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Intraday Forex Technical Report

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U.S. Update: Dollar stronger

Thu, Jul 2 2009, 16:24 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team

What happened in Asia

Dollar regained the upside during Asian session, as risk aversion return to markets after a report raising doubts over Russia's banking sector prompted players to sell the risk-sensitive unit. Gbp remained under selling pressure, while Japanese yen managed to hold the 96.00 level against dollar. Currencies traded in narrow ranges ahead of early European morning data.

What happened in Europe

The Euro zone unemployment rate has increased to a ten year high of 9.5% in May from a revised 9.3% with unemployment having surged from 7.3% in May last year, providing more bad news from the labor market, as jobless rate is expect to continue rising in the next few months. Bad news, help greenback as safe haven currency ahead of ECB; finally, the Governing Council decided to leave rates unchanged at 1.0%, triggering a first spike against greenback, quickly diluted after the release of Nonfarm Payrolls in the U.S. America lost 467K jobs, while unemployment rate rose less than expected also to 9.5%. Stocks and futures fell after the release, as well as long term treasuries, sending dollar and yen up after the news, that send traders out of riskier assets. Gbp continued under selling pressure as the U.K.'s economic recovery is proving to be not as easy as market anticipated, after the Bank for International Settlements and the Organization for Economic Cooperation and Development warned the country's public finances are only going from bad to worse.

What to expect

While stocks continue falling and close to key support levels, (S&P is barely holding above 900), majors remain in the same range we have been seeing since early June. True, closer to the base of the range, but no major break outs have happened today. Euro holds just above the 1.4000 level, while Gbp hover around 1.6400 after reaching an intraday low of 1.6330. Yen could have been the most benefited currency of the day, still 10 pips away from 96.00. With volume decreasing rapidly, expect majors to consolidate around actual levels, and tiny markets to begin growing. Welcome to summer doldrums.

Published on  Thu, Jul 2 2009, 16:25 GMT