The single currency and the greenback both cam under pressure in the
start of the week due to debt woes, Swiss franc benefited and hit
record highs against both currencies on safe-haven flows, euro opened
lower today and quickly hit fresh low of 1.1365 against the Swiss franc
and the Swissy also tumbled below previous low of 0.8080 to as low as
0.8034, the gold also surged to historical high of $1598.41 this morning
as investors rushed to a safety place to put their capital due to
Eurozone sovereign debt crisis and U.S. debt ceiling problem.
Euro slipped to an intra-day low of 1.4052 against the greenback on
the back of intra-day selloff in EUR/CHF on stop hunting (stops at
1.1475) as traders still worry that the widely spreading debt crisis in
Eurozone may not find solution in the near future. Former Treasury
secretary and currently a Harvard Professor said that the eurozone
leaders should take more aggressive measures to the debt crisis and if
Europe does not get the crisis under control soon, other G20 countries
should put pressure on Europe in doing so. Oh the other hand, the
release of slightly better-than-expected EU bank stress tests results
(only 8 out of 90 banks failed the tests) did little help to the euro as
market participants had not much confidence in the results and traders
turn their focus on the next emergency meeting of EU leaders called by
German Chancellor Angela Merkel to be held on Thursday in Brussels,
hoping the private investors can contribute to finalize the second Greek
bailout plan. Stops below 1.4090 were triggered this morning and more
stops are tipped below 1.4050 and 1.4000 whilst bids are expected above
of these levels. On the upside, offers are located at 1.4100-10 and more
at 1.4150-60.
In U.S. there is still very few sign of progress on raising the
country's debt ceiling ahead of the 2 August deadline. Democratic and
Republican senators will start considering the compromise measure this
week, some expect the Democratic-led Senate would pass the legislation
whether they can will over the Republican-led House of Representatives
remains a big doubt for the time being which indirectly put pressure on
the greenback as both rating agencies Moody's and Standard & Poor's
already warned last week that they are considering to downgrade U.S. top
credit ratings should the debt ceiling not be raised in time. USD/JPY
stuck in very narrow range on Japanese holiday today, despite heavy
selling in EUR/JPY and AUD/JPY on risk aversion, standing bids from
Japanese names between from 78.90 down to 78.60 kept the pair confined
in tight trading band and stops below 78.40 seem safe for now.
Cable fell initially in tandem with euro to as low as 1.6065 but
found some buying interest from Asia names above 1.6050 and an article
from UK Telegraph also helped supporting sterling as it suggested a
rate hike by Bank of England may come as early as November according to a
prediction done by a big accounting firm. At the moment, bids from
Asian names remain at 1.6050 and further out at 1.6000 (stops below)
whilst offers are reported from 1.6130 up to 1.6150.
Elsewhere, the release of much better-than-expected NZ Q2 CPI greatly
increase the chance for more rate hikes before year end and pushed the
kiwi to high as 0.8490, just slightly below last week's 30-year high of
0.8507.
EUR/CHF Daily Outlook
Daily Pivots: (S1) 1.1482; (P) 1.1540; (R1) 1.1587;
EUR/CHF dives again at the week starts and reaches as low as 1.1405
so far. Intraday bias remains on the downside and further fall should
now be seen to next cluster level at 1.0903/23 (100% projection of
1.3243 to 11082 from 1.2344 at 1.0903 and 161.8% projection of 1.3833 to
1.2399 from 1.3243 at 1.0923). On the upside, above 1.1597 minor
resistance will suggest short term bottoming and bring rebound to 1.1802
support turned resistance and above.
In the bigger picture, whole down trend from 1.6827 (2007 high) is
still in progress and in any case, medium term outlook will remain
bearish as long as 1.3243 resistance holds. Long term target of 138.2%
projection of 1.8234 to 1.4391 from 1.6827 at 1.1516 is already met. But
there is no sign of reversal as long as 1.2344 resistance holds. Next
target will be 161.8% projection at 1.0609. Nevertheless, break of
1.2344 will be the first sign of bottoming and should bring stronger
rebound to 1.3243 resistance for confirmation.
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