MARKET REVIEW: Dollar edges up ahead of FOMC meeting on
Tuesday
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Dollar edged a touch higher on Monday due to position adjustments ahead of the FOMC interest rate decision on Tuesday. However, sentiment remained negative on the U.S. unit after last Friday's poor U.S. employment report for July. Some investors expected that although the Fed was likely to raise interest rates by 0.25% on Tuesday's meeting, uncertainty of the pace of U.S. economic growth would keep the Fed's tightening cycle on hold ahead of the U.S. Presidential election in November.
U.S. wholesale inventories rose by 1% in June and although it beat forecasts of a 0.5% rise, the data did not have much positive impact on the greenback. Euro and Cable retreated slightly from 1.2291 to 1.2245 and 1.8445 to 1.8378. Dlr/yen strengthened to 110.93 on active cross selling in yen while dlr/chf was range-trading between 1.2501 and 1.2575.
Tuesday's focus will be on the FOMC meeting, with the interest rate decision expected to be announced at 1815GMT. On the data front, U.K will release trade deficit, CPI and RPI; Germany will release trade surplus for June while the U.S. will release productivity and labour cost data for the second quarter.
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Major Economic Indicators for Today (Jul 23, 2004)
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Time Country Indicator
0600 Germany Trade Balance (Euros) Jun
0830 U.K. Trade Balance Jun
0830 U.K. CPI Y/Y Jul
0830 U.K. RPI - X M/M Jul
0830 U.K. RPI - X Y/Y Jul
1230 U.S. Productivity Q2
1230 U.S. Labour Cost Q2
1815 U.S. Fed Rate Decision
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TODAY'S FOREX MARKET OUTLOOK
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USD/YEN - 110.66
Update Time : 00:45GMT
Although dollar has recovered after finding support at 109.82, this move looks corrective and reckon upside would be limited, bring resumption of erratic decline from 112.49, below 110.14 would confirm and yield stronger retracement of upmove from 107.02 to 109.50 later.
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Daily Technical Outlook
EUR/USD, USD/CHF, GBP/USD, USD/YEN
USD 80/m, Contact us for further information query@acetrader.com
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DAILY TECHNICAL OUTLOOK ON USD/YEN
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Last Update At : 2004/08/10 00:23
USD/YEN - 110.70..Despite yesterday's initial weakness, failure to test Friday's low at 109.82 n subsequent cross-inspired rebound fm 110.14 to 110.93 suggest caution on our daily short but as long as 110.93/00 holds, downside bias remains for early decline fm 112.49 to correct recent upmove fm 107.02 to resume, below 110.14 sup wud confirm n extend weakness to 109.50, however, steep fall below there is unlikely n reckon 109.11 (62% r) shud hold n yield rebound later.
We are holding short with stop placed at 111.00, as break wud signal the decline fm 112.49 is being retraced instead n risk stronger rebound to 111.47 (50% r of 112.49-109.82) but res at 111.90 shud cap upside today n yield another decline later this week.
On the upside, only a daily close abv 111.90 wud signal aforesaid upmove has indeed resumed n yield subsequent re-test of 112.49 res, abv wud bring one more rise to 113.20, being 62% proj. of 107.02-112.49 measured fm 109.82, however, price wud falter well below 114.00...
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Daily/weekly recommendations, medium term outlook, daily
technical outlook, wave analysis
(Majors) - USD 150/m, (Majors/Minors/Crosses) - USD 240/m
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YESTERDAY'S RECOMMENDED TRADES
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INTRA-DAY EUR/YEN CROSS OUTLOOK - +135.80+
Update Time : 2004/08/09 18:20GMT
Despite early retreat fm 135.89, as renewed buying at 135.40/45 has lifted euro, upside bias is retained for resumption of recent upmove fm 130.75, bring re-test of said res n then twd 136.00 which is likely to hold on 1st testing.
Hold long, stop as indicated, break wud signal temp. top is made n risk retrace. to 134.95/00.
Rate: +135.80+
Strategy: +Target met+
Position: Long at 135.45
Objective: 135.80
Stop-Loss:
Resistance: 136.00/136.32/136.70
Support: 135.20/135.00/134.57
INTRA-DAY EUR/YEN CROSS OUTLOOK - +135.75+
Update Time : 2004/08/09 12:02GMT
Although euro has eased after faltering below res 135.70 n consolidation is in store, bullishness remains for recent upmove to resume, bring re-test of res 135.70/79, abv wud extend marginally twd 136.00 b4 pullback due to loss of momentum.
Hold long, stop as indicated, only below 135.20 wud signal intra-day top is made n risk 134.90/95..
Rate: +135.75+
Strategy: +Target met+
Position: Long at 135.45
Objective: 135.75
Stop-Loss:
Resistance: 135.79/136.00/136.32
Support: 135.00/134.57/134.28
DAILY EUR/YEN CROSS OUTLOOK - 135.22
Update Time : 2004/08/09 07:43GMT
Although euro has retreated after holding below res at 135.79, pullback shud be ltd to 134.90 n upside bias remains for recent upmove fm 130.15 to resume later, abv said res wud encourage for marginal gain to 136.30/35 but 136.90/00 wud remain intact.
Trade fm long side, stop 134.70, below wud risk retrace. to 134.42 b4 rebound later this week...
Rate: 135.22
Strategy: Hold long
Position: Long at 135.20
Objective: 136.00
Stop-Loss: 134.70
Resistance: 135.79/136.32/136.70
Support: 135.00/134.42/133.53
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AceTrader Performance Update
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July 2004 (Pips)
Intraday Daily
USD/YEN +217 -31
EUR/USD +509 +186
USD/CHF +529 +499
GBP/USD +752 +301
YTD 2004 (Pips)
Intraday Daily
USD/YEN +338 -31
EUR/USD +2550 +1130
USD/CHF +2421 +1001
GBP/USD +2941 +548
Alex Tsui
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Trendsetter Financial Markets Limited
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email: alex@acetrader.com
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