Dollar Temporarily Supported by Housing Data

Dollar remains pressured today, in particular against Sterling.
Despite weaker than expected durable goods orders and consumer confidence, dollar is temporarily supported by better than expected existing home sales data and recovers mildly against Euro and Swiss Franc. Though, risk remains on the downside.

US durable goods order came in much weaker than expected, dropping 8.3% in Oct, far below expectation of 4.6% fall, and being the largest decline since Jul 2000. Both ex-auto and ex-defense autos also dropped unexpectedly by 1.7% and 6.4% respectively. Conference Board Consumer Confidence dropped to 102.9 in Nov, following downward revision from 105.4 to 105.1 in Oct. However, Existing home sales came in stronger than expected, rising by 0.5% to 6.24M annualized rate, following upward revision in prior month’s figures.

Earlier today, Euro remained firm against dollar and surged to new record high against yen. Eurozone M3, the broad measure of money supply, remains solid and grew at same rate as previous month’s 8.5% rise despite missing consensus of 8.7%. 3 months averages increased to 8.4% growth form 8.2%, still far above 4.5%, where ECB believes is consistent with medium term price stability. In short, ECB will likely raise rates, at least at the same pace, in early 07. On the other hand, Sterling surged against dollar and yen too, after U.K. Chancellor of the Exchequer Gordon Brown said economic growth will exceed the government’s earlier forecast of 2.2% to 2.5% this year.


Daily Pivots: (S1) 1.2023; (P) 1.2066; (R1) 1.2108; More.

USD/CHF is being kept above yesterday’s low of 1.2030 and continues to trade sideway. Outlook remains unchanged. Even though 4 hours MACD’s rise to above signal line suggest a short term low might be formed at 1.2030, a break above 1.2120 minor resistance is needed to confirm such case. Otherwise intraday bias remains on the downside and further decline is still in favor towards 1.1919 (this year’s low).

On the upside, above 1.2120 will turn outlook consolidative first but as long as upside is limited below 1.2206 support turned resistance, touching of 1.2206 consolidation should still be brief and decline should resume sooner rather than later. Above 1.2206 will suggest lengthier consolidation will follow before another fall.

In the bigger picture, decisive break of 1.2182 support suggests that medium term fall from 1.3283 has possibly resumed with first downside target at 1.1919 (this year’s low). Break will confirm such case and encourage further weakness to 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404. Meanwhile, the current decline from 1.2768 will still be treated as in progress as long as 1.2343 support turned resistance holds or before medium term reversal pattern forms.

USD/CHF 4 Hours Chart - Learn Forex, Trade Forex, Forex News, Forex Headlines

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Shing-Ip Tsui is the founder and CEO of ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.