USD Weaker in New York But Yen Crosses Lower (Midday Snapshot)


It has been an interesting morning of trade in New York with the market extremely volatile following the economic releases but unsure as to the direction it wants to take. While equities are slightly firmer, currency carry trades have come off to reflect a notable divergence. Meanwhile, the USD has been offered with the Swisse leading the way against the greenback, followed by the Kiwi, Euro and Aussie. Although the headline reading for US GDP was better than expected, some downward revisions to the previous month, along with a much weaker personal consumption component left some traders with an unsettling feeling. Meanwhile, in Canada, headline GDP was weaker than forecast, with a downward revision also seen to the previous month. The only bright spot on the day came from Chicago PMI which managed to slightly better expectation. The IMF was back on the wires with a sluggish recovery call for the US economy despite some improved financial conditions. The IMF also stated that the USD was moderately overvalued. This follows a report from the same organization earlier in the week which also said the Euro was overvalued.


Eur/Usd: Despite the impressive rally on Friday, we still hang on to a bearish outlook with a lower top now sought out below 1.4305 ahead of the next drop. The daily ATR projects a high now that could run back above 1.4200, while the 78.6% fib retrace off of the 1.4305-1.4005 move comes in by 1.4240. If the market does decide to continue to push higher towards 1.4240, we will be there waiting. STRATEGY: SELL @1.4235 FOR AN OPEN OBJECTIVE, STOP @1.4365. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE ON FRIDAY.

Written by Joel Kruger, Technical Currency Strategist for
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