US data point towards stabilization

Forex News and Events:

Australian Westpac consumer confidence increased by the most in five months to 99.1, overshadowing the lower than expected housing finance (total ex-refinancing) which fell 1.4% m-o-m. Regardless of the mixed data, it could be safely said that the 1.25% policy easing operated since November 2011 is starting to have a positive impact over the non-mining economy. AUD advanced against all of its G10 peers, gaining most against the USD (+0.26%). NFIB small business optimism index for the US dropped yesterday to 91.4 from 94.4 m-o-m, its largest decline in two years. Confidence among small businesses was lower across the board but it was mainly led by economic expectations. What’s more, with the passage of the health care bill by the Supreme Court, NFIB warns one has to “wait for July’s survey to realize the effect” over small businesses. The TIPP/IBD optimism index was also released during the US session, coming in better than expected at 47.0 up from 46.7. The index is joining other sentiment indexes such as the University of Michigan index of consumer sentiment or the Conference board consumer confidence into a stabilization pattern. Today’s data out of the US might show that the trade deficit has narrowed, principally due to lower oil prices and a lower demand for external goods.
Consensus for the data stands at a deficit of USD 48.6BN against a prior 50.1BN. May wholesale inventories will also probably have grown but will most likely have done so at a slower pace. This is due to the fact that inventories have been accumulating for the past few quarters, which naturally pushed investors to lower their production. Last but not least, we expect the FOMC minutes to be published at 18:00 GMT. The minutes will probably provide some explanation as to the Fed’s stance, especially that doves have been increasingly vocal. As a matter of fact, San Francisco Fed Williams said the central bank must maintain “extraordinary vigilance” and Chicago Fed Evans commented last week right after the FOMC meeting that he believed new round of asset purchases to have a stronger impact than an extension of the bond buying program. 

Today's Key Issues (time in GMT):

2012-07-11T00:30:00 AUD AU Westpac Consumer Sentiment
2012-07-11T01:30:00 AUD AU Home Loans (MoM)
2012-07-11T06:00:00 EUR GE CPI (YoY)
2012-07-11T06:45:00 EUR FR Current Account
2012-07-11T09:30:00 EUR GE 10-Year Bund Auction
2012-07-11T12:30:00 USD US Trade Balance
2012-07-11T12:30:00 CAD CA Trade Balance
2012-07-11T17:00:00 USD US 10-Year Note Auction
2012-07-11T18:00:00 USD US FOMC Meeting Minutes

The Risk Today:

EURUSD EURUSD continues to trade below the symmetrical triangle in formation since the start of June. The downside pressure however eased and the pair is now trading around the 1st June low at 1.2287 after having reached a two-year low at 1.2235. We expect the pair to trade around this level, however our bias is towards further downside. The first areas of supply can be found at 1.2147/52 (29th June 10’ low), 1.2000 (psychological support) then 1.1862 (7th June low), and 1.1772 (30th Dec 05’ low). If the pair pulls back up into the triangle, the first levels of demand can still be found at 1.2439 (Multiple support and resistance in June), 1.2685 (June 19th high & June 20th low), 1.2754 (June 20th high), 1.2826 (22nd May high), 1.2906 (support turned resistance), 1.3066 (8th May high), 1.3081 (gap high), 1.3122 (2nd May low), then 1.3179 (7th May pivot high).

GBPUSD Despite today aggressive move, GBPUSD is still flirting with the lower band of the ascending channel around 1.5520 while moving away from the lower bound of the Bollinger band. The pair seems to be regaining some kind of bullish momentum exhibiting higher lows for the past two days. We expect GBPUSD to trade around the ascending lower band of the channel for the day. If the pair fails to continue its upward move, the first zones of supply will be located at 1.5405 (8th June low), 1.5374 (6th June low), 1.5321 (5th June low), then 1.5268 (13th Jan low). The next resistances lie at 1.5566 (Multiple June bottoms), 1.5663 (June 18th & 19th lows), 1.5714( June 14th and 21st high), 1.5785 (23rd May high), 1.5852 (22nd May high), 1.5954 (1st Mar pivot high), 1.6066 (support turned resistance), 1.6207 (4th May high), 1.6302 (30th May high), 1.6335 ( 31st Aug 11’ high), 1.6455 (29th Aug 11’ high).

USDJPY USDJPY broke down from the ascending triangle it has been trading in since the start of June, quickly trading through 79.34 support. The bears seemed to hold the upper hand with further downside expected in the coming session. Now that the pair has broken lower than 79.51 and is holding around 79.34 (15th June high & 20th Feb close), the next levels of supply will be lying at 79.20 (10th June low), 78.50 (6th June pivot low & downtrend top), 78.00 (Psychological lvl), 77.66 (1st June low), 77.36 (13th Feb low) then 76.58 (3rd & 17th Jan low). The next levels of resistance are at 79.95 ( 22nd May & 23rd May highs),80.21 (reversal), 80.62 (2nd May high), 81.60 (failed corrective rally), 82.56 (6th April high), 82.99 (3rd April high), trigger resistance at 83.40.

USDCHF Despite today aggressive move, GBPUSD is still flirting with the lower band of the ascending channel around 1.5520 while moving away from the lower bound of the Bollinger band. The pair seems to be regaining some kind of bullish momentum exhibiting higher lows for the past two days. We expect GBPUSD to trade around the ascending lower band of the channel for the day. If the pair fails to continue its upward move, the first zones of supply will be located at 1.5405 (8th June low), 1.5374 (6th June low), 1.5321 (5th June low), then 1.5268 (13th Jan low). The next resistances lie at 1.5566 (Multiple June bottoms), 1.5663 (June 18th & 19th lows), 1.5714( June 14th and 21st high), 1.5785 (23rd May high), 1.5852 (22nd May high), 1.5954 (1st Mar pivot high), 1.6066 (support turned resistance), 1.6207 (4th May high), 1.6302 (30th May high), 1.6335 ( 31st Aug 11’ high), 1.6455 (29th Aug 11’ high).

Resistance and Support: