range and into the upper half of the wider 94 to 99 range. With intraday momentum charts reading overbought as price presses deeper into its weekly cloud we are not expecting any further upwards.
[B]UsdChf:[/B] USD/CHF is pinned down between trendlines at 1.0630 and 1.1020. Intraday, the probability of a move outside of a 1.0765 to 1.0915 is low.
[B]Resistance and Support:
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By[B] Loic Bondiguel [/B]- ACM Advanced Currency Markets, Geneva, Switzerland