Despite some initial USD selling overnight against many of the major currencies, the Greenback has managed to recover back towards daily opening levels across the board. The Yen has been the standout underperformer on the day with some heavy cross related interest in the crosses helping to bolster Usd/Jpy back above 94.00.
MORNING SLICES
Fundys – Despite some initial USD selling overnight against many of the major currencies, the Greenback has managed to recover back towards daily opening levels across the board. The exceptions have been in the Yen and Swissie. The Yen has been the standout underperformer on the day with some heavy cross related interest in the crosses helping to bolster Usd/Jpy back above 94.00. UK retail sales was the big story on the economic calendar with the much stronger than expected result initially generating some fresh Sterling related bids which was most obviously reflected through the Eur/Gbp rate, which managed to undergo an impressive round of selling back to 0.8600 ahead of the latest minor bounce. Also out of the UK were BBA loans for home purchases which showed a nice improvement from the previous month. In the Eurozone, the seasonally adjusted current account reading also managed to show an improvement from the previous month. Another cross rate that generated a good deal of attention overnight was Eur/Chf which was very well bid after breaking back towards and eventually through stops just over 1.5200. However, the more steady buying offset any suspicions of a potential SNB intervention. German FinMin Steinbrueck was on the wires talking of a weaker and less important USD versus the Euro and Yuan down the road, while the RBA’s Debelle said Australia would emerge stronger than most. In New Zealand, officials continue to try to talk down the local currency after saying that the economy needed a weaker currency to boost exports. Looking ahead, initial jobless claims (555k expected) and continuing claims (6330k expected) are due at 12:30GMT, followed by the RPX composite at 13:00GMT and existing home sales (4.83M expected) at 14:00GMT. In Canada, all eyes will be focused on the anticipated release of the Bank of Canada monetary policy report due at 14:30GMT. US equities are marginally bid, while commodities are mixed with oil lower and gold slightly higher.
Techs - EUR/USD continues to consolidate below the 1.4340 yearly highs with the market unsure of the next directional move. Key levels to watch over the coming session come in by 1.4280 and 1.4155. USD/JPY very well bid on Thursday but still confined to the recent range trade and additional rallies expected to be well capped into the 95.00 area. A break above 94.80 should accelerate gains somewhat, but the overriding trend remains grossly bearish and any rallies above 95.00 are viewed as a good sell opportunity. Key short-term support comes in by 94.00. GBP/USD has been trading in the 1.6500 area over the past few days and is very near to the 1.6745 2009 highs. However, there is some solid internal range resistance at current levels and we would not at all be surprised to see a topside failure over the coming sessions ahead of bearish resumption back towards 1.6000 and below. Key levels to watch over the coming session come in by 1.6560 and 1.6385. USD/CHF attempting to carve out a meaningful base and could be on the verge of recovering from the very well defined range lows. A break back above 1.0720 will potentially set up a bullish reversal day and provide added confirmation.
Flows – Spec accounts caught short Usd/Chf. Sovereign account and Far East name on the offer in Eur/Usd. Asian reserve manager buying Usd/Cad.
Trade of the Day – Gbp/Jpy: We continue to focus on the break of multi-day channel support in the previous week and view the current rally as corrective ahead of a significant bearish resumption. Shorter-term technicals show a falling trend-line off of the recent highs which currently comes in just by 157.00 and with hourly studies expected to be well overbought on a test of this area today, we recommend establishing a short trade ahead of 157.00 in anticipation of a major pullback from there. [B]Strategy: SELL @156.70 FOR AN OPEN OBJECTIVE, STOP @158.70. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5pm ET) ON THURSDAY.
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P&L Update and Overview: Many of you have been asking for a way to better track trading results and open positions. In response to these requests and in an effort to be fully transparent, a simulated portfolio was been created in June to track and mirror all recommendations and trades. Below is a return on equity curve since inception on June 1, 2009, along with an open and closed position tracker. I am hopeful that this will make things easier for you all.
Additionally, please feel free to check out a [B]full profit and loss statement since inception on June 1, 2009[/B].
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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