Good morning from Hamburg. The FX week started very quite, but it seems to be an exciting.
Market review
On Monday the USD traded near the lowest level in seven weeks versus the EUR. Because today economists expect a report that will show US home sales rose, adding to signs that the global economy is stabilizing. Also the US gross domestic product (GDP), published on Friday, is expected to show a contraction. But the forecasts are at an annual rate of -1.5 %, less than an annual pace of decline in the first quarter of -5.5 %. Many analysts assess it to be the last negative quarter of this recession. But this weekend Federal Reserve Chairman Ben Bernanke said the growth in the second half of the year 2009 would not be enough to bring down the unemployment rate. He awaits the beginning of the recovery next year and also that the inflation stays quite low in a couple of years. If the economy began to show strength, the central bank will unwind the financial programs, he added.
The AUD gained 0.2 % and traded close to the highest level in more than three weeks against the JPY after Asian stocks continues the global equity rally today. It seems that investors are shifting to higher-yielding assets and let the JPY fell against 12 out of 16 most-traded currencies.
The NZD/USD traded unchanged at 0.6560 and remains relatively unaffected from the speculation central bank Governor Alan Bolland may leave interest rates at a record low on the July 30 meeting. Two weeks ago he even said that the kiwi “needs to be persistently weak over the coming years” to bolster exports.
USD/CHF
The USD/CHF is trading in the near of the upper Fibonacci Fan line. The currency pair gets a crucial support from the S1 pivot point at 1.0626 in July. Viewing on the previous month, we could recognize a horizontal trend channel (violet). If the formation is strong enough, the USD could cross the fan line and will drift towards the upper line at 1.0970.
USD/JPY
In July the USD/JPY was able to recover from its low of Andrew’s pitchfork and is now remaining at the top of the formation. Especially noticeable is the breakthrough of the short and medium term MA through the long MA. This long signal is offset by a very high Momentum, which is decreasing. However, there seems to be a very strong resistance at 95.08. An early breakthrough could mean the end of the bearish trend.
