Dollar is mixed in early US session without a clear direction. The greenback weakened against commodity currencies today as stock markets rebounded. But it’s staying in tight range against Euro and Swiss Franc. On the other hand, sterling extended this week’s sharp fall and weakened broadly. Economic data from US has little impact on the markets. Initial jobless claims rose slightly more than expected by 21k to 311k in the week ended August 9, hitting the highest level in six weeks. Continuing claims rose 25k to 2.54m in the week ended August 2. Also released in early US session, US import price dropped -0.2% mom in July, Canada new housing price index rose 0.2% mom in June.
Released from Eurozone, German GDP contracted -0.2% qoq in Q2 versus expectation of -0.1% qoq. French GDP grew 0.0% qoq versus expectation of 0.1% qoq. Overall Eurozone GDP grew 0.0% versus expectation of 0.1% qoq. All were below expectations. Eurozone GDP was unrevised at 0.4% yoy in July. In the latest quarterly Survey of Professional Forecasters (SPF), ECB noted that respondents generally anticipated that expected inflation “to be on an upward sloping path over the next few years as a result of the recovery in real economic activity and an unwinding of the downward impact of previous oil, food and exchange rate developments”. Meanwhile, “stable inflation expectations and wage growth, although moderate, are considered to provide a floor to inflation”.
BoE MPC member Miles said that wages increased “pretty weakly” and that suggested there remained “a degree of spare capacity or slack in the labor market”. And thus, he noted the central bank could keep rates at the current record low of 0.50% for “a bit longer”. Nonetheless, he expected upward pressure in wages into 2015 and wage settlements would probably at around 2%. Regarding Eurozone, he’s said its “dead in the water” without any growth. In BoE’s quarter inflation report released yesterday, The central bank reduced its estimate of slack from a range of between 1% and 1.5% to just 1%. The central bank indicated that it preferred slack to be largely used up before tightening begins. The BoE forecast the first rate hike to take place in 1Q15 and the policy rate would reach 2% by 4Q16. Also released from UK,, RICS house price balance dropped to 49 in July.
Elsewhere, New Zealand business manufacturing index dropped to 53 in July, retail sales rose 1.2% qoq in Q2. Japan machine orders rose 8.8% mom in June. Swiss PPI dropped -0.8% yoy in July.
Daily Pivots: (S1) 0.9044; (P) 0.9071; (R1) 0.9101; More….
The consolidation from 0.9114 continues and intraday bias remains neutral. Deeper decline could be seen as the consolidation extends. Below 0.9032 will turn bias to the downside and extend the correction to near term channel support (now at 0.8983). Strong support would likely be seen there to bring another rally. Above 0.9114 will target 0.9156 key resistance next. However, sustained break of the channel support will indicate reversal and target 0.8855 and below.
In the bigger picture, price actions from 0.9971 are viewed as a correction pattern. The break above 55 week EMA argues that it might be finished at 0.8698 already. Focus is back on 0.9156 resistance. Decisive break there should confirm this case and turn outlook bullish for a test on 0.9971 high. Meanwhile, break of 0.8855 near term support will dampen this bullish view and would extend the correction to 50% retracement of 0.7065 to 0.9971 at 0.8518 and below. In that case, we’ll start to look for reversal signal below 0.8518 again.
Business NZ Manufacturing Index Jul
Retail Sales Ex Inflation Q/Q Q2
RICS House Price Balance Jul
Machine Orders M/M Jun
French GDP Q/Q Q2 P
German GDP Q/Q Q2 P
Producer Import Prices M/M Jul
Producer Import Prices Y/Y Jul
ECB Monthly Bulletin
Eurozone CPI M/M Jul F
Eurozone CPI Y/Y Jul F
Eurozone CPI – Core Y/Y Jul F
Eurozone GDP Q/Q Q2 A
New Housing Price Index M/M Jun
Import Price Index M/M Jul
Initial Jobless Claims (AUG 9)
Natural Gas Storage