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Daily Report: Euro Recovery Continues ahead of G7 Call, RBA Cut 25bps, BoC NextEuro continues to recover against dollar and yen ahead of an emergency conference call between G7 finance ministers today. Canadian finance minister Flaherty confirmed there will be a call with counterparts from US, JP, UK, Germany, France and Italy. Flaherty noted that Europe is the "real concern" right now with some banks "undercapitalized" while other Eurozone states haven't taken enough access to address the undercapitalization issue, nor are they building an "adequate firewall". And some G7 officials are worried that a bank run in Spain could have repercussions beyond the Eurozone. A US treasury official said that it's hoped to see "accelerated" actions from Europe to "strengthen the European banking system" over the next few weeks, including to a run-up to G20 meeting in Mexico on June 18-19. |
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| Featured Technical Report | |
AUD/USD Daily OutlookDaily Pivots: (S1) 0.9655; (P) 0.9700; (R1) 0.9774; More A temporary low is place at 0.9588 and bias is turned neutral for some consolidations. Recovery might extend higher but upside is expected to be limited by 0.9934 resistance (38.2% retracement of 1.0473 to 0.9588 at 0.9926) and bring another all. Below 0.9588 will extend the whole decline from 1.0852 to 161.8% projection of 1.0852 to 1.0225 from 1.0473 at 0.9459 next. We're expecting strong support above medium term level at 0.9387 to continue downside, at least on first attempt. Hence, focus will be on reversal signal on next fall. Nonetheless, sustained break of 0.9934 will argue that fall fro 1.0852 might be finished and should bring stronger rebound back to 1.0225/0473 resistance zone. |
| Special Reports |
RBA Eases For A Second Consecutive MonthAs expected the RBA lowered the cash rate by -25 bps, following a -50 bps cut in May, to 3.5% in June. Deterioration in the sovereign debt crisis in the Eurozone and moderation in the Chinese economic growth were reasons triggering the reduction. Moreover, cautiousness of business and household spending which might continue in the near-term also contributed to the need for further easing. After the rate cut, policymakers believed that borrowing costs have dropped to be a 'little below their medium-term averages'. BOC To Pause In June With Less Hawkish StatementThe Bank of Canada will likely deliver a much less hawkish statement after the meeting next Tuesday. The rapid deterioration in the global environment, especially the sovereign debt crisis in the Eurozone, is expected to affect he recovery outlook in Canada. Moreover, the slowdown in China should have negative impact on the export sector of Canada. We expect the central bank to maintain the policy rate at 1% as the urgency of tightening has greatly reduced. |
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Orders and Options Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: The single currency continued to edge higher in Asia this morning after yesterday's strong rebound and short-term specs as well as U.S. big names were seen buying the pair aggressively since New York session, some short-covering ahead of G-7 teleconference also seen supporting the headline pair and bids from same parties are still noted at 1.2450 as well as 1.2420 with stops building up below 1.2390 and 1.2370. On the upside, offers from funds are reported at 1.2550-60 and larger sell orders are tipped further out at 1.2590-00. Traders are awaiting the release of eurozone data (including PMI Services and EMU retail sales) later today. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: EUR/USD – Sell at 1.2570Although euro has retreated after intra-day rise to 1.2542, reckon the Kijun-Sen would limit downside and near term upside risk remains for the rise from last week’s low of 1.2288 to bring retracement of recent decline to 1.2550-60 (50% Fibonacci retracement of 1.2824-1.2288), however, resistance at 1.2575 should limit upside and bring another decline later. Trade Idea: USD/JPY – Sell at 78.95Although dollar has continued to edge higher after yesterday’s rebound and we are keeping our view that further consolidation above Friday’s low of 77.65 would be seen, reckon upside would be limited to Friday’s high of 78.72 and price should falter well below previous support at 79.21 and bring another fall later. A break of support at 77.99 (yesterday’s low) would signal rebound from 77.65 has ended and bring a retest of this level Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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