| ifcmarkets Intraday snapshot |
The 1.4500 level is being challenged, as scope has been created for 1.4580. Tuesday's Asian session break above 1.4395 completes a two-day consolidation phase, and a seven-week bear resistance line near 1.4500 is likely to be broken. EUR bulls are still on course for meeting the 1.618 extension target at 1.4733 in the longer-term. Corrective weakness will attract support while above 1.4406 and only below 1.4391 would question the bullish EUR outlook. |
| Extends the short-term uptrend towards 1.6415, as GBP bulls remain in control. The push into fresh five-week highs above 1.6330 brings the 1.6500 level into the picture, which lies in front of the May 31 lower reaction high at 1.6546. Only a reversal below Monday's 1.6262 low would concern GBP bulls, exposing 1.6175. |
| Continues to push lower towards 77.82, as the powerful USD bear trend persists. Tuesday's Asian session low at 77.88 is not expected to hold, and a push below the minor downside target at 77.82 would expose 77.44 and the fortified 77.00 support level. Only a recovery above 78.28 would provide temporary respite, opening 78.39. However, corrective upside scope is limited. |
| Pushes into fresh eleven-week highs, and is set to meet targets at 1.0955 and 1.0979. The major reaction high at 1.1014 from May 2 is now within striking distance, as the medium-term uptrend extends. Corrective weakness will attract support while above 1.0875, and only below Monday's 1.0795 low would concern AUD bulls. |
| Talk about it. Threaten it. But the last thing the Bank of Japan should do is intervene. So far, the central bank has done good. Unlike its central bank neighbors in Korea, Thailand and the Philippines, the Bank of Japan has resisted temptation to halt its currency's rally against the dollar, even though the yen has risen to a four-month high at Y77.88 and isn't too far way for its record high of Y76.50. The country's trade, economy and finance ministers all sallied forth to express their concerns as the yen rose. A strong yen is hardly what Japan needs as the country struggles to recover from the devastation of the March 11 earthquake and tsunami. But, intervention now will only make matters worse. First of all, the yen's strength is largely due to dollar weakness, a trend that is entirely out of Tokyo's control and one that could intensify if there isn't an early solution to the U.S. debt ceiling negotiations. Finance Minister Yoshihiko Noda recognized this in his comments by calling the yen's move "one-sided". Second of all, currency markets love to play with a line in the sand. If the Bank of Japan provided one around current level it could find itself committed to a long-running battle to defend that level. And, if it was eventually forced to give in to the speculators as central banks have often had to do in the past, the bank would lose credibility and have damaged its ability to defend the yen in the future. In other words, in a battle with so much stacked against it the central bank has to be even more canny than usual, despite the growing pressure from Japanese corporations for the authorities to wade into the market and help to promote exports with a weaker yen. But, the best solution to achieve this is to keep the market guessing. So far, this policy has worked. |
U.K. second-quarter GDP released Tuesday showed a sharp slowdown and was in line with economists' expectations but traders had been so downbeat about the prospects for U.K. growth that sterling jumped against both the dollar and the euro in London trade. Sterling briefly made it above $1.64 while the euro sank to as low as 0.8826 pence. The earlier flight from the dollar seems to have run out of steam with traders unwilling to push the dollar lower before any fresh news out of the U.S. The U.S. dollar pushed toward its lowest level against the Canadian dollar since late 2007. |
| The dollar fell sharply in volatile Asian trade Tuesday after U.S. President Barack Obama made clear in a nationwide address there was no deal in sight to end the debt stalemate that threatens to bring an unprecedented ratings downgrade. The fall was temporarily arrested by a quick spike of some 70 pips against the yen, but traders quickly ruled out any intervention by Japan to arrest the yen's rise, and the dollar resumed its downward trend. "Defaulting on our obligations is a reckless and irresponsible outcome to this debate. And Republican leaders say that they agree we must avoid default," Obama said. But he also made clear that there is little agreement on how to reach a deal. Speaking of the latest Republican proposal put forward by House Speaker John Boehner, which would raise the debt ceiling in a two-step process, "it doesn't solve the problem," Obama said. |
| Foreign exchange investors ran for the cover of the Swiss franc Monday in New York as the looming potential of a U.S. debt default and continued problems in Greece weakened the dollar and euro. The dollar hit an all-time low versus the Swiss franc at CHF0.8021, and the franc notched a 1.5% gain versus the euro, which has been hit by Europe's own Greece-led debt stumbles. The moves continued a record-setting ascent for the franc against the dollar and euro. Also, the besieged dollar dropped to another post-intervention low of Y78.05 against the yen, but traders were reluctant to bid up the yen too much at the risk of provoking Japanese officials to move to halt the yen's strength. |
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