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Mid-Day Report: Euro Remains Locked in Tight Range ahead of European Banks Stress Test ResultsThe greenback has little changed after the release of much weaker-than-expected June U.S. Empire State manufacturing index as traders await European bank stress test results. The Empire State manufacturing index showed a negative figure for two consecutive months, a general sign of recession, this month's number also made the 3-month average the worst figure since August 2009. U.S. industrial production (0.2% vs forecast of 0.3%) and capacity utilization (76.7% vs consensus of 77.0%) data also came in slightly lower than expected. Nevertheless, the greenback has remained confined within narrow range ahead of the stress tests results, the European Banking Authority is going to release the results at 16:00GMT hoping to reassure investors that the banks in the region have sufficient capital. |
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| Featured Technical Report | |
EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.4073; (P) 1.4178 (R1) 1.4240; More. As noted before, with 1.4577 resistance intact, EUR/USD's fall from 1.4939 is still mildly in favor to continue. Below 1.4055 minor support will flip bias back to the downside for 1.3870 and below. Nevertheless, we'll start look for reversal signal as EUR/USD approaches medium term trend line support (now at 1.3746). Meanwhile, break of 1.4577 will indicate that EUR/USD's correction from 1.4939 has completed and will bring stronger rise to 1.4939 and above. |
| Special Reports |
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. |
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Trade Idea Update: USD/CHF – Sell at 0.8250As the greenback has rebounded after intra-day retreat to 0.8120, retaining our view that further consolidation above this week’s low at 0.8080 would take place and mild upside bias remains for retracement to 0.8240-49 (50% Fibonacci retracement of 0.8400-0.8080 and 38.2% Fibonacci retracement of 0.8523-0.8080) before prospect of another decline. A break of said support at 0.8120 would suggest rebound from 0.8080 has possibly ended Trade Idea: USD/CAD – Sell at 0.9690Despite yesterday’s fall to 0.9549, lack of follow through selling and the subsequent rebound suggest consolidation would be seen and recovery to 0.9650 cannot be ruled out, however, renewed selling interest should emerge below 0.9700 and bring another decline later. Looking ahead, only a sustained breach of indicated previous support at 0.9513 would signal wave 5 is underway for an eventual retest of wave 3 low of 0.9446. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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