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Forex − USDJPY approaches its 4 Months low

Wed, Jul 8 2009, 09:44 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Forex News and Events:

Tuesday began with FX markets and Equities looking like some risk was being put back into traders’ books. EUR/USD rose above 1.4000, AUD/USD above 0.8000 while EUR/JPY hit 133.50 as both the USD and JPY lost ground. The major exception to the above was the Pound which suffered a sharp sell off after UK industrial production data showed further contraction rather than the marginal increase predicted and the NIESR made something of a u-turn on their previous forecast that the UK economy had hit it’s lowest ebb at the end of Quarter 1. GBP/USD fell from 1.6250 to 1.6150 while EUR/GBP rose to 0.8650. The US session put paid to any thoughts of increased risk appetite and sent the Dollar and JPY back higher. Firstly, there was a statement from the House of Representatives that a further stimulus package could be required in the future. This sent equities tumbling and the negative sentiment was further cemented by news that credit card and home equity loan delinquencies had hit an all time high. The final nail in the coffin of optimism on the day was talk that the CFTC was said to be considering imposing limits on speculators in oil and other energy futures to try to combat some of the ‘extreme’ moves we have seen of late. This sent commodities, in general, lower with oil closing below $63 a barrel. The other thing to mention that may become ‘interesting’ tomorrow is that EUR/CHF has slipped back close to where the SNB took action recently. I would say they are likely to emphasize their stance once again… The rise of risk aversion seen yesterday continued to be the dominating factor with trading in the Far East. EUR/JPY came under persistent pressure overnight from the beginning from 132.00 and eventually took out some sizeable stops at the 131.40 level. In similar fashion, USD/JPY slipped lower an, despite encountering some strong buying at 94.60 and 94.50, later took out stops at the 94.45 area. EUR/USD felt the pressure of the cross supply and fell through 1.3900 to a low of 1.3862. Talk of sovereign demand at 1.3875 stemmed the flow and saw the market rise back to 1.3900. The Pound suffered further negative sentiment in Asia as GBP/USD fell to 1.6070 and EUR/GBP rose to 0.8650. This was mostly due to comments from ex-MPC member Nickell who said that the UK housing market is still a long way from recovery and that the Bank of England could possible extend QE above the £150 billion already spent.

Today's Key Issues (time in GMT):

06:45 CHF Unemployment Rate JUN 3.50% vs. 3.40%
06:45 CHF Unemployment Rate (sa) JUN 3.60% vs. 3.50%
08:00 TRY Industrial Production (YoY) MAY -15.80% vs. -18.50%
10:00 EUR Euro-Zone GDP s.a. (QoQ) 1Q F -2.50% vs. -2.50%
10:00 EUR Euro-Zone GDP s.a. (YoY) 1Q F -4.80% vs. -4.80%
10:00 EUR Euro-Zone Household Cons (QoQ) 1Q F -0.50% vs. -0.50%
10:00 EUR Euro-Zone Gross Fix Cap (QoQ) 1Q F -4.20% vs. -4.20%
10:00 EUR Euro-Zone Govt Expend (QoQ) 1Q F 0.00% vs. 0.00%
10:30 GBP BRC June Shop Price Index Jul-08
11:00 EUR Industrial Prod. YoY (nsa wda) MAY -20.00% vs. -21.60%
11:00 EUR Industrial Production MoM (sa) MAY 0.50% vs. -1.90%
12:00 USD MBA Mortgage Applications Jul-02 Prev. -18.90%
20:00 USD Consumer Credit MAY -$10.0B vs. -$15.7B

The Risk Today:

EurUsd .The near-term outlook is neutral/negative and with intraday momentum looking stretched another day between 1.3825 and 1.4050 is in prospect as cross moves elsewhere are washed through EUR/USD liquidity.

GbpUsd Cable remains capped below the 21 day average at 1.6390, the signs of bearish divergence on weekly and daily momentum charts, makes the pound vulnerable this month. Intraday Fibonacci support is at 1.6005 with trendline and recent range low at 1.5745/1.5800 beyond that.

UsdJpy USD/JPY has slumped onto major support this morning following the deterioration in the outlook for risky assets. Below 94.00 we would expect significant stop loss selling.

UsdChf USD/CHF keep staying locked between trendlines at 1.0630 and 1.1020. Again, relatively random unexciting price action expected today.

Resistance and Support:

Published on  Wed, Jul 8 2009, 09:47 GMT