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Mid-Day Report: EUR/USD Strengthens as ADP Missed, Portugal Bailout ConfirmedEUR/USD resumes recently rally and is heading towards 1.5 psychological level after ADP employment missed expectation. The private sector job report showed 179k expansion in April, below consensus of 193k. Challenger report showed -4.8% yoy fall in job cuts in April. The data showed continuous improvement in the job market in US but that shouldn't be enough to convince Fed Chairman Bernanke's stance to refrain from stimulus exit within 2011. On the other hand, the common currency has been relatively resilient in this week's rebound in dollar, as supported by viewed on more rate hike from ECB in Q3. |
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| Featured Technical Report | |
EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.4755; (P) 1.4823 (R1) 1.4891; More. EUR/USD's rally resumes today by taking out 1.4901 resistance and reaches as high as 1.4931 so far. Intraday bias is back on the upside for 161.8% projection of 1.2873 to 1.386 from 1.3427 at 1.5024, which is close to 1.5 psychological level. On the downside, however, break of 1.4754 support will indicate that a short term top is formed, possibly with bearish divergence condition in 4 hours MACD and should bring pull back through 1.4492 support instead. |
| Special Reports |
ECB: Vigilant Or Not?While the ECB is widely expected to leave the main refinancing rate at 1.25% in May, the focus is on the accompanying statement and the press conference as clues on the next rate hikes may be provided. Although President Trichet had said after April's rate hike that policymakers 'did not decide today that it was the first in a series of interest rate increases', recent economic developments and comments from ECB members suggested that further tightening later in the year is highly likely. The market will probably search for the 'vigilant' language in the statement as it signals a rate hike in the coming meeting. Our bottom line is that the next rate hike will be in July but a raise in June cannot be ruled out should inflationary pressures accelerate faster than anticipated. RBA Leaves Cash Rate Unchanged But Sees Rising Inflationary PressuresAs expected, the RBA left the cash rate at 4.75% for a 5th meeting in May. While acknowledging continued growth in global economy, policymakers stated floods in Queensland may cause a decline in real GDP in 1Q11. Concerning inflation, the central bank was aware that underlying inflation has run its course recently. In the longer term, price levels will increase further if economic conditions evolve broadly as expected. We expect the central bank will resume tightening in the second half of the year as inflation pressures heighten. |
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Trade Idea Update: GBP/USD –Sell at 1.6590As the British pound has rebounded after intra-day marginal fall to 1.6453 and price broke above the Kijun-Sen, suggesting consolidation with mild upside bias would be seen for correction towards previous support at 1.6585 but the Ichimoku cloud top (now at 1.6604) should limit upside, bring another decline later. A break of said support would extend the decline from 1. 6747 top for weakness to previous support at 1.6432 Trade Idea: AUD/USD – Buy at 1.0705As the Australian dollar has continued to move lower after retreating from fresh record high of 1.1011 (Monday's high), retaining our view that minor top has been formed and consolidation below there is seen with mild downside bias for retracement to 1.0774/77 (38.2% Fibonacci retracement of 1.0390 to 1.1012 and minor support) but reckon 1.0701 (50% Fibonacci retracement) would limit downside, bring another rise later. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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