Good morning from the Free and Hanseatic City of Hamburg and welcome to Varengold Bank FX´s Daily FX Report. Today we are expecting a lot of data from the USA as well as from the UK, which could have a decisive effect on the FOREX market. However, have a nice Wednesday and enjoy it.
Market review
The JPY fell close to a one-week low against the EUR before a U.S. report today that may show industrial production shrank at a slower pace, added by signs that the worst of the recession maybe is over. After positive share performances in the U.S. and Asia, the high-yielding AUD rose against the USD yesterday. The MSCI Asia Pacific Index of regional shares raised 1 % after the S&P 500 Index climbed 0.5 %, spurred investors to buy higher-yielding assets. Gains in shares inside the USA could be caused by a U.S. report yesterday, which showed that retail sales increased last month more than economists expected. The U.S. currency could get volatile against other currencies, after investors expect more data this week. Today the Federal Reserve will report the U.S. factory production, which is expected to fell by 0.6 % in June after a 1.1 % drop in May.
The EUR/JPY rose for a third day after touching a high at 130.96. It was the highest level since July 8th. The strong AUD rose for a second day after performing a 1.22 % gain against the USD yesterday. It reached a high at 0.7949, which is the highest level since July 7th.
AUD/JPY
Since March 2009, the AUD/JPY has been trading along Fibonacci retracement levels. After touching the 50 % (70.77) Fibonacci support-line, it pulled back to the bearish trend channel, which started at the beginning of June. Additionally the market has also crossed the 74.00 resistance line, which could be a further sign that it could gain towards the next Fibonacci resistance level of 23.6 % (75.93).
AUD/USD
Since the beginning of June, the AUD/USD has been moving inside a downward trend channel with a horizontal resistance level at 81.00. After the currency pair touched the lower line of the channel for the fourth time, it pulled back again and seems to be in a recovery phase. The MACD could indicate a long signal as well.
