EUR/CHF Daily Fundamental Analysis for August 08, 2011

The EUR/CHF on Monday is expected to start a new volatile week after ending last week bearishly with a new historic high for swissy powered by rising haven demand as the SNB failed to strongly reverse the rally.

Investors will start the new week assessing the new fundamentals, especially as the U.S. nonfarm payrolls where not as weak as expected, yet remain with a slow pace of progress.

Investors will also focus on the progress in the euro area and whether the ECB action is starting to ease the jitters and whether the bond buying is true and if it calmed the market indeed. Also investors will assess the impact of the SNB’s move on swissy and the expanded supply of franc as the SNB steps up the efforts to weaken the currency to shelter the economic recovery.

The Swiss economy will start the week with the unemployment rate for July at 05:45 GMT and likely remained unchanged at 2.8% while in seasonally adjusted terms also to have held at 3.0%.

AUD/USD Daily Fundamental Analysis for August 08, 2011

The AUD/USD pair dropped to the lowest level in two months, as fears controlled the markets due to the uncertainty about the global economy recovery, which reduced demand for the higher yielding currencies.

The Australian dollar declined sharply against the greenback with the sluggish economic recovery outlook in Australia, adding that the Reserve Bank of Australia will leave the interest rates unchanged until the end of the year.

The fears are dominating the market movements as the European debt crisis is hurting the outlook for the global economic recovery, while investors are still worried about the European Central Bank’s inability to contain the crisis, dampening demand for higher yielding currencies.

We start the week with the Australian AUD TD securities inflation for July at 00:30 GMT, while June’s reading was flat at 0.0%. As for the annualized reading, it inclined by 2.9%.

Moreover, at 01:30 GMT Australia’s economy is to present the ANZ job advertisements for July, where the previous reading was 3.7%.

Pessimism Remains in Markets despite the Better than Expected U.S. Jobs Report

Despite the better than expected jobs report from the United States, yet stock markets in the United States reversed earlier gains and dropped back into red, as the better than expected Non-farm payrolls couldn’t diminish fears over the outlook for global growth or rising concerns from the European debt crisis spreading into Italy and Spain.

The Non-farm payrolls increased in July by 117,000 jobs well above estimates of 85,000 added jobs and rising from the prior month as well, while unemployment fell unexpectedly to 9.1% from 9.2% reported back in June.

Nonetheless, recent signs suggested economic growth is slowing down in the world’s largest economy, which led some traders and analysts to speculate that the U.S. economy is heading into a double dip recession, and that continued to weigh down on confidence levels among investors.

Stocks in the United States fluctuated by opening on Friday after rising as much as 1% in the opening minutes, where the Dow Jones Industrial Average was nearly unchanged to trade around 11,383, while the S&P 500 index was down by nearly 0.06% to trade around 1199. European stock indexes were also mixed before closing on Friday, where FTSE 100 was down by nearly 1.60% to trade at 5307 and the DAX was down by nearly 1.40% to trade around 6324.

The U.S. dollar dropped against a basket of major currencies on Friday, where the U.S. dollar index was trading at 74.83, compared with the opening level at 75.21. The Euro recovered against the Dollar, where the EUR/USD pair traded at $1.4217, compared with the opening level at $1.4075, and the British Pound also rose back against the Dollar, where the GBP/USD pair traded around $1.6388, compared with the opening level at $1.6240.

Gold prices rose on Friday, where gold was trading around $1660 an ounce, and crude oil prices slightly rose to trade around $86 a barrel.

Markets Experiencing A Panic Selloff Ahead of the U.S. Jobs Report

A global selloff was triggered yesterday and this morning within the broad financial markets, as sentiment continues to worsen over fears from a possible global economic slowdown, while signs of a downturn are more evident in the U.S., meanwhile Europe continues to fight its ongoing sovereign credit crisis.

As pessimism over the outlook for growth in the United States and Europe spread fears across the global markets, a selloff wave took the global equity sharply lower, and boosted demand for lower-yielding/safe-haven assets. Wall Street suffered yesterday its worst day since the financial crisis in the fall of 2008.

Stocks in Asia and Europe also fell sharply as fears from a new recession in the U.S. wiped most of this year’s gains. Investors started buying government bonds as they were trying to preserve their cash and willing to accept almost no profits to their investments.

Many surprises were seen this week, starting with the unexpected intervention from the SNB and BoJ. The U.S. released disappointing manufacturing and services report. While the ECB signaled on Thursday that they will purchases more bonds from Ireland and Portugal but did not mention Spain and Italy.

Investors are very confused now, especially ahead of the infamous jobs report from the United States later today, which could confirm that the U.S. is heading towards a new recession, while other major economies around the world are also showing signs of weakness.

Gold hit yesterday a new record high at $1681.97 as demand on safe haven increased, and today remains close to those levels trading as of this writing around $1664.00. Crude oil extended its losses on Friday to drop below $85 a barrel on concerns over the outlook for global growth that could cripple demand.

The Australian dollar extended on Friday its losses against the U.S. dollar, reaching the lowest of 1.0422, especially after the RBA slashed its 2011 economic growth forecasts from the prior 3.25% to 2%, while inflation was expected to remain elevated above 3% during this year.

After the selloff wave drained the global financial markets, some correctional movements are seen ahead of the U.S. non-farm payrolls report as investors are trying to catch their breath. Yet caution persists, and a negative outcome could extend the losses that were seen earlier today across the board.

The dollar index is trading around the 75.00 level. The yen strengthened again reaching the lowest of 78.30 since demand on safe haven managed to support its high value. The euro rose slightly today and is trading around the 1.4130 level. The GBP is trading around the 1.6270 especially after a positive PPI report.

USD/JPY Technical Analysis for August 5, 2011

USD/JPY skyrocketed on Thursday, as the Bank of Japan intervened in the FX markets to stem the tide of Yen buying in the markets. We warned you over the last couple days that this could happen, so if you listened – you did quite well. Obviously, you can only buy this pair now. We encourage buying on dips for the time being, at least until we hit the 80 mark, which should be massive resistance. If we get above that area, then the trend could be up for a while.

USD/CHF Technical Analysis for August 5, 2011

The USD/CHF rose, and then fell as the markets around the world were rocked on Thursday. The 0.76 level looks like it is holding the pair up at the moment, so if that area gives way – we think it falls much farther. The trend is certainly down, so a breaking of that level wouldn’t be a surprise to us. The daily close below that level gets us short. Any and all rallies will also be sold.

USD/CAD Technical Analysis for August 5, 2011

The USD/CAD skyrocketed during Thursday trading as oil markets sold off. The CAD is highly sensitive to oil pricing, and as such we think that the pair could rise even more as we try to reach parity. The 0.98 – 0.99 areas should be some resistance, but will more than likely give way as the economies around the world will certainly need less and less oil to function. We like buying on dips, but much lower.

NZD/USD Technical Analysis for August 5, 2011

The NZD/USD fell hard on Thursday as the markets ran from anything risk related. The Kiwi dollar looks very vulnerable at this point as the 0.85 level gave way without a fight. The next major support level is just below at the 0.82 level, and it could produce a bounce. The truth is – these kinds of moves don’t happen as one-off movements, and the market should continue to fall. We sell rallies at this point.

GBP/USD Technical Analysis for August 5, 2011

GBP/USD fell precipitously on Thursday as traders found nothing but a wall of fear out there. The markets have turned decidedly bearish, and the Dollar is a bastion of safe haven trading. The jobs report us due out today, and could push this market around. If we can break below the 1.62 level – this market goes much farther down. We think the 1.65 level is going to be massive resistance, and sells could be done there.

EUR/USD Technical Analysis for August 5, 2011

The EUR/USD pair fell on Thursday as the trading community ran for the hills. The ECB basically said nothing at its conference call on Thursday, and that spooked the markets. The pair has taken a decidedly bearish turn, but the 1.40 area hasn’t been broken yet. If it is – we are massive sellers. Also of note, the debt crisis in Europe has gotten worse as bonds are being forced to pay higher yields. The pair is a sell only pair now and we will continue to sell rallies at this point.

EUR/CHF Technical Analysis for August 5, 2011

EUR/CHF fell again on Thursday as traders ran for cover in the markets. Fears of global slowdowns and recessions have sparked a massive selloff in all risk-related assets, and the EUR/CHF pair fell in unison. We still like selling this pair on rallies, and even on new lows. The trend is your friend, and it has been a great one for years. We never buy this pair, and certainly see nothing to change that anytime soon.

AUD/USD Technical Analysis for August 5, 2011

The AUD/USD pair fell apart on Thursday as traders ran from anything risk-related. The 1.05 area is starting to give way, and if they do – 1.02 will be in the cards almost right away. The pair is a risk-related one, as such will almost certainly fall whenever the stock markets do the same thing. If we find ourselves falling again, we are going to sell below 1.0400 or so.

USD/CAD Daily Fundamental Analysis for August 05, 2011

The USD/CAD pair rose back on Thursday after the Bank of Japan decided to intervene in markets to weaken the Yen, which provided the U.S. dollar with strong momentum against major currencies including the CAD, and that contributed in pushing the USD/CAD pair to the upside.

Moreover, concerns from the European debt crisis continued to provide support for safe and lower yielding assets, which provided the USD with more bullish momentum. Also, the ECB signaled it will start a six-month operation to inject liquidity in markets, which provided the USD with more strength to rise against the CAD.

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 U.S. and Canadian data from their respective labor markets, 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.

Friday August 05:

Canada will release the jobs report for July at 11:00 GMT, where the net change in employment is expected to rise by 15.0K, compared with the prior estimate that showed Canadian employers added 28.4 thousand jobs back in June, while unemployment is expected to remain unchanged at 7.4%.

The United States will release the infamous jobs report for the month of July, where the Non-farm payrolls are expected to show that 85,000 jobs were added in July, compared with 18,000 added jobs back in June, while the unemployment rate is expected to remain unchanged at 9.2%.

At 14:00 GMT, Canada will release the Ivey Purchasing Managers index for the month of July, where seasonally adjusted Ivey PMI is expected to expand to 62.0, compared with the prior estimate of 59.9 back in June.

Stocks and Major Currencies as Pessimism Continues to Dominate on European Debt Crisis Fears

Rising concerns from the European debt crisis and signs of slowing growth in the United States economy continued to boost demand for lower yielding and safe assets on Thursday, where investors fear Italy and Spain will be the next victims of the European debt crisis, and traders are now focused on the U.S. jobs report, which is due on Friday, and expected to show job growth remained weak as the economy seems to be losing momentum.

The Bank of England announced on Thursday it decided to leave the benchmark interest rates unchanged, while the BOE also left the asset purchases program unchanged as well, while the European Central Bank left the benchmark interest rates unchanged as expected, nonetheless, the ECB Chairman, Jean-Claude Trichet, announced the ECB will start a six-month operation to inject liquidity in the markets in order to ease the tensions amid growing concerns from the European debt crisis. The ECB also signaled that inflation risks remain to the upside, which provided gold with support to rise.

Meanwhile, the Bank of Japan announced earlier on Thursday, it intervened in markets to weaken the Yen in order to support the economy, which boosted demand for safety including gold, and that continued to provide gold prices with more bullish momentum to set a new record high above $1681 an ounce.

The U.S. Labor Department released the jobless claims for the week ending July 30, where jobless claims came slightly below expectations at 400,000 down from 401,000 in the prior week and better than expectations of 405,000, however that didn’t improve confidence in markets, since investors are already focused on Friday’s jobs report from the United States.

Stocks in the United States extended the drop by opening on Thursday, where the Dow Jones Industrial Average was down by nearly 1.40% to trade around 11,730, while the S&P 500 index was down by nearly 1.70% to trade around 1239. European stock indexes were also lower before closing on Thursday, where FTSE 100 was down by nearly 2.20% to trade at 5461 and the DAX was down by nearly 1.80% to trade around 6520.

The U.S. dollar rose back against a basket of major currencies on Thursday, where the U.S. dollar index was trading at 74.95, compared with the opening level at 74.41. The Euro fell sharply against the Dollar, where the EUR/USD pair traded at $1.4138, compared with the opening level at $1.4349, and the British Pound also fell against the Dollar, where the GBP/USD pair traded around $1.6318, compared with the opening level at $1.6436.

Gold prices continued to rise on Thursday to reach a new record high above $1681 an ounce, where gold was trading around $1680 an ounce, and crude oil prices extended the losses to trade around $90 a barrel.

GBP/USD Daily Fundamental Analysis for August 5, 2011

On Thursday, the pair dropped as the dollar benefited from the BoJ intervention in the Foreign Exchange market while the sterling retreated as the BoE opted to leave both interest rate and APF unchanged in August.

The rate decision did not have much impact on the pair as it was expected by analysts and investors. After the weak economic data from theU.K., expectations are increasing that there will be no change in monetary policy from the BoE this year, where boosting APF may be closer than raising interest rate. 

On the other hand, the dollar took advantage of the BoJ intervention while it was not much affected by the initial claims data which showed slight improvement as initial jobless claims inched down to 400,000 in the week ended July 30 from the revised prior 401,000.

On Friday, the week ends with the release of the awaited non-farm payrolls report from theUnited States, due at 12:30 GMT. Expectations refer that change in non farm payrolls will reach 95,000 in July from the previous 18,000 while unemployment will linger at 9.2%. Yet, before the release of the NFP, theU.K.will release Producer prices index at 08:30 GMT.

The non-farm payrolls report is predicted to have significant impact on the pair as investors are waiting for the data to see whether there is improvement or further deterioration after the drop seen in June. The market is full of tensions as the recent data from the U.S. provided some clues that the world’s largest economy is signaling a slowdown in growth pace, hence an improvement may help the dollar to continue its rebound against the franc while downbeat figures are predicted to push the pair to the downside.

On the flip side, the British data may have an impact on the pair if it held any surprise such as a higher than expected rise which would put more pressure on policy makers to raise interest rate. Annual CPI slipped to 4.2% in July form 4.5% in June on the back of the sluggish growth in the second quarter.

 

 

 

USD/CHF Daily Fundamental Analysis for August 5, 2011

On Thursday, the Swiss franc continued its drop against the dollar, where the pair was still affected by the unexpected rate decision and interventions by the Swiss National Bank (SNB). The SNB cut the three-month Libor interbank rate; in addition, policy makers said they would increase the supply of francs in the market over the next few days which is expected to have continuing effect on the franc. The SNB pledged to use further measures if necessary, thus further depreciation in the franc is expected to be seen in the coming period, yet some bet that the effect will not last long as the worries in the markets will increase demand on the franc as a refuge.  

On the other hand, the dollar was not much affected by the initial claims data which showed slight improvement as initial jobless claims inched down to 400,000 in the week ended July 30 from the revised prior 401,000.  

On Friday, the week ends with the release of the awaited non-farm payrolls report from theUnited States, due at 12:30 GMT. Expectations refer that change in non farm payrolls will reach 95,000 in July from the previous 18,000 while unemployment will linger at 9.2%. InSwitzerland, CPI for the year ending July will be out with expectations referring to a rise to 0.7% from 0.6%.

The non-farm payrolls report is predicted to have significant impact on the pair as investors are waiting for the data to see whether there is improvement or further deterioration after the drop seen in June. The market is full of tensions as the recent data from the U.S. provided some clues that the world’s largest economy is signaling a slowdown in growth pace, hence an improvement may help the dollar to continue its rebound against the franc while downbeat figures are predicted to push the pair to the downside.

The Swiss data are not expected to have remarkable effect on the pair as inflation is already constant, even if it rose on the back of the SNB’s cut to borrowing it would still move within secure ranges as it is far from the bank’s targeted level.

EUR/CHF Daily Fundamental Analysis for August 05, 2011

Swissy remained generally weak on Thursday after the SNB move which was also followed by another intervention from Japan and then the ECB’s decision to expand the liquidity operations.

Swissy continued to fluctuate as the speculation continued over the next move for the central bank, and the move from the BoJ and extending the money supply to stem the currency’s rally is exactly what the SNB started to shelter the economy.

Haven demand has been the main upside support for both currencies, and with the two consecutive interventions and the steady policy from the ECB the speculation is for more coordinated action from central banks that might be seen and the Swiss National Bank has intervened before and likely to do it again, which is keeping swissy fragile.

After Trichet said the ECB decided to provide more liquidity and six-month tender and expand the REFI operations till the end of the year, the swissy returned to find some ground versus the euro. The volatility remains very high especially as the ECB said the bond program is ongoing and was never dormant and also comments on the EFSF and said it should be used efficiently.

News reports said that the ECB bought Irish and Portuguese securities and Trichet signaled the possibility by saying the ECB might buy bonds as soon as today.

With the recent decisions and actions from central banks, the situation is clearly complicated and the uncertainty is high and that will keep the choppy trading for the pair with the weak outlook for the euro amid the debt crisis and the fear of more intervention by the SNB.

We expect more fluctuations on Friday with the end of the week trading. Switzerland will end the week at 07:15 GMT with the July inflation data. The Consumer Price Index is expected with 0.6% following 0.2% drop and on the year to rise 0.7% following 0.6%.

EUR/USD Daily Fundamental Analysis for August 05, 2011

The EUR/USD continued under strong downside pressure on Thursday especially after the unexpected move from the ECB to expand the support to the financial sector to ease the tension.

The ECB left rates steady at 1.50% and said that the monetary policy remains accommodative with rising downside pressures on growth especially from the market tension, though the outlook for inflation remains to the upside.

Trichet announced that the ECB will extend the liquidity provisions with the new six-month tender while expanding the current REFI operations till the end of the year to ease market jitters and rising tension. The president did not dispel the bond program and said it is ongoing and even news suggested the bank already bought Irish and Portuguese bonds, which Trichet hinted as a possibility and bonds surely moved higher opposed to the weak euro.

The rising risk of slowing global growth and the lingering debt problems and the risk of Italian and Spanish contagion is keeping investors jittery and the euro weak.

On Friday, the focus will be on the outlook for the global recovery with the infamous jobs report from the United States that will define the market trend for the coming period. The labor market conditions in the U.S. will be the testimony over the current state of the economy and the outlook for growth and QE3 especially as this week we already saw main moves from other central banks and the Federal Reserve might follow soon.

Germany will end the week with the Industrial Production for June at 10:00 GMT which is expected with a weak 0.1% rise following 1.2% surge the previous month, and on the year at 8.1% following 7.6%.

The United States will release the infamous jobs report for the month of July, where the Non-farm payrolls are expected show that 100,000 jobs were added in July, compared with 18,000 added jobs back in June, while the unemployment rate is expected to remain unchanged at 9.2%.

Heavy volatility and mixed trading will prevail until the figures, where the end of the week trading might be further pressure on the pair. Weak numbers will increase risk aversion temporarily and then support confidence on expectations the Fed will act, and good figures will slightly ease the woes yet keep the downside pressure with the high uncertainty over the outlook and the sluggish recover that will keep the dollar favored for gains.

Yen and CHF Slid after BoJ and SNB Interventions

As governments became more concerned about the markets conditions, both the Swiss National Bank and Bank of Japan intervened yesterday and early this morning in an attempt to put an end to the rising value of their currencies which is damaging their exports and their economic recovery.

The Swiss National Bank cut the interest near zero yesterday and expanded the banks’ deposits to 80 billion CHF. Meanwhile BoJ spent 1 trillion yen ($13 billion) to sell the yen and might pump some extra liquidity into the markets, since they pledged to ease the monetary policy further.

The yen fell sharply today against the USD, and the pair recorded the highest of 80.00 from the lowest of 76.96, while the USD/CHF pair reached the highest of 0.7799 this morning. However as pessimism about the global economic growth persists, these downside movement may be short lived.

Now the Feds are expected to adopt a third round of quantitative easing as the economy is on the verge of falling into recession, while the European Central Bank may be put under pressures to buy more bonds to ease the credit crisis that seams to have no resolution.

Today the ECB and BoE will hold their monetary policy meetings, and neither is expected to rise the interest rate, however both economies still face difficult circumstances, therefore BoE might continue to be dovish, while Trichet will continue to face difficult questions during his press conference later today.

These decision coupled with the labor data from the U.S. today and tomorrow, caution, volatility and swift movements will persist. Concerns about the faltering U.S. economic recovery are still prevailing, especially after the U.S. released more disappointing data yesterday via the ISM services and factory orders reports.

Today the U.S. will release the weekly jobless claims and tomorrow the non-farm unemployment report will be on schedule. Till then investors will take all their precautions and demand on safe haven may continue. Thereby the U.S. dollar rose sharply today reaching the highest of 74.82.

Oil fell towards the $91.50 level as questions about demand continue to be asked since growth is jeopardized. Gold is consolidating around the $1663.00 level, while the euro fell to the lowest of 1.4210 and the pound fell to the lowest of 1.6330 ahead of the monetary policy meetings.

AUD/USD Daily Fundamental Analysis for August 05, 2011

The Australian dollar declined sharply against the greenback with the sluggish economic recovery fears, adding that the Reserve Bank of Australia will leave the interest rates unchanged until the end of the year.

The Australian dollar, nicknamed the Aussie, continues the downside movements against the dollar as investors prefer to buy safe heaven currencies like the U.S. dollar over the Australian currency.

The fears are dominating the market movements as the European debt crisis is hurting the outlook for the global economic recovery, while investors are still afraid about European Central Bank inability to contain the crisis, damping the demand for high yielding currencies.

The focus those days remains on the slowing global recovery and expectations for more actions from central banks to support the recovery, especially after the surprise intervention from the SNB and the BoJ. The jitters are keeping risk aversion more evident and the focus now is on the United States and the state of the economy.

On Friday, The United States of America will release a number of economic data on Friday, starting with the non-farm payrolls at 12:30 GMT, which is expected to show that the U.S. economy added 100 thousand jobs during the month of July compared with the previous 18 thousand jobs.

Unemployment is expected to be steady at 9.2%, while the yearly average hourly earnings index is expected to hold at 1.9%.

The U.S. economy will end the week at 19:00 GMT with the consumer credit index for June, where the prior reading was $5.077 billion and expected to come at $5.050 billion.