Afternoon US Dollar Wrap-Up
The USD is weaker to end New York
but on the highs for the US session as trade winds down for the first 24 hours
of the week. Initially firm at the open in Asia last night, the USD came under
selling pressure early against the Yen as traders began to process the
implications of further PBOC action in addition to last week’s 27 BP rate
hike. Speculation regarding another shift in the Yuan policy or other
operations to slow down growth was seen as a bearish development and the USD/JPY
pair drifted lower; EURO/JPY and GBP/JPY both became active and cross
spreaders soon drove the non-USD pairs to new highs against the Yen in active
trade.
The Greenback was the default seller across the board and
continued to weaken into European then early US trade. After stops fired off
across the board the major pairs were at significant support/resistance early
New York but the rally ran out of steam heading into the European close.
Traders now feel that the lack of US fundamentals until late this week will
shift focus to non-UAS fundamentals through Thursday’s release of Durable
Goods data. Due out tonight in the Eurozone are Q2 GDP for France and the
German ZEW survey; analysts point out that although the Eurozone has been
growing at a faster pace than previously projected, French GDP is not expected
to be a significant part of that growth and German industrial confidence may
have been waning recently; traders look for soft data to inspire a bout of
long-liquidation in the EURO overnight. Cable has been tracking EURO and
benefiting from the cross-spreaders so a correction lower of today’s gains is
a strong possibility.
On the day, GBP saw gains to the high end of the 1.8900
handle, high prints at 1.8999 before selling and lack of follow-though saw the
rate deflate to under 1.8940 into the close; traders say stops were the fuel
on the way up but poorly set longs liquidated into the later part of the day
as gains were short lived. EURO managed to hit stops layered above the
1.2840/60 area driving the pair into offers at 1.2880 but aggressive buyers
lifted the pair through the last round of stops for a two-month high at 1.2940
before falling back to close below the 1.2900 handle. Analysts look for
follow-through on the EURO to the 1.2980 area but warn that the large level of
open longs may lead to a liquidating break before a new 2006 high. Look for
the USD to consolidate small gains from New York into Asia and the focus to
turn to European trade tonight. Look for the USD to open New York higher on
Tuesday.
USD/JPY Daily
R3: 8760/70
R2: 8730
R1: 8700
Current Price : 8666
S1: 8600
S2: 8550
S3: ?
Pair at a point of confusion trading both sides of unchanged
in quiet trade; not attracting sellers or buyers of size. Stops above 8700
area said to be mixed with offers so a rally to 8700 area or a bit farther is
a good selling opportunity. Stops under the market said to be sub-8600 with
more under 8550 area. Pair holding up well under cross-spreading so a rally is
likely when spreads are unwound.
GBP/USD Daily
R3: 1.9080
R2: 1.9050
R1: 1.8990/1.9000
Current Price : 1.8945
S1: 1.8900
S2: 1.8860
S3: 1.8800
Pair rallies to test resistance at top of range, fails on
lower volume and a drop in OI. Look for the pair to be inside range day
closing lower on light volume as currently the contract is heavily long with
more long-liquidation likely; stops under 1.8800 area said to be liquidating
longs so any push lower could get ugly on the downside. Close over 1.8900
mildly bullish but new longs scarce.
www.infinitybrokerage.com for details
Trading Futures, Options on Futures, and Foreign Exchange
involves substantial risk of loss and may not be suitable for all investors.
You should carefully consider whether trading is suitable for you in light of
your circumstances, knowledge, and financial resources. You may lose all or
more of your initial investment. Opinions, market data, and recommendations
are subject to change at any time. The information contained on this email
does not constitute a solicitation to buy or sell by Infinity Futures, Inc.,
and/or its affiliates, and is not to be available to individuals in a
jurisdiction where such availability would be contrary to local regulation or
law.