Mid-Day Report: Dollar Rises after Durable Orders

Dollar rises against Euro in early US session after better than expected economic data. Headline durable goods orders rose 0.7% in June versus expectation of 0.4%. Ex-transport orders rose 0.8% versus expectation of 0.6%. The dollar index reaches as high as 81.01so far in early US and is testing 81.02 near term resistance. Technically, we’d maintain that 81.02/48 represents an important resistance zone for the index. Whether it could break through the zone would very much depends on whether EUR/USD could move away from 1.3476 key support decisively.

German Ifo business claim dropped to 108.0 in July versus expectation of 109.5. Current assessment gauge dropped to 112.9 and expectations gauge dropped to 103.4. Both missed economists consensus. Ifo noted in the statement that “geopolitical tensions are taking their toll on the German economy.” Also released, German Gfk consumer sentiment rose to 9.0 in August. Eurozone M3 money supply rose 1.5% yoy in June.

UK GDP rose 0.8% qoq in Q2, inline with expectation. The figure surpassed pre-crisis peak in Q1 of 2008. Index o services rose 1.0% 3mo3m in May. Earlier this week, IMF raised growth forecast for UK to 3.2% in 2014, 0.4% higher than prior projection. That’s nearly double of US’s 1.7% and triple of Eurozone’s 1.1%. 2015 growth forecast was also upgraded to 2.7%, up from prior projection o 2.5%.

Japan national CPI core slowed to 3.3% yoy in June as expected, down from May’s 3.4% yoy. After adjustment for the April tax hike, CPI ore slowed to 1.3% yoy, down from prior month’s 1.4% yoy. That’s the second month of slow down from April’s 1.5% yoy. BoJ governor Kuroda has repeatedly insisted that inflation was still on track to reach the 2% target and the setback was temporary. However, there were expectations that BoJ could be forced to ease policy further if inflation drop below 1% mark. Tokyo CPI core was unchanged at 2.8% yoy in July versus expectation of 2.7% yoy. Also released from Japan corporate services price index rose 3.6% yoy in June as expected.

Daily Pivots: (S1) 0.9009; (P) 0.9023; (R1) 0.9039; More….

USD/CHF’s rally continues today and reaches as high as 0.9046 so far. The break of 0.9036 resistance indicate resumption of the rebound from 0.8698 low. Intraday bias remains on the upside and current rise should target a test on 0.9156 key resistance. On the downside, below 0.9007 minor support will turn bias neutral and bring retreat. But outlook will stay bullish as long as 0.8958 resistance turned support holds.

In the bigger picture, price actions from 0.9971 are still viewed as a correction pattern. Decline from 0.9838 is seen as the third leg. As long as 0.9156 resistance holds, deeper fall would still be seen to 50% retracement of 0.7065 to 0.9971 at 0.8518 and below. We’d start to look for reversal signal below 0.8518 again. Meanwhile, note that medium term downside momentum has been diminishing as seen in weekly MACD. Break of 0.9156 will argue that such correction pattern is completed and will turn outlook bullish for a test on 0.9971.

USD/CHF 4 Hours Chart

USD/CHF Daily Chart

GMT
Ccy
Events
Actual
Consensus
Previous
Revised
23:30
JPY
National CPI Core Y/Y Jun
3.30%
3.30%
3.40%

23:30
JPY
Tokyo CPI Core Y/Y Jul
2.80%
2.70%
2.80%

23:50
JPY
Corporate Service Price Y/Y Jun
3.60%
3.60%
3.60%

06:00
EUR
German GfK Consumer Sentiment Aug
9
8.9
8.9

08:00
EUR
German IFO – Business Climate Jul
108
109.5
109.7

08:00
EUR
German IFO – Current Assessment Jul
112.9
114.5
114.8

08:00
EUR
German IFO – Expectations Jul
103.4
104.5
104.8

08:00
EUR
Eurozone M3 Y/Y Jun
1.50%
1.10%
1.00%

08:30
GBP
GDP Q/Q Q2 A
0.80%
0.80%
0.80%

08:30
GBP
Index of Services 3M/3M May
1.00%
1.00%
0.90%

12:30
USD
Durable Goods Orders Jun
0.70%
0.40%
-1.00%

12:30
USD
Durables Ex Transportation Jun
0.80%
0.60%
-0.10%

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