NZD/USD Technical Analysis August 4, 2011

The NZD/USD pair had a fairly quiet and even day on Wednesday as the markets rocked back and forth all around the world. The Kiwi has enjoyed a different dynamic lately as the Chinese are currently buying up bonds out of New Zealand. This puts support under the currency and as such keeps it afloat even when the risk is being taken off in the markets. We like going long if we can break the highs from Wednesday.

USD/CAD Daily Fundamental Analysis for August 04, 2011

The USD/CAD pair retreated earlier on Wednesday after the ADP employment report showed U.S. private employers added more jobs than expected in July, where the ADP employment report showed 114,000 jobs were added, better than median estimates of 100,000 added jobs, which eased some of the concerns over the health of the U.S. labor market.

Nonetheless, the USD/CAD pair erased some of its losses after the ISM services index was released, where the ISM services index showed activities eased in July to 52.7 below expectations of 53.5, which spread further concerns over the outlook of the U.S. economy, especially as the ISM manufacturing index for the same month also showed easing activities in July.

The focus in markets will now turn to the outlook for growth, as recent signs suggest economic growth is slowing in both the United States and Canada, while traders will be eyeing data from the U.S. labor market, as the infamous jobs report is due on Friday, and traders will be eyeing the recent developments in the U.S. labor market, and if the data proves disappointing, we should expect the USD to gain more momentum and rise against the CAD.

Thursday August 04:

At 12:30 GMT we have the weekly jobless claims, which are expected to rise to 405,000, where last week jobless claims fell to 398,000, which marked the lowest since early April.

EUR/USD Daily Fundamental Analysis for August 04, 2011

The EUR/USD rallied on Wednesday amid choppy trading as investors were mixed following the surprise SNB decision which lifted the euro versus the franc and accordingly versus the dollar on expectations that the European central banks might actually take action today.

Eased U.S. debt ceiling woes did not much relief the market as the focus shifted to slowing global growth and the fear of the era of sluggish growth and extended fiscal tightening that will further weigh on the fragile recovery.

The euro was powered by expectations that the ECB might take action to ease the tension after the sudden move from the SNB, which was also support for the euro to regain its appeal.

In an unexpected move, the Swiss National Bank cut the target range for the three month Libor Interbank rate to 0.00-0.25% from 0.00-0.75% and also said it will increase the supply of francs to the money market over the coming days.

The SNB said that the franc was “massively overvalued” and threatens the recovery amid rising downside pressure and worsening state of the economy. The SNB also said they will expand the sight deposits to 80 billion francs from 30 billion and add more measures if needed to support the recovery and prevent swissy from the extensive rally.

Nevertheless, with the ADP jobs numbers the tension somehow eased ahead of the nonfarm payrolls, yet the focus remains on Friday. As for Thursday the ECB is the spotlight with a light load of data from the United States.

Germany will start the major day for the euro zone at 10:00 GMT with June’s Factory Orders which are expected with 0.2% drop following 1.8% surge in May, while n the year to ease to 6.8% following 12.2%.

The highlight for the day will surely be the European Central Bank rate decision and press conference. The decision at 11:45 GMT is expected with steady rates and the main rate to be held at 1.50%.

Trichet’s press conference will follow at 12:30 GMT and investors are looking for hints for the next move, where a rate increase hint is highly unlikely and the president will refrain from strong vigilance. Also more focus will be on the ECB’s plan to deal with the debt crisis, whether the exception given to Portuguese bonds will be delivered to Ireland and what the president has to say about the Greek bond buyback and EFSF bond buying.

At 12:30 GMT we have the usual weekly jobless claims, where last week jobless claims fell to 398,000, which marked the lowest since early April.

EUR/CHF Daily Fundamental Analysis for August 04, 2011

Swissy weakened strongly against its major counterparts and the EUR/CHF surged to the upside after the unexpected move from the Swiss National Bank in a new attempt to halt the franc’s rally.

In an unexpected move, the Swiss National Bank cut the target range for the three month Libor Interbank rate to 0.00-0.25% from 0.00-0.75% and also said it will increase the supply of francs to the money market over the coming days.

The SNB said that the franc was “massively overvalued” and threatens the recovery amid rising downside pressure and worsening state of the economy. The SNB also said they will expand the sight deposits to 80 billion francs from 30 billion and add more measures if needed to support the recovery and prevent swissy from the extensive rally.

This unexpected move from the SNB is likely to keep the pair biased to the upside in the coming days, where the EUR/CHF will fluctuate heavily on Thursday especially with the ECB rate decision, yet the intervention move from the SNB the pair will likely be biased to the upside.

The focus is surely on the rate decision on Thursday from the ECB, where the bank is expected to hold rates steady as the focus turns to what Trichet has to say. The decision is at 11:45 GMT and expected with steady rates and the main rate to be held at 1.50%.

Trichet’s press conference will follow at 12:30 GMT and investors are looking for hints for the next move, where a rate increase hint is highly unlikely and the president will refrain from strong vigilance. Also more focus will be on the ECB’s plan to deal with the debt crisis, whether the exception given to Portuguese bonds will be delivered to Ireland and what the president has to say about the Greek bond buyback and EFSF bond buying.

GBP/USD Daily Fundamental Analysis for August 4, 2011

On Wednesday, the pair advanced as the sterling got a boost after a report showing that U.K., services sector accelerated in July to 55.4 from the prior 53.9, beating analyst’s forecasts of 53.2, while the dollar was negatively affected by Moody’s warns that theU.S.may still lose its AAA top rating.

With regard to fundamentals from the U.S., the ADP report showed that the private sector added 114,000 jobs in July, lower than 157,000 jobs added in June yet better than forecasts of 100,000.

On the Thursday, at 11:00 GMT, the UK will release the waited rate decision for the month of August, where forecasts refer to no change in both interest rate and APF. The decision may not have a significant impact as the latest announcements by policy makers showed that they will keep loose monetary policy for a while, thus the decision will probably hold no surprises.

At 12:30 GMT, the U.S economy will release initial jobless claims for the week ended July 30 and continuing claims for the week ended July 23, while the Swiss economy lacks fundamentals.

The data is predicted to have an impact on the pair as it comes after the ADP report and before the release of the awaited non-farm payrolls report due on Friday.

USD/CHF Daily Fundamental Analysis for August 4, 2011

On Wednesday, the Swiss franc lost ground against majors, including the dollar, where the pair rebounded from a record low after the Swiss National Bank (SNB) unexpectedly cut the three-month Libor interbank rate to a range between 0.00-0.25 percent compared with the prior 0.00-0.75 percent range. Also, the SNB said it would increase the supply of francs in the market over the next few days to halt the franc’s rise which is deemed as overvalued according to the SNB which pledged to use further measures if necessary. The dollar, on the other hand, was downwardly affected by Moody’s warns that the U.S. may still lose its AAA top rating. Regarding fundamentals, U.S. ADP report showed that the private sector added 114,000 jobs in July, lower than 157,000 jobs added in June yet better than forecasts of 100,000. On Thursday, at 12:30 GMT, the U.S economy will release initial jobless claims for the week ended July 30 and continuing claims for the week ended July 23, while the Swiss economy lacks fundamentals. The U.S. data is predicted to have an impact on the pair as it comes after the ADP report and before the release of the awaited non-farm payrolls report due on Friday. With the expansionary monetary policy seen by the SNB along with the other possible interventions, the pair is predicted to show some rise, to halt its southern bearish direction.

NZD/USD Daily Fundamental Analysis for August 04, 2011

The New Zealand dollar (Kiwi) slumped to a 2-week low versus the dollar as the European debt crisis escalates once again with fear of spreading to Italy and Spain, so investor’s fears escalate which is a negative impact on the market’s movements.

Furthermore, the market is moving into the hurdle phase as the fears dominate the investors and pushing them to increase the investment in safe haven assets such as the Gold and the Yen.

The New Zealand dollar is pressured with downbeat growth signals with signs the U.S. economic recovery is losing momentum all worsening the outlook for the global recovery and denting demand for the commodity currency.

On Thursday, the New Zealand economy will release the employment change during the second quarter at 22:45 GMT (Wednesday), where the previous reading was 1.4%.

The Unemployment rate in New Zealand for the second quarter will be published at 22:45 GMT, and is expected to improve to 6.5% from the previous 6.6%.

At 12:30 GMT the U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance which is expected at 405 thousand following the unexpected drop to 398 thousand last week.

USD/JPY Daily Fundamental Analysis for August 04, 2011

The yen declined versus the dollar before the Bank of Japan announces the rate decision this week amid expectations it will take steps to counter the currency’s strength.

Economic recovery in Japan is under pressure as global demand for Japanese products slowed as the yen’s appreciation reached to the highest level in four months against the U.S. dollar, hurt exporters. The President of BOJ noted this week that the yen’s strengthening will threatenJapan’s economic growth.

Moreover, Japan’s economy needs time to revive again before the end of 2011, where the sustained recovery in manufacturing may take time as companies are facing a shortfall of engine spares which halted the production cycle.

On Thursday, at 06:00 GMT the Bank of Japan is going to release its decision about the interest rates for August, where expectations indicated that the Bank will leave the rates steady between 0.0% and 0.10% to support the economic recovery.

At 12:30 GMT the U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance which is expected at 405 thousand following the unexpected drop to 398 thousand last week.

AUD/USD Daily Fundamental Analysis for August 04, 2011

The market has witnessed aggressive movements after the U.S. agreed to raise the debt ceiling and the investors see the global economy is losing momentum which increased demand for the precious metal as an investment haven.

The Australian dollar declined sharply against its major counterpart the American dollar as the Reserve Bank of Australia decided yesterday to keep the rates unchanged steady at 4.75% for an eighth straight meeting as the Bank wants to gauge the U.S. slowdown.

Moreover, the Australian dollar continues the downside movement against its major counterparts, where it continues its sharp decline versus the American dollar as the Australian economy reported a narrowing trade surplus in June, and the retail sales unexpectedly decline damping demand for Aussie.

The Australian economy won’t introduce any fundamentals on Thursday, but at 12:30 GMT the U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance which is expected at 405 thousand following the unexpected drop to 398 thousand last week.

EUR/USD Technical Analysis August 3, 2011

The EUR/USD fell on Tuesday as traders are starting to de-risk their portfolios during this latest round of economic uncertainty. The European bond markets make owning European anything is a risky proposition. The pair does have the Dollar in it and because of that – it hasn’t fallen as far as the Euro has against most other currencies. We like selling rallies at this point, and until the daily candle can close above 1.45 or so.

USD/JPY Technical Analysis August 3, 2011

The USD/JPY pair fell on Tuesday as traders piled into the “risk off” trade in all markets. The debt limit crisis seems to have only left more questions than answers, and the situation in the European bond markets is only getting worse. In time like this, traders buy the Yen. We expect this trend to continue, but one has to wonder when the Bank of Japan steps in?

GBP/USD Technical Analysis August 3, 2011

The GBP/USD fell, and then bounced on Tuesday as traders wrestled with the ideas of the debt limit increase votes. The truth is that the pair normally acts as a risk barometer of sorts, and this action is a little bit odd. However, the charts don’t lie, and this pair looks like it could make another attempt at 1.65 based upon the 1.63 support holding. Of course, we want to see a break of the Tuesday high in order to buy – but it will only be a short-term position at best.

USD/CHF Technical Analysis August 3, 2011

USD/CHF fell hard on Tuesday as the trading world looked for safe havens. The Swiss Franc seems to be the ultimate safe haven, and as such – the pair fell drastically. In fact, it is currently testing the 0.76 level at the end of the New York session, which of course is an all-time low. If you sell here, you are simply chasing the trade. We prefer to sell bounces.

EUR/CHF Technical Analysis August 3, 2011

The EUR/CHF pair fell 350 pips on Tuesday as the trading world is running from European bond issues and anything else risk related at this point. The pair has closely tracked gold this year in an inverse direction, and as the gold markets rose $40 – this pair was always going to fall. The pair is way oversold at this point, and should only be sold – but after a bounce that is desperately needed.

AUD/USD Technical Analysis August 3, 2011

The AUD/USD pair dropped an amazing 2 handles on Tuesday to reach the 1.08 level at the end of the day. The level represents the latest breakout, and needs to hold for the bulls to win the day as it were. Because of this, we are waiting to see if there is supportive action in this area, and if so – we could see a buying opportunity. However, the daily candle for Tuesday is closing at its absolute lows – never a good sign.

USD/CAD Technical Analysis August 3, 2011

USD/CAD rose again during the Tuesday session, and the 0.96 handle has been breached again. The pair is still in a massive downtrend, but with all of the debt crisis issues and sovereign risk fears out there, the world is buying USD. It is also selling oil, and that is the biggest problem for the Canadian dollar, not that the Bank of Canada has an issue with a falling Loonie. We still think this pair goes a bit lower, but there is a bounce coming from here. We are looking for bearish action near 0.98 and parity to sell from.

NZD/USD Technical Analysis August 3, 2011

The NZD/USD pair fell hard on Tuesday as traders shunned the “risk on” trade, of which this currency pair is considered to be part of. The pair is still decidedly bullish, but a pullback seems to be in the midst of us now. We look to buy on support, but not until a daily candle shows us this at either the 0.86 or 0.85 levels.

USD/CAD Daily Fundamental Analysis for August 03, 2011

The USD/CAD pair extended its gains on Tuesday, as pessimism continued to dominate investors all around the globe, where fears from the European debt crisis spreading to Italy and Spain fueled worries, as yields on Spanish and Italian governmental bonds rose to the highest level in 14 years, while a disappointing income report from the United States also raised concerns over the outlook for growth, as well as the outlook for growth in Canada, since the United States is Canada’s largest trading partner, and that put huge downside pressures on the CAD, and pushed the USD/CAD pair accordingly to the upside.

The focus in markets will now turn to the outlook for growth, as recent signs suggest economic growth is slowing in both the United States and Canada, while traders will be eyeing data from the U.S. labor market, as the ADP employment report will be released on Wednesday, and traders will be eyeing the recent developments in the U.S. labor market, and if the data proves disappointing, we should expect the USD to gain more momentum and rise against the CAD, which means that the USD/CAD pair will probably extend its rise over the coming period.

Wednesday August 03:

The United States will start with the ADP employment change for the month of July at 12:15 GMT, where the ADP employment report is expected to show that U.S. private employers added 110,000 jobs in July, compared with 157,000 added jobs back in June.

At 14:00 GMT we have the ISM services index for the month of July, where the ISM services index is expected to expand to 54.0, compared with 53.3 back in June.

At 14:00 GMT, factory orders will be released for the month o June, where factory orders are expected to rise by 0.4%, compared with 0.8% in May.

EUR/CHF Daily Fundamental Analysis for August 03, 2011

Swissy steadily continued to extend the gains on Tuesday rising to a new all time high versus the euro as haven demand continued to support the Swiss Franc amid the rising uncertainty.

Swissy is holding strong despite the downside pressure from the currency gains on growth, where data today showed retail sales rallied and manufacturing unexpected widened which was further support for the franc.

Still, the fears dominant the market over the outlook for the euro area and slowing growth are weighing on the sentiment and keeping investors biased towards haven assets like the franc. Investors are still wary over the ability of leaders to contain the debt crisis, especially as Italian and Spanish bond yields rallied to multi-year highs today stocking concerns that the situation is still worsening and the market will block the nations out of funding.

We still see the jitters and volatility evident and to prevail on Wednesday with services fundamentals, jobs figures from the United States and ahead of the rate decision from the ECB on Thursday.

The euro area is set to release the final revision for the PMI Services for July at 08:00 GMT and expected to maintain the slowing pace from June unrevised from the advanced estimate of 51.4; also the final estimate for the Composite Index is also expected to hold weak at 50.8.

At 09:00 GMT the June retail sales are expected with 0.5% rebound following 1.1% slump in May and on the year to ease the drop to -0.9% following -1.9%.

EUR/USD Daily Fundamental Analysis for August 03, 2011

Choppy and mixed trading prevailed on Tuesday as the focus remained on the worsening outlook for the global recovery and focus on the U.S. Senate as they where to vote on the bill and send it to president Obama to sign it into law, yet investors remained worried it might not be sufficient to prevent rating downgrades.

After the Congressional leaders reached an agreement to raise the debt-limit investors started to see that the measures were not sufficient and do not meet the $4 trillion of cuts needed to retain the top credit rating, which further assures that it is a long austerity road for the United States and at the time of sluggish recovery which further fueled the pessimistic vibe in the market.

Investors are worried again over the outlook for the global recovery and the deepening debt crisis in the euro area as well, especially as bond yields returned to rally and the effect of the measures to stem the contagion subsides. The fear of slowing growth is intensifying the pressure on peripheral euro zone economies which is further intensifying the crisis.

More volatility is expected to be seen on Wednesday with the market assessing the U.S. debt limit deal and assessing the slowing signs of the recovery and choppy trading is likely to prevail.

Germany will start with the final revision for the PMI Services for July at 07:55 GMT and expected unrevised from the flash estimate with the slowing pace from June at 52.9.

The euro area is set to release the final revision for the PMI Services for July at 08:00 GMT and expected to maintain the slowing pace from June unrevised from the advanced estimate of 51.4; also the final estimate for the Composite Index is also expected to hold weak at 50.8.

At 09:00 GMT the June retail sales are expected with 0.5% rebound following 1.1% slump in May and on the year to ease the drop to -0.9% following -1.9%.

The United States will start with the ADP employment change for the month of July at 12:15 GMT, where the ADP employment report is expected to show that U.S. private employers added 110,000 jobs in July, compared with 157,000 added jobs back in June.

At 14:00 GMT we have the ISM services index for the month of July, where the ISM services index is expected to expand to 54.0, compared with 53.3 back in June.

At 14:00 GMT, factory orders will be released for the month o June, where factory orders are expected to rise by 0.4%, compared with 0.8% in May.