Daily Update 19/08/2008

Consolidation In The Majors

Overnight News Bullets

FR Bank of France Business Sentiment (Jul) out at 92 vs. 94 expected.
EC Euro-Zone Trade Balance (Jun) out at -3.0B vs. 0.5B expected.
CA Int’l Securities Transactions (Jun) out at C£7.247 vs. C$5.000 expected.
US NAHB Housing Market Index (Aug) out at 16 as expected (all time low).
NZ PPI Inputs QoQ (2Q) out at 5.6% vs. 2.3% prior.
NZ PPI Outputs QoQ (2Q) out at 3.5% vs. 1.8% prior.
AU Preliminary BoP Imports MoM sa (Jul) out at 5.0% vs. -2.0% prior.
JN BoJ Target Rate out at 0.50% (unchanged) as expected.
GE Producer Prices MoM/YoY (Jul) out at 2.0%/8.9% vs. 0.7%/7.5% expected.

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
06:00	GE	Producer Prices MoM/YoY (Jul)	0.7%/7.5%
07:30	SW	Total Number of Employees YoY (2Q)	2.0% (prior)
07:30	SW	Industry Capacity (2Q)	91.4% (prior)
09:00	GE	ZEW Survey (Econ. Sentiment) (Aug)	-62.0
09:00	GE	ZEW Survey (Current Situation) (Aug)	10.0
09:00	EC	ZEW Survey (Econ. Sentiment) (Aug)	-65.0
12:30	CA	Wholesale Sales MoM (Jun)	0.7%
12:30	US	Producer Price Index MoM/YoY (Jul)	0.6%/9.3%
12:30	US	PPI Ex Food & Energy MoM/YoY (Jul)	0.2%/3.2%
12:30	US	Housing Starts (Jul)	960K
12:30	US	Building Permits (Jul)	970K
21:00	US	ABC Consumer Confidence (Aug 17)	-50

What's going on?

FX: Consolidation in the majors. USD looks overbought, only buy on new highs (break-outs).
The king of carry is shifting from EURJPY to USDJPY and we believe that the correlation seen over the past 4 weeks will continue to favor higher levels in USDJPY on the back of strong bidding for the dollar and continuing cross selling in EUR crosses.

FX

EURCHF to break lower

FX Trading Strategies

Pair	Supp.	Resis.	Comments
EURCHF	1.60	1.6180	The pair sustained below the 100 day SMA, which has capped the down- side since April. With risk aversion highly present and EURCHF still not responding to recent EUR-weakness, downside is attractive. We sell at 1.6095 offer, stop bid at 1.6116, targeting 1.6010.

Risk warning
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