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Daily Forex Commentary
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Yen on the rise and ISM on the agenda
Tue, Sep 2 2008, 07:02 GMT
by Jyske Bank Team
Today’s comment
Majors & Scandies
By the Majors & Scandis Team
Yen on the rise
The yen finally managed to break below the psychological threshold at 160 thereby leaving all major moving averages behind. Consequently, the cross is now closing in on our short term target at 156. The break to the downside does, however, mean that the 8 year long uptrend on EUR/JPY is about to crumble should EUR/JPY stay below 161 - 162. A new downtrend on EUR/JPY would mean that much lower levels will be lurking in the wings, hence our long term bullish view on the yen versus the EUR. The falling EUR/JPY has also been dragging the EUR/CHF lower due to increased volatility and risk aversion amongst currency traders. We foresee a coming test of the bottom of our range in EUR/CHF at 160.
EUR/USD is once again flirting with the previous low around 145.70. We consider it only a matter of time before this level of support gives in and opens the gateway towards new lows.
We therefore recommend to stick with already sold EUR/USD positions as a coming test of 143 - 143.50 is lurking in the wings. Sterling is still feeling the heat from a very poor performing British economy. Overnight GBP has been sold off against both the USD and the EUR. The long term trend on GBP is definitely down.
As widely expected the RBA turned the spot this morning and lowered the interest rate by 25bps. AUD/USD managed to get above 85 in the aftermath, but overall the AUD is still living on the edge as are the other two commodity currencies NZD & CAD. The rising yen also makes the present situation of exactly these three currencies especially precarious considering the huge speculative currency positions linked to the uridashi bond issuances.
Emerging Markets
By the Emerging Markets Team
ISM will influence EM today.
Today we do not have any important events on Emerging Markets. In fact the main event will be the US ISM data. We expect a lower number than expected (less than 50.0), which could put pressure on USD short term. This will then put pressure on the dollar related UScurrencies.
Today’s Key Events
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09.00 PPI, Romania
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11.00 PPI, Euroland
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14.00 Industrial production, Brazil
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16.00 ISM, USA
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03.30 GDP, Australia
Published on Tue, Sep 2 2008, 10:19 GMT
Archive
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