GFT Daily Market Commentary

Forex Market Commentary for September 3, 2008 by Cornelius LucaGFT Daily Market Commentary

The dollar retained overnight gains and closed higher on Tuesday, and the slide in the CRB Index helped. There was limited reaction to news the manufacturing ISM slipped to 49.9 in August from 50.0 in July amid thin trading. The economic calendar for Wednesday features the Eurozone Q2 GDP, PMI services and retail sales, and the US factory good orders is not significant. The dollar remains in a solid uptrend, and in the short term the upside remains favored. Keep it in mind that Federal Reserve Banks Dallas and Kansas City asked for discount rate hikes August 5.

Euro/dollar

The euro/dollar fell further a near eight-month low and broke below a trendline support rising since October 2006. My model remains short and the pair should extend its decline.

Immediate support is at 1.4410. Below 1.4365, further support is seen at 1.4265. Distant support is now seen at 1.3935.

Initial resistance is at 1.4470. The next levels to watch are 1.4545 and 1.4600. Above 1.4725, distant resistance is at 1.4780 from the 0.786% retracement of the upmove between February and July.

Oscillators are declining.

NEAR-TERM: Bearish

MEDIUM-TERM: Bearish

LONG-TERM: Mixed

Dollar/yen

Dollar/yen reversed Monday’s losses and averted a head-and-shoulders formation. My model remains short below 109.30 but the pair is back to sideways trading, now that traders are back at their desks.

Good resistance is at 109.15 from a 50-point pivot, which targets 109.65 and 108.65. Next strong resistance is at 110.35 from a 50-point pivot, which targets 109.85 and 110.85.

Initial support is at 108.45. Strong support is at 107.95 from a 50-point pivot, which targets 107.45 and 108.45. Distant support follows at 106.54.

Oscillators are mixed.

NEAR-TERM: Slightly bullish

MEDIUM-TERM: Mixed

LONG-TERM: Mixed

Sterling/dollar

Sterling/dollar sank further a near 2 1/2-year low and there is little reason to expect the selling pressure to stop.

Immediate support is at 1.7630. Below 1.7590, distant support is at 1.7420.

Initial resistance is at 1.7800. The next level is 1.7910 from the 0.786% retracement of the upmove between November 2005 and November 2007. Distant resistance is at 1.7965.

Oscillators are falling.

NEAR-TERM: Bearish

MEDIUM-TERM: Bearish

LONG-TERM: Bearish

Dollar/Swiss franc

Dollar/Swiss branded an eight-month high. The medium-term outlook remains positive – and so does my model. After some early profit taking, the upmove should resume.

Initial resistance comes at 1.1184. Next level is 1.1270. Distant resistance looms at 1.1360.

Immediate support is pegged at 1.1053. This is followed by 1.1010, 1.0950 and 1.0890. Distant support remains at 1.0725.

Oscillators are rising.

NEAR-TERM: Bullish

MEDIUM-TERM: Bullish

LONG-TERM: Mixed