Forex: EUR/USD ends week unchanged

 

The Euro finished on Friday around the same price level it opened Monday's Asian session against the Dollar and ended July with a small monthly loss far from the lows.

EUR/USD jumped on Friday after the release of week economic data in the US and recover from weekly lows at 1.4230, reaching levels above 1.4410. The pair erased weekly losses but it was unable to hold above 1.4400.

Next week will be important for markets observers: the debt ceiling in the US will be reach, the ECB and the BoE will decide on monetary policy and next Friday, the big employment report will be published in the US including the unemployment rate and non-farm payrolls.

These events are likely to increase volatility in the market and particularly in the EUR/USD. The Euro could come under pressure once again if the market turns its attention from the debt ceiling crisis toward the EU debt crisis, pointed out Ilian Yotov, FX Strategist and Founder at AllThingsForex.

“The probability that the euro will reach over 1.4696 next week is extremely high, the probability that it will move above 1.4748 though is very low,” said Lara Iriarte, Director and Technical Analyst at ElliottWaveForex on its forecast. According to her the EUR/USD should find a high between those levels before turning to the downside for a new strong trend. 

Forex: USD/CHF hits fresh highs above 0.8030

The USD/CHF is recovering ground from all time lows and recently reached a fresh daily high at 0.8035, approaching to Wednesday’s high that are located at 0.8045. The pair bottomed on European hours at 0.7988, record low.

Slobodan Drvenica, analyst at Windsor Brokers Ltd affirms that the pair remains in a near-term narrow range sideways trade. “Current consolidation is seen preceding fresh leg lower, as near-term studies remain negative, with 0.7950/00 in focus.” To the upside, the analyst says that only a regain of 0.8075 would ease immediate bear pressure.

The Swiss Franc is also moving off session highs against its European rival as market sentiment improves in Europe and in the US.

Forex: EUR/USD fails to hold above 1.4300

The hegemonic currency was lifted above 1.4300 against the Greenback, supported by stocks entering to positive ground in Wall Street in the wake of better-than-expected pending home sales data.

EUR/USD rose near 60 pips from its 1-week low at 1.4254, breaking above 1.4300 to a high of 1.4313. However, the Euro couldn't sustain momentum and has retreated to the 1.4290/95 zone where it is currently trading, 0.50% below its opening price.

"On the upside, 1.4325 zone offers initial resistance, while only regain of 1.4400 would improve near-term tone", said Slobodan Drvenica, analyst at Windsor Brokers Ltd. Drvenica sees immediate resistance levels at 1.4325, 1.4376 and 1.4400, while he places next support levels at 1.4250, the 1.4200/1.4190 area and then 1.4156.

Forex: USD/CAD jumps, approaching 0.9500

The Dollar jumped across the board in the last hour as stocks decline in Wall Street and Europe and gold retreats sharply. USD/CAD rose 70 pips in 30 minutes and moved away from multi-year lows. Greenback jumped from 0.9420 to 0.9490, reaching the strongest levels in two days.

To the upside, immediate resistance lies at 0.9495/00 and above at 0.9520/25 (July 22, 25 highs) while support could be located at 0.9440 and below at 0.9400/05 (July 26 low).

The Loonie weakened in the market as crude oil tumbled to $97.30 a barrel, following a reported that showed an increase in inventories. CAD/CHF plummeted from 0.8505 to 0.8434, 4-week low while NZD/CAD jumped to 0.8257, hitting a fresh 4-year high.

Forex: EUR/GBP at daily low 0.8810

With conflicting messages coming out of the Eurozone, investors are turning attention back to the communities debt problems and subsequently pressuring the EUR lower today. The EUR/GBP thus has edged slightly below the day´s opening price, trading currently at a daily low of 0.8810 in morning trade over New York.

While appearing to run into modest support at its current level, the next critical levels to be aware of are listed at 0.8798 (Daily Low Jul 22), 08757 (Daily Low Jul 19) and 0.8706 (Daily Low Jul 18). To the upside, resistance is placed at 0.8877 (30-Day MA), 0.8883 (Daily High Jul 26) and 0.8895 (50% of 0.9084 – 0.8706).

Nick Bennenbroek of Wells Fargo reports: “The euro reversed some of yesterday’s gains as German finance minister Schaeuble said he was again a ‘blank check’ for secondary bond market purchases by Europe’s financial aid fund. There were also reports that the IMF is looking to limit its contribution to the further Greek financial assistance package.”

Forex: EUR/USD tumbles below 1.4450

 

EUR/USD retreated further from 3−week highs at 1.4535 and extended its decline below 1.4500. The Euro broke under 1.4440 and tumbled to 1.4421, reaching a fresh daily low.

At the moment EUR/USD trades at 1.4430, more than a hundred pips and is trimming weekly gains. According to Slobodan Drvenica, analyst at Windsor Brokers Ltd the 1.4437 is a strong support and at 1.4430 the daily 20 SMA lies. “Holding above 1.4320 zone, 22/25 July higher platform and main trendline support keeps the bullish outlook intact.”



The Euro also fell to new daily lows against its European rivals and also versus the Yen as stocks extend losses in Wall Street in Europe. 

Forex: AUD/USD retreats from record highs

The Australian dollar has given up some of its recent gains against the Greenback, retreating to the 1.1030 zone, tracking gold moves, which is also pulling back from a fresh all-time high set at $1,631.20 an ounce in recent trade.

AUD/USD however, seems to have found support at the 1.1030 zone and it is currently trading around 1.1040 where it is 0.68% above its opening price and near its new post-float record high struck earlier at 1.1078. Australian Dollar gains were propelled by higher-than-expected CPI figures published during the Asian session, which signal the RBA may need to further tighten monetary policy in the near-term, coupled with a broad-based weak Greenback.

Nick Nasad, analyst at FXTimes sees the first target to the topside between 1.1225-1.1245, and then halfway between there and the 1.1295 level, around 1.1265 for further upside gains in the pair. "Such a rally may first be prefaced with a throwback, but I expect any throwback to be a shallow one", said Nasad.

Forex: Commodity currencies hold gains against USD

The so-called commodity currencies such as the AUD, CAD and NZD, are trading near multi-month highs against a weakened Greenback as the US Congress hasn't progressed on talks over raising the debt ceiling, needed before Aug 2 in order to avoid default.

The Loonie reached on Tuesday its strongest level in almost 4 years against the Greenback. USD/CAD bottomed out 0.9405 during the European session, hitting its lowest since Nov 2007, and bounced, although the recovery has been limited by the 0.9450/55 resistance area. USD/CAD has been moving in a 30-pip range for the last hours and currently quotes at 0.9440, where it remains 0.33% below its opening price.

AUD/USD rose over 120 pips on Tuesday and touched a 12-week high at 1.0963 before settling right below that level. The Aussie is trading at the 1.0950 area, on track to set the 6th consecutive daily gain.

The Kiwi established a fresh record high against the big Dollar at 0.8740 before the Wall Street opening and consolidates near that level, around 0.8715. The NZD has gained 5% so far this month.

Forex: USD/CHF finds resistance at 0.8040, remains near all time lows

 

The Swiss Franc rose to fresh record highs against the Dollar after Barack Obama remarks on negotiations between republicans and democrats amid the debt ceiling crisis. USD/CHF bottomed at 0.7999 and recovered ground at a slow pace. The recovery of the Dollar found resistance at the 0.8040 level during the European morning and since then it has been moving sideways in a small range, around 0.8020/25.

“Previous low at 0.8073 offers initial resistance, ahead of 0.8135/50, 21 July low / 25 July high, where a lower top is anticipated, to maintain bear structure,” said Slobodan Drvenica, analyst at Windsor Brokers Ltd. According to him only a regain of 0.8276, “would ease immediate bear pressure.”

Greenback is headed toward the sixth monthly decline in a row and has fallen more than 150 pips from Friday’s closing price.

Forex: GBP/USD bounces after limited correction

After staging a short-lived correction toward the 1.6370 area as the US Dollar spiked on the back of a better-than-expected US consumer confidence reading, GBP/USD has resumed its upward move, inching back to the 1.6400 area.

GBP/USD is currently trading at the 1.6400/05 region, recording a 0.81% gain on the day. Cable had climbed over 150 pips and peaked at 1.6419 earlier on Tuesday, setting a fresh 6-week high, underpinned by UK growth report.

Valeria Bednarik, chief analyst at FXstreet, sees immediate resistance levels at the 1.6420 area, ahead of 1.6450 and 1.6490, while she locates support levels at 1.6340, 1.6300 and 1.6270. "Lose of 1.6340 however, may put the short term trend towards the downside, more if market sentiment continues changing to risk aversion today", said Bednarik.

Forex: EUR/USD rises back above 1.4500

The retreated of the Euro from 3-week highs at 1.4521 found support at 1.4455 and recently it gained momentum and resumed the upside. EUR/USD is currently testing levels on top of 1.4500, at levels not seen since the European morning. At the moment the pair trades at 1.4505, 130 pips above today’s opening price. Since July 4 the EUR/USD does not close a day above the 1.4500 level.

According to Valeria Bednarik, Chief Analyst at FXstreet, hourly charts in the EUR/USD show price well above bullish 20 SMA currently around 1.4440 (previous daily highs and strong support) “while indicators are flat giving no clear signs of further strength either side of the board. 4 hours indicators, hold a timid bullish momentum helping keep the downside limited for now.”

Forex: EUR/USD steady in range

EUR/USD bounced off daily lows that lie at the 1.4325 area, and has risen near 50 pips during the New York session as the Greenback remains pressured amid uncertainty over the US debt ceiling deal. The Euro climbed half a cent toward the 1.4375 zone, where it is currently trading, still 10 pips below its opening price.

EUR/USD trade has been marked by erratic swings in range between 1.4325 and 1.4335 during Monday's American session, with the pair unable to set a fresh direction in typical summer trading.

From a technical view, Fan Yang, analyst at FXTimes, considers a break above 1.4450 as an initial signal for a medium-term bullish continuation, with short-term target at 1.4555 and a target towards 1.4940 in August. On the contrary, Yang points out that break below 1.4230 starts the bearish continuation outlook. "A short-term outlook targets 1.41. A break below that opens up 1.3850", he said.

Forex: GBP/USD remains rangebound below 5-month highs

GBP/USD retreated from a 5-month high reached during the Asian session at 1.6340, and has spent most of the day rangebound between 1.6260 and 1.6330 as investors remain cautious ahead of the UK second quarter GDP figures to be published on Tuesday. At time of writing, GBP/USD is trading at the 1.6285 zone, recording a 0.28% loss on the day.

"Current narrow-range consolidation is seen preceding fresh push higher, to target levels above 1.6400 barrier", said Slobodan Drvenica, analyst at Windsor Brokers Ltd. "Corrective dips need to be contained by 20 day MA, currently at 1.6250 and trendline support/previous high at 1.6230/00 zone, to maintain immediate bulls, otherwise, deeper reversal into 1.6130/1.6060, Fib 38.2%/50% levels, would be the likely scenario".

Regarding UK's GDP, economists anticipate a 0.2% growth over the second quarter, although a lower-than-expected result could raise expectations of more monetary stimulus from the BoE, weakening the Sterling.

Forex: USD/JPY trims losses and rises to 78.40

Greenback extended its recovery from daily lows against the Yen following Wall Street opening and rose above 78.30 reaching at 78.42, the highest price since the European morning. Currently trades at 78.34/36, less than 20 pips below Friday’s closing price.

On a wider perspective, according to Alpari, the USD/JPY is likely to weaken over the short-medium term “because of lingering market concerns about a US sovereign downgrade and low probability of JPY selling intervention, especially given that Japanese equity markets continue to hold up well despite a strong JPY.”

The Yen also fell in the last hours against European currencies as stocks in the US trim losses. In Wall Street, the Dow Jones is losing 60 points but initially it was falling 120 points.

Forex: USD/CHF holds near records lows, attempts to recover above 0.8050

The USD/CHF reached an all time low earlier during the European session at 0.8020. The downside took a breather in the last hours and the pair moved slightly of session lows and at the moment it is attempting to recover further ground above 0.8050 and trades at 0.8052/55.

Despite bouncing from the lows, Greenback is trading 130 pips below Friday closing price.

According to Slobodan Drvenica, analyst at Windsor Brokers Ltd the pair weakened after breaking below 0.8073, which lead to new record lows. “This keeps broader bear tone firmly in play, as daily studies point lower. On the downside, 0.8000 is an initial target, break of which to open figures at 0.7950/00, while 0.8130/50 zone caps.”

Forex: EUR/USD falls to test daily lows

The Euro weakened in the market after the opening bell at Wall Street. EUR/USD broke below 1.4355/60 and fell to 1.4335, level that is located just 10 pips above daily lows. If it falls below 1.4320 it would be trading at the lowest level since last Thursday, when the European Council announced measures to address the European debt crisis.

From a technical perspective, Valeria Bednarik, Chief Analyst at FXstreet, affirms: “Lacking definition, hourly chart shows indicators flat around their midlines, while price hovers around and also flat 20 SMA. 4 hours chart shows a slightly bullish tone as per a strong 20 SMA heading north, yet only above 14440, past week high, the pair may resume its bullish tone.”

The Euro also weakened versus the Swiss Franc and reached a fresh 6-day low. EUR/CHF fell to 1.1518, rebounded and currently trades above 1.1530. 

Forex: EUR/JPY threatens 112.00

The EUR/JPY is currently eroding daily support just to the upside of 112.00, as an all-around risk averse sentiment hangs over the marketplace given the ineptitue of the US political system to raise the debt ceiling. The pair had earlier reached as high as 113.00 over the Asian session, however cautioun has favored the typically considered safe-haven yen since then.

While the EUR/JPY so far has not broken support at 112.00, if that goes expected further critical levels at 111.68 (Tenkan-Sen Line) and 111.44 (Daily Low Jul 21). To the upside, resistance is placed at 113.02 (Session High Jul 25), 113.57 (Daily High Jul 22) and 113.66 (Kijun-Sen Line).

Forex: EUR/USD bottoms at 1.4325

 

The EUR/USD retreated further from weekly highs after Wall Street opening and bottomed at 1.4324, daily low. The pair found support at the mention level and rebounded to the upside, trimming losses. The recovery faced resistance at 1.4380 and currently EUR/USD trades at 1.4360/65, 0.40% below today’s opening price.

The Euro trimmed losses in the last hour but is still headed toward the first daily decline of the week. On a weekly basis it is rising almost 250 pips.

“While the euro may dip and even as far as 1.3770 (support on the weekly chart), we can easily see a return to the Nov 30, 2009 high at 1.5141 before the end of August,” wrote Barbara Rockefeller in the daily report.

Forex: USD/CHF retreats to 0.8150

The Dollar erased gains versus the Swiss Franc. The USD/CHF peaked during the European session at 0.8244, the highest price in two days but it failed to hold, lost strength and started a retreated. The decline found support around the 0.8150 zone. In the last hours the pair has remained relatively steady moving in a range between 0.8150 and 0.8185, around the same price level it had at the beginning of the day.

“Steady below 0.8200, the pair seems to be gaining further bearish strength in current American session, with price below 20 SMA and indicators just below their midlines, although lacking strength at this time,” said Valeria Bednarik, collaborator at FXstreet. According to her, below 0.8145, the pair could fall further to test all time lows at 0.8070.

Forex: AUD/USD backs away from 10-week highs

The Aussie has moved off its 10-week high reached earlier at 1.0873 against the Greenback as risk appetite is easing on Friday after the spike the markets enjoyed yesterday. AUD/USD fell around 35 pips from highs to the 1.0835 area where the correction was contained by the 20-hour SMA.

Despite the bearish correction, the Aussie is holding pretty well, supported by gold prices' sharp rise. At time of writing, AUD/USD is trading at the 1.0845/50 area, still 0.10% above its opening price.

"The overall bullish outlook remains intact for a rise to 1.10+ levels. Resistance-turned-Support is seen at 1.0800 and then significant Support is seen near 1.0730", comments the Kshitij Consultancy Services team. "A dip to 1.0750-30 if seen can attract fresh buying in the market. As mentioned in the morning, Aussie is gearing up for a rally to 1.10 or even higher in the coming days/weeks".

Forex: EUR/USD rally continues above 1.4400

The EUR/USD broke decisively above 1.4400 and jumped to 1.4435 hitting a new 2-week high. The Euro resumed its rally after the release of a statement made by the Council of the European Union with details about the agreement on a plan to help Greece. The pair has now risen 300 pips from Thursday’s low.

“Technical studies indicate that supports are located at the 100DMA line at 1.4303 and then at the 10DMA line at 1.4152. On the other hand, resistance levels are seen at 1.4467/96 and then at the 21Day Upper Bollinger Level at 1.4557,” the Talking-Forex Analysis Team wrote on its daily report.

The Euro is opening the Asian session on a strong note, gaining ground across the board.

Forex: EUR/JPY takes the lead early Asia

A rocketing Euro is finding fresh buyers early in the illiquid transition from New York to Asian markets. The opposite is true for the Japanese Yen, surprisingly unable to unleash any bullish speculative attack at this time of the day; it did actually on USD/JPY, but failed miserably.

The combination of both behaviors leaves us with EUR/JPY landing at a new high of 113.25, after taking off at 112.88.

The fact that European officials finally came around to a long-term solution over the Greek debt crisis is encouraging the bid tone, which will find the first area of congestive traffic around 113.50. The bullish engulfing bar on the daily chart keeps the bias higher, and until reaching mentioned resistance (current price 113.20) a run-up of 30 pips in the next few hours is likely.

So, looks like there is still a chance to make some pips for those jumping in the Euro bandwagon, as long as no risk averse news hit the wires. Any turnaround on the current rise, and we envisage 112.65 area to provide decent support for the Euro.

Forex: Bearish USD/CHF spikes at Asian open

 

Since USD/CHF price action has a tendency to move on the contrary (negatively correlated) to EUR/USD, traders are now more confident that serious inroads to the downside can be achieved as the Euro strengthens throughout the market after Europe agreed on Thursday to a financial aid package giving urgent aid to save Greece from default.

As a result, the Swissy has gained ground against the Greenback for the second consecutive day, opening Thursday’s session at 0.8192, advancing into the 0.8235 price zone in early Asia, then retreating to target fresh 3-day lows below 0.8150 (July 19 low) where it has just closed the American trade.

At the time of writing, USD/CHF has spiked into the 0.8205 zone at Asian open only to return to prices back near the open. Now that a handful of weaker shorts have been taken out, another test of USD/CHF bids into 0.8080/75 can be expected. To the upside, above 0.8205, next resistance lies at 0.8235. To the downside, next support lies at 0.8120 (July 15 low).

Forex: USD/JPY bottoms out at 78.30

 

The USD/JPY is falling on Thursday for the second day in a row despite risk appetite. US Dollar bottomed at 78.30, the lowest level in 4−months, and currently is moving slowly off session lows, attempting to recover ground above 78.50. The pair is on its way to the lowest daily close on record.

The upside remains capped by a strong resistance level around 79.30 (July 15, 19, 20 highs). To the downside the pair continues to reach lower lows signaling a continuation of a long-term downtrend. Today Greenback approached record lows that lie at 76.40 (March 16).

Forex: USD/CHF drops to 2-day low

The US Dollar remains weak across the board and is setting fresh session lows against the Swissy during the American afternoon. USD/CHF has dropped near 60 pips since the Wall Street opening, breaking below the 0.8200 mark and printing a fresh 2-day low at 0.8157 within the last hour. Currently, the cross is quoting at the 0.8165 region, 0.33% lower since opening.

According to Valeria Bednarik, analyst at FXstreet, USD/CHF needs to lose 0.8145 static support zone to gain bearish momentum and extend its slide near record lows around 0.8070. Bednarik places next support levels at 0.8145, 0.8100 and 0.8070, while she locates immediate resistance levels at 0.8200, 0.8235 and then 0.8280.

The Greenback is among the worst performers on Thursday, as optimism over an agreement in Europe to deal with the region's debt crisis damped Dollar's appeal.

Forex: USD/CAD consolidates above 3 ½-year low

The Loonie advanced further against the Greenback on Thursday, reaching its strongest since November 2007 as the Dollar weakened on risk appetite during the American session on prospects a Greek bailout deal could be reached.

USD/CAD fell to its lowest in over 3 ½ years at 0.9422 , also supported by stronger oil prices, and has been trading in a tight range just above that level ever since. At time of writing, USD/CAD is quoting at the 0.9445 zone, 0.29% below its opening price.

The Canadian Dollar is gaining for third straight day versus the US currency as the CAD strengthened this week after the Bank of Canada signaled it was closer to raising interest rates.

Forex: AUD/JPY, signs of bearish bias - FXTimes

AUD/JPY can be observed as a barometer of risk sentiment, according to Fan Yang, CMT, Chief Technical Strategist at FXTimes.

“Resolution of European debt crisis, as well as unified approach dealing with the US debt ceiling and overall budget issues are things that can boost risk appetite. In that regards, tomorrow’s EU summit can shake things up for the Aussie-Yen as well,” he explains.

From a technical standpoint, “The RSI reading in the 4H chart however was able to break the previous high, but found resistance at 60. Staying below 60, the RSI reading would reflect maintenance of the bearish momentum,” comments Mr. Yang. “The bearish outlook is at the moment contained above the 200SMA in the daily chart. Therefore, if we clear below the recent low of 83.12, we can open up lower support pivots, 82.20 in the very short-term (50% retracement and channel support).”

At the time of writing, AUD/JPY has closed the American session at 84.64, 30 pips below its starting price. To the downside, immediate support lies at 84.27 (July 18 high) and, below there, 84.05 (June 20 low). To the upside, resistance levels lie at 84.95 (June 3 low) and 85.20 (20-day EMA).

Forex: EUR/USD regains 1.4200, nears daily highs

 

EUR/USD is back headed north after staging a limited bearish correction, having risen near 70 pips from lows back above the 1.4200 mark.

EUR/USD reached a fresh session high at 1.4234 within the last hour, just 5 pips shy of its 4−day high struck earlier, although uncertainty has been capping further gains in the hegemonic currency ahead of the euro zone summit on Thursday.

At time of writing, EUR/USD is quoting at the 1.4225 area, recording a 0.50% gain on the day. On the upside, next resistance lies at the 1.4240/50 zone and then 1.4285, while on the downside, immediate support could be found at 1.4190 ahead of 1.4165....

Forex: 14% odds for EUR/CHF to reach parity before year end - BBH

Analyzing the options market and using current spot and implied volatility, Brown Brothers Harriman estimates that the odds that the EUR/CHF could reached 1.00 before the end of the year is about 14% and it rises to 35% considering the next 12 months. “While not the odds-on favorite, it seems sufficiently high that it cannot be simply ignored,” wrote Marc Chandler, Global Head of Currency Strategy.

Chandler affirms that recent global debt crisis and in particular the European debt crisis, put the Swiss Franc safe haven function “on steroids”. This is not good new for Swiss equities. “The appreciation of the Swiss franc against the euro is one of the reasons why the Swiss Market Index (SMI) has generally underperformed,” Chandler noted.

Forex: CHF gains momentum across the board

 

The Swiss Franc strengthened in the last hour following the release of the IMF report on Europe. USD/CHF erased gains and pulled back below 0.8200 and fell to 0.8162, the lowest level since Asian hours. The pair moved further away from 0.8232 (daily highs). 

The Swiss Franc also rose considerably in the last hour versus its European rivals. EUR/CHF peaked at 1.1670 but reversed and turned to the downside falling a hundred pips in less than 60 minutes. The pair retreated to 1.1555, area that lies just a few pips above today’s opening price. GBP/CHF also tumbled in the last hour, falling from 1.3267 to 1.3153 and trimmed gains.

The IMF presented a report on Euro Area policies and affirmed that Executive Directors see that the Euro debt crisis poses risks to the European and to the global recovery. They called for strong policy implementations in the programs, more efforts to restore confidence and to strengthen the economic governance.

“Directors stressed a number of essential actions. First, they urged a rapid implementation of the commitment to scale up the capacity of the European Financial Stability Facility (EFSF) and supported a more flexible use of the EFSF as a backstop for sovereign and banking problems. Second, Directors called for clarity in the approach to private sector involvement with regard to ongoing programs and in the context of the European Stability Mechanism. And third, they called for immediate measures to strengthen the financial system through adequate capitalization and a strong follow up to the stress-test.”

Forex: NZD/USD at new record highs

The Kiwi resumed the upside against the Dollar after moving in ranges for a few days and reached a new record high at 0.8572. NZD/USD broke above 0.8505 and jumped to the upside.

“The NZD/USD pair fell on Monday, but bounced towards the end of the day again as it appears the uptrend simply is too strong to cause any significant drop in price for more than a few hours. The pair is a bull pair, and buying is the only thing to do. We like buying this pair on dips, and will not sell it,” the Forex mansion Team said.

So far, the pair is rising for the fourth consecutive week in a row. In the last seven days it has risen 450 pips.

The Kiwi is outperforming the Aussie and the Loonie. AUD/NZD fell below 1.2500 and bottomed at 1.2478, the lowest price in 11 months while NZD/CAD reached earlier at 0.8147 the highest price since 2008.

Forex Flash: Risk of BOJ intervention is low - BBH

The Japanese yen in recent days has remained mostly steady near it´s lowest level since the earthquake in March, holding within a tight range around 79.00 since late Thursday. Still the BBH Global Currency Strategy team suggests: “Given the low volatility and the US and European debt tensions, we continue to suspect that the risk of BOJ intervention is low. At the same time, as the euro zone economy appears to be losing momentum and the US economy is disappointing, the Japanese economy looks poised stage a stronger recovery in the coming months.”

The BBH analysts adds: “We note that the Nikkei is the best performing G7 equity market over the past month. Foreign investors had been substantial buyers of Japanese share in the first part of the year (~$40 bln through April), repatriated some money in Q2 but in recent weeks have returned to the buy side again.”

Forex: EUR/USD unable to hold above 1.4200

EUR/USD fell back below 1.4200 in the American afternoon after failing for second time on Tuesday to extend gains above the 1.4210/15 zone where the pair set a 3-day high earlier. Despite the risk-on environment, the hegemonic currency was unable consolidate above 1.4200 against the Greenback, weighed down by the IMF saying that contagion risk in the euro zone is high, and dropped near 60 pips back to the 1.4150 region.

EUR/USD has been trading between 1.4150 and 1.4210 most of the New York session, unable to set a fresh direction, and currently it is quoting at 1.4160, holding onto a 0.35% gain.

If the Euro manages to break through 1.4210, next resistance could be found at the 1.4250 zone and 1.4280, while if it falls below 1.4150/45, immediate supports might be found at 1.4130 and the 1.4100/1.4090 region.

Forex Flash: USD/CAD targets 1.00 over 1m & 3m – UBS

 

With the BoC monetary policy decision in focus today, the USD/CAD remains mostly bearish around 0.9550. Chris Walker of UBS informs: "Our Canadian economist is in line with consensus, and expects the base rate to be kept unchanged at today's policy meeting. As far as the policy statement is concerned, we would not be surprised to see mildly hawkish overtones seep into the text, given that CPI in May showed a significant increase.”

Given the possibility of the Canadian central bank turning more hawkish, Walker places both the 1-month as well as 3-month target at 1.00.

Forex: GBP/USD pulls back from 1.6160

 Cable was unable to sustain bullish momentum which brought it nearly 100 pips higher in the last few hours of trade to a high of 1.6160, and has since pulled back towards 1.6100 by mid-day over the old continent. The pair seems to find modest support their however, and currently trades settled at 1.6120 in wait of fresh direction.

The technical analysts over at AceTrader suggest: “Although cable has eased after intra-day rally to 1.6148 and sideways trading would be seen, as long as near term support at 1.6107 holds, bullishness remains for upmove from yesterday's low of 1.6005 to extend gain towards 1.6165 but resistance at 1.6195 would hold from here.”

They go on to state: “Buy again on dips with stop as indicated, break would risk stronger pullback to 1.6055.”

Forex: EUR/CHF consolidates above 1.1600

The EUR/CHF continues to pull back from the Sunday night historic low of 1.1375 given the eurozone debt jitters, today supported by a slighlty improved risk sentiment which has allowed the pair to jump some 130 pips over the European session and reach as high as 1.1650 by mid-day.

The pair has since run into firm resistance at that mark as traders re-evaluate and wait for further direction, trading currently quiet around 1.1620. If the EUR/CHF manages to extend further above however, expect resistance past previous levels at 1.1723 (High July 13, 10-Da MA), 1.1751 (Daily High Jul 12) and 1.1808 (Daly Low Jun 27).

In the case of a reversal, support is placed at 1.1516 (Hourly Low Jul 19), 1.1399 (21-Day Lower Bolli) and 1.1365 (Historic Low Jul 18).

Forex: USD/CAD downside limited at 0.9540

The USD/CAD has come under broad selling pressure today as the dollar weakens on higher risk taking spurring crude prices slightly higher. The pair dropped another 50 pips over the European session, hitting a low near 0.9540 befoe running into apparently firm support and pulling back towards 0.9560 where it remains at time of writing.

While still overall bearish, if the USD/CAD breaks lower in the coming hours further critical levels past previously mentioned support are listed at 0.9527 (Daily Low Jul 18), 0.9513 (Daily Low May 11) and 0.9505 (Daily Low May 4). Above, resistance is placed at 0.9635 (Daily High Jul 18), 0.9667 (21-Day MA) and 0.9668 (July 13 High).

Forex: GBP/USD remains above 1.6000, bearish tone intact

GBP/USD opened Monday’s trade at 1.6105, broke below key support in the 1.6075 area to hit session lows near 1.6000 and has recovered some of its daily losses, hovering now just above the 200-day EMA.

“Note the RSI reading finally broke below 40 to kill the bullish momentum, and even shows some short-term bearish momentum as the reading kissed 30,” explains Fan Yang, Chief Technical Strategist at FXTimes. “At the second half of today’s US session, we are seeing some pullback after the strong bearish candle from a little earlier.”

Mr. Yang continues: “If the market fails to break above 1.6075 in the Asian session, and can avoid breaking back above the 1.6110 level in the upcoming European session (in about 12hours), then the bearish outlook is still valid, at least in the very short-term towards 1.5930-1.5940 area.”

At the time of writing, GBP/USD has closed the American session at 1.6055, around 50 pips below its starting price. If the cross continues its descent during the Asian trade, Slobodan Drvenica of Windsor Brokers Ltd. expects buying interest at 1.6050, 1.6030 and 1.6000. To the upside, he recognizes resistance at 1.6127, 1.6164 and 1.6192.

Forex: USD/CHF consolidates below 0.8200

Despite the risk-off environment, the Dollar has managed to regain ground against the Swissy after opening Monday's Asian session near all-time lows at the 0.8085 zone. However, after rising 100 pips along the day, USD/CHF found resistance at the 0.8185/80 region during American hours and has been consolidating in a narrow range just below ever since, currently at 0.8170.

"Current recovery attempt is so far seen capped at 0.8200, with break here required to signal stronger correction towards 0.8273/0.8300", said Slobodan Drvenica, analyst at Windsor Brokers Ltd. "Holding below 0.8200, however, keeps bears in play for fresh attempt through 0.8073, towards 0.8000/0.7900 targets".

Forex: EUR/USD drops back towards 1.4020

 

The EUR/USD is once again coming under modest selling pressure, dropping some 50 pips in the last hour to test daily lows near 1.4020. The pair appears to be catching slight support at that level, yet still remains ready to break towards 1.4000 as overall sentiment worsens over New York.

Writing for FXstreet Independent Analysis team, Valeria Bednarik suggests: “Risk environment amid sovereign debt woes continues dominating the scenes, with European share markets negative, and gold quoting around fresh record highs above $ 1600/oz. Recent US disappointing data however, favored a limited recovery in the cross, still limited below 20 SMA in the hourly chart, and with indicators heading south below their midlines.”

Bednarik adds: “Bigger time frames show momentum still heading south, while strong static resistance area around 1.4090, intraday highs and lows from the last days.”

Forex: EUR/GBP rejected at 0.8700

 

The EUR/GBP found firm support at a fresh 6−week low this morning at 0.8704, reversing course over the European session as risk aversion wanes slightly from what it was over the Asian markets. The pair still remains some 40 pips off the day´s opening price at 0.8780 at time of writing, and could possible retest those recently mentioned minimum levels if sentiment turns lower suddenly once again.

As we head towards mid-day over Europe, the EUR/GBP looks poised for a modest recovery with the immediate resistance levels listed at 0.8795 (High May 15, 100 Day MA), 0.8831 (55-Day MA9 and 0.8842 (10-Day MA). A re-test of lows will bring support at 0.8675 (Daily Low May 31), 0.8663 (200-Day MA) and 0.8658 (Daily Low May 30).

Forex: EUR/USD curbs downside at 1.4015

The EUR came under heavy selling pressure to open the week as overall uncertainty on both sides of the Atlantic keeps markets jittery, however the EUR/USD finally found technical support around 1.4015 in morning trade over the old continent, nearly 150 pips under the day´s opening price. The pair currently has recovered back up towards 1.4050 where it trades quietly at time of writing.

Technically speaking, Stoyan Mihaylov of Deltastock writes: “EUR/USD is in a consolidation after the recent top at 1.4941 (May 4th, 2011). Technical indicators are descending and trading is situated between the 50- and 200-Day SMA, currently projected at 1.4311 and 1.3636.”

Mihaylov adds: “Still in the descending corrective channel below 1.4281 high and the intraday bias is negative with an initial resistance at 1.4090. I continue to favor a reversal for a break through 1.4090 and 1.4199, en route to 1.4370. Major support on the downside is 1.3950.”

Forex: USD/CHF pares initial sell-off

The USD/CHF dropped to a fresh historic low of 0.8042 in early trade over Asia, as overall uncertainty regarding the US and Eurozone debt situations drove investors to the safety of the Swiss franc. The pair has since battled back to the day´s opening price of 0.8150 however, remaining consolidated around their in morning trade over Europe.

Techincally, the Kshitij Consultancy Services team writes: “Dollar-Swiss has seen a downside breakout of its 0.8300-8550 sideways range. The overall downtrend remains intact. With Support-turned-Resistance in 0.8280-8300 region, the outlook remains bearish for a fall to 0.8070-50-8000 or even 0.7950 in the coming weeks. 0.8070 is a significant Support level seen on the downside and while it holds, we migth see a rally to 0.8250-8300.”

They add: “A break above 0.8300 is not looking likely. However, if seen, the upmove can extend to 0.8400. Remember the pair is finding Resistance near 0.8200 itself, as such the upmove could be well restricted to 0.8200 itself.”

Eurozone: 8 banks fail the stress test, 5 Spanish institutions

8 European banks has failed 2011 stress test according to the European Banking Authority inform released today. Five Spanish, two Greek and one Austrian banks haven't pass the test. All Irish banks have passed as well as German institutions. The 2011 test has counted 91 banks across 21 European countries.

EUR/USD reacts up and breaks 1.4180.

Forex Flash: EUR/USD is likely to trend sideways - Commerzbank

 

Even though the EBA published the stress tests results, showing that only 8 of 90 banks failed the tests giving the Euro some relief, "the Euro zone politicians are still struggling for a solution to the sovereign debt crisis after the situation escalated last week", said Antje Praefck, analyst at Commerzbank. 

Meanwhile, "in the USA, the debate over the raising of the debt ceiling is becoming more and more urgent. There is a chance of a US default at the beginning of August if the government and opposition cannot come to an agreement. The rating agency Moody’s has therefore placed the country's rating under review for a possible downgrade," said Praefck.

"Against this background, general uncertainty in the currency markets remains high. Depending on the news flow, sometimes USD and sometimes EUR will come under greater pressure… All this points to choppy, volatile sideways trading in EUR-USD over the coming days", added Antje Praefck.

Forex: Euro slightly lower after stress test results

The Euro held relatively calm following the release of the stress test results. EUR/CHF rose initially to 1.1575 but retreats afterwards to 1.1520, 30 pips below the price it had before the releases. Similar movements showed EUR/GBP that climbed to 0.8780 but pulled back after a few minutes to 0.8755. Against commodity currencies the Euro turned lower approaching session lows versus the Kiwi and the Loonie.

The results showed that 8 banks failed. The European Banking Authority said: “Eight banks fall below the capital threshold of 5% CT1R over the two-year time horizon, with an overall CT1 shortfall of EUR2.5 bn. Sixteen banks display a CT1R of between 5% and 6%.”

Forex: EUR/USD short-lived rally after stress tests results

EUR/USD jumped toward session highs after the European Banking Authority (EBA) published the results of the last stress tests to European banks, showing that only 8 out of 91 banks failed of which 5 are Spanish, 2 Greek, 1 Austrian. The EU regulator said that other 16 banks narrowly passed the tests.

The Euro rose to 1.4187 on a relief rally but quickly moved back to pre-results levels. At time of writing, EUR/USD is quoting at the 1.4150/60 area, 0.10% above its Friday's opening price.

From a technical perspective, Valeria Bednarik, analyst at FXstreet said, "Pair remains hovering near 1.4160 strong Fibonacci resistance area, and despite a failure attempt to break higher, price quickly retreated from 1.4190 session high. Despite a timid bullish tone as per price holding above 20 SMA, pair needs at least to break daily highs, to gain ground towards 1.4250 area".

"Below 1.4100, the bearish trend may take the lead, with the pair then pointing for an approach to 1.4050 support zone", said Bednarik.

Forex: Dollar weakens ahead of stress test results

The US Dollar weakened in the market ahead of the release of the release of the European stress test results. EUR/USD rose above 1.4100 to test levels on top of 1.4150 while GBP/USD broke above intra-day resistance level at 1.6130/35 and reached 1.6155 approaching daily highs.

The Loonie and the Kiwi rose further against the Dollar. USD/CAD hit a new daily low at 0.9535 while NZD/USD eared losses and climbed to challenge daily highs around 0.8445. AUD/USD remains moving in a range, with support at 1.0625 and resistance at 1.0675.

Despite recovering against the Dollar, the Euro remains near session lows across the board. In a few minutes, at 16:00 GMT the results will be published.

Forex: AUD/USD holds above 1.0625

The AUD/USD dropped sharply earlier and found support around the 1.0625. The mention support was tested after Wall Street opening and managed to hold. To the upside, the recovery of the Aussie was capped by the 1.0675 zone. Currently AUD/USD trades at 1.0650, 0.70% below today’s opening price, and continues to move sideways consolidating losses ahead of the release of the European stress test results.

“The sideways range of 1.0500-0800 remains intact and it is now trading at the middle of this range. A breakout of this sideways range will determine the further direction of move,” wrote the Kshitij Consultancy Services Team.

Forex: EUR/USD eases to 1.4100 ahead of Stress tests

 

Euro recovery from 1.4095 lows on early European session has been capped at 1.4180, and the pair has pulled lower afterwards, giving away previous gains and returning to 1.4100 as investors square positions ahead of the release of EU banks' stress tests.

On the downside, the pair might find support at 1.4095 (day low), and below here, 1.4035 (intra-day level) and 1.3950 (intra-day level). On the upside resistance levels lie at 1.4200 (day high), and above here, 1.4280 (Jul 14 high), and above here, 1.4370/75 (Jul 7/8 highs).

The results of the stress tests could determine Euro direction, according to Kathy Lien, Director of Global Research & Analysis for GFT, with 15 being the magic number: "If more than 15 banks fail, the EUR/USD could extend below 1.41. If less than 15 banks fail, the EUR/USD will rally."

Forex Flash: USD/CHF seen at 0.9700 next year - Wells Fargo

The Swiss Franc has been rallying continuously for the last 12 months and, according to the Wells Fargo FX Express - Monthly, reaching overstretched levels, which could lead to a trend shift if Eurozone debt stabilizes and the US gets through the "soft Patch".

The USD/CHF s expected to appreciate steadily in the mid-term, according to the Wells Fargo FX Express, reaching 0.8300 area in 3-months time, and 0.8400 by year end, to extend gains to 0.9025 by mid 2012 and rally towards 0.9700 in the second half of 2007.

US GOLD - Comex gold seen as top-heavy as record-breaking week comes to an end

New York 15/07/2011 - Gold on the Comex division of the New York Mercantile Exchange fell modestly on Friday, with the recent rally to fresh records highs prompting the sale of physical metal and general profit-taking.

Gold futures for August delivery were last down $3.30 at $1,586.00 per ounce and from Thursday’s all-time record high $1,594.90.

After the big run-up this week, gold is starting to feel a bit overcrowded, a US-based gold trader said.

“Case in point, my great aunt from Tennessee called me [on Thursday] morning to inform me that her church group was pooling some money together to buy gold coins and that if I were smart I would do the same,” the trader said.

“It's almost certainly a good time to sell off some positions the moment you start getting random trading advice from distant relatives whom you normally only see at family reunions,” he added.

Gold is also facing some headwinds from the physical market due to the higher prices, Standard Bank said in a note.

“Physical selling and scrap gold coming to the market has outpaced buying for the fourth day, pushing our Standard Bank Gold Physical Flow Index (GPFI) into negative territory for the first time since late-April,” it said, adding that physical selling is the strongest it has been in 13 months.

Additionally, Federal Reserve chief Ben Bernanke, in testimony before the Senate on Thursday, clarified earlier comments related to the possibility of a third phase of so-called quantitative easing (QE3).

He told the Senate sub-committee that additional accommodative policies might be considered at some point but that the Fed has no plans to change its policies in the immediate future.

Those comments were interpreted by the market to be less dovish than what he had said before the House on Wednesday.

“This has dented expectations of QE3, thereby reducing appetite for precious metals from a liquidity perspective,” Standard Bank said.

Having hit fresh lifetime highs this week, gold is now starting to look a bit top-heavy but remains supported on anxiety over European bank stress test results that are due out later today, RBC Capital Markets said in a note.

“As it's Friday and book-squaring is often the name of the game, we would not be surprised to a see a further pullback… those lucky enough to have gotten long early in the week will look to book profits,” it said.

In wider markets, the dollar was down against the euro at 1.4117, down about half a cent on the day.

Forex: GBP/USD remains rangebound above 1.6100

 

The sharp rally that led GBP/USD toward a 3−week high at 1.6192 on the back of Moody's placing the US rating on revision for downgrade late Wednesday, eased along the European session and the pair entered in a consolidation range that has held during American hours.

GBP/USD retreated from highs but the correction was limited by the 1.6090 zone, and the cross has spent most of the NY session above that level but capped by 1.6160. At time of writing, the pair is quoting at 1.6135, 0.22% above its opening price.

From a technical perspective, Valeria Bednarik, chief analyst at FXstreet, recently commented, "Holding steady above 1.6080 area, the pair has a shy bearish momentum in the hourly chart while price hovers around a flat 20 SMA and contradicts indicators, as the pair moves on market sentiment rather than anything else. 4 hours chart, shows current candle managed to open firm above 200 EMA, helping keep the downside limited".

Forex: USD/CHF fails to rise back above 0.8200 returns to 0.8155

Greenback reached a fresh daily high at 0.8199 against the Swiss Franc but lost strength and pulled back toward 0.8150. Despite retreating, USD/CHF is holding far all time lows recorded during Asian morning when it bottomed at 0.8083.

“Corrective action on extremely overextended hourly studies is seen preceding fresh weakness, with 0.8000, then 0.7900 levels in focus, as wider picture outlook remains firmly bearish,” said Slobodan Drvenica, analyst at Windsor Brokers Ltd.

On a weekly basis the pair is headed toward the second decline in a row and to the biggest weekly loss since late May.

The Swiss Franc also strengthened versus the Pound and the Euro in the last hours and trimmed losses. EUR/CHF pulled back below 1.1600 while GBP/CHF was rejected from levels on top of 1.3200.

Bernanke: Fed not ready to increase stimulus at this point

Ben Bernanke testified before Congress for the second day in a row, this time at the Senate Banking Committee. According to the Chairman the central bank is not prepared at this point to take further action, signaling that the Fed would wait to see how the economy progress before taking further actions to stimulate the economy.

Regarding inflation, Fed’s chairman mentioned that currently is higher and closer to the target the central bank has. The increase in prices is among the reasons why the Fed won’t start soon another round of QE. Also he affirmed that it may not be effective to increase asset purchases but current state of the economy forces the bank to examine way to stimulate growth if needed.

Forex: USD/CAD hits 2-months lows and rebounds

The Loonie rose following the release of US economic data and reached a 2-month high but it failed to rally further and retreated. USD/CAD tumbled to 0.9548, the lowest price since May 11 but rebounded and in the last hour accelerated to the upside, approaching 0.9600. Currently trades at 0.9594/98, 0.09% above today’s opening price.

Recent decline of the Loonie was accompanied by a decline in crude oil and stock indexes. The Dow Jones trimmed gains and currently gains 0.11% and the Nasdaq is now in negative territory falling 0.33%. Market sentiment weakened as Ben Bernanke testifies before Congress and following mix data from the US.

From a technical perspective, USD/CAD support levels according to Mataf lie at 0.9450, 0.9520 and 0.9560 while resistance at 0.9610, 0.9665 and 0.9780.

Forex: EUR/USD dips below 1.4200, hits fresh daily low

The Euro weakened in the market and pulled back. EUR/USD failed to hold above 1.4200 and fell sharply in the last hour losing almost a hundred pips. The pair dropped from 1.4235 to 1.4140, hitting a new daily low. The Euro managed to rebound and rise back above 1.4150, but remains facing pressure as risk aversion sets in.

From a technical perspective, according to Fan Yang, Chief Technical Strategist at FXTimes the EUR/USD is at the crossroad with a mix of bullish and bearish signals. “The 4H chart also has a mix of signals. The bullish signal is a break above a declining resistance, as well as the ability to break back into the triangle. Still, the market has a chance to confirm by not heading higher. A rally above 1.4340 area, the middle of the previous triangle, and then above the 200SMA in the 4H chart, should push the market to the bullish side.”

Market movements continue to be moderated as investors start to center its attention on tomorrow’s European streets test results.

Forex: USD/JPY declines, support at 78.65

 

Thanks to breaking news that Moody's placement of US Aaa government bond rating and related ratings on review for possible downgrade, the Japanese yen is extending its decline against the Greenback in early Asia.

The dollar had already been taking a beating, seen declining throughout the market after Bernanke’s testimony in Congress on Wednesday, but at the close of the American session, USD/JPY began its campaign to target lower levels, extending its decline to lows below 78.65 before bouncing slightly, last quoted in the 78.75 price zone, down from 78.98.

Forex: GBP/USD jumps to 3-week highs as Moody’s warns US

GBP/USD soared and broke above the 1.6120 resistance zone, reaching at 1.6173, a 3-week high. The pair remains trading near the highs extending its rally that started during Wednesday’s American session following Ben Bernanke opening statement.

“Technical studies indicate that support levels are located at 1.5948/06 and then at the 21Day Lower Bollinger Level at 1.5873,” said the Talking-Forex analysis team. According to them resistance levels are noted at the 100-DMA line at 1.6250, 1.6263 and then at 1.6283.

The Dollar weakened in the market recently after Moody's put US Aaa Rating on a review for a possible downgrade.

From Tuesday’s lows GBP/USD has risen almost 400 pips and posted on Wednesday the biggest daily gain since late February.

Forex: Swissy climbs vs. majors, USD tanks

The Swiss franc has gained sharply versus its European and American counterparts in recent weeks.

Wednesday’s session saw the CHF appreciate the most against the US dollar since the 27th day of March, dropping around 160 pips from its start price of 0.8303. This price action came on the back of a weak Greenback after US Fed Chairman, Ben Bernanke testified in Congress.

"The comments were not upbeat by any means, and obviously, no one wants the economy to get to the point where more stimulus is needed," comments Richard Sichel, chief investment officer of Philadelphia Trust Co.

The franc has strengthened versus the euro as investors seek a refuge from the ongoing debt crisis in the euro region, particularly as Fitch Ratings on Wednesday downgraded Greece deeper into junk territory, citing the absence of a new and fully funded financing program for the country.

The dollar is now extending its decline against its major rivals as Moody's Places US Aaa Government Bond Rating and Related Ratings on Review for Possible Downgrade.

The Swiss currency has risen about 11% versus its euro-zone and U.S. counterparts in the past three months. At the time of writing, USD/CHF is under pressure in early Asia, quoted at 0.8110, down from 0.8176. Versus the Euro, the Swiss currency is quoted a 1.1510, down from 1.1576.

Forex: USD/CAD edging towards 0.9600

 

The high risk aversion seen in recent days which pressured commodity currencies to weaken across the board has given way, allowing the USD/CAD to drop back towards the 0.9600 mark where it traded around prior to the sell−off. Today the pair has dropped around 60 pips from it's opening price, appearing to find modest support around the technical barrier ahead of the North American session.

If the USD/CAD manages to break past that level, expect further critical levels to present themselves at 0.9564 (Daily Low Jul 8), 0.9524 (21-Day Lower Bolli) and 0.9513 (Daily Low May 11). Above, resistance is placed at 0.9646 (Hourly High Jul 13), 0.9693 (100-Day MA) and 0.9780 (61.8% of 0.9564 -0.9914).

Forex: AUD/USD rallies to 1.0700 on strong Gold prices

Australian Dollar's retreat from 1.0790 bottomed yesterday at 1.0520 low and the pair has bounced up strongly on Wednesday, favoured by higher Gold prices, reaching day highs at 1.0695, the 61.8% Fibonacci retracement level of Jul 8-12 decline.

Immediate resistance, thus, lies at the mentioned 1.0695 (Fib retracement level), and above here, 1.0725/35 (Jul 11 highs) and 1.0790 (Jul 11 highs). On the downside, support levels are 1.0655 (intra-day level), and below here, 1.0580 (day low) and 1.0525 (jul 12 low).

Technical indicators show increasing bullish momentum in 4 hour charts, according to Valeria Bednarik, analyst at FXstreet: " 4 hours chart shows an increasing bullish momentum, with current candle opening just above a still bearish 20 SMA, while indicators approach downside up to their midlines."

Forex: USD/JPY recovery, capped below 79.55

Dollar decline from Friday's high at 81.50 extended sharply yesterday as risk aversion boosted Yen demand, breaking below key 79.55/70 support area, to hit a fresh 4-month low at 78.50, and the pair attempted to regain lost ground on Asian session, although 79.55 has limited the upside.

On the downside, the pair might find support at 79.10 (day low), and below here, 78.50 (Jun 12 low), and then 78.00. On the upside, immediate resistance lies at 79.55/70 (May 5/Jun 8 lows), above here, at 80.00 (psychological level), and 80.35 (Jul 12 high).

Yesterday's daily close below 79.55 supports further bearish activity for today, according to the ecPulse technical analysis team: "This breach support the expectations for the pair to continue the expected intraday downside trend for today, and supported by the negative pressures forced by the MA 50."

Forex Flash: USD/CAD: Key support at 0.9565 - Commerzbank

The Dollar has bounced off the breached downtrend resistance line off Aug 2010 highs, and, according to Axel Rudolph, technical analyst at Commerzbank, increasing the odds for a revisit to the 200-day MA at 0.9875, if the pair holds above 0.9565.

If the pair holds above 0.9565, it could extend its recovery to the 200-day MA, at 0.9874, says Rudolph: "A continued advance to the 200 day moving average at .9874 may now be in the making, provided that no drop
through this week’s low at .9565 occurs."

On the downside, below 0.9565, Rudolph sees the pair heading to 0.9527/.9449: "Should this be the case, though, the .9527/.9449 support area (early April and mid-May lows and May trough) will be back in the limelight."

Forex: EUR/USD on recovery, nears 1.4100

Euro sell off seen on Monday and Tuesday has found support at fresh 4-month low 1.3835, to bounce up as fears about a massive debt contagion in the Euro Area ebb, regaining 1.4000 level during Asian session, to extend gains in Europe, reaching day highs at 1.4090.

On the upside, if the Euro manages to hold above 1.4055/60, next resistance levels would be at 1.4180 (broken trendline support), and above here, 1.4230 (Jul 11 high).

On the downside, support levels are 1.3950 (day low), and below here, 1.3900 (intra-day level) and 1.3835 (Jul 12 low).

Forex: EUR/USD pulls back after Ireland downgrade

The Euro lost momentum across the board after Moody's Investor Service downgraded Ireland rating one notch to Ba1, losing the "investment grade". EUR/USD retreated sharply from 1.4050, falling almost a hundred pips to 1.3960.

The outlook for Ireland remains negative and according to Moody’s the key driver for today’s decision “is the growing possibility that following the end of the current EU/IMF support programme at year-end 2013 Ireland is likely to need further rounds of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a precondition for such additional support, in line with recent EU government proposals.”

The EUR/USD currently trades at 1.3970, on its way to the third decline in a row and headed toward the first daily close below 1.40 since March 15. 

Forex: USD/CHF nears all time low after FOMC

The US dollar weakened short after the Fed published its last meeting minutes that showed some members are willing to provide further monetary stimulus if economic growth remains too slow to make satisfactory progress toward reducing the unemployment rate.

USD/CHF dropped around 50 pips after the minutes and touched a fresh 2-week low at 0.8280, just 6 pips shy of 0.8274 where the pair set its all time low on Jun 28th. At time of writing, USD/CHF is trading at the 0.8300 area, where it prints a 0.68% loss on Tuesday.

Forex: Dollar falls after FOMC minutes

 

The Dollar extended its retreated across the broad following the release of the FOMC minutes. EUR/USD broke above 1.4025 and rose to test daily highs while GBP/USD also rose above previous American session highs and reached levels on top of 1.5940.

Commodity currencies gained momentum supported by rising stocks. In Wall Street, the Dow Jones turned higher after the minutes and currently is up 0.43% while the Nasdaq erased losses and is now rising 0.3%,

The Swiss Franc and the Yen jumped versus the Dollar and reached fresh highs. USD/CHF plummeted 50 pips and dropped back under 0.8300, approaching all time lows. USD/JPY fell to test daily lows.

The minutes showed discussions about how to remove monetary stimulus but no agreement on a specific guideline. “Few members” pointed out that if economic growth becomes too slow more stimulus would be needed. 

FOMC: Discusses exit strategy, need for further stimulus

Fed June meeting minutes show all but one official agreed on key elements of exit strategy while making clear that the discussion "did not imply that a move toward such normalization would necessarily begin sometime soon".

The Committee considered a set of specific principles that would guide its strategy of normalizing the stance and conduct of monetary policy. The suggested order of an exit is first to cease reinvesting principal on bonds it holds, and then either simultaneously or soon after change the forward guidance on the federal funds rate, followed by raising the target for federal funds rate, then selling agency securities after the first hike.

However, a few Fed officials suggested that the central bank may have to consider further stimulus measures instead if growth remains too slow. "Participants also discussed the medium-term outlook for monetary policy. Some participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate and if inflation returned to relatively low levels after the effects of recent transitory shocks dissipated, it would be appropriate to provide additional monetary policy accommodation", the Federal Open Market committee said in the minutes of its June 21-22 meeting.

Forex: EUR/USD tests levels above 1.4020

The EUR/USD tested levels above the 1.4020 zone that capped the upside during the European session. The pair trimmed losses and currently is trading less than 40 pips below the price it had at the beginning of the day after reaching at 1.4026 a new American session high.

“The EUR/USD has found support to bounce after a quick reaction of Italian and in general the euro zone area to latest developments of the crisis, and much worse than expected US Trade Balance,” said Valeria Bednarik, collaborator at FXstreet.

From a technical perspective, Bednarik pointed out that the EUR/USD “seems ready to regain 1.4000 as indicators began a correction from oversold extremes, and extend gains towards the 1.4060/80 area, once recent intraday high at 1.4025 is overcome.”

The Euro moved off session lows across the board but still remains trading with losses.

US GOLD - Comex gold gains on persistent sovereign-debt crisis, euro comes off lows

New York 12/07/2011 - Gold on the Comex division of the New York Mercantile Exchange edged into positive territory on Tuesday after the euro bounced off a four-month low following the sale of Italian Treasuries.

Gold futures for August delivery were last up $4.20 at $1,553.40 per ounce in New York. Trade has ranged from $1,541.10 to $1,556.10.

The European common currency has been hammered over the past 48 hours when fears over sovereign-debt contagion in the eurozone sparked a flight to safety. The euro fell to 1.3834 against the dollar earlier this morning - its lowest since March 11.

“The gold market, given the total environment, is doing quite well. The continued problems in Europe are prompting gold buying across the continent,” Sterling Smith, an analyst with Country Hedging, said. “The market remains very nervous about moving into any sort of paper asset.”

But the euro has since recovered somewhat to 1.40004 due to speculation that ECB has been buying up peripheral eurozone debt.

Additionally, the successful completion of a one-year Italian Treasury bill auction lent temporary support to the single currency.

“Those two pieces of news provided the market with a brief sigh of relief. The euro rallied and the stock markets fared a little better,” Smith said.

Nevertheless, the euro does appear to be moving into a longer term bear market, he added.

“While that's bullish for the dollar index, its not going to have that big of an effect on the gold market,” Smith said. “It's certainly possible for gold to rally even if the dollar also goes up. People aren't in love with the dollar - they simply see it as the least offensive choice at this moment.”

Elsewhere, talks to raise the US debt ceiling from $14.3 trillion are stalling, which may be “encouraging a little [gold] buying as well”, Smith said.. The Treasury Department has said that Congress has until August 2 to act or risk a credit event.

The market also awaits the release of the minutes from the Federal Open Market Committee's (FOMC) June meeting later today.

“While we don’t expect anything unusual, last week’s extremely disappointing non-farm payrolls figures might have raised market expectations for another round of quantitative easing (QE3),” Standard Bank said in a note.

“Further monetary accommodation by the Fed would be unequivocally bullish for gold. For today though we don’t expect the Fed to make any concrete commitment to additional monetary support, but don’t discount that the market might be moved by a possibly more dovish tone,” it added.

In other precious metals, Comex silver for September delivery was last down 31.8 cents at $35.380 per ounce. Trade has ranged from $34.810 to $36.075.

Platinum futures for October delivery on the Nymex were up $2.80 at $1,731.10 per ounce, while the September palladium contract was down $3.15 at $764.30.

Forex: USD/CHF trades near 2-week lows

USD/CHF is trading near its 2-week low struck earlier at 0.8312 after a limited Greenback bounce as risk aversion eased somewhat. USD/CHF was unable to extend the recovery from lows above the 0.8365 area and it retreated to the 0.8325 zone.

At time of writing, USD/CHF is quoting at the 0.8330 region, where it is 0.32% below its opening price. USD/CHF is falling for third straight day as the Franc has been supported by the risk-off environment.

From a technical perspective, Slobodan Drvenica, analyst at Windsor Brokers Ltd, said, "Recovery attempt from yesterday’s low at 0.8328 was short-lived, as gains were capped by 20 day MA, at 0.8396. Subsequent weakness reached fresh low at 0.8311, confirming negative structure and looking for test of 0.8300/0.8273 lows, below which to open fresh phase lower and post new record lows. On the upside, 0.8400 offers strong resistance".

Wall Street wavers after sharp slide

US stock indexes are wavering between small gains and losses on Tuesday a day after the biggest global sell-off since March, amid deepening concerns about the euro zone debt crisis as European officials for the first time refused to rule out default by Greece.

The Dow Jones industrial average is down 12 points or 0.10% at 12,493. The Standard & Poor's 500 Index drops 1 point or 0.11% at 1,318. The Nasdaq Composite Index is down 8 points, or 0.31% at 2,793.

In the macroeconomic domain, a report showed the US trade deficit widened in May to -$50.2 billion from a revised -$43.6 billion in April. Consensus was around a deficit of -$44.1 billion.

In the FX market, the Euro pared losses against the Greenback. Oil has erased previous intraday losses and is above $95 a barrel, while gold hovers around $1550 an ounce.

Forex: GBP/USD on recovery, reaches 1.5900 area

Pound retreat from Friday's high at 1.6080 extended on early London session amid surging aversion to risk, reaching fresh 5-month highs below 1.5800, to find support at 1.5775, and bounce up as panic eases, returning to 1.5900 area on early US session.

On the upside, the pair might find resistance at 1.5910/30 (Jun 27/28 lows), and above here, 1.6000 (psychological level) and 1.6040 (day high). Support level lies at 1.5775/00 (day lows), below here, 1.5745 (Jan 25 lows) and 1.5650/60 (Dec 17/31 highs).

On the longer-term, the pair has resumed the short -term downtrend below 1.5911, with further downside expected, according to Mohammed Isah, technical analyst at FXTechstrategy: "With the break of the 1.5911 level, its Jun 26’2011 low triggering the resumption of its short term downtrend, further downside risk is now expected. Support starts at the 1.5749 level, its Jan 25’2011 low followed by the 1.5700 level, its psycho level and then the 1.5600 level."

Forex: EUR/USD finds resistance at 1.4050, holds near session lows

The recovery of the Euro after reaching a fresh 6−week low at 1.3983 was capped by the 1.4050 area. The EUR/USD has remained relatively steady in the last hours after plunging 150 pips during the European session. The pair is trading at the moment at 1.4025/30, 240 pips below Friday’s closing price.

“The pair finished the session sharply lower as market participants continued to speculate over the future stability of the Eurozone and in particular whether Italy will be the next country to seek financial assistance,” Talking-Forex affirms regarding today’s session.

From a technical point of view, the Talking-Forex Team locates support levels at 1.3968 and then the 200-Daily Moving Average line at 1.3906. “On the other hand, resistance levels are placed at 1.4073 and then at 1.4151, followed by the 100DMA line at 1.4275.”

US GOLD - Investors buy gold as global debt problems cast shadow over paper currencies

New York 11/07/2011 - Gold on the Comex division of the New York Mercantile Exchange was propelled to a two-week high Monday as concerns over US and European debt had investors fleeing currencies and riskier assets.

Gold futures for August delivery in New York were last up $6.30, or 0.4 percent, at $1,547.90 per ounce; however, the yellow-metal has since come off its intraday high of $1,557.60 due to some afternoon profit taking.

The markets are closely watching the bubbling debt situation in Italy. The country's credit default swaps climbed 13 percent to 281 basis points this morning, while its debt-to-GDP ratio now stands at 120 percent - second only to Greece within the eurozone. An emergency meeting of European policy makers started today in Brussels to discuss Italy's problems.

These jitters led to euro to fall by about three cents to a low of 1.3983 against the dollar. Often times, a stronger greenback would lead to lower gold prices; however, in this case, the dollar seemed to merely benefit from the euro's weakness and not its own strength, market participants said.

“Gold has shown a pattern of re-establishing itself as alternative currency on days when Europe's credit woes reappear. This overall nervousness and resulting safe-haven demand has more than offset the slowdown we've seen in physical gold demand,” a US-based fund manager.

“Neither the governments across Europe nor Congress [in the US] have shown the political will needed to get their houses in order. People will keep buying gold until these central bankers and politicians start exhibiting some true leadership,” he added.

The macroeconomic news out of the US of late has also been pretty grim. Non-farm payrolls increased by only 18,000 last month, the weakest reading since September and well below expectations of a 97,000 gain, the Commerce Department reported on Friday.

The ratio between employment and the population declined to 58.2 percent, which is the lowest level ever recorded.

Additionally, talks on the US federal budget have broken down after the Republicans refused over the weekend to agree to a compromise spending plan that included tax increases. Congress has until the end of the month to raise its $14.3 trillion debt ceiling before risking a credit event.

And inflation figures from China released over the weekend also boosted precious metals inflows amid fears of rising prices. CPI last month, at 6.4 percent, was up from 5.5 percent previously, while PPI rose to 7.1 percent from 6.8 percent previously.

“Chinese inflation rates seem to be accelerating… we do not think the price increases will level out anytime soon,” MF Global's Ed Meir noted. “This means that inflation rates could spike again in July, leading to further Chinese tightening.”

In gold specific news, Comex net speculative length last week fell by 23.9 tonnes and now stands at 601.6 tonnes, which is below last year’s average of 777.6 tonnes. Net longs dropped by 18.0 tonnes, while shorts rose by 5.9 tonnes.

“Although we still feel that, from a fundamental perspective, there is potential for further upside over the medium term, we would beware of the build-up of speculative short positions,” Standard Bank said in a note.

“Currently, speculative short positions are at 129.0 tonnes, well above last year’s average (90.7 tonnes), indicating a market that is less supportive - which could see the gold price more vulnerable to shifts in investor sentiment,” the analysts added.

Forex Flash: Long JPY/KRW, USD/IDR; Short NZD/SGD - UBS

It will be difficult for EM to hold up as Brussels runs out of ideas, according to the UBS FX Analysts. Given this scenario of uncertainty and high risk aversion, the team at UBS recommends buying JPY vs KRW through spot. The rate at the time of writing is 13.15. We put a 2% stop at 12.88 and target 5% gains to 13.80. Two other FX trades, which we are not adding to our portfolio just yet, but do see as attractive in the current environment are long USDIDR and short NZDSGD.

Forex: GBP/USD holds near 5-month low

After a short-lived bounce toward the 1.5935 area, the British Pound has resumed its downward move against the Dollar, falling back to the 1.5900 region.

GBP/USD had set a fresh 5-month low at 1.5881 at the beginning of the American session weighed down by risk aversion and tracking the Euro lower, although it managed to hold above the mentioned low which represents the 61.8% retracement of the 1.5345/1.6747 rally.

At time of writing, GBP/USD is trading at the 1.5900/05 where it is more than 100 pips or 0.67% below its opening price.

"Technical studies indicate that supports are located at the 21Day Lower Bollinger Level at 1.5850, followed by 1.5821 and then at 1.5750. On the other hand, resistance levels are seen at the 200DMA line at 1.6047 and then at the 21DMA line at 1.6101", said the Talking-Forex team.

Forex: EUR/USD decline reaches 1.4100 area

Euro retreat from last week highs at 1.4575 extended on Monday below 1.4200 to break through uptrend support line at 1.4160, weighed by risk aversion amid debt contagion fears in the Euro Area, to retrace the entire Jun 27 − Jul 3 rally, reaching day lows right above 1.4100.

Immediate resistance lies at 1.4100 (Jun 26 low) and below here, 1.4070 (Jun 16 low) and 1.4015 (May 25 low). On the upside, resistance levels lie at 1.4160 (broken trendline support), and above here, 1.4200/20 (Jul 7/8 lows), and 1.4270 (intra-day level).

The pair has renewed its downtrend today, Stoyan Mihaylov, technical analyst at Deltastock, heading to 1.4070 en route to 1.3969: "Friday's quick rise to 1.4350 was the final leg of the consolidation pattern since 1.4220 low and now the downtrend has been renewed, for 1.4070, en route to 1.3969. Initial resistance is projected at 1.4182."

Forex: USD/CHF holds under 0.8400

Despite a modest uptick in risk aversion today due to fear of contagion spreading throughout the Eurozone, the USD/CHF holds still to the bottomside of 0.8400 finding firm support so far at the 0.8360 mark. Today´s calm comes after a 160 plummet on Friday following the widely disappointing US NFP results.

In the case that the current risk-off sentient catches up to the USD/CHF, expect immediate support at 0.8304 (21-Day Lower Bolli), 0.8276 (Historic Low Jun 28) and 0.8264 (1.2100 on the Recip). Above, resistance is placed at 0.8402 (10-Day MA), 0.8415 (21-Day MA) and 0.8523 (Daily High Jul 8).

Forex: USD/JPY Long-term negative - FXTechstrategy

The Dollar Yen risk remains on the downside as upside attempts continue faltering, according to Mohammed Isah, technical analyst at FXTechstrategy, who expects the pair to break lower, heading towards 79.55 on its way to 78.00 and, eventually to 76.18.

Only a sustained break through 81.27 level would ease downside pressure and shift the pair's ficus to higher levels, says Isah: " a break and hold above the 81.27 level, its Jun 28’2011 high must occur to put its downside vulnerability on hold and then aim at the 82.21 level."

Forex: AUD/USD in range above 1.0680/90 Support

Australian Dollar retreated from 1.0790 high on Friday found extended on Asian session to 1.0680, where the pair found support to consolidate through Asian and European trading, with upside moves contained at 1.0725/35 resistance area.

On the downside, below 1.0680 (day lows), the pair might face support at 1.0655 (Jul 6 lows) and then 1.0515 (Jun 29 low). On the upside, resistance area lies at 1.0725/35 (day highs), and above here, 1.0790 (Jul 1/3/8 highs) and 1.0890m (May 11 high).

On the near-term, the pair remains rangebound between 1.0660 and 1.0790, with the overall outlook, positive, according to the Kshitij Consultancy Services Team: "Aussie is ranged between 1.0660-1.0790 over the last few days. Important to note is that, it is bouncing back well from 1.0700-0670 region which keeps the overall outlook bullish for the pair. Important Resistance is seen near 1.0785 and a break above it will take the pair up towards 1.0850-70."

Forex: EUR/GBP slips under 0.8850

Renewed fears of contagion continue to rattle the European markets on Monday, pushing the EUR/GBP to a fresh nearly 4-week low at 0.8844 amid broad risk aversion. The pair dropped some 120 pips on Friday as Italian and Spanish risk premiums soared, and today sentiment remains by-and-large bearish as we head into mid-day over the session.

If the EUR/GBP continues to push lower further into the day, immediate support is projected at 0.8828 (Daily Low Jun 21), 0.8792 (61.8% of 0.8611-0.9084) and 0.8783 (100-Day MA). In the case of a reversal, resistance is placed at 0.8908 (21-Day MA), 0.8971 (10-Day MA) qand 0.9001 (Hourly High Jul 8).

Forex: In focus – US jobs report, Chinese CPI

he U.S. dollar lost ground against the sterling, yen and Swiss franc on Friday as considerably weaker-than-expected U.S. jobs data raised expectations that the U.S. Federal Reserve will leave interest rates low well into next year.

The U.S. Bureau of Labor Services (BLS) June employment report surprised the market with a modest gain of only 18,000 jobs in payroll employment compared to a consensus forecast of 88,000. Payroll gains for April and May were also revised downwards.

However, as we start the new week, the focus should not the weakest US jobs data in nine months, according to Marc Chandler at Brown Brothers Harriman.

“Instead, the significant development this week is the pressure on Italy. Italian bonds sold off every day this past week and this brought the 10-year benchmark yield to its highest level in 9 years,” comments Mr. Chandler. “After all, it was well appreciated that for a number of reasons the US economy has lost some momentum in H1. Even the Federal Reserve has acknowledged this.”

Another point of focus this week should be the Chinese CPI figures released over the weekend, which continues to rise, standing now at 6.4% in June from 5.5% the previous month. This indicates that the Chinese economy is showing further signs of slowing down.

EUR/USD has opened the week with a 50-pip downside gap open in the 1.4205 price zone. According to Sean Lee, Editor at Forex Live, next key support lies near 1.4150.

US GOLD - Comex gold rallies as 'catastrophic' jobs report fuels safe-haven demand, revives talk of QE3

New York 08/07/2011 - Gold on the Comex division of the New York Mercantile Exchange gained 0.8 percent on Friday after a dismal US jobs report led to increased speculation that the Federal Reserve might resort to more quantitative easing to boost employment.

Gold futures for August delivery were recently up $11.60 at $1,542.20 per ounce in New York. Trade has ranged from $1,525 to $1,546.

US non-farm payrolls increased by only 18,000 last month, the weakest reading since September and well below expectations of a 97,000 gain. The national unemployment rate rose to a six-month high of 9.2 percent, up from 9.1 percent in May.

Additionally, the ratio between employment and the population declined to 58.2 percent, which is the lowest level ever recorded.

“This is pretty much a catastrophe,” Sterling Smith, an analyst with Country Hedging, said. “When you take out the birth/death adjustments and look at people actually working, this report is noticeably and demonstrably worse than what it appears to be from the headline number.”

The impact on gold prices has been multifaceted. First, the market has shifted into risk-off mode, which means that investors are moving wealth into safe-haven assets, such as gold.

This risk reduction mindset is evidenced by the fact that the Dow Jones Industrial Average, S&P 500 and Nasdaq each dropped more than one percent following the release of the report.

Additionally, light sweet crude (WTI) oil futures for August delivery on the Nymex are down $2.79 to $95.88 per barrel.

But, more specifically, the poor jobs report puts pressure on the US Fed to at least consider pumping more liquidity into the system via a third round of quantitative easing (QE3) or some other form of monetary loosening, Smith said.

As for the other precious metals, Comex silver for September delivery was down 6.9 cents at $36.475 per ounce. Trade has ranged from $36.010 to $36.895.

Platinum futures for October delivery on the Nymex were down $4.10 at $1,738.90 per ounce, while the September palladium contract was off $11.05 at $775.50.

Forex: EUR/USD drops 2% this week

The Euro erased all previous week's gains against the Greenback and is closing Friday below 1.4300 as euro zone woes continue to put pressure on the hegemonic currency. On Tuesday, Moody's downgraded Portugal credit rating, triggering a sell-off in the Euro crosses.

Despite the ECB raised interest rates by 25bps on Thursday and Trichet sounded pretty hawkish, the shared currency couldn't sustain momentum as risk aversion intensified on Friday on the back of weaker-than-expected US employment data.

Earlier, EUR/USD set a 1-week low at 1.4204 and despite a recovery attempt above 1.4300, it fell back to the 1.4230/70 area where it has spent the last hours. The pair is currently at 1.4240 on track to record a 1.97% loss this week.

Forex Flash: Brazilian Real Gains Not Over Yet – Wells Fargo

The Real, the currency of Brazil, reached a 12-year high versus the Dollar in July. “The combination of a strong economy and high nominal and real interest rates continues to attract significant foreign capital inflows, putting upwards pressure on the Brazilian real,” wrote Vassili Serebriakov, Currency Strategist at Wells Fargo Bank. Analysts at the bank point out that they see more scope for further gains in 2011 “as the US Federal Reserve maintains its very accommodative policy stance.” Domestic fundamental are sufficiently supportive. The Real should see a downward correction in 2012, when Fed’s policy changes.

They project the USD/BRL at 1.5300; 1.5000; 1.5200; 1.5400; 1.5700 and 1.6000 in 3, 6, 9, 12, 15 and 18 months respectively.

Forex: GBP/USD resists above 1.6000

GBP/USD couldn't sustain upside momentum and after peaking at 1.6077 on the back of the NFP figures, it weakened and fell back to the 1.6000 area. However, the correction was limited by the 1.6000 psychological level and Cable managed to bounce back to the 1.6040 area afterward. At time of writing, GBP/USD is trading at 1.6020, 0.33% above its opening price.

On weekly basis however, despite the Pound managed to trim part of the previous losses, it is on track to close the week negative against the Greenback as the British currency remains pressured by the BoE's dovish monetary stance.

US stocks advance on strong jobs data

US stocks advanced on Thursday after the ADP employment report showed private employment in the US increased more than expected in June, lifting expectations of a solid NFP tomorrow.

The Dow Jones industrial average gains 92 points, or 0.73% at 12,716. The Standard & Poor's 500 Index is up 12 points or 0.90% at 1,351. The Nasdaq Composite Index advances 33 points or 1.17% to 2,867.

The ECB also improved investor sentiment as Trichet said the bank had decided to suspend rating requirement for Portugal's debt that can be used by banks as collateral, following Moody's decision to cut country's credit rating to junk earlier this week.

In the FX market, the US Dollar advanced against the Yen and the Franc but is weaker against the Euro and commodity currencies. Crude oil rose to near $99 a barrel on risk appetite, while gold fell to $1525 an ounce

Forex: USD/CHF finds resistance below 0.8500 and retreats to 0.8420

The Swiss Franc trimmed losses across the board so far during the American session after falling sharply en European hours. The USD/CHF peaked at 0.8495 after the release of US economic data. The pair was unable to reach 0.8500 and retreated more than 50 pips from the highs. At the moment trades at 0.8430/35 after hitting a new American session low at 0.8420.

“Fresh rally spiked to the levels just under 0.8500, signaling possible resumption of recovery from 0.8273/0.8304, interrupted by 0.8524/0.8370 correction. To confirm this, regain of 0.8524 is required, with clearance of key short-term barrier at 0.8550 to suggest possible basing for fresh recovery phase,” wrote Slobodan Drvenica, analyst at Windsor Brokers Ltd on its daily analysis. Drvenica warns that a rejection under 0.8500/24, “risks lower top and fresh weakness, with break below 0.8360 to bring near-term bears back in play.”

US GOLD - Comex gold shrugs off ECB interest rate hike; market awaits news on US budget, eurozone debt

New York 07/07/2011 - Gold in New York moved marginally lower Thursday following decisions by Europe and China to raise interest rates; however, the downside is seen as limited as the market has already shifted its focus back to the lingering debt problems in the US and eurozone.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange were recently down $1.70, or 0.1 percent, at $1,527.50 per pound. Trade has ranged from $1,522.20 to $1,534.90.
Earlier today, the European Central Bank, as widely expected, raised its key interest rate Thursday to 1.5 percent, up from the 1.25 percent rate set in April.

Additionally, China's central bank overnight upped its benchmark deposit and lending rates by 25 basis points - its third rate increase this year.

“The ECB hike has already been fully priced in and additional Chinese tightening surprises no one. That's why gold is just treading water this morning,” a US-based find manager said.

Traditionally, interest rate hikes would lead to softer gold prices as the yellow-metal is often bought as an hedge against inflation.

“[But] the market right now is more interested in the [US] budget talks and Europe's spiralling debt problems,” he added.

Earlier this week, Moody's Investors Service lowered Portuguese debt to junk status, which increased demand for safe-haven assets, like gold.

“The negative effect of a hike in Chinese interest rates proved to be short-lived. It was not long before the focus returned to concerns over the eurozone debt crisis,” Standard Bank said in a note.

In the US, Republicans and Democrats continue to bicker over the Federal budget and have yet to agree to raise the country's $14.3 trillion debt ceiling. The country's debt limit will be exceeded by August 2, unless Congress takes action.

“The US debt-ceiling debate is shaking the markets' confidence. President Obama is struggling to reach a compromise with Republicans who insist on spending cuts before they will agree to an increase in the US government’s borrowing limit,” Standard Bank added.

In other US data, ADP reported that private sector payrolls rose by 157,000 last month, which easily beat estimates of a 67,000 gain and May's tally of 38,000.

In gold specific news, Goldman Sachs raised its three-month gold forecast to $1,565 from $1,480; its six-month forecast to $1,635 from $1,565; and its 12-month forecast to $1,730 from $1,690.

“We expect gold prices to continue to climb in 2011 given the current low level of US real interest rates,” Goldman said. “However, with our US economics team forecasting strong US economic growth into 2012, we expect US real interest rates to begin to rise next year, likely causing gold prices to peak in 2012.”

Elsewhere, Comex silver for September delivery was up 44.9 cents at $36.365 per ounce. Trade has ranged from $35.70 to $36.50.

Forex: GBP/USD holds soft tone under 1.6000

The British Pound has edged somewhat lower against the Dollar on Thursday, giving up modest intraday gains, despite the risk-on mood surrounding the market.

The Sterling is falling for third straight day against the Greenback, currently trading at the 1.5960 region, recording a 0.27% loss on Thursday. GBP/USD remains under pressure as investors speculate the BoE might consider more monetary stimulus to support the nation's economy following its decision to keep monetary policy unchanged today.

From a technical perspective, Slobodan Drvenica, analyst at Windsor Brokers Ltd, said, "Negative near-term picture favors further losses, with key support at 1.5910 in focus, as pair continues to channel lower from 1.6745 and broke below 200 day MA, on a daily chart. On the upside, immediate barrier lies at 1.6000 zone, while 20 day MA, currently at 1.6055, is expected to cap corrective attempt. Regain of key short-term barrier at 1.6139 would improve and signal fresh strength". 

Forex: EUR/USD jumps to 1.4370

The Euro surged across the board supported by the ECB, Trichet words and risk appetite. The EUR/USD bottomed at 1.4220 but rebounded sharply and rose more than 150 pips from daily lows, reaching a fresh high at 1.4373. At the moment the European currency is retreating, trading back below 1.4350.

“A rally in the EUR/USD incurred shortly after, Mr. Trichet reinforced his position on possible ‘selected default’ of Greece. With credit agencies still being concerned about a possible default, any signs of a negative rollover of debt for bondholders could structure a negative snowball effect. In turn, ECB is planning to off-set the problem before it occurs,” said Andrei Tratseuski from Forex Club.

The Dollar lost momentum in the market as stocks extended gains in US and in Europe amid risk appetite triggered by the ECB and better-than-expected economic data in the US.

BoE decides to leave monetary policy unchanged

As was highly expected, the Bank of England left the key interest rate unchanged at 0.5%, it´s level since early 2009. What´s more, the central bank left its asset purchase facility, or as it is commonly known as quantitative easing, untouched at £200B.

BoE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

BoE Interest Rate Decision

0.5%Actual

0.5%Consensus

0.5%Previous

Forex: Pound, steady after BoE

The Pound has remained broadly unaffected by BoE's monetary policy decision, with GBP/USD steady at 1.5980 half way through the days trading range 1.5940/6020. EUR/GBP trades at 0.8940, above important support at 0.8925, and the GBP/JPY at 129.45 within the consolidation range between 129.00 support and 129.65 resistance.

The BoE has decided to leave its Bank Rate unchanged at 0.5% all-time low, as widely expected as well as to maintain the target of its bonds purchasing programme at GBP200 billion. As usual, the Bank has not given any further details, the minutes of the meeting will be released on July the 20th.