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Daily Report: Greenback Remains Confined in Narrow Range as Traders Await European Banks Stress Tests ResultsThe greenback came under pressure again after the second ratings company put U.S. AAA credit rating on negative creditwatch, according to the Chairman of Standard & Poor’s sovereign rating committee, John Chambers, there is at least 50 percent chance that the rating company will cut U.S. top grade credit rating in the next 3 months, even if U.S. lawmakers settle a deal to raise the country’s debt ceiling within July, the White House still needs to reach agreement with the republicans on reducing budget deficit to cope with the country’s long term debt problems, failing to do so may lead to a possible downgrade of the AAA rating. The greenback slipped against the Japanese yen on the news to 78.89 before finding cross-related bids from Japanese importers and buying interests are lined up all the way down to 78.50 with sizeable stops remain below 78.40. On the upside, mixture of offers and stops is tipped at 79.60-70 and further out at 80.00. |
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USD/JPY Daily OutlookDaily Pivots: (S1) 78.53; (P) 79.06; (R1) 79.67; More. Intraday bias in USD/JPY remains neutral and some more consolidations could be seen above 78.46 temporary low. Stronger recovery cannot be ruled out but after all, we'd expect upside to be limited well below 81.46 resistance and bring fall resumption. Below 78.46 will resume the whole decline from 85.51 and should target 100% projection of 85.51 to 79.56 from 82.22 at 76.27 and then 75.98 low. |
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Fed Will Wait And See Before Another Move, Despite Signal Of Further StimulusFed Chairman Ben Bernanke's testimony before the House gave further signals that more expansionary measures are possible for boosting growth. Initial market reaction: higher equities, higher commodities, lower Treasury prices and lower USD, suggested investors welcomed additional stimulus. Concerning the growth outlook, the Chairman stated that recent slowdown has been driven by temporary factors such as surges in gasoline prices and supply chain disruptions to auto production following the earthquake in Japan. He retained the growth forecasts by FOMC members. Chinese Macro Data Surprise To The UpsideThe new set of Chinese macroeconomic data presented pleasant surprises and further signaled talks of hard landing might have been overdone. While GDP growth moderated to +9.5% y/y in 2Q11 from +9.7% in the prior quarter, it exceeded market consensus of a +9.3% expansion. The upside surprise was driven by strong growth in industrial production (IP). Considering the policy outlook, we expect the government will maintain a tight monetary stance in order to keep inflation under control. Yet, chances of further rate hikes and increases in RRR in the second half of the year must be lower than the first half. |
Trade Idea: USD/JPY – Hold long entered at 78.55As the greenback has remained confined within narrow range after yesterday’s rebound from 78.45 to 79.61, as long as said support holds, mild upside bias remains for another rebound to said resistance, however, a sustained breach above there is needed to add credence to our view that temporary low is formed and bring retracement of recent decline towards 80.00 but reckon previous support at 80.50 would remain intact. Trade Idea: EUR/USD – Stand asideAlthough the single currency recovered after yesterday’s retreat to 1.4115, as euro has retreated again today after meeting resistance around 1.4199, suggesting further consolidation below this week’s high of 1.4282 would be seen and pullback to 1.4112 (38.2% Fibonacci retracement of 1.3838-1.4282) is likely, however, break of 1.4060 (50% Fibonacci retracement as well as current level of the Ichimoku cloud bottom) is needed to confirm top has been formed Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||
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