Sign inDarrell's Commentaries
Daily Currency Analysis
EUR/US$
From highs near 1.4440, the Euro edged weaker in early Europe on Tuesday as the currency was vulnerable to a limited correction following sharp gains since Friday. The dollar was still finding it very difficult to gain any significant traction as underlying sentiment remained negative with markets still looking for opportunities to push the currency weaker.
The US economic data remained stronger than expected with a 3.6% increase in pending home sales for June following a revised 0.8% rise the previous month as lower prices continued to attract buyers into the market.
The other US data did not have a significant impact as the 1.3% decline in personal income for June followed the one-off boost in May from fiscal stimulus payments.
There will be important releases on Wednesday with the ADP employment data and PMI reading for the services sector. The data will provide important evidence on Friday’s key payroll data and the dollar’s reaction will also be watched very closely to assess whether the traditional relationship of the dollar gaining from firmer data can be revived.
Ranges were generally narrow during the day with Euro consolidation just below the 1.44 level as dollar sentiment was still weak with firm risk appetite.
Source: VantagePoint Intermarket Analysis Software
Call now and you will be provided with FREE recent forecasts
that are up to 80% accurate. 800-732-5407
If you would rather have the recent forecasts sent to you, please go here
Yen
Overall risk appetite was still firm in Asian trading on Tuesday as equity markets strengthened to 11-month highs and this dampened demand for the Japanese yen. The Australian central bank removed its bias towards lower interest rates at the latest policy meeting which will provide some degree of support for high-yield currencies.
Bank of Japan members commented on the rise in bond yields and there will be some pressure on the bank to curb any further rise in yields which could also erode yen support to some extent. The Japanese currency was able to resist losses on Tuesday with the dollar again hitting resistance close to the 95.50 level.
The yen also gained ground after opposition political comments over a possible review to currency reserve management policies, but there was still significant selling interest on yen rallies with the dollar firming back above 95 from lows around 94.35.
Sterling
Sterling pushed to a high of 1.70 against the dollar in Asian trading on Tuesday which was a fresh 10-month high for the currency.
The construction PMI index improved to 47.0 in July from 44.5 previously, which was a 16-month high, maintaining the run of favourable UK data.
The Bank of England monetary meeting will come into closer focus with the decision due on Thursday. The main area of debate will continue to be the quantitative easing and whether the programme of bond buying will be expanded. There should still be reduced expectations that the bank will increase bond buying and this should also provide near-term Sterling support.
Sterling was unable to sustain the 1.70 level and weakened back towards 1.69. It also dipped slightly against the Euro, but retained a generally firm tone during the day as international risk appetite remained stronger.
Swiss franc
The dollar continued to probe support levels below 1.06 against the dollar in Asian trading on Tuesday.
Swiss consumer prices fell 0.7% in July to give a year-on-year decline of 1.2% which was slightly below expectations and will keep the National Bank alert to the deflation threat. Given these deflation fears, there will be increased central bank determination to avoid Swiss currency gains.
The franc dipped early in US trading which sparked speculation over bank intervention, although there was no confirmation of central bank action with the dollar settling just above the 1.06 level later in the US session.
Source: VantagePoint Intermarket Analysis Software
Call now and you will be provided with FREE recent forecasts
that are up to 80% accurate. 800-732-5407
If you would rather have the recent forecasts sent to you, please go here
Australian dollar
As expected, the Reserve Bank of Australia left interest rates on hold at 3.00% following the latest council meeting and the bank also removed the easing bias. This policy shift had already been signalled earlier by the bank and initial currency gains were not sustained.
The latest retail sales report was also weaker than expected with a 1.4% monthly decline which will create some caution, although underlying confidence should remain firm in the near term. There will continue to be strong near-term buying support on retreats with the threat of increased volatility.
Tags:forex, currency, yen, u-s-dollar, sterling, euro, swiss-franc, australian-dollar
Share
