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Daily Forex Technical Report

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Daily Forex Technical Report − Dollar Firm, Focus on ISM Services and ADP Employment

Wed, Jun 4 2008, 08:02 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Dollar Firm, Focus on ISM Services and ADP Employment

Dollar remains firmly supported by the hawkish comments from Bernanke yesterday that fueled more speculation that Fed could remove some of the policy easing this year. Interest rates futures are now pricing close to 60% chance that Fed will high by 25bps by December. The upcoming growth data will be crucial to solidify such expectation and provide further support to the greenback. In near term, today's ISM non-manufacturing index and ADP employment report will be closely watched. While the ISM services index is expected to drop slightly in May, it's expected to remain in expansion territory at 51. ADP employment report is expected to show -30k contraction in May. Q1 labor costs and productivity will be released too.

Sterling dips further today on the back of the worst reading of nationwide consumer confidence at 69 released overnight. Focus is now on Service PMI which is expected to be unchanged at 50.4 in May. The Japanese yen is mildly higher on risk aversion as well as being supported by better than expected Q1 capex which dropped -4.9% comparing to expectation of -9.6%. Other data to be released include Eurozone PMI services and retail sales.

Aussie is lifted mildly after better than expected Q1 GDP which grew 0.7% qoq, 3.6%. However, the Canadian dollar continues it's recent fall, on the back of deeper retreat in oil price to below $125 a barrel.

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GBP/USD Daily Outlook

Daily Pivots: (S1) 1.9580; (P) 1.9660; (R1) 1.9714; More

Cable's fall from 1.9852 extends further to as low as 1.9540 today and break of 1.9612 cluster support (50% retracement of 1.9363 to 1.9852 at 1.9608) dampens original near term bullish view. Rise from 1.9363 should have completed at 1.9852 already and at this point, further decline could be seen to retest 1.9337/63 support zone. On the upside, above 1.9740 resistance is needed to indicate such fall has completed and shift bias back to the upside. Otherwise, further fall is in favor in case of recovery.

In the bigger picture, down trend from 2.1161 have made a low at 1.9337. The corrective nature of the rise from 1.9337 to 2.0391 and fall from 2.0391 to 1.9363 suggests that price actions from 1.9337 are developing into sideway consolidation to whole fall from 2.1161. Though, the structure and length of this consolidation could either be in form of a three wave sideway consolidation or in form of five wave triangle pattern. In any case, such consolidation will continue as long as 1.9337 support holds and risk of another rise to retest 2.0391 remains. Break of this support zone is needed to indicate that decline from 2.1161 has resumed.

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Published on  Wed, Jun 4 2008, 08:04 GMT