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Daily FX Report

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After a weak start in the new week, the JPY finally rose again after stocks declined

Mon, Jul 13 2009, 12:28 GMT
by Varengold Bank Research Team

Varengold Wertpapierhandelsbank AG

Good morning from Hamburg and welcome to a new and exciting FX trading week. We hope you will enjoy the new adjusted layout of Varengold’s Daily FX Report.

Market review

After a weak start in the new week, the JPY finally rose again after stocks declined, which increased repeatedly the demand for the relative safety of Japan’s currency. The MSCI Asia- Pacific Index of regional shares fell 1.5 % while the Nikkei 225 stock average also slid 1.5 %. The JPY climbed near an eight-week high versus the AUD and the NZD. It rose for a second day against the GBP after the “Sunday Times” reported, without saying where it got the information, that Lloyds Banking Group Plc may announce further losses of as much as 13 billion GBP ($21 billion). The EUR traded near a one-month high against the GBP on speculation ECB President Jean-Claude Trichet may signal today the central bank will refrain from cutting interest rates. It rose versus 12 of the 16 major currencies. The central bank said in its monthly report last week that interest rates are “appropriate” and the Euro-Zone’s economy will gradually emerge from recession in 2010.

The AUD/JPY fell for a second day, trading currently around 71.80. It reached a low at 70.96 on July 8th, which was the lowest level since May 18th. The strong and dominant JPY also rose against the GBP after touching a high at 148.91. But this level is far away from its record high on last Wednesday. It reached a high at 146.78 versus the GBP, which was the best performance of the JPY since May 21st.

USD/JPY

Since June, the USD/JPY has been trading in a bearish trend channel. A large price plunge results in that the pair crossed the lower trend line and left the trend formation. But it seems that the USD developed a support level at 91.81. Additionally, the RSI indicator might show an overbought signal and the MACD is going to cross the signal line. This development could indicate that the currency will raise and come back in the old trend formation.

CAD/JPY

During the past three months, the CAD/JPY has been moving along Fibonacci projection lines. After it touched the 123% (78.92) twice and tried to cross the upper channel of Andrews’ Pitchfork, it pulled back and trades currently around 79.50. If the market doesn’t exit its bearish phase with a break trough the given resistance lines, it may continue falling along the Pitchfork channels and the Fibonacci projection lines.

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Published on  Mon, Jul 13 2009, 12:34 GMT