The major stock indexes lingered in the red Friday, but they have come off session lows. At 10:50 a.m. ET, the Nasdaq tumbled 2.1%. It was down 2.5% earlier. The NYSE composite lost 1.3%. Meanwhile, the Dow and S&P 500 gave up 1.2% each. Volume was tracking slightly lower on both exchanges. In economic news, the University of Michigan sentiment index dropped to 75 vs. 80.9 in October, the lowest since Oct. 2005. Comtech Group () gapped below its 50-day moving average, dropping...
Mid-Day Report: Dollar Regains Strength, Steady after GDP Revision
May 16, 2008 on 3:25 pm | In Currency |
Action Insight | Written by ActionForex.com | Nov 29 07 14:15 GMT |
Forex Mid-Day Technical Report Dollar Regains Strength, Steady after GDP Revision
Dollar regains strength against European majors today as correction continues. Q3 GDP growth was revised up to 4.9% annualized rate, fastest growth in four years and slightly above expectation of 4.8%. The growth rate was also much stronger than Q2’s 3.9%. However, the data did little to change the view of steep slowdown in Q4 due to housing and mortgage markets problems. Jobless claims surged sharply higher to 352k, the first above 350k reading since Fed and signal a more sever deterioration in the job market. New home sales will be released later in the morning. Recent Fedspeaks will also continue with Mishkin and Bernanke featured today.
Sterling gave back yesterday’s gain after dovish comments from BoE members on the testimony before Parliamentary Treasury Select Committee. Blanchflower also made clear his intent to vote for a decrease again in December, though the overall vote will still be tight. Sterling is also weighed down by steeper than expected slow down in how price growth which saw Nationwide House price Index fell by the most since Jun 95, -0.8% mom in Nov, dragging yoy rate to 6.9% versus expectation of 8.4%. Germany’s job market continues to show surprised improvement. Unemployment rate dropped further from 8.7% to 8.6% in Nov, as the number of jobless fell by a further -53k. However, Eurozone Retail PMI fell for the third consecutive month to 45.9 in Nov, suggesting the majority of purchasing managers are feeling pessimistic. Euro heads to retest yesterday’s low. EUR/USD
Daily Pivots: (S1) 1.4749; (P) 1.4804; (R1) 1.4895; «www.actionforex.com»
EUR/USD’s recovery was limited at 1.4859 and eases back today. At this point, correction from 1.4966 is still expected to extend lower as long as 1.4859 resistance holds, probably towards 1.4519 clusters support. Above 1.4859 will indicate that fall from 1.4966 has possibly completed and bring retest of 1.5 cluster resistance.
As discussed before, while rise from 1.4014 is completed, it’s early to confirm that rise from 1.3360 has completed too. Focus is now on 1.4519 cluster support (50% retracement of 1.4014 to 1.4966 at 1.4490). Decisive break of this support zone will add much credence to the case that rally from 1.3360 has completed too after failing 1.5 key medium resistance and bring deeper correction to 1.4014/4281 support zone before resuming the long term up trend. But strong rebound above this level will suggest another rise should be seen before making a medium term top.
In the bigger picture, 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) and is now close to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which will overlap with 1.5 psychological resistance. Upside could be limited by this resistance initially on overbought condition. Sustained trading above this key resistance is needed to confirm medium term rally is still underway to next projection target of 100% projection at 1.7048. On the downside, firm break of 1.3851 resistance turned support is needed to be the first signal that this up trend from 1.1639 has completed. Otherwise, long term outlook remains bullish.
GBP/USD
Daily Pivots: (S1) 2.0657; (P) 2.0744; (R1) 2.0907; «www.actionforex.com»
Cable’s rebound was limited by at 2.0380, below mentioned 2.0845 cluster resistance and eased back to 2.06 level today. Short term outlook remains neutral at this moment. With 2.0845 cluster resistance (61.8% retracement of 2.1161 to 2.0353 at 2.0852) remains intact, the original view still holds. That is, rise from 1.9652 has completed after touching medium term rising channel resistance. Fall from 2.1161 is expected to extend further to retest medium term rising channel support (now at 2.0040) after finishing the current corrective rebound from 2.0353. Below 2.0579 support will bring retest of 2.0353 low first. However, sustained break of 2.0845 cluster resistance will indicate that fall from 2.1161 has completed and will bring retest of this high.
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) 1.1032; (P) 1.1114; (R1) 1.1188; «www.actionforex.com».
USD/CHF’s rebound from 1.0890 resumes today and reaches as high as 1.1199 so far. At this point, further rally is still in favor as long as 1.1097 support holds. However, upside is still expected to be limited by 1.1298 resistance and bring resumption of the fall from 1.2467. on the downside, below 1.1071 will flip intraday bias back to the downside, indicating recovery is completed and bring retest of 1.0890 low.
In the bigger picture, 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. Sustained trading below 1.1100 clusters support (95 low and 100% projection of 1.3283 to 1.1919 from 1.2467 at 1.1103) encourages decline to next medium term target of 161.8% projection at 1.0260. On the upside, however, break of 1.1298 resistance will be bring stronger rebound towards 38.2% retracemment of 1.2467 to 1.8090 at 1.1492 first.
USD/JPY
Daily Pivots: (S1) 108.71; (P) 109.59; (R1) 110.92; «www.actionforex.com».
USD/JPY is bounded in tight range after rebound from 107.21 reached as high as 110.47. At this point, intraday bias remains on the upside as long as 109.13 minor support holds and further rise could still be seen. But still, upside is expected to be limited by 111.76 resistance and bring resumption of fall from 117.94. On the downside, below 109.13 will indicate rebound has completed and bring retest of 107.21 low.
In the bigger picture, sharp decline from 124.13 remains in force and is expected to extend at least further to 100% projection of 124.13 to 111.59 from 117.94 at 105.40 and will likely bring retest key long term support zone of 101.22/65. On the upside, above 111.76 resistance will suggest that fall from 117.94 has completed and bring lengthier consolidation. But a break of 115.91 resistance is needed to signal down trend from 124.13 has completed too. Otherwise, medium term outlook remains bearish.
EUR/JPY
Daily Pivots: (S1) 161.14; (P) 162.36; (R1) 164.50; «www.actionforex.com»
EUR/JPY’s rise from 159.36 reaches as high as 163.62 earlier today. But subsequent retreat and touching of 161.83 minor support turned intraday outlook neutral for the moment. Outlook remains unchanged. With EUR/JPY still kept below 164.00/26 cluster resistance and struggling at 55 days EMA (now at 162.80), the case that rise from 149.27 has already completed at 167.72 is still in favor. That is, price actions from 168.93 is developing into larger scale consolidation and the last falling leg is in progress, with price actions from 158.67 as interim consolidation. Below 161.83 will suggest that EUR/JPY has failed the 164.00/26 cluster resistance again and will encourage a retest of 159.36 support first.
Also, note that choppy trading could still continue until a break of the established range of 158.67 and 164.30. On the downside, break of 158.67 will confirm fall from 167.62 has resumed for 61.8% retracement of 149.27 to 167.72 at 156.31 first. On the upside, sustained break of 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 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.
Forex News Digest
«c.moreover.com»
Thu, 29 Nov 2007 10:28:00 GMT from The Australian
«c.moreover.com»
Thu, 29 Nov 2007 10:16:00 GMT from Reuters UK
«c.moreover.com»
Thu, 29 Nov 2007 10:02:00 GMT from Yahoo! Canada
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Industrial prod’n M/M Oct 1.60% 1.80% -1.40%
23:50 JPY Japan Industrial prod’n Y/Y Oct 4.70% 4.00% 0.80%
07:00 GBP U.K. Nationwide hse price M/M Nov -0.80% 0.10% 1.10%
07:00 GBP U.K. Nationwide hse price Y/Y Nov 6.90% 8.40% 9.70%
09:00 EUR Germany Unemployment rate Nov 8.60% 8.70% 8.70%
09:00 EUR Germany Unemployment change Nov -53K -30.0K -40.0K
09:45 GBP MPC Treasury Committee Hearings
11:00 GBP U.K. CBI distribution trade Nov 13 8 10
13:30 CAD Canada Current account Q3 1.0B 3.5B 8.36B
13:30 CAD Canada PPI M/M Oct -1.10% -0.50% -0.90%
13:30 CAD Canada PPI Y/Y Oct -1.00% N/A 0.10%
13:30 USD U.S. PCE core Q/Q Q3 1.80% 1.80% 1.80%
13:30 USD U.S. GDP deflator Q3 0.90% 0.80% 0.70%
13:30 USD U.S. GDP annualised Q3 4.90% 4.80% 3.90%
13:30 USD U.S. Personal consumption Q3 2.70% 2.80% 3.00%
13:30 USD U.S. Jobless claims Nov 352K 332.0K 330K
15:00 USD U.S. New home sales Oct 0.75M 0.77M
15:00 USD U.S. New homes change Oct -2.60% 4.80%
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