Daily Report: Dollar Back Under Pressure, Kiwi Shines
>> Sep 22, 2009
Daily Report: Dollar Back Under Pressure, Kiwi ShinesDollar is back under pressure after brief recovery on rebound in crude oil and gold as well as optimism of expansion in the Asian economies that fuel investors; appetite for higher yields. After brief retreat crude oil once again drew support from the medium term trend line and rebound back to above 70. On the other hand, gold is back to 1010 level after breaching 1000 briefly yesterday. Manila based Asian Development Bank said Asia, excluding Japan, will grow 3.9% in 2009, up from prior projection of 3.4% and may accelerate to 6.4% in 2010. New Zealand dollar is the strongest currency today after reporting the first current account surplus in six years. An article published in Financial Times called for coordination intervention from G7 countries to avoid unexpected plunge in dollar. The article, written by an UBS FX strategist argue that a plunge in the dollar will risk exporting deflation across the globe and tip G7 countries into liquidity traps where "extremely loose monetary and fiscal policies are unable to prise their economies out of deflation". Looking back at the dollar index, with 77.24 resistance intact, there is no confirmation of bottoming yet and another low below 76.03 support might still be seen. But, we continue to expect strong support from 75.89 key support level to finally conclude the whole five wave decline from March high of 89.62 and bring sizeable rebound to send the index back above 80 level. However, we'd emphasize again that development in crude oil and gold will be crucial on whether this 75.89 key support would finally hold. Focus will now be on whether crude oil will stay below last week's high of 73.19 and sustain below 70 on next fall and also on whether gold will extend the pull back from last week's high of 1025 to 983.2 support. A break above 73.19 and 1025 and oil and gold respectively will inevitably power the dollar index through 75.89 key support.  Talking about the strength in NZD, AUD/NZD is still falling inside a near term channel and is heading to 1.2021 key support level. Momentum of the fall since April isn't too convincing yet and such fall is likely just part of the consolidation pattern that started at 1.2928 after failing 1.2966 key resistance. Strong support is expected from 1.2021 level to end recent decline and shift the relative strength back to Aussie. However, a firm break of 1.2021 will possibly strengthen and accelerate the trend in Kiwi which might re-establish it as the better candidate for carry trades.  On the data front, New Zealand current account balance recorded first surplus of NZD 0.12B in six years in Q2. Swiss trade surplus came in narrower than expected at CHF 1.79B in August. Canadian retail sales is expected to rise 0.5% mom in July with ex auto sales dropped -0.1%. US house price index is expected to rise 0.5% mom in July. USD/JPY Daily OutlookDaily Pivots: (S1) 91.31; (P) 91.92; (R1) 92.53; More. USD/JPY's break of 91.42 minor support suggests that recovery from 90.12 has completed at 92.52 already. Intraday bias is flipped back to the downside for retesting 90.12 low first. Break will confirm whole fall form 97.77 has resumed for lower channel support at 89.56 next. On the upside, in case of another rise, we'd continue to expect recovery to be limited by 93.29 resistance and bring fall resumption . However, decisive break of 93.29 will indicate that whole fall from 97.77 has completed and will turn focus back to upper channel resistance (now at 96.46). In the bigger picture, on the one hand, USD/JPY is still trading well below 55 weeks EMA and the long term falling trend line resistance The lower highs, lower lows pattern since 2007 high of 124.13 is still intact. Weekly MACD is also staying negative. On the other hand, the choppy look of the fall from 101.43 so far argues that it's corrective in nature and thus suggests that rise from 87.12 is still in progress. The conflicting indications keep medium term outlook mixed and question remains on whether USD/JPY has bottomed out at 87.12 already. Focus is now on the lower channel support of the falling channel from 101.43. Sustained break there will indicate that the fall from 101.43 is accelerating which in turn argues that such fall is developing into an impulse. In other words, fall from 101.43 is part of the whole down trend from 124.12 and should extend beyond 87.12 low. On the other hand, while strong rebound from the channel support isn't an adequate signal of reversal, it will add more favor to the case that fall from 101.43 is merely a correction. Break of 97.77 resistance will further affirm the case that USD/JPY has bottomed out at 87.12 already.  Economic Indicators Update
| ||||||||||||||||||||||||||||||||||||||||||||||
0 comments:
Post a Comment