USD/CAD Technical Analysis August 10, 2011

The USD/CAD pair slammed into the parity level on Tuesday as traders sold off everything risk related. However, as the Asian markets stabilized we saw the risk trade put back on and as such, the Loonie was bought back up. Oil rose, and this always puts pressure on the Loonie – which is exactly what happened on Tuesday. We the trend is down and we suspect that although the 0.98 level might serve as some kind of support – this pair ultimately goes down again.

NZD/USD Technical Analysis August 10, 2011

The NZD/USD pair fell, and then rose again as the market sentiment around the world changed wildly over the course of Tuesday. The pair eventually ended the day higher – and in fact had been in a 400 pip range. The 0.85 level just ahead could be resistance, and as such – we want the market to decide if it will hold before we place any new longs.

USD/CAD Daily Fundamental Analysis for August 10, 2011

The USD/CAD pair erased earlier gains and dropped back on Tuesday, where the USD/CAD pair rose earlier on Tuesday to reach parity amid the huge pessimism that continued to dominate markets after the S&P downgrade the U.S. AAA credit rating, however, better than expected housing data from Canada, in addition to hopes the FOMC will pledge to keep the loose monetary policy unchanged for an extended period, provided the CAD with momentum to rise back against the USD, and accordingly, the USD/CAD pair fell back.

Moreover, crude oil prices erased earlier losses and rose back after falling to as low as $75 a barrel amid the uncertainty surrounding the outlook for global growth, however, crude oil prices rebounded to the upside, which boosted the CAD, and pushed the USD/CAD pair to drop.

Investors will be focused on the FOMC rate decision later on Tuesday amid the recent developments, where it’s unclear whether the FOMC will signal the possibility of QE3 after the S&P downgrade to the U.S. debt.

Wednesday August 10:

From the U.S. the wholesale inventories index for June is due at 14:00 GMT and expected to ease to 1.0% following 1.8%.

At 18:00 GMT the Monthly Budget Statement for July is due with the deficit expected to widen to $140.0 billion from $43.1 billion.

EUR/CHF Daily Fundamental Analysis for August 10, 2011

The franc is still driving the EUR/CHF pair to the downside as the bearishness dominates the movement amid strong risk aversion in the market and fears over the worsening debt crisis in the euro area.

The swiss franc on Tuesday rallied yet to a fresh record high versus the euro as the volatility increases with rising jitters of another sudden move from the Swiss National Bank to weaken its currency.

Investors saw some signs of progress in the bond market in the euro area as Trichet on Tuesday confirmed the intervention in the secondary market and Italian and Spanish borrowing costs eased with the support, yet the haven demand on swissy assures that investors remain tensed and not fully confident that the measure is enough to prevent the contagion risk.

On Wednesday, the market will remain jittery especially with the lack of major fundamentals. No data is queued from release from both nations, where the market sentiment will be the main focus for the pair amid a light fundamental week.

The focus will be on the sentiment and the final decision from the Federal Open Market Committee late on Tuesday which will have its echo on the market on Wednesday, especially if the fed failed to calm the market and investors.

Also, jitters will remain with the franc at records high which will keep the fear evident for any sudden intervention from the SNB again as the haven demand is still evident and favored placing the odds for further swissy gains!

EUR/USD Daily Fundamental Analysis for August 10, 2011

The mixed sentiment and choppy trading prevailed for the EUR/USD with the focus predominantly on the Feds decision as the euro moved higher most of Tuesday ahead of the decision.

Investors focused on the fragile sentiment and worsening outlook for financial stability and growth which fueled speculations that the FOMC will likely take action to stem the crisis and the worsening state of confidence.

On Wednesday, the market movement is bound to be a reaction to the late Tuesday decision from the Federal Reserve and if the fed did not ease the jitters and stabilize markets, the strong selloff will return to control the market in a new pressure on policy makers for more coordinated efforts to control the crisis that echoes the starting days of the financial crisis.

As we said, the aftermath of the FOMC will remain the focus and eyes will also be on the performance across equity and bond markets for signs of stability to help the euro sustain the gains and otherwise the bearishness will return obviously on the pair.

In other data, Germany will release the final estimate for the July consumer price index which is expected unrevised at 0.4% rise on the month and 2.4% on the year and in EU harmonized terms also to remain unrevised with 0.5% monthly gain and 2.6% on the year.

From the U.S. the wholesale inventories index for June is due at 14:00 GMT and expected to ease to 1.0% following 1.8%.

At 18:00 GMT the Monthly Budget Statement for July is due with the deficit expected to widen to $140.0 billion from $43.1 billion.

GBP/USD Daily Fundamental Analysis for August 10, 2011

On Tuesday, the pair fluctuated as the dollar remained vulnerable before the Fed meeting, where the impact of the S&P cut to U.S. sovereign rating by one step to AA+, losing its top rating for the firs time since 1941, was still prevailing, lowering demand on high-yielding currencies.

Grim manufacturing and trade reports from theU.K.caused the pound to snap its earlier advance. Manufacturing production fell 0.4% in June compared with the prior 1.8% expansion, while visible trade deficit widened to 8873 million pounds in June from the revised deficit of 8467 million pounds, adding to worries the growth pace is slowing.

On Wednesday, the awaited inflation report will be available at 09:30 GMT; thereafter, theUSwill release MBA mortgage applications for August 5 at 11:00 GMT followed by monthly budget statement at 18:00 GMT.

The inflation report is predicted to have an impact on the pair if the growth or inflation expectations came higher than estimated as investors will wait to see the outlook for the bank and thereby predict its monetary action over the coming months.

 

USD/CHF Daily Fundamental Analysis for August 10, 2011

On Tuesday, the dollar fell to record low versus the Swiss franc after as the impact of the S&P cut to U.S. sovereign rating by one step to AA+, losing its top rating for the firs time since 1941, is still having negative effect on the market, sparking demand on refuges, led by the franc which remain the most favorable safe harbor amid the improvement in the Swiss economy. The dollar remained weak before the Fed meeting. The negative sentiment is still giving strong support to the franc which makes the mission of the SNB very difficult to curb the franc’s advance. Last week, the SNB unexpectedly cut interest rate and announced it may adopt any needed measures to stop the franc’s rally. On Wednesday, the US will release MBA mortgage applications for August 5 at 11:00 GMT followed by monthly budget statement at 18:00 GMT, while the Swiss economy lacks fundamentals. The news is not expected to have a significant impact on the market, where worries are expected to continue in the market.

NZD/USD Daily Fundamental Analysis for August 10, 2011

The market continues its downside movement as the global economic growth outlook falters, where haven assets advanced after the greenback after the Standard & Poor’s downgraded the US’s long-term credit rating, while the European crisis continues to escalate, damping the demand for higher-yielding investments and accordingly pressuring kiwi.

New Zealand dollar dropped against the greenback as concern over a slowdown in the U.S. economy and the euro-region’s debt crisis sapped demand for higher-yielding assets.

Kiwi also weakened with the selloff in Asian stock markets that declined to the lowest since 2008 on concern the U.S. economy might fall in recession. More losses were seen after the reported rise in Chinese inflation which fueled speculation for further monetary tightening that will dampen growth in New Zealand’s biggest trading partner.

On Wednesday, at 22.4 GMT (Tuesday) the New Zealand economy is to start by the NZ card spending for July, while it inclined by 0.8% in June.

At 14:00 GMT, the U.S. economy will release the wholesale inventories for June, where the previous reading was 1.8% and expected to retreat to 1.0%. The monthly budget statement for July will be released at 18:00 GMT, where the previous reading showed a deficit of $43.1 billion and expected to widen to a deficit of $140.0 billion.

USD/JPY Daily Fundamental Analysis for August 10, 2011

The USD/JPY pair dropped for the second day, as the Japanese yen was able to cover 80 percent of its previous losses the dollar when BOJ intervened in the FX market and sold the yen.

Investors increased demand on the Japanese currency as a safe haven, after risk aversion returned to control the market, increasing pressure on the yen to soar to the dangerous zone against greenback.

The U.S. sovereign credit rating downgrade by Standard and Poor’s triggered a strong selloff across global bourses, where investors abandoned risky assets and shifted their investments to the yen, which increased expectations for another intervention from the BOJ.

On Wednesday at 23:50 GMT (Tuesday), the Bank of Japan will publish the minutes for July 11-12 meeting.

The Tertiary industry index for June will be released at 23:50 GMT, and expected to show a rise of 1.0% from the previous rise of 0.9%.

At 14:00 GMT, theU.S.economy will release the wholesale inventories for June, where the previous reading was 1.8% and expected to retreat to 1.0%. The monthly budget statement for July will be released at 18:00 GMT, where the previous reading showed a deficit of $43.1 billion and expected to widen to a deficit of $140.0 billion.

AUD/USD Daily Fundamental Analysis for August 10, 2011

The Australian dollar extends its downside movements against the U.S. dollar, the pair reached the lowest level in about five months at 0.9930, after the Australian economy reported that business conditions index dropped to -1 in July from 2.

Moreover, Aussie continues the bearishness as the stock markets slumped the most in three years on concerns that the loss of the US long-term credit may worsen on the global economic outlook amid dire growth expectations.

As for the negative outlook intensified after the Standard & Poor’s agency downgraded the US’s credit rating from AAA to AA+ along the sluggish US economy; at the meantime the global economy faces also the European debt crisis with the pressure spreading to Italy and Spain which might indeed worsen the outlook.

On the other hand, the Australian dollar dropped after the China’s consumer prices rose by more than economists forecast, stoking concern the government will take more measures to cool growth.

On Wednesday, the AUD Westpac consumer confidence index S.A. for August is due at 01:30 GMT, where the prior reading dropped 8.3% during July, while the economy also will release its retail sales ex. Inflation for the second quarter at 01:30 GMT.

At 14:00 GMT, the U.S. economy will release the wholesale inventories for June, where the previous reading was 1.8% and expected to retreat to 1.0%. The monthly budget statement for July will be released at 18:00 GMT, where the previous reading showed a deficit of $43.1 billion and expected to widen to a deficit of $140.0 billion.

EUR/USD Technical Analysis August 9, 2011

The EUR/USD pair fell on Monday, continuing the downward pressure that we have seen in this market for a while. The two purple lines on the chart point out how this pair has gradually fallen over the last several months. This pair is a “sell only” pair now, and as such we don’t buy. The idea of owning whatever issues going on in Europe is ridiculous. The pair may bounce, and if it does – we sell.

AUD/USD Technical Analysis August 9, 2011

The AUD/USD fell yet again on Monday. The pair simply cannot get out of its own way, and now finds itself at a massive support area. If this area cannot hold – we are going to really fall out of bed at this point. The 1.02 level was a massive resistance area before, and a break of it started another bullish run towards all-time highs. There is plenty of support in this area, now we need to see a supportive candle in which to buy. If we can get to parity and below – this will start a new bearish trend in this market.

NZD/USD Technical Analysis August 9, 2011

NZD/USD fell on Monday, as traders shunned anything related to risk. The pair looks like it is going to run down to the 0.8000 level, and it is at that area that we will see a lot decided. The bullish trend is still intact believe it or not, but we are starting to get to a point that you really have to question this. The 0.8000 mark will make or break this pair in our opinion. 

GBP/USD Technical Analysis August 9, 2011

GBP/USD fell hard on Monday as the “risk off” trade came into vogue again as a result of the US downgrade. The pair was near the top of the recent consolidation area, in the form of the 1.65 zone. Because of this, the market was already “leaning” in a downward direction and it only took a little bit of bad news to get the riskier Pound to sell off. However, we feel that the 1.63 area is support, and this pair will more than likely continue to chop around in this 200 pip zone for a while.

USD/JPY Technical Analysis August 9, 2011

USD/JPY fell again on Monday, as traders sold off everything risk related. In fact, the Dow fell over 600 points, and as such – the “risk off” trade came into play. The Bank of Japan has made it well-known that they are considering another intervention, so we aren’t involved in this pair. In fact, it looks like the 77.50 area could be a natural support level. If we had to take a position in this pair – we would perhaps buy. But luckily for us, we don’t have to be involved in this pair at all.

USD/CAD Technical Analysis August 9, 2011

USD/CAD rose yet again on Monday as the oil markets continue to fall. The oil markets control the fate of the CAD, and as the Light Sweet Crude market is sitting right at $80 – we can monitor that to decide how to trade this pair. The $80 level is key for oil, and if it gives way, this pair will rise as the Loonie falls in value. The parity level is just above, and one cannot help but think it should be massively resistive. We are waiting to see if we get to it, and would be very interested in selling the pair at parity.

EUR/CHF Technical Analysis August 9, 2011

The EUR/CHF pair fell on Monday as traders ran from anything related to risk in the marketplace. The pair is inversely correlated to the price of gold, which rose $70 during the session, so there is no surprise this pair fell. The trend is down, and we continue to sell this pair with the belief that it will eventually head towards parity.

USD/CHF Technical Analysis August 9, 2011

The USD/CHF pair fell on Monday, but managed to bounce a bit towards the end of the session as the Dollar got a little bit of a bid at the 0.75 level. The pair is in a bearish trend, and the truth is that we will not buy this pair, and as a result we wait to see if we can get a bounce in which to sell. A break to new lows gets us selling as well.

USD/CAD Daily Fundamental Analysis for August 09, 2011

The USD/CAD pair extended its rise on Monday, as pessimism dominated global financial markets after the S&P rating agency downgraded the United States AAA credit rating, in addition to mounting concerns from the European debt crisis despite the ECB announcement to include Italian and Spanish bonds in its bond purchases program, which weighed down on confidence among traders and boosted demand for lower yielding and more safe assets, and the provided the USD/CAD with strong bullish momentum.

Moreover, crude oil prices dropped amid the uncertainty surrounding the outlook for global growth, which weighed down on the CAD as well.

Investors will be focused on the FOMC rate decision on Tuesday amid the recent developments, where it’s unclear whether the FOMC will signal the possibility of QE3 after the S&P downgrade to the U.S. debt. Meanwhile, investors will most likely continue to target lower yielding assets, and that should keep the bullish momentum going for the USD/CAD pair over the coming period.

Tuesday August 09:

Canada will release the housing starts index for the month of July at 12:15 GMT, where housing starts are expected to ease to 193.2 thousand, compared with the prior estimate of 197.4 thousand back in June.

The main focus will be on the FOMC rate decision at 18:15 GMT, where the Federal Reserve is expected to keep the rate at their historical low of 0.0-0.25% and might not take more actions to support the fainting recovery, nevertheless, investors are bracing for a surprise after the unexpected moves from the SNB and the BoJ and followed by the ECB with expanding the special money operations to ease the market tension and the Fed might just do so.

EUR/USD Daily Fundamental Analysis for August 09, 2011

The EUR/USD started the week on Monday with heavy volatility and fluctuations amid rising pessimism and fears over the debt crisis across both ends of the Atlantic and the euro remained weak despite the ECB’s steps to calm markets.

After the decision announced over the weekend, the European Central Bank stepped in the market to calm nervous investors and shelter Italy and Spain from surrendering to rising market pressures. The ECB started the bond buying which instantly drove the bonds higher and lowered borrowing costs, yet surely did not calm nerves and the euro remained weak.

Investors see that the ECB is playing on risky grounds and will need to expand its balance sheet strongly to prevent the contagion spread to both critical nations that are too big to fail. The ECB was out of options and had to act preemptively and not leave both nations vulnerable to market speculation until they are forced to ask for assistance.

The jitters and downbeat sentiment remain dominant and sparked by Friday’s late move from S&P to cut the United States top credit rating. Fears are evident over the outlook for the recovery and the risk of falling in another recession which is now complicated by the debt crisis that also worsens with recessionary prospects, which reminds us again of the same vicious cycle seen with the outbreak of the financial crisis and that keeps the market tensed.

On Tuesday, the focus will remain on central banks and financial chiefs ability to calm the nerves and take effective measures to stem the selloff and the bear market we are entering! The G7 and G20 pledged to take “all necessary measures” to support the sentiment and ensure financial stability and growth.

The focus will mainly be on the Federal Reserve and the FOMC decision. The markets before downplayed the odds for a swift and rapid move from the Fed to expand into QE3 now, yet after the sudden move from S&P now investors expect the Federal Reserve to act and maybe not rush into quantitative easing, yet act to calm markets at least take the same steps as the ECB which instantly last week expanded the liquidity operations with the 6-month tender to ease the tension and provide liquidity which investors will also eye on Tuesday to see the extent of demand on the tender as a reflect to the financial sector’s jitters.

The data on Tuesday will start from Germany at 06:00 GMT with June trade figures, where the trade surplus is expected to narrow slightly to 14.0 billion from 14.8 billion as exports are expected with 1.0% drop following 4.3% rise and imports to drop 1.8% following 3.7% rise. The current account surplus on the other hand is expected to widen to 10.0 billion euros from 6.9 billion.

As we said, the main focus will be on the FOMC rate decision at 18:15 GMT where the Federal Reserve is expected to keep the rate at their historical low of 0.0-0.25% and might not take more actions to support the fainting recovery, nevertheless, investors are bracing for a surprise after the unexpected moves from the SNB and the BoJ and followed by the ECB with expanding the special money operations to ease the market tension and the Fed might just do so.