Mid-Day Report: Euro Firm, Sterling Pressured, Dollar Mixed
May 15th, 2008
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Action Insight | Written by ActionForex.com | Nov 14 07 13:59 GMT |
Forex Mid-Day Technical Report Euro Firm, Sterling Pressured, Dollar Mixed
Euro remains firm across the board after solid GDP data. On the other hand, Sterling is hammered on increased expectation of rate cut from BoE in early 08. Dollar remains mixed in general after weaker than expected PPI report which showed 0.1% mom, 6.1% yoy growth in Oct comparing to expectation of 0.3% mom, 6.3% yoy. Retail sales rose 0.2% in Oct, inline with expectation while ex-auto sales rose missed expectation by rising 0.2% only.
Sterling was firm in early European, supported by solid job report that showed claimant count dropped another -9k in Oct while average earnings growth accelerated to 4.1% yoy in Sep. However, Sterling reversed sharply after the released of «www.bankofengland.co.uk». The report forecasts inflation in UK will settle at its target of 2.0%, after being pushed to above 2.0% by energy prices, assuming at least on rate cut in 2008. This prompted increased expectation that BoE will act as soon as Q1.
On the other hand, Euro is lifted by stronger than expected Q3 GDP data which showed 0.7% qoq, 2.6% yoy growth comparing to expectation of 0.6% qoq, 2.5% qoq. The comparative strength between Euro and Sterling is also seen in the sharp rally in EUR/GBP cross. EUR/USD
Daily Pivots: (S1) 1.4538; (P) 1.4585; (R1) 1.4650; «www.actionforex.com»
EUR/USD’s rise from 1.4518 extends further to as high as 1.4713 today. At this point, intraday bias remains on the upside as long as 1.4633 minor support holds. Retest of 1.4751 high should be seen. correction from 1.4751 has likely completed after drawing support from 4 hours 55 EMA and short term rising channel. Break of 1.4751 will confirm rise from 1.4014 has resumed for next upside target of 1.5 psychological resistance.
On the downside, below 1.4633 will flip intraday bias back to the downside and suggest that consolidation from 1.4751 is possibly still in progress and will bring another fall to 1.4519 before completion. Though, rise from 1.4014 should still be in force as long as 1.4414 clusters support (50% retracement of 1.4124 to 1.4751 at 1.4438) remains intact.
The long term view remains unchanged. Regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high), with subsequent correction ended at 1.1639. Such rally is expected to extend further to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance. A break below 1.3851 is resistance turned support is needed to be the first signal that such rally has completed. Otherwise, medium term outlook remains bullish.
GBP/USD
Daily Pivots: (S1) 2.0566; (P) 2.0663; (R1) 2.0804; «www.actionforex.com»
Cable retreats sharply after rebound from 2.0523 was limited at 2.0845 earlier today. Break of 2.0670 minor support turns intraday bias is flipped to the downside for the moment and retest of 2.0520/38 cluster support (50% retracement of 1.9879 to 2.1161 at 2.0520) could be seen. However, as long as this cluster support holds, rise from 1.9879 should still be in progress. Above 2.0845 will encourage a retest of 2.1161 high.
However, decisive break of 2.0520/38 cluster support will indicate that whole rise from 1.9652 has already completed, after touching medium term rising channel resistance. In such case, focus will be back to medium term rising channel support (now at 1.9986). But otherwise, rise from 1.9879 remains in force as long as 2.0520/38 cluster support holds.
In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. Break of 61.8% projection level at 2.0677 now encourages further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.
USD/CHF
Daily Pivots: (S1) 1.1235; (P) 1.1267; (R1) 1.1306; «www.actionforex.com».
USD/CHF weakens today and is now pressing 1.1187 low. At this point, further decline is still expected as long as 1.1300 resistance holds. Sustained trading below 1.1187 will encourage further fall to test next important medium term support at 1.1100 (95 low). On the upside, above 1.1300 will indicate that a short term bottom is possibly formed and bring recovery to 4 hours 55 EMA (now at 1.1353) and above. But upside should be limited below 1.1597 support turned resistance and bring another fall.
In the bigger picture, medium term down trend from 1.3283 (05 high) has now breached medium term support of 1.1288. The current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend resumed. With this interpretation, next downside target is 1.1100 clusters support (95 low and 100% projection of 1.3283 to 1.1919 from 1.2467 at 1.1103). Hence, downside could be supported there initially on oversold condition and bring rebound.
On the upside, even though a stronger rebound would be seen in case of a break of 1.1597 resistance, break of 1.1891 resistance is needed to indicate fall from 1.2467 has completed. Otherwise, further decline is still in favor after correction.
USD/JPY
Daily Pivots: (S1) 109.75; (P) 110.37; (R1) 111.51; «www.actionforex.com».
USD/JPY’s rebound from 109.12 extends further to as high as 111.55 today. With a short term bottom in place at 109.12, further recovery could now be seen to 112.04/113.39 resistance zone. But still, upside should be limited there and bring another fall. On the downside, below 110.53 minor support will flip intraday bias back to the downside for 108.99 support first. Sustained break of 108.99 will encourage further decline to next short term target of 100% projection of 124.13 to 111.59 from 117.94 at 105.40.
In the bigger picture, the three wave structure of the up trend from 101.65 to 124.13 suggests that it’s corrective in nature. Such development flipped favor to the case that the rally from 101.65 could indeed be the final leg of a long term triangle formation (147.68, 101.22, 135.20, 101.65, 124.13). The break of falling trend line (147.68, 135.20) was merely a throwover in the last leg. Sustained trading below 108.99 low will add more credence to this case and put key long term support zone of 101.22/65 into focus. On the upside, break of 115.91 resistance is needed to be the first signal that fall from 124.13 has completed. Otherwise, medium term outlook remains bearish.
EUR/JPY
Daily Pivots: (S1) 159.71; (P) 160.91; (R1) 163.14; «www.actionforex.com»
EUR/JPY’s rebound from 158.67 continues today and is now pressing mentioned 164.00 resistance (61.8% retracement of 167.62 to 158.67 at 164.26). At this point, intraday bias remains on the upside as long as 161.81 minor support holds. But still, as long as 164.00 resistance (61.8% retracement of 167.62 to 158.67 at 164.26) holds, the current rebound will be treated as correction to the fall from 167.62 only and further decline is still in favor. Below 161.81 will turn intraday bias back to the downside bring retest of 158.67 low. However, above 164.00/26 cluster resistance will flip favors back to the case that price action from 167.72 is merely consolidation to rise from 149.27. and will bring retest of this high and then 168.93 key resistance.
In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed. Meanwhile, on the downside, break of 149.27 low will also have the long term rising channel taken out, which in turn add much weight to the case that rise from 88.97 has indeed completed at 168.83 and bring much deeper medium term decline.
Forex News Digest
«c.moreover.com»
Wed, 14 Nov 2007 11:37:00 GMT from Excite Money & Investing
«c.moreover.com»
Wed, 14 Nov 2007 10:49:00 GMT from International Herald Tribune
«c.moreover.com»
Wed, 14 Nov 2007 10:43:00 GMT from CNBC
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:30 AUD Australia W’pac consumer confidence -4.20% N/A -0.30%
07:00 EUR Germany GDP Q/Q Q3 0.70% 0.70% 0.30%
07:00 EUR Germany GDP Y/Y Q3 2.40% 2.50% 2.50%
09:30 GBP U.K. Claimant count Oct -9.9k -5.0K -12.8K -13.9k
09:30 GBP U.K. ILO unemployment rate Sep 5.40% 5.40% 5.40%
09:30 GBP U.K. Avg. earnings 3m Y/Y Sep 4.10% 3.90% 3.70%
10:00 EUR Eurozone GDP Q/Q Q3 0.70% 0.60% 0.30%
10:00 EUR Eurozone GDP Y/Y Q3 2.60% 2.50% 2.50%
10:30 GBP BoE Quarterly Inflation Report
13:30 USD U.S. PPI M/M Oct 0.10% 0.30% 1.10%
13:30 USD U.S. PPI Y/Y Oct 6.10% 6.30% 4.40%
13:30 USD U.S. PPI core M/M Oct 0.00% 0.20% 0.10%
13:30 USD U.S. PPI core Y/Y Oct 2.50% 2.60% 2.00%
13:30 USD U.S. Retail sales M/M Oct 0.20% 0.20% 0.60% 0.70%
13:30 USD U.S. Retail sales less auto M/MOct 0.20% 0.30% 0.40% 0.30%
13:30 CAD Canada Leading indicators Oct 0.10% 0.30% 0.40% 0.30%
14:10 USD Bernanke Speaks on FOMC Communications
15:00 USD U.S. Business inventories Sep 0.30% 0.10%
SAP () disappointed investors Wednesday by reporting first-quarter revenue and software license sales that missed analyst estimates. It also said a key software project has been delayed. SAP, based in Walldorf, Germany, said net income fell 22% from the year-earlier quarter to 242 million euros, or $374 million at early Wednesday’s currency exchange rate. Excluding the write-down from its nearly $7 billion acquisition of business intelligence software maker Business Objects, SAP said...