Forex Market Review 20/08/2008

USD on the retreat... short-term

It looks like we will have a correction here. Keep a bearish bias for the short term, unless the USD makes new highs.

Overnight News Bullets

GE PPI MoM/YoY (Jul) out at 2.0%/8.9% vs. 0.7%/7.5% expected.
SW Total Number of Employees YoY (2Q) out at 2.0% as prior.
SW Industry Capacity (2Q) out at 90.4% vs. 91.4% prior.
GE ZEW Econ. Sentiment (Aug) out at -55.5 vs. -62.0 expected.
GE ZEW Curr. Situation (Aug) out at -9.2 vs. 10.0 expected.
EC ZEW Econ. Sentiment (Aug) out at -55.7% vs. -65.0 expected.
CA Wholesale Sales MoM (Jun) out at 2.0% vs. 0.7% expected.
US PPI MoM/YoY (Jul) out at 1.2%/9.8% vs. 0.6%/9.3% expected.
US PPI Ex Food & Energy (Jul) out at 0.7%/3.5% vs. 0.2%/3.2% expected.
US Housing Starts (Jul) out at 965K vs. 960K expected.
US Building Permits (Jul) out at 937K vs. 970K expected.
US ABC Consumer out at -49 vs. -50 expected.
JN All Industry Activity Index MoM (Jun) out at -0.9% as expected.
AU Westpac Leading Index MoM (Jun) out at 0.1% vs. 0.0% prior.
AU DEWR Skilled Vacancies MoM (Aug) out at -1.7% vs. -0.5% 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
07:00	JN	Convenience Store Sales YoY (Jul)	4.2% (prior)
07:00	SZ	Money Supply M3 YoY (Jul)	1.5% (prior)
08:30	UK	BoE Minutes
08:30	UK	Public Finances (Jul)	-£10.B
08:30	UK	Public Sector Net Borrowing (Jul)	-£4.3B
09:00	EC	E-Z Construction Output MoM/YoY (Jul P)	0.5%/10.7%
11:00	US	MBA Mortgage Applications	-1.5% (prior)
12:30	CA	Leading Indicators MoM (Jul)	0.1%
12:30	CA	Retail Sales MoM (Jun)	0.5%
12:30	CA	Retail Sales Less Autos MoM (Jun)	0.6%
14:30	US	DOE/API Energy Storage figs. Crude Oil:	1000K
22:45	NZ	Visitor Arrivals (Jul)	-1.4% (prior)

This and Next Week’s Highlights:

Date, Region, Release

Aug 21 SZ Trade Balance, PPI, ZEW Survey
Aug 21 NO GDP
Aug 21 EC PMI Indices
Aug 21 UK Retail Sales, Total Business Investment
Aug 21 CA CPI, Bank of Canada CPI
Aug 21 US Jobless Claims, Philly Fed, Leading Indicators, EIA Nat. Gas Storage
Aug 21 JN BoJ Minutes for July
Aug 22 EC Current Account, Industrial New Orders
Aug 22 UK GDP, Private Consumption, Government Spending
Aug 22 US Fed’s Bernanke Speaks on Financial Stability at Jackson Hole
Aug 25 GE Import Prices
Aug 25 SW Trade Balance
Aug 25 US Existing Home Sales

What's going on?

USD went slightly lower yesterday and is likely to correct further today
The Bank of England’s minutes from the last round of interest rate decision, scheduled for release today at 8:30 GMT, will be keenly observed for hints of future policy decisions. The speculation is currently pointing towards a language of easing inflationary pressures and as such fueling expectations of a future rate cuts.

GBPUSD to break higher...

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

FX Trading Strategies

Pair	Supp.	Resis.	Comments
GBPUSD	1.8510	1.8785	We think it is very likely that dollar strength will take a breather, if for no other reason that the technical set up is there for antother relief rally after finally seeing some higher lows on our hourly charts. We placed an order to buy 1.8683 bis, stop 1.8660, targeting 1.8770.

Risk warning
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