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Daily Report: Dollar Keeping Post FOMC Gain, ECB AwaitedDollar was given a mild boost after the rather non-evental FOMC statement overnight and is holding on to its gain so far. Retreat of risk appetite ahead of the highly anticipated ECB press conference today also help supports the greenback and sent Asian equity indices broadly lower. Yen is also mildly softer after IMF's comments. Meanwhile, Aussie is lifted slightly by better than expected trade and retail sales data. But after all, markets are staying in consolidation mode with all eyes on the ECB meeting. |
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| Featured Technical Report | |
USD/CHF Daily OutlookDaily Pivots: (S1) 0.9734; (P) 0.9769; (R1) 0.9798; More... USD/CHF's recovery from 0.9694 is still in progress and further rise cannot be ruled out. But again, a short term top is at least formed at 0.9971, on bearish divergence condition in 4 hours MACD, after hitting 0.9916/48 resistance. Hence, upside of the current recovery should be limited below 0.9971 and bring fall resumption. Below 0.9736 minor support will flip bias back to the downside and send USD/CHF towards 38.2% retracement of 0.8930 to 0.9971 at 0.9573 first. Break will have further bearish implication and target 0.9420 key near term support level. |
| Special Reports |
The Fed Left Policy Setting Unchanged, Kept Interest Rates Low Until Late 2014The FOMC meeting was a rather disappointing one as policymakers failed to deliver any new measures to boost the deteriorating economy. While we had anticipated that the Fed would be refrained from announcing QE3 in August, we thought it would at least extend the low rate guidance to 2015. Yet, the Fed decided to leave it unchanged. Policymakers were maintaining easing bias but few changes were found in the languages of the accompanying statement. We expect the Fed was still gauging the impacts of the operation twist which was extended last month. We maintain our view that the QE3 will be announced at the next meeting. ECB to Disappoint in AugustThe market has been eagerly awaiting the ECB meeting which will be held Thursday after President Mario Draghi's comment last week that the central bank would do whatever it can to preserve the euro. This has raised speculations that the ECB would resume bond purchases in the form of SMP. However, there are many hurdles to this move, in particular opposition of the Bundesbank. While the case of ECB purchases of bond has greatly increased due to worsening of situations in Spain and Italy, the timing of the move is an important issue. The ECB obviously prefer to see the Spanish government request support from the EFSF with conditionality in place before the central bank's involvement in bond purchases. However, this may not come earlier than the Thursday. In such case, we expect the ECB would not announce SMP in August, leaving it to September possibly. We also believe the central bank to leave interest rates unchanged this month, after the surprising rate cut in July. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: Despite overnight late drop after the FOMC on dollar's broad-based rebound, the single currency has recovered after intra-day brief fall to 1.2218 and bids from Eastern European and Japanese names (in EUR/JPY) are still noted at 1.2210-20 with stops seen below 1.2200-10 but more buying interests from same parties should emerge around 1.2170-75 and further out at 1.2115-20, followed by bigger stops below 1.2100-10. On the upside, whilst offers from macro funds at 1.2250 were filled this morning, more selling interests from sovereign names are tipped at 1.2290-00 and also at 1.2320-30 with mixture of offers and stops located at 1.2345-50, bigger buy stop orders are placed above 1.2360 but sizeable offers remain at 1.2380-00 region to protect 1.2400 option barrier. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: USD/JPY – Buy at 78.10Yesterday’s rebound above the Ichimoku cloud top suggests low has been formed at 77.90 and consolidation with upside bias is seen for test of previous resistance at 78.68, however, break there is needed to confirm and bring further gain to 78.81 resistance, above there would signal recent decline from 80.63 has possibly ended and bring a stronger rebound to next resistance at 79.17 which is likely to hold from here. Trade Idea: EUR/USD – Stand asideAlthough the single currency has recovered after intra-day brief fall to 1.2218, the overnight selloff below previous support at 1.2225 suggests near term downside risk remains for the fall from 1.2390 to bring a deeper correction of the rise from 1.2042 and weakness to 1.2200 cannot be ruled out, however, reckon 1.2170-75 (previous resistance and 100% projection of 1.2390-1.2225 measuring from 1.2337) would limit downside Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fundamental Highlights
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