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Mid-Day Report: Euro Steady after ECB Kept Rate at 1%, Draghi Extended Full Allotment Refinancing, But Not MoreEuro continues to stay in tight range after ECB kept rates unchanged at 1.00% as widely expected. In the post meeting press conference ECB President Draghi noted that growth in Eurozone remained "weak" with "heightened uncertainty weighing on confidence and sentiment giving rise to increased downside risk to the economic outlook". Also Draghi pledged to continue main refinancing at "fixed rate, full allotment" for as long as necessary, as least until January. But he also dashed hope for more LTRO cheap loans and said that "some of the problems in the euro area have nothing to do with monetary policy," and it's not right for "monetary policy to fill other institutions' lack of actions". EUR/USD is struggling below 1.25 for the moment while EUR/JPY didn't find enough momentum to get through 100 psychological level. Meanwhile, note that the common currency is seen quite weak against Aussie as risk sentiments improved. Indeed EUR/AUD dipped below 1.2667 temporary support and has resumed recent decline. |
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| Featured Technical Report | |
EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.2420; (P) 1.2464 (R1) 1.2544; More..... Outlook in EUR/USD remains unchanged. Consolidation from 1.2287 is still in progress and stronger recovery cannot be ruled out. But in that case, upside should be limited by 1.2641 resistance, which is close to 38.2% retracement of 1.3283 to 1.2287 at 1.2667, and bring fall resumption. Below 1.2287 will extend recent fall and target 100% projection of 1.4246 to 1.2625 from 1.3486 at 1.1865 which is close to 1.1875 low. |
| Special Reports |
BOC Left Interest Rates Unchanged, Statement Not as Dovish as AnticipatedThe Bank of Canada left the policy rate unchanged at 1%. Policymakers acknowledged worsening in global economic outlook and increasing risks going forward. Yet, it retained the stance that the next move of the central bank would be a rate hike, rather than a cut. This should be attributed to the relatively stable domestic recovery. Concerning exchange rate, the BOC retained the rhetoric that persistent appreciation would be detrimental to growth despite the recent decline. 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'. |
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Orders and Options Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Session: Orders and Options WatchEUR: Although the single currency retreated quite sharply as traders awaited ECB press conference, bids from Middle East names above 1.2440 lifted the pair again in New York morning, however, offers are still noted at 1.2525-30 and mixtures of offers and stops remain at 1.2540-50 and further out at 1.2575-85. On the downside, buying interests from same parties are still noted at 1.2440-50 and also at 1.2400-10 with stops building up below 1.2385-90. Option expires today include 1.2400, 1.2445 and 1.2500 (NY cut). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea Update: USD/CHF – Hold long entered at 0.9610Failure to extend yesterday’s rebound and the subsequent retreat from 0.9676 suggest further consolidation would be seen, however, as long as support at 0.9577 holds, mild upside bias remains for another rebound to said resistance, break there would bring a stronger bounce to 0.9700-10. Looking ahead, only break of latter level would signal the retreat from 0.9771 has possibly ended Trade Idea Update: EUR/USD – Hold short entered at 1.2515Although euro has rebounded after yesterday’s retreat from 1.2542 to 1.2410 (price just held above the Ichimoku cloud top), suggesting caution on our short position entered at 1.2515 but as long as said resistance at 1.2542 holds, further consolidation would be seen with mild downside bias for another fall to 1.2410, break there is needed to confirm top is formed, bring further fall to 1.2390. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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