| ifcmarkets Intraday snapshot |
Further EUR gains to 1.4556 are expected, bringing the July 4 reaction high at 1.4580 and the 1.618 Fibonacci extension target at 1.4592 within striking distance. Tuesday's gains completed a bullish continuation pattern on the 60-minute chart, which has created room for a wave equality target at 1.4626. Corrective weakness will attract support while above 1.4422, and only below there would question the positive EUR outlook. |
| Extends the short-term uptrend towards the 1.6450 target, as GBP bulls remain in control. The push into fresh six-week highs completed a bullish rectangle on the 60-minute chart, bringing the 1.6500 level into the picture and the important May 31 lower reaction high at 1.6546. Corrective weakness will attract support while above 1.6325, and only below Monday's 1.6262 low would concern GBP bulls. |
| Continues to push lower towards 77.44, as the powerful USD bear trend persists. Another push into fresh four-month lows below 77.82 during Wednesday's Asian session extends the downtrend, which has scope for 77.00 and the March 2011 all-time low at 76.25 for the slightly longer-term. Regaining ground above 78.05 would provide temporary respite to open 78.23, but corrective upside scope is limited. |
| Pushes into fresh 29-year highs above 1.1014, and AUD bulls are eyeing the confluence of 1.618 Fibonacci extension targets at 1.1174. Resistance from the four-week bull channel at 1.1064 on the weekly chart is being challenged, and a sustained break through there is required to make the 1.1174 targets achievable. Corrective weakness will attract support while above 1.0970, and only below 1.0938 would concern AUD bulls. |
| Don't go too bananas for the Aussie. The Australian dollar has found itself a leader among Asian currencies as it benefits from rising fears in the investment community that, even if the U.S. doesn't default on its debt, the country will still face a downgrade. This has brought fresh flows into other triple-A credit markets with investors showing declining interest in not only the dollar but the euro, the yen and the pound as well. But it isn't only Australia's credit rating that has investors on the move. On Wednesday, the country reported a surprisingly large jump in inflation to 3.6% in the second quarter from 3.3%, taking it even further away from the Reserve Bank of Australia's 2-3% target and erasing any hopes that the central bank would now be able to start lowering rates. On the contrary, money markets are now betting that rates are on their way up again with speculators wagering that the next move will come as early as August. The RBA has encouraged these expectations with Governor Glenn Stevens suggesting earlier this week that a strong currency has its advantages. This has helped the Aussie to outstrip other commodity currencies as well with the New Zealand dollar lagging given the less hawkish outlook for New Zealand interest rates and the Canadian dollar falling behind given its close association with the debt-tainted U.S. economy |
A reminder from German Finance Minister Wolfgang Schaeuble that the euro zone's debt woes are far from over dented the euro in European trading Wednesday, but the losses were tempered as the U.S. debt-ceiling impasse continues to weigh on the dollar. Schaeuble said Berlin opposes a carte blanche for the euro zone's bailout fund to buy government bonds in the secondary market. That option had been assumed when euro-zone policymakers hammered out Greece's new aid package last week and was seen as crucial to their efforts to stop the crisis from spreading to other indebted nations like Spain and Italy. Paul Robson, currency strategist at Royal Bank of Scotland Group PLC, said Schaeuble's remarks are a timely reminder that last week's deal is no panacea even though the needed political will had been exhibited. "It was a useful step, but there is still a lot to be done," he said. |
| Asian currencies soared to new highs against the dollar Wednesday, as investors showed the greenback no mercy on increasing expectations the U.S. will lose its triple-A credit rating. The U.S. currency fell to Y77.78, its lowest since the post World War II-low of Y76.25 marked in March. Japan Finance Minister Yoshihiko Noda reiterated that he will continue to closely monitor the market. Central banks in Thailand and South Korea for a second straight day intervened to keep their currencies from rising too quickly and damaging their export-dependent economies. Wednesday's gains extended a months-long trend of investors piling into Asian currencies and out of currencies like the dollar and euro, which are burdened by seemingly intractable fiscal problems. "Now more than ever, Asia is seen as a region where there are strong fundamentals," said Thomas Harr, head of Asian FX strategy at Standard Chartered Bank. "These flows coming into Asia are safe-haven flows; they are increasing even though you could say that risk appetite is not very strong," he said. |
| A bitter stalemate over a deal to raise the U.S. debt ceiling and the specter of a U.S. credit downgrade drove an already-battered dollar down further against its major rivals Tuesday in New York. While other markets this week have seemed to take the lack of a debt deal in stride, the dollar reached its lowest level versus the Japanese currency since March 17. The U.S. currency fell near 1% against the euro, reaching new three-week depths versus its rival. Overnight, the dollar repeated its recent predilection and fell to a fresh all-time low versus the safe-haven Swiss franc at CHF0.7997. The dollar's latest plunge started when President Barack Obama made clear in a nationwide address Monday night that no deal was in sight to end the debt stalemate. There appeared to be little in the way of new momentum on breaking a debt-negotiation impasse Tuesday. To that end, U.S. House Democrats will broadly oppose House Speaker John Boehner's (R, Ohio) plan to raise the debt ceiling, House Minority Whip Steny Hoyer (D., Md.) said Tuesday and the White House said the president will veto the Boehner plan if it is sent to him. |
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