EUR/GBP (SELL): We recommend SELL with a close stop/loss.
EUR/USD (SELL): Sell here with double stop at 145.78.
EUR/CHF (NEUTRAL): Strong movement at the end of H1. No recommendation at current levels. Sell with double stop if we reach 124.50-125 again.
Yesterday Greece voted in favour of the austerity plan, and moreover we saw very good figures from the US in the form of Chicago PMI – these events bode well for today’s ISM industry figures. These figures will be very decisive. To a great extent, risk-tolerant investors have become active in recent days, but poor ISM figures will presumably cause equity investors in particular to become hesitant – and that would have a spill-over effect in the FX market (SEK, EUR and NOK will be sold). On the other hand, good figures will give rise to renewed optimism – at least until the end of next week. As the situation appears right now, it seems that most observers expect good figures tomorrow. Also, it might be a good idea to keep a close eye on the PMIs from Europe and the UK today.
Yesterday the Fed made its last purchase of government bonds as part of QE2. Over the period, Fed has carried out no less than 70% of the purchases of US government bonds, and it will be interesting to see whether investors will ‘demand’ a higher interest rate.
EUR/USD (SELL): As stated yesterday, the next movement of EUR/USD will be fuelled by the growth theme. We recommend that investors sell with a double stop at 145.78.
If 145.78 is breached, we think the growth indicators were good and that at least until the release of employment figures from the US (Friday) next week, we will see a strong increase in risk appetite.
EUR/CHF (SELL): Stops were taken out yesterday, and USD/CHF also contributed to an upward movement of EUR/USD. Also, in each of the past two years, we have at mid-year seen a trend reversal towards the upside for EUR/CHF. There are speculations whether to a great extent this can be attributed to a closing of swaps/loans toward the end of the period. EUR/CHF increased by 6.5% on these occasions. This would equal 125.50 and hence a test of the strong resistance at 124.50-125.
EUR/GBP (SELL): We recommend SELL with a close stop/loss at 90.75.
Today’s most important events:
09:58 EUR PMI manufacturing
10:30 GBP PMI manufacturing
16:00 USD ISM manufacturing