GBP/USD Weekly Fundamental Analysis for August 8 – 12, 2011

The GBP/USD moved to the downside in the week ended August 5 after rising over the past three weeks as the S&P warning that the U.S. still may lose its top credit rating, record-high rise in Italian and Spanish bond yields and slowdown in global growth made the dollar more favorite for investors as a safe haven currency.

The tensions spreading in markets eroded demand on high-yielding currencies. In addition, the BoE left interest rate and APF unchanged, in line with market expectations, which increased predictions the BoE would leave loose monetary policy probably for next year to boost recovery that started to wane as seen by the most recent data which made expectations in favor of increase in APF rather than a rise in interest rate.

In theU.S., the situation is not better, as the world’s largest economy is receiving warnings from rating agencies that the AAA top rating is at risk, while the latest data also referred to a slowdown in growth which increased speculations the Fed will announce a third round of stimulus to reinvigorate the economy.

However, the non-farm payrolls report showed improvement as theU.S.economy added 117,000 jobs in July from 46,000 in June while unemployment slipped to 9.1% from 9.2%.

This week, eyes will be on the BoE minutes to know whether there is a change in the nine-panel members point of view after the latest data released, where the bank will determine September’s rate decision according to the latest growth and inflation forecasts due this week in August’s inflation report.

On the other hand, the main focus in theU.S.will be the on the FOMC rate decision which is, however, predicted to witness no change in the Fed’s monetary stance.

The release of the data this week will be as follows:

Monday August 8:

Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

Tuesday August 9:

As of 08:30 GMT, theU.K.will release important data; manufacturing production for June is predicted to retreat to 0.2% from 1.8%, while visible trade deficit is estimated to narrow to 8100 million pounds from 8478 million pounds.

In the U.S., eyes will be on the FOMC rate decision , due 18:15 GMT, in case of any surprise from the Fed may announce a third round of stimulus to reinvigorate growth that started to slowdown after the end of QE2 in June, especially after the monetary interventions seen last week by the SNB, BoJ and ECB. Yet expectation refer to no change on monetary policy as the Fed will probably keep interest rate unchanged and will not announce new stimulus.

Wednesday August 10:

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.

Thursday August 11:

At 12:30 GMT, the U.S economy will release trade balance report which is expected to show a narrowed deficit of $47.5 billion in June from $50.2 billion deficit a month earlier. At the same time, initial jobless claims for the week ended August 5 and continuing claims for the week ended July 30 will be available, while theU.K.lacks fundamentals.

Friday August 12:

The week ends with the release of some fundamentals from the U.S. which are retail sales for July, University of Michigan confidence for August and business inventories for June at 12:30 GMT, 13:55 GMT and 14:00 GMT respectively, while the U.K. lacks fundamentals.

USD/CHF Weekly Fundamental Analysis for August 8 – 12, 2011

The USD/CHF continued its original southern journey in the week ended August 5 as worries in markets enhanced demand on the Swiss franc as favorable safe haven, where the Swiss National Bank (SNB) borrowing cost cut could not change the direction to the upside on the weekly charts.

With the S&P warning that theU.S.may still lose its top credit rating, record-high rise in Italian and Spanish bond yields and slowdown in global growth in addition to the improvement in the Swiss economy, the franc remained the most attractive refuge, especially after the intervention of the BoJ in the FX market through selling the yen.

The 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 impact of the decision did not last long as investors continued to resort to the franc amid the worries prevailing in markets.

Regarding the main highlight of the previous week, the non-farm payrolls report showed improvement as theU.S.economy added 117,000 jobs in July from 46,000 in June while unemployment slipped to 9.1% from 9.2%.

The outlook for the pair is bullish as the monetary measures announced by the SNB are predicted to take its effect in the coming period, especially after the SNB President Philipp Hildebrand announcement that the bank will adopt all “effective measures” to halt the franc’s appreciation.

This week, the spotlight will be on unemployment from the Swiss economy, where the main focus in theU.S.will be the FOMC rate decision.

The Fed is predicted to keep interest rate at its low level between 0.00% and 0.25% in August to boost recovery that started to wane as seen by the most recent data, where there are talks that the U.S. is in a need of a third round stimulus.

For this week, the release of the data will be as follows:

Monday August 8:

As of 05:15 GMT, the Swiss economy will release its only data for the week which is unemployment for July with expectations referring to steadiness in the seasonally adjusted reading at 3.0%. On the other hand, the U.S.has no releases.

Tuesday August 9:

Eyes will be on the FOMC rate decision , due 18:15 GMT, in case of any surprise from the Fed may announce a third round of stimulus to reinvigorate growth that started to slowdown after the end of QE2 in June, especially after the monetary interventions seen last week by the SNB, BoJ and ECB. Yet expectation refer to no change on monetary policy as the Fed will probably keep interest rate unchanged and will not announce new stimulus.

Wednesday August 10:

TheUSwill release MBA mortgage applications for August 5 at 11:00 GMT followed by monthly budget statement at 18:00 GMT.

Thursday August 11:

At 12:30 GMT, the U.S economy will release trade balance which is expected to show a narrowed deficit of $47.5 billion in June from $50.2 billion deficit a month earlier. At the same time, initial jobless claims for the week ended August 5 and continuing claims for the week ended July 30 will be available.

Friday August 12:

The week ends with the release of some fundamentals from theU.S.which are retail sales for July,UniversityofMichiganconfidence for August and business inventories for June at 12:30 GMT, 13:55 GMT and 14:00 GMT respectively.

AUD/USD Weekly Fundamental Analysis for August 08-12, 2011

The market is under pressure and the pair moved sharply to the downside as fears of slowing global growth and moving to new recession chocked the sentiment.

Last week witnessed a lot of events that had a heavy impact on the market’s movements, where the U.S. lawmakers agreed to raise the debt ceiling, supporting the dollar against the all currencies. Furthermore, investors see the global economy losing momentum, which also increased demand for precious metals as an investment haven.

The Australian dollar declined against its major counterpart the American dollar as the Reserve Bank of Australia decided to keep rates unchanged at 4.75% for an 8th straight meeting as the Bank wants to gauge the U.S. slowdown.

Moreover, the Australian dollar is still in a downside movement against its major counterparts, where it continues its sharp decline versus the American dollar amid the fragile sentiment and high uncertainty over the outlook for the recovery.

Major highlights for this week that will affect the AUD/USD pair’s trading

Monday August 08:

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%.

Tuesday August 09:

At 01:30 GMT Australia continues with the home loans index for June. Further, the Australian business confidence index for July is due at 01:30 GMT after 0 in June.

TheU.S.economy will issue the unit labor coast for the second quarter at 12:30 GMT, where the preliminary reading is expected to show a rise of 2.3% from the previous 0.7%. While the non-farm productivity for the second quarter is expected to decline by 0.8% from the prior rise of 1.8%.

At 18:15 GMT, the Federal Reserve Bank Open Market Committee rate decision, where all eyes will be focused on the central bank statement as they are expected to keep rates steady at 0.0-0.25%.

Wednesday August 10:

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, 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.

Thursday August 11:

The market will witness data that has a heavy impact on the market movements, where the Australian economy will issue at 01:30 GMT a number of important data regarding the labor market. The unemployment rate for July is expected unchanged at 4.9%.

Moreover, the employment change for July after the nation has added 23.4K workers in June.

The U.S. trade balance for June will be released at 12:30 GMT, where it’s expected to show a deficit of $47.5 billion from the previous deficit of $50.2 billion.

At 12:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for state unemployment insurance increased 400 thousand last week.

Friday August 12:

At 12:30 GMT, the U.S. economy will release the advanced retail sales for July, where the previous reading was 0.1% and expected to come at 0.4%. The University of Michigan confidence for August will be released at 09:55 GMT, where the preliminary reading is expected to come at 63.2 from the previous of 63.7.

The U.S. business inventories for June will be released at 10:00 GMT, where it had a previous of 1.0% and expected to come at 0.6%.

USD/CAD Weekly Fundamental Analysis for August 08-12, 2011

The USD/CAD pair rose back last week, as investors were concerned over the outlook for global growth amid signs economic growth is slowing down in the United States, while mounting fears from the European debt crisis boosted demand for lower yielding assets, which weighed down heavily on the CAD, as it boosted demand for the USD, and accordingly, the USD/CAD pair was able to gain momentum.

Moreover, crude oil prices dropped heavily last week, which also added further pressure on the CAD, and provided the USD/CAD pair with further bullish momentum to rise to the highest level since June.

Rising pessimism in global financial markets should put the CAD under more pressure over the coming period, where investors fear the U.S. economy is heading into a double dip recession, and since the United States is Canada’s largest trading partner, we should expect the Canadian economy to suffer deeply, and that should provide the USD/CAD pair with bullish momentum, unless of course the Fed announce a third round of quantitative easing, since it will put the USD under huge pressure, although this is unlikely.

Highlights for this week that will probably affect the USD/CAD pair’s direction are:

Monday August 08:

The week will start light with no data queued for release from both Canada and the United States which leaves the market volatility and choppy trading dominant ahead of the FOMC decision.

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.

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.

Thursday August 11:

The ECB will release the monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50%.

Canada will release the new housing price index for the month of June at 12:30 GMT, where the new housing prices rose by 0.4% in May, while compared with a year earlier, the new housing price index rose by 1.9% back in May.

Canada will also release the international merchandise trade balance for the month of June, where the trade deficit is expected to widen to 1.0 billion CAD, compared with the prior deficit of 0.8 billion CAD.

The data from the United States will start as usual with the weekly jobless claims at 12:30 after they rose last week by 400 thousand.

Also at 12:30 GMT the trade balance for June is due and the deficit is expected to narrow to $47.5 billion from $50.2 billion.

Friday August 12:

The United States will end the week with a high note starting with the retail sales index for July at 12:30 GMT, which are expected with 0.4% rise following 0.1% and excluding autos with 0.2% rise after remaining unchanged in June and excluding auto and gas to hold steady with 0.2% rise.

The University of Michigan Confidence for August is due at 13:55 GMT, and expected with a slight drop to 63.2 from 63.7.

The business inventories index for June will follow at 14:00 GMT and expected to slow to 0.6% from 1.0% the previous month.

EUR/USD Weekly Fundamental Analysis for August 08-12, 2011

The EUR/USD ended another volatile week with more losses versus the dollar amid the prevailing jitters over the outlook for the recovery and the worsening debt crisis.

The yield on Italian and Spanish bonds continued to surge and the focus was on the weekend meetings between the euro area leaders as France and Germany are taking more preemptive steps in holding talks with Italy and Spain to ensure that the nations are safe from harm and speculation.

This week will again be about the speculation and the outlook for the recovery amid the tight ability of governments and central banks to maneuver. The fundamental load this week is light and the focus will mainly be on the FOMC rate decision and whether the Fed will take more action following those from the SNB, BoJ and extended money operations from the ECB to ease the market tension.

With the prevailing fear over the outlook for the recovery and the deepening debt crisis the volatility will extend again, especially as the lack of major fundamentals will leave the focus on the sentiment to drive the market movements and accordingly we expect heavy volatility to prevail this new week for the EUR/USD.

Other news from the euro area and the U.S. economy to affect the pair this week:

Monday August 08:

The week will start light with no data queued for release from both the euro area and the United States which leaves the market volatility and choppy trading dominant ahead of the FOMC decision.

Tuesday August 09:

Germany will start the day 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.

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.

Wednesday August 10:

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.

Thursday August 11:

The ECB will release the monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50%.

The data from the United States will start as usual with the weekly jobless claims at 12:30 after they rose last week to 400 thousand.

Also at 12:30 GMT the trade balance for June is due and the deficit is expected to narrow to $47.5 billion from $50.2 billion.

Friday August 12:

The euro area industrial production for June is due at 09:00 GMT and expected to remain steady on the month with 0.1% gain and to rise 4.5% on the year following 4.0%.

The United States will end the week with a high note starting with the retail sales index for July at 12:30 GMT which are expected with 0.4% rise following 0.1% and excluding autos with 0.2% rise after remaining unchanged in June and excluding auto and gas to hold steady with 0.2% rise.

The University of Michigan Confidence for August is due at 13:55 and expected with a slight drop to 63.2 from 63.7.

The business inventories index for June will follow at 14:00 GMT and expected to slow to 0.6% from 1.0% the previous month.

EUR/CHF Weekly Fundamental Analysis for August 08-12, 2011

The unexpected move from the Swiss National Bank did little to reverse the franc’s record versus the euro as the pair still ended last week with strong gains.

In an unexpected move last week, 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.

Still, the fear over the outlook for the recovery and the deepening debt crisis in the euro area kept swissy the favored for gains amid the dire outlook and the pessimistic sentiment.

This week the sentiment is to be the main pillar for the market as investors assess the effect of the moves from both the SNB and the ECB and the bonds buying if it was confirmed, which might ease the jitters and help the euro rise off its record lows powered by fears of another violent intervention.

Other news from the euro area and the Swiss economy to affect the pair this week:

Monday August 08:

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%.

Tuesday August 09:

Switzerland will release the SECO Consumer Confidence for July at 05:45 GMT which is expected to decline to -5 from -1.

Wednesday August 10:

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.

Thursday August 11:

The ECB will release the monthly report at 08:00 GMT and will include the details of the special liquidity operations and the extension of the money operations that Trichet announced last week when the bank left rates steady at 1.50%.

Friday August 12:

The euro area industrial production for June is due at 09:00 GMT and expected to remain steady on the month with 0.1% gain and to rise 4.5% on the year following 4.0%.

USD/JPY Daily Fundamental Analysis for August 08, 2011

The USD/JPY pair fluctuated last week sharply after the BOJ intervened in the FX market and sold the yen, as the Japanese currency retreated against most of its major counterparts due to the selling pressure from the BOJ.

On the other hand, the global stock markets dropped sharply on concerns about the outlook of the global economy recovery, where investors are looking for safer investments, which could bring the Japanese yen higher once again.

On Monday at 23:50 GMT (Sunday),Japanwill release the current account total for June, where the previous reading showed a surplus of 590.7 billion yen, while it’s expected to show a surplus of 652.8 billion yen.

The adjusted current account total for June is expected to show a surplus of 961.1 billion yen from the previous surplus of 391.0 billion. On the other hand, the trade balance for June is predicted to show a surplus of 113.1 billion from the prior deficit of 772.7 billion.

At 05:00 GMT, Japan will release the Eco Watchers Survey: Current for July, where the previous reading was 49.6 and expected to come at 50.0, while the Eco Watchers Survey: Outlook had a prior reading of 49.6.

USD/CAD Daily Fundamental Analysis for August 08, 2011

The USD/CAD pair extended its rise on Friday, as fears persisted in markets despite the better than expected jobs report from the United States, where U.S. employers added more than expected jobs in July, while Canada’s jobs report showed mixed results, as the change in employment came below expectations, while unemployment dropped unexpectedly in July.

Meanwhile, the Ivey PMI was released from Canada for the month of July, as the index showed contraction, which put negative pressure on the CAD, as economic activities seem to be easing in Canada as well, and accordingly, the USD was able to gain momentum against the CAD, 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.

Investors are most likely to remain focused on the prospects of slowing global growth next week, and that should keep the negative pressure on the CAD over the coming period, since investors will continue to target lower yielding assets, however, the USD/CAD pair might undergo a correction on Monday amid the lack of economic news from both countries, since the pair has risen sharply last week.

Monday August 08:

The week will start light with no data queued for release from both Canada and the United States which leaves the market volatility and choppy trading dominant ahead of the FOMC decision.

NZD/USD Daily Fundamental Analysis for August 08, 2011

The NZD/USD pair propped sharply last week, as demand increased on greenback as a low yielding currency due to concerns over the outlook, and the uncertainty about financial markets.

The New Zealand currency reached to the lowest level in two weeks against the U.S. dollar as Asian stock markets declined for the fourth day in a row, reducing demand for Kiwi.

Further, the New Zealand government noted that Kiwi reached the highest level that may be hurt the nation’s exporters, so they should find ways to curb the currency’s gain.

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 starts its rebounding curve.

Both countries won’t release any fundamentals on Monday leaving the movement on the back of the prevailing sentiment and affected by their performance mainly versus other currencies.

USD/CHF Daily Fundamental Analysis for August 8, 2011

As of 05:15 GMT, the Swiss economy will release its only data for the week which is unemployment for July with expectations referring to steadiness in the seasonally adjusted reading at 3.0%. On the other hand, the U.S.has no releases.

Data from Switzerland may not have a significant impact on the pair’s movements unless it comes out with a surprise. In general, the latest data from the Swiss economy is showing progress relative to other major economies which gained the franc additional strength and made it more favorable safe haven.

The outlook for the pair is predicted to be to bullish, especially after the SNB pledge to use all measures to curb the franc’s advance and as the measures adopted the previous week by the SNB are expected to have effect in the coming period, yet the franc may face some difficulties in depreciating as it will still have strong demand from investors seeking refuge.

GBP/USD Daily Fundamental Analysis for August 8, 2011

Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

Still, there are some concerns in the market which may give some advance to the dollar as a safe haven, where eyes will be on the FOMC rate decision and inflation report from the U.K. which are supposed to provide guidance to both bank’s intention for the coming period amid the undergoing slowdown in both economies and worldwide.

EUR/USD Daily Fundamental Analysis for August 08, 2011

The EUR/USD will start the week on Monday with heavy volatility as the market continues to react to the nonfarm payrolls and the weekend meetings between euro area leaders to contain the debt crisis.

The volatility is high and the jitters over the outlook for the recovery and the worsening debt crisis keeps the bias evident towards haven assets with the yen and franc suffering the excessive rally and pressuring the central banks to move, while gold settles at its records high.

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.

On Monday, the market will turn to assess its impact and see how it affected the market as the ECB releases their weekly bond buying and whether it remained dormant for the 19th week or indeed the ECB purchased bonds last week.

The week will start light with no data queued for release from both the euro area and the United States which leaves the market volatility and choppy trading dominant with the focus on slowing growth and deepening debt crisis ahead of the FOMC decision and the speculation on whether the Federal Reserve will act or not.

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%.

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.

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.

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.