Daily news bulletin covering the foreign exchange market
| 08.08.2008 10:21:41 |
| This market comment is published by our Customer Forex Trading Desk and is not the product of our Financial Research department. As such, these recommendations are not subject to the Swiss Bankers Association's Directives on the Independence of Financial Research. |
 Hot News |
| Short-term Technical Analysis |
| Crude Oil and Precious Metals |
| Economic Data |
| Hot News |  |
| As expected, the European Central Bank left its interest rates on hold at 4.25%. There were also no surprises from the Bank of England, as it too left its interest rates unchanged (at 5%). Following the ECB meeting, Jean-Claude Trichet gave a press conference in which he announced that, according to the latest figures, there was a slowing of economic growth in the middle of 2008. He added that "annual HICP inflation [had] remained considerably above the level consistent with price stability since last autumn, reaching 4% in July”. The worrying inflation rates were primarily a result of sharp increases in energy and food prices. Trichet's statements caused some concern on the market and triggered a further decline of the single currency. After seasonal adjustment, Germany’s foreign trade balance recorded a surplus of EUR 18.1 bn in June 2008, well up on analysts’ forecasts of a EUR 15 bn surplus. June exports were up 4.2% on the previous month, while imports dipped 0.1%. France's foreign trade deficit widened sharply in June to a record EUR 5.64 bn, the main reason being an increase in energy imports. First-time claims for state unemployment benefits in the US soared to a disappointing 455 000 in the week ending 2 August, the highest figure since March 2002. A combination of the explosion on a Shell pipeline on Tuesday evening, political unrest in Nigeria, ongoing tension because of the Iran nuclear situation and the start of the hurricane season have revived concerns over crude oil supplies. As a result, having dipped to a three-month low, the price of oil headed back north again, gaining 1.4%. | |
| Short-term Technical Analysis |  |
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| Cross | Spot level | Previous day move (in pips) | Supp. | Res. | Daily target |
| USD/CHF | 1.0734 | 0.0182 | 1.0650 | 1.0765 |
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Daily chart
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1.0610 | 1.0800 | |||
| Short-term chart |
1.0570 | 1.0840 | |||
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Comments As we had expected, the greenback was unable to breach any major points during yesterday's trading. This notwithstanding, the day was not entirely uneventful, with the USD first declining sharply to 1.0250, following disappointing US employment figures, before clawing back some of its losses to test its resistance at 1.0630 during Jean-Claude Trichet's speech. We needed to wait for last night to see the greenback breach its major resistance at 1.0645 and then surge beyond that point, spurred on by the stop-loss orders placed at those levels. The end of this week will be crucial for the USD's future. If the pair closes above 1.0650 this evening, it will confirm a medium-term bullish trend; if it dips below that mark, however, it could indicate that the upswing was short-lived and excessive. The next resistance and our target for the day is 1.0765 and then 1.0840 if the first resistance is broken. |
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| EUR/USD | 1.5153 | -0.0317 | 1.5145 | 1.5285 |
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Daily chart
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1.5075 | 1.5310 | |||
| Short-term chart |
1.5050 | 1.5336 | |||
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Comments In the end, the expected rebound on the single currency was only very short-lived. The poor figures for the number of US residents filing first-time claims for state unemployment benefits gave the euro an instant boost and it advanced to 1.5503. The slightly renewed interest in the EUR/USD was then rapidly counterbalanced by ECB President Jean-Claude Trichet’s speech, which caused the pair to plummet to its supports at 1.5330 by yesterday evening. After the close in Europe, the single currency continued the downward movement initiated earlier in the day, dropping below the major support at 1.5285. If the pair was to close at this level this evening, it would confirm a general medium-term trend. Our target for today is 1.5075. |
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| USD/JPY | 109.90 | 0.43 | 109.30 | 110.15 |
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Daily chart
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108.90 | 110.45 | |||
| Short-term chart |
108.60 | 111.00 | |||
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Comments Throughout the day yesterday and overnight, the dollar gradually gained ground against the yen. The slight upward trend is likely to continue into today, and we expect to see the pair test the resistances at 110.15, or even 110.45 if the trend picks up. We expect good buying opportunities and a good support at 108.60. |
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| EUR/CHF | 1.6268 | -0.0059 | 1.6245 | 1.6290 |
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Daily chart
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1.6225 | 1.6340 | |||
| Short-term chart |
1.6180 | 1.6355 | |||
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Comments It was not until overnight trading that we saw the euro break out of it trading range and test a new support at 1.6245. However, the test of the support was inconclusive, given that this morning we are back trading in the range of 1.6275–1.6345 mentioned yesterday. Today, we will continue to play the aforementioned trading range. |
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| GBP/USD | 1.9272 | -0.0230 | 1.9255 | 1.9350 |
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Daily chart
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1.9210 | 1.9410 | |||
| Short-term chart |
1.9185 | 1.9450 | |||
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Comments We mentioned yesterday the possibility that the cable might breach its major support at 1.9470 – and that is precisely what did happen. Sterling is sinking like the proverbial stone against the greenback, and this decline is likely to continue, with the possibility now that the pair could slip as far as 1.9215/9185. |
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| Crude Oil and Precious Metals | |
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| Spot | Pips move | ||
| Crude Oil | 119.75 | 0.88 | Daily chart |
| Platinum | 1565.00 | -25.50 | Daily chart |
| Gold | 862.90 | -21.35 | Daily chart |
| Silver | 15.79 | -0.83 | Daily chart |
| Economic Data | |
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| GMT Time | Economic data | Country | Period | Forecast | Previous |
| 14:00 | Wholesale Inv. | USA | June | 0.4% | 0.8% |
