Daily Forex Review 18/08/2008

USD to revert lower for now?

USDCAD looking prone for a reversal (lower).

Overnight News Bullets

SW Activity Index Level (Jun) out at 123.4 vs. 123.6 prior.
NO Trade Balance NOK (Jul) out at 37.4B vs. 38.5B expected.
CA Manufacturing Shipments MoM (Jun) out at 2.1% vs. 1.0% expected.
CA New Motor Vehicles Sales MoM (Jun) out at -1.0% vs. 0.0% expected.
US Empire Manufacturing (Aug) out at 2.8 vs. -4.0 expected.
US Net Long-Ter TIC Flows (Jun) out at $53.4B vs. $60.0B expected.
US Total Net TIC Flows (Jun) out at $51.1B vs. -$2.5B prior.
US Industrial Production (Jul) out at 0.2% vs. 0.0% expected.
US Capacity Utilization (Jul) out at 79.9% vs. 79.8% expected.
US Univ. Of Michigan Confidence (Aug P) out at 61.7 vs. 62.0 expected.
UK Rightmove House Prices MoM/YoY (Aug) out at -2.3%/-4.8% vs. -1.8%/-2.0% prior.
JN Tokyo Dept. Store Sales YoY (Jul) out at -0.9% vs. -7.4% prior.
JN Nationwide Dept. Store Sales YoY (Jul) out at -2.5% vs. -7.6% 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
07:15	SZ	Retail Sales YoY (Jun)	3.3%
09:00	EC	Euro-Zone Trade Balance Jun	1.2B
12:30	CA	Int’l Securities Transactions (Jun)	C$5.000
17:00	US	NAHB Housing Market Index (Aug)	16
22:45	NZ	PPI Inputs QoQ (2Q)	2.3% (prior)
22:45	NZ	PPI Outputs QoQ (2Q)	1.8% (prior)

This and Next Week’s Highlights:

Date	Region	Release
Aug 19	JN	BOJ Target Rate
Aug 19	GE	Import Price Index, Producer Prices, ZEW Survey
Aug 19	US	PPI, Housing Starts, Building Permits
Aug 19	CA	Wholesale Sales
Aug 20	JN	BoJ Monthly Report, Convenience Store Sales
Aug 20	UK	BoE Minutes
Aug 20	CA	Leading Indicators, Retail Sales
Aug	US	DOE/API Inventories
Aug	EC	Construction Output

What's going on?

Discussions in the US increasing about the role of the FED in the current credit crisis. Bernanke has to define which financial institutions it’s safe to let fail and which companies are important to protect.
U.K. house prices in August are falling 2.3% lead by a significant drop of the London house prices (-5.3%). The BOE highlighted the problem last week by saying that the housing market faces a significant adjustment as banks ration loans for homebuyers.
The USD TWI finally seeing a little weakness over the weekend. EUR and AUD doing best.

USDCAD to revert lower...

EUR	USD	JPY	GBP	CHF	AUD	CAD	NZD	NOK	SEK	PLN
	+	-		+

FX Trading Strategies

Pair	Supp.	Resis.	Comments
USDCAD	1.0450	1.0675	This pair is running out of steam and we think that further correction is due. We look to sell in below 1.0560, stop at 1.0585, first target will be 1.0500, second target 1.0455.

Risk warning
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