The single currency and sterling both dropped on risk aversion,
USD/JPY also fell as stock markets as Asian stock markets followed the
selloff in European and U.S. equity markets and tumbled, most European
indices slipped over 3% (STOXX 50 and FTSE 100) with German DAX dived
over 5%, then U.S. major indices were also sharply lower, DJI (-5.55%,
biggest selloff since December 2008), S&P 500 (-6.66%) and NASDAQ
(-6.9%). Nikkei 225 and Hang Seng opened lower this morning and Nikkei
broke 9000 and currently still down by 2.3% whilst Hang Seng once
plunged over 6% below 20000 but has rebounded from low. The greenback
against the Japanese yen back to the launching pad level right before
Bank of Japan intervened the currency market last week, however, still
heard decent bids around 77.00. Japan's Finance Minister Yoshihiko Noda
repeated today that he is closely watching the financial markets, then
BOJ Governor Masaaki Shirakawa also said that he is worried by volatile
exchange rate and excessive yen rise would have a negative impact on the
country's economy, however, early comments from Noda saying G7 did not
discuss specifics on intervention in the meeting yesterday gave traders
signal that there may not be joint intervention like back in March.
USD/JPY did rebound briefly on verbal warnings from Japanese officials
but the pair was down again due to the lack of real action by BOJ/MOF.
Bids are still noted from 77.00 down to 76.50 with sizeable stops remain
below 76.20 and 76.00, On the upside, offers are lined up around
77.80-90 with some stops seen at 78.00 but more selling interest should
emerge around 78.50 with next batch of stops located at 79.10 and 79.50.
Intensified risk aversions on free falling European and U.S. shares
pressed euro sharply lower yesterday from 1.4432 to as low as 1.4130,
statements from Standard & Poor's also bough relief to the greenback
as the rating agency indicated that despite the downgrade of U.S.
sovereign rating, the ratings of some states and local government will
be kept and stay above the statues of the sovereign, S&P's also
stated that rating on U.S. banks will not be affected by the downgrade
of nation's sovereign. Having said that, the single currency rebounded
in Asian session after finding decent demand from sovereign names,
unwinding in EUR/JPY as Hang Seng recovered almost 50% of early losses
also seen supporting the pair. Good bids from same parties are still
noted from 1.4150 down to 1.4130 with stops placed below latter level,
more buying interest is likely to emerge around 1.4100 and 1.4070 with
next batch of stops below 1.4050. On the upside, offers are reported at
1.4250-60 and further out at 1.4300.
Sterling basically followed euro's foot-steps, dropped throughout
yesterday and hit a low of 1.6269 this morning on massive risk aversions
and youth riots in London, however, cable also rebounded from low as
Asian bourses bounced off lows. The release of better-than-expected UK
data also seen lifting sterling, BRC sales data came in at 0.6% versus
forecast of -0.5% and RICS House Price data also showed
higher-than-expected number at -22.0% against consensus of -28.0%. The
British pound is likely to confine in narrow range ahead of the release
of UK June industrial and manufacturing production data at 08:30GMT with
forecast at 0.4% m/m and 0.2% m/m respectively. Order books are
relatively light today with some offers tipped at 1.6350-60 and
1.6380-90 with stops placed above 1.6400 whilst bids from Asian and
Middle East sovereign names noted from 1.6300 down to 1.6270 with stops
placed below 1.6250-60.
Continued safe-haven demand pushed Swiss franc higher again and
Swissy was hovering near its record low formed at 0.7480 and stops below
this level are in focus with option barrier tipped at 0.7450, offers
are reported at 0.7650 with stops only emerging above 0.7700 and 0.7750.
AUD/USD Daily Outlook
Daily Pivots: (S1) 1.0093; (P) 1.0272; (R1) 1.0363;
AUD/USD dives to as low as 0.9926 but drew some support from
mentioned 38.2% retracement of 0.8066 to 1.1079 at 0.9928 and recovers.
Intraday bias is turned neutral for the moment and some sideway trading
might be seen. But near term outlook will remain bearish as long as
1.0526 resistance holds and another fall could still be seen. Decline
from 1.1079 is treated as a correction in the long term up trend. Below
0.9926 will target channel support (now at 0.9652). Though, break of
1.0526 will indicate short term bottoming and will flip bias back to the
upside for retesting 1.1079 high.
In the bigger picture, bearish divergence condition daily MACD
suggests that rise from 0.8066 might be finished. And that's possible
considering that AUD/USD has just missed a long term projection target
at 1.1084. The break of 1.0390 support affirms this case and deeper
decline would now be seen towards long term channel (now at 0.9652). But
we will treat it as a correction only. And, as long as 0.9404
resistance turned support holds, the whole up trend from 2008 low of
0.6008 should still be in healthy status.
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