Forex Analysis & Today's Strategy USDJPY 30 July 08

USD makes a decisive move through first key resistance levels on banking stock relief and oil drop. More USD strength to come despite weak US employment report likely on the way?
AUD in trouble and may stay that way with more key Australian data in tonight's Asian session…
Overnight News Bullets § GE CPI MoM/YoY (Jun) out at 0.6%/3.3% vs. 0.5%/3.2% expected. § SW Retail Sales MoM/YoY (Jun) out at 1.8%/3.3% vs. 0.0%/0.6% expected. § SZ UBS Consumption Indicator (Jun) out at 2.246 vs. 1.910 expected. § UK Net Consumer Credit (Jun) out at 0.9B vs. 1.0B expected. § UK Net Lending Sec. On Dwelling (Jun) out at 3.1B vs. 3.7B expected. § US S&P/Case-Shiller Home Price Index (May) out at 168.54 vs. 169.85 prior. § US S&P/CS Comp-20 YoY (May) out at -15.78% vs. -16% expected. § US Consumer Confidence (Jul) out at 51.9 vs. 50.1 expected. § JN Industrial Production MoM/YoY (Jun P) out at -2.0%/0.2% vs. -1.7%/0.6% expected. § AU Building Approvals MoM/YoY (Jun) out at -0.7%/-7.8% vs. 1.0%/-4.1% expected. § JN Small Business Confidence (Jul) out at 39.9 vs. 40.7 prior. O/N Data Heat map: EU US JP UK SZ AU CA NZ NO SE FR + + - + - + Calendar Today's Highlights: Time (GMT) Region Release Consensus 08:00 E-Z Bloomberg Retail PMI’s (Jul) 09:00 E-Z Business Climate Indicator (Jul) -0.02 09:00 E-Z Consumer Confidence (Jul) -18 09:00 E-Z Economic Confidence (Jul) 93 09:00 E-Z Industrial Confidence (Jul) -7 09:00 E-Z Services Confidence (Jul) 8 09:30 SZ KOF Swiss Leading Indicator (Jul) 0.95 12:15 US ADP Employment Change (Jul) -60K 12:30 CA Industrial Product Price Index MoM (Jun) 1.0% 12:30 CA Raw Materials Price Index MoM (Jun) 3.5% 14:35 US DOE (and API) Crude Oil Inventories. DOE -1300K 23:01 UK GfK Consumer Confidence (Jul) -37 23:15 JN Nomura/JMMA Manufacturing (Jul) 46.5 (prior) This and Next Week’s Highlights: Date Region Release Jul 31 AU Trade Balance, Retail Sales, Private Sector Credit Jul 31 JN Labor Cash Earnings, Housing Starts, Annualized Housing starts Jul 31 NZ NBNZ Business Confidence, Housing Starts, Construction Orders Jul 31 SZ CPI Jul 31 UK Nat’wide House Prices Jul 31 SE Consumer Confidence, Manufacturing Confidence Jul 31 GE Unemployment Change, Unemployment Rate Jul 31 NO Unemployment Rate, Credit Indicator Growth Jul 31 E-Z Euro-Zone CPI, Euro-Zone Unemployment Rate Jul 31 CA GDP Jul 31 US Personal Consumption, GDP Price Index, Core PCE, Employment Cost Index, Initial Jobless Claims, Continuing Claims, Chicago Purchasing Manager index, NAPM-Milwaukee, EIA Natural Gas Storage Change, Paulson Speaks on Markets Aug 1 GE Retail Sales Aug 1 SW GDP Aug 1 NO Unemployment Rate Aug 1 UK PMI Manufacturing Aug 1 E-Z PMI Manufacturing Aug 1 US Change in Nonfarm Payrolls, Unemployment Rate, Change in Manufact. Payrolls, Average Hourly Earnings, ISM Manufacturing, ISM Prices Paid, Construction Spending, Baker Hughes U.S. Rig Count. FX USDJPY to break key-resistance? EUR USD JPY GBP CHF AUD CAD NZD NOK SEK PLN - + - - + - + FX Trading Strategies Pair Supp. Resis. Comments USDJPY 106.86 108.60 The pair has managed to stay above the 200 day SMA for the last couple of days and with the bullish risk sentiment, more upside is prefered. We buy ½ a position at 108.17 bid, stop offer at 107.98, targeting 108.60+
MAJOR HEADLINES – PREVIOUS SESSION § US Weekly ABC Consumer Confidence fell to -47 from -41 § Japan Jun. Industrial Production fell -2.0% MoM vs. -1.7% expected § Australia Jun. Building Approvals fell -7.8% YoY vs. -4.1% expected § Japan Jul. Small Business Confidence fell to 39.9 vs. 40.7 in Jun. THEMES TO WATCH – UPCOMING SESSION Key Risk Events (All times in GMT) § Germany and EuroZone Jul. Retail PMIs (0800) § EuroZone Jul. Confidence Indicators (0900) § Switzerland Jul. KOF Swiss Leading Indicator (0930) § US Jul. ADP Employment Change (1215) § Canada Jun. Industrial Product Price and Raw Materials Price Index (1230) § US Weekly Crude Oil and Product Inventories (1535) § UK Jul. GfK Consumer Confidence Survey (2301) § Japan Jul. Manufacturing PMI (2315) § Australia Jun. Trade Balance (0130) § Australia Jun. Retail Sales (0130) § Japan Jun. Labor Cash Earnings (0130) § New Zealand Jul. NBNZ Business Confidence (0300) § Japan Jun. Housing Starts (0500) Market Comments The USD finally made its move yesterday - a follow up move that came just in the neck of time as final short-term support was nearing for the greenback. The trigger was a bit hard to discern and perhaps seems more like a delayed reaction to the drumbeat of USD supportive developments lately that simply saw the dam breaking yesterday or the straw breaking the camels back or whatever metaphor you might choose... Certainly, the slightly less discouraging than expected House Price Index and slightly less horrible than expected Consumer Confidence data were insufficient for the short term to cause the kind of move we saw yesterday. Perhaps most of the encouragement for the USD came from Merrill Lynch stock, as the companies dire-looking writedowns and capital raising efforts were given a positive "cleaning house one final time" spin by the market and the shares rallied sharply on the day (close to 20% from the lows!). It appears that renewed banking sector woes have been the key development holding the USD back, so if the fear level continues to fade, this will continue to put wind at the USD's back. The JPY has made a bit of a comeback in the non-USD crosses as oil prices fell another couple of percent yesterday and as fixed income rallied steeply yesterday. These developments outweighed the big rally in equities in the North American session yesterday (cynics may say that this was due to the SEC extending its special no-naked-short-selling rule until August 12, though it did say that it did not plan on extending the rule after that date). We repeat our broken record chant: the market doesn't appreciate the potential for JPY strengthening... The UK saw absolutely atrocious retail sector data yesterday in the form of the worst CBI Distributive Trades Survey results in the 25-year history of the survey. At first GBP fell across the board, even against EUR and CHF, but later in the day, as the USD rally made its presence felt, the GBP found its stiff upper lip and remembered its correlation with the USD and took back the lost and then some against the EUR. Still, it looks like GBPUSD itself could continue to suffer if we see follow through in the USD strength, with only the pesky 55-day moving average barring the way toward NZDUSD made a follow-up move through the huge neckline-like support area just below 0.7400 that puts it on a path to an evenly more southerly destination. This is one of the most obvious fundamental stories going out there, with the economy going into a nosedive, the banking sector beginning to seize up due to over-exuberant lending when times were good (sound familiar?) and now the RBNZ governor out overnight once again cheering the market's prediction (a very weak NZD is just the medicine that will help ease the country's pain in the coming years) of further rate cuts down the road for the highest yielder among the G-10. NZDUSD is in a real bear market now, one that could see it back down toward 0.6000 eventually, and perhaps surprisingly rapidly as well. Let's now see how the USD navigates what will likely be a very poor employment report this Friday - this report may matter far less than the development in oil prices and banking stocks, but could cause "volatility bumps" in the road. Finexo Ltd. Mörsenbroicher Weg 19140470,Düsseldorf 40470, GERMANY | accounts@finexo.com | Phone: + 49 211 9954 7956
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