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Daily FX Report

A growing dollar

Tue, Aug 12 2008, 10:53 GMT
by Varengold Bank Research Team

Varengold Wertpapierhandelsbank AG  |  View company's profile


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Good morning from rainy Hamburg and welcome to the Varengold Daily FX Report. The weather in Hamburg has gotten colder. We hope, however, to get a better summer in Germany and hope for successful trading days for all our clients.


Market review

The Japanese corporate goods price index rose 7.1% in July, higher than an expected 5.8% increase. That’s marking the highest rate of rise in 27 years and adds to worries that high commodity prices are hurting companies and are leading to an economic recession. Additionally, the Japanese consumer confidence index fell to a record low of 31.4 in July, the fourth straight month of decline. Some analysts see a chance of a BOJ rate hike, while the central bank is more worried about slowing economic growth than the risk of runaway inflation. In spite of the data, the USD/JPY hardly reacted and traded unchanged at 110.12.

The AUD was hit by worries over sharp falls in commodities, because Australia is a big exporter of metals and other resources. Additionally, market expectations of RBA rate cuts added pressure on the currency. The AUD/USD dipped 0.2% to 0.8824 and remains around a 6-1/2-month low level of 0.8789.

The dollar index rose 0.2% to a 6-month high of 76.425, while oil retreated further from record highs, and concerns over the slowing global economy hurt other currencies. The EUR/USD decreased 0.3% to a 6-month low of 1.4860.


EUR/JPY

Since the beginning of May, the EUR/JPY has been trading in a bullish trend channel with a resistance at 169.77 and a support level at 164.64. The currency pair decreased in the least trading days and crossed the support level. This development might be a trend reversal.


AUD/JPY

The AUD/JPY showed a bullish face between the beginning of May and the end of June. After touching the resistance level at 103.83 twice, it started to decrease to its old level at 97. If the market does not break trough the support, we will expect a new bullish development for the next days.

Published on  Tue, Aug 12 2008, 10:56 GMT


Varengold Wertpapierhandelsbank AG http://www.varengold.de/ | info@varengold.de

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Legal disclaimer and risk disclosure

This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational purposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.
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