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Daily Forex Strategy Briefing

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Greenback Testing Resistance

Tue, Jul 29 2008, 23:29 GMT
by Hans Nilsson

CMS Forex

Greenback Testing Resistance

• The dollar rose across the board Tuesday following a US equity rally and better-than-forecast US economic data. The yen fell as risk appetite increased and a Bank of Japan official warned about a Japanese recession. The commodity-related Australian and Canadian dollars continued their slump and fell to important technical supports. The EUR/USD is testing the important 1.56-area support. The euro was pressured by new indication of the EMU economic weakness as French consumer confidence fell to a record low of -48 in July. The greenback is testing resistance on a slightly improved dollar environment against the backdrop of a worsening European economic outlook.


• The GBP/USD fell after the Confederation of British Industry said its survey of retailers fell to the lowest level since the survey began in 1983. The pair extended losses and broke support from the short uptrend after the greenback advanced on better-than-expected news. The pair is at support at 1.98. If this support is broken, the GBP/USD may fall to the 1.95-area. We sell the pair with stop at 2.0135.

Financial and Economic News and Comments

US & Canada

• The Conference Board said its July index on consumer confidence increased to 51.9, from June’s revised 51.0. The July reading was slightly better than the expected 51.0. Still, the share of people telling the Conference Board that jobs are hard to get increased to 30.3% from 29.7% in June. Those saying jobs were plentiful fell to 13.5% in July from 14.1%.


• The S&P/Case-Shiller home-price index for 20 US metropolitan areas dropped 15.8% y/y in May, slightly less than expected but still the biggest decline since records began in 2001, after falling 15.2% y/y in April.

Europe

• The CBI’s retail sales gauge dropped in July to the lowest level in a quarter-century as record oil prices forced shoppers to cut spending, the Confederation of British Industry said. The survey showed 25% of the retailers sold more goods than a year earlier and 61% sold fewer goods. Resulting in a net balance of -36% is the lowest since the survey began in July 1983, compared with -9 in June. The index for durable household goods such as refrigerators, furniture and booksellers fell to -100. Grocers and footwear stores were the only outlets to report a positive sales balance.

Asia-Pacific

• Bank of Japan Deputy Governor Kiyohiko Nishimura said the Japanese economy may be moving into a recession.

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Published on  Tue, Jul 29 2008, 23:37 GMT