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.

GBP/USD Daily Fundamental Analysis for August 3, 2011

On Tuesday, the pair fell as the dovish sentiment in the market due to concerns that the approval ofU.S.debt-ceiling increase and budget cut would lead to sluggish growth, especially after slowdown in manufacturing in major economies.

The downbeat sentiment triggered demand on low-yielding currencies, thereby pushing the pair to the downside, where the pound showed some advance after the better-than-estimated ease in expansion in construction, yet it failed to continue the rebound. PMI constriction showed an ease in expansion to 53.5 from the prior 53.6, above expectations of 53.1.

On Wednesday, bothU.K.andU.S.will release important data. After the release of manufacturing and construction data,U.K.eyes will be on services sector, the largest sector in the British economy; at 08:30 GMT,UKwill release PMI services for July with expectations showing a decline to 53.5 from 53.9.

As of 11:00 GMT,U.S.will release MBA mortgage approvals for July 29. At 12:15 GMT then 14:00 GMT, the U.S economy is to release ADP employment change where it is expected to decrease to 100,000 in July from the previous 157,000, while ISM non- manufacturing will decline to 54.0 in July from 53.3, according median forecasts.

With the mounting concerns spreading in markets, the pair is expected to move further to the downside.

 

 

 

USD/CHF Daily Fundamental Analysis for August 3, 2011

On Tuesday, tensions returned once again to markets as the approval of raisingU.S.debt ceiling and budget deficit cut raised concerns theU.S.would lead global economies into sluggish growth, therefore investors resorted to low-yielding currencies, led by the franc which benefited from the improvement in data.  

Swiss retail sales for the year ending June bounced 7.4% compared with the revised 3.9% drop, while PMI manufacturing rose to 53.5 in July from 53.4 in June.

On Wednesday, while the Swiss economy lacks fundamentals, the U.S will release important data. As of 11:00 GMT, MBA mortgage approvals for July 29 will be available. At 12:15 GMT then 14:00 GMT, the U.S economy is to release ADP employment change where it is expected to decrease to 100,000 in July from the previous 157,000, while ISM non- manufacturing will decline to 54.0 in July from 53.3, according median forecasts.

The U.S. data is predicted to be carefully watched as the ADP employment may give an indication to the status of the U.S. labor sector before the release of the awaited non-farm payrolls due on Friday. Also, the ISM non-manufacturing is expected to have an impact on the market after the sharp drop in manufacturing to 50.9 in July from 55.3.

Amid the worries persisting in market and progress in Swiss data, the pair is expected to continue its downside direction.

The Deteriorating U.S. Recovery Fueled Poor Sentiment

The optimism seen Monday morning was short lived. The ISM manufacturing index from the U.S. quickly overshadowed the agreement to raise the debt ceiling emerging in Washington the day before.

The ISM manufacturing index showed that activities eased in July to 50.9, the lowest in two years, barely above what is considered to be a recessionary number, fueling poor sentiment among the market participants and many companies.

Today markets await the release of the U.S. personal spending which is believed to stagnate during June, this would confirm the U.S. recovery is in a fragile state, therefore we cant exclude another recession.

As the global economic growth is endangered, pessimism has been dominating the financial markets today, and more negative pressures were put on the higher yielding assets, including the commodity and equity markets.

Asian and European stocks fell today as risk adverse trading grew in force with concerns over the slowing U.S. economy and the ongoing debt crisis in Europe. Swift trading will persist today as the debate on growth prospects will continue.

The USD gained considerably and is trading above the 74.50 level as of this writing. The JPY is found at 77.30, while the CHF continues to benefit from the rising demand on safe haven, and is trading at 0.7800.

Gold this morning is trading close to its record highs at $1625.00 level. While crude oil fell to the $94.00 level as growth prospects deteriorated. The AUD fell today after the RBA decided to leave the interest rates unchanged at 4.75%.

Investors will continue this week to be alert for the economic data as well as the officials announcements. Tomorrow the employment parade will start from the States, culminating with Friday’s non-farm employment change.

The euro fell today to the lowest of 1.4158 today and as of this writing is trading around the 1.4180 level. The GBP is trading with a downside bias around the 1.6270 level although the PMI construction exceeded expectations in July.

NZD/USD Daily Fundamental Analysis for August 03, 2011

The NZD/USD pair dropped for the second day from its all time high, as concerns regarding the slowdown in theU.S.economy increased demand for lower yielding currencies, pushing the pair to the downside.

Despite the new debt plan lunched by the U.S. lawmakers, the higher yielding currencies retreated on concerns that the U.S. economy is still on the edge of a credit downgrade.

At the meantime, the New Zealand economy gives some signs of picking up as retail sales soared during the first quarter, adding that the economic recovery started its rebounding curve.

On Wednesday the U.S. economy will release the ADP employment change for July at 12:15 GMT, where it’s expected to come at 105 thousands from the previous reading of 157 thousands.

The ISM non-manufacturing composite for July will be released at 14:00 GMT and expected at 54.0 following 53.3 and. The factory orders index for June is expected with 0.5% drop following 0.8% increase.

USD/JPY Daily Fundamental Analysis for August 03, 2011

The USD/JPY pair dropped sharply reaching its postwar record, as confidence diminished even after the U.S. officials approved the debt ceiling plan. On the other hand, greenback soared against most of its major counterparts after the Congress approval.

Despite the new debt plan lunched by the U.S. lawmakers, the higher yielding currencies retreated on concerns that the U.S. economy is still on the edge of a credit downgrade.

On the other hand, the U.S. ISM manufacturing for July came worse than both the previous and expected reading fueling concerns over the outlook for the recovery.

On Wednesday the U.S. economy will release the ADP employment change for July at 12:15 GMT, where it’s expected to come at 105 thousands from the previous reading of 157 thousands.

The ISM non-manufacturing composite for July will be released at 14:00 GMT and expected at 54.0 following 53.3 and. The factory orders index for June is expected with 0.5% drop following 0.8% increase.

AUD/USD Daily Fundamental Analysis for August 03, 2011

The Australian dollar, nicknamed Aussie, declined against the dollar after the RBA left rates steady for the eight month citing high uncertainty which weakened aussie.

The Reserve Bank of Australia noted that the decision is prudent at this time amid the fears that dominate the market, while investments are picking up which is a positive phase to push the economy to return once again to the normal levels.

We can see that the Australian economy is to exit from this hurdle phase before the end of the year as the RBA introduce more stimuli to support the economic recovery, and we see the RBA’s decision highly expected amid the global conditions.

At 23:30 GMT (Tuesday), the AiG performance of construction for July is due after it recorded 35.8 during June and the AiG performance of service index which was at 48.5 in June.

Furthermore, the Australian economy is to end the week with the retail sales for June at 01:30 GMT after the reported drop of 0.6% in May.

TheU.S.economy will release the ADP employment change for July at 12:15 GMT, where it’s expected to come at 105 thousands from the previous reading of 157 thousands.

The ISM non-manufacturing composite for July will be released at 14:00 GMT and expected at 54.0 following 53.3 and. The factory orders index for June is expected with 0.5% drop following 0.8% increase.

EUR/USD Technical Analysis August 2, 2011

The EUR/USD first rose, then fell during the Monday session. The fact that it has broken below the bottoms of two o hammers suggests that some kind of major support in the 1.4250 area might be getting demolished. If we manage to stay under that level – we feel this pair goes down. The pair is in a downward channel, so we sell rallies in general as the world will certainly begin to focus on European debt worries after the debt limit deal is passed in the US.

USD/JPY Technical Analysis August 2, 2011

The USD/JPY pair had an extremely wild day on Monday as traders weigh the results of a possible debt limit deal along with the idea of a possible Bank of Japan intervention in the FX markets. The day had an extremely wide range, but this is what makes the day such a good signal as a move above the highs or lows would be impressive. If we can break the highs from Monday, we would go long. We wouldn’t sell as it is only a matter of time before we see the BoJ get involved.

GBP/USD Technical Analysis August 2, 2011

The GBP/USD pair fell hard on Monday as traders failed to break above the 1.65 level. This area has been identified by us as a potentially major resistance area, and as such – we were ready. The level will continue to hamper rising rates in this pair. A break of the low on Monday gets us short again. A daily close above 1.65 would be impressive, and could get us long.

USD/CHF Technical Analysis August 2, 2011

The USD/CHF pair fell hard on Monday as the US stock exchanges fell. The pair did manage to bounce however, and as such – is forming a candle that looks somewhat like a hammer. This shows that although there is a significant downtrend in play at this point, there may be some support in the 0.77 area. We are waiting to see a bounce in order to sell this pair.

EUR/CHF Technical Analysis August 2, 2011

EUR/CHF absolutely fell apart on Monday as traders piled into the Franc. The pair even came close to challenging the 1.10 mark, which we had suggested it would target recently. (We didn’t however; think that it was going to be in a sudden move like this.) By all measures this pair is oversold – but that hasn’t mattered before, so we are looking for rallies to sell.

AUD/USD Technical Analysis August 2, 2011

The AUD/USD continues to struggle with the idea of the 1.10 handle on Monday, making trading this pair an extremely choppy situation lately. The pair has found support in general, but it simply cannot gain traction at these altitudes. Because of this, we are firm in our commitment to buy the Aussie, but we are waiting to see if there is a pullback first, as we think a retest of 1.08 could be in the cards before it is all said and done.

USD/CAD Technical Analysis August 2, 2011

The USD/CAD had a bullish day on Monday as the oil markets went back and forth. The pair looks like it is trying to bounce, and that would make sense as the market has fallen so hard over the last several months, and the 0.9450 area is such a major area that it was fitting to see another bounce from it. We are presently very neutral when it comes to this pair, but are willing to sell at higher levels such as the 0.98 or parity.

NZD/USD Technical Analysis August 2, 2011

The NZD/USD pair fell on Monday as the world is trying to figure out how to trade around the debt limit situation in America. It should be noted that the stock markets sold off in the US after originally suggesting a gain in the futures markets. Because of this, “risk on” trades like the NZD/USD suffer. We believe it is only a minor setback in the pair, and would be interested in buying, but at lower levels. We are waiting for a cheaper price in which to buy the Kiwi.

USD/CAD Daily Fundamental Analysis for August 02, 2011

The USD/CAD pair rose on Monday as pessimism spread through markets after the ISM manufacturing was released from the United States for July, as the ISM manufacturing slowed to 50.9 well below expectations, which spread concerns among traders over the outlook for growth in the United States, 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, since U.S. lawmakers were able to reach an agreement to raise the debt ceiling, nonetheless, signs that economic growth is slowing in both the United States and Canada should provide the USD with more momentum to rise against the CAD, which means that the USD/CAD pair will probably extend its rise over the coming period.

Tuesday August 02:

The United States will release the income report for the month of June at 12:30 GMT, where personal income is expected to rise by 0.2%, compared with 0.3% in May, while personal spending is expected to rise by 0.2%, compared with the prior flat estimate. Core PCE is expected to rise by 0.2% in June, compared with 0.3% back in May, while compared with a year earlier, Core PCE is expected to rise by 1.4%, compared with 1.2% in the prior estimate.

Slowing U.S. Manufacturing Activities Overshadow Optimism from Debt Agreement

Slowing manufacturing activities in the United States spread a huge wave of pessimism across U.S. markets, as despite earlier optimism in markets after U.S. President Barack Obama announced that lawmakers were finally able to reach an agreement to raise the debt ceiling and reduce the deficit, yet slowing manufacturing activities added to concerns that the economy will remain weak over the coming quarter at least, which boosted demand for low yielding and more safe assets.

Meanwhile, data from the manufacturing sector from China also boosted confidence earlier on Monday, as China’s PMI slowed in July but was better than expectations, while the Institute for Supply Management released its manufacturing index for July, which showed the ISM manufacturing index slowed heavily to 50.9 from 55.3 reported back in June.

Stocks in the United States dropped by opening on Monday, where the Dow Jones Industrial Average was down by nearly 0.60% to trade around 12,070, while the S&P 500 index was down by nearly 0.70% to trade around 1284. European stock indexes were mixed before closing on Monday, where FTSE 100 was up by nearly 0.45% to trade at 5840 and the DAX was down by nearly 0.90% to trade around 7094.

The U.S. dollar rose back against a basket of major currencies on Monday, where the U.S. dollar index was trading at 73.88, compared with Friday’s closing at 73.75. The Euro dropped against the Dollar, where the EUR/USD pair traded at $1.4274, compared with the opening level at $1.4353, and the British Pound also dropped against the Dollar, where the GBP/USD pair traded around $1.6278, compared with the opening level at $1.6411.

Gold prices erased earlier losses and rose on Monday, where gold was trading around $1623 an ounce, and crude oil prices trimmed earlier gains as well but remained higher to trade around $96 a barrel.

EUR/CHF Daily Fundamental Analysis for August 02, 2011

Choppy trading prevailed for the EUR/CHF on Monday with the focus still on the debate in the United States and the decision to raise the debt limit which dominated the markets.

The swissy also enjoyed the upper hand as debt woes are returning to haunt the euro gradually, with the slowing pace of recovery and rising uncertainty. The EU and IMF officials started their first review of Portugal’s bailout to assess their commitment to the terms in order to release the second tranche of loans.

We still see that swissy is favored for more gains amid the rising uncertainty and risk aversion, which is supporting haven currencies.  The franc is trading at record highs versus the euro confirming that the debt relief is only temporary as haven demand on swissy remains evident.

On Tuesday, Switzerland will start the week with the annual Retail Sales index for June at 07:15 GMT after it slumped 4.1% in May.

Also at 07:30 GMT from Switzerland the PMI Manufacturing for July is expected with a drop to 52.8 from 53.4.

At 09:00 GMT the euro area June Producer Price Index is due and expected with 0.1% rise on the month following a drop of 0.2% and on the year to ease to 6.0% following 6.2%.

EUR/USD Daily Fundamental Analysis for August 02, 2011

The start of the week was still about the United States and comments from Obama that a deal is reached to raise the debt limit which affected the market and supported the euro versus the dollar which traded with high volatility.

Investors were worried and the focus was on the vote which was expected late Monday, and jitters were evident especially after the vote was delayed a number of times, and also the deadline is on Tuesday so there is no way out for the United States!

The market’s focus on Tuesday will still be about the debt ceiling debate and how rating agencies rate the move. Avoiding default will be supporting to the sentiment yet already have been priced in the market since the start of the week and accordingly the effect is only temporary as the focus returns to the heavy data and the slowing global recovery, especially the slowing U.S. economy.

At 09:00 GMT the euro area June Producer Price Index is due and expected with 0.1% rise on the month following a drop of 0.2% and on the year to ease to 6.0% following 6.2%.

The United States will release the income report for the month of June at 12:30 GMT, where personal income is expected to rise by 0.2%, compared with 0.3% in May, while personal spending is expected to rise by 0.2%, compared with the prior flat estimate. Core PCE is expected to rise by 0.2% in June, compared with 0.3% back in May, while compared with a year earlier, Core PCE is expected to rise by 1.4%, compared with 1.2% in the prior estimate.