Good morning from beautiful Hamburg and welcome to the Varengold Daily FX Report. It seems that the highly volatile phase last weeks has taken a break, which suggests that the market does not trust the easing recession. We wish you a prosperous trading day.
Market review
The GBP declined against EUR and USD as a U.K. government report showed that the national budget deficit rose in June to a new all-time high, since 1993. The budget deficit nearly doubled it figure in the previous year and rose from £7.5bln to £13bln in June. This could denote that the government will struggle to find buyers for its assets in the future. The EUR/GBP increased 0.47 percent and the GBP/USD fell from near a three-week high to 1.6459 at yesterday’s closing. The Swiss central bank raised its foreign currency holding in the second quarter to the highest level within the last twelve years. The SNB accumulated 81.7bln CHF from 55.8bln CHF at the end of the first quarter of 2009. The JPY extended its gains against the USD on concern that the U.S. commercial lender CIT Group Inc. will file for bankruptcy and renewing the demand for JPY as a safe haven. The USD/JPY weakened yesterday 0.48 percent and in the early Tokyo trading hours further 0.28 percent.
The AUD/USD decreased from near a one-month high on concern that the central bank may keep the target interest rate at the historical low level as a report showed that the inflation rate stagnated on a low level.
USD/JPY
The currency pair has been trading in a downward trend-channel since June which accelerated at the beginning of July. This trend seems to have stopped at last week’s S1 pivot point. After a short recovering, the USD/JPY seems to be driven by the bears again and find currently support at its pivot point. If the market breaks trough this point, it could boost the downward movement and decline near to the S1 point at 92.47.
GBP/USD
Since the 8th of July the GBP/USD has been moving along a bullish Fibonacci fan. After it reached its high at 1.6554 on July 20th, the market started a recovery phase and crossed the upper line of the Fibonacci fan. This could be a sign for further bearish movements towards the support level around 1.6290. If the pair exits the fan, it may rise back towards the high of 1.6554 from July 20th.
