| Currency <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> | Daily Percentage Change (%) | Intraday High | Intraday Low | Day's Range (pips) |
| AUDUSD | +1.2% | 0.7624 | 0.7524 | 100 |
| USDCHF | -1.0% | 1.2544 | 1.2400 | 144 |
EURUSD | +1.0% | 1.2719 | 1.2557 | 162 |
AUDUSD<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
The Australian dollar rose on the day to top our percentage gainers as speculation increased of a rate hike as far away as December of this year. Already pricing in another 25 basis point rate hike for next weeks meeting, traders are now looking for continued tightening in the Pacific region following the inflationary report in the overnight. According to the Australian Bureau of Statistics, consumer prices rose 1.6 percent from the previous quarter. The annualized figure, as a result, jumped higher above the benchmark 2-3 percent target set by the Reserve Bank of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Australia standing at a 4 percent pace. Along with a continually tight labor market and rebound in the housing market, the higher rate of inflation is spurring Aussie strength as the economy continues to purport a monetary tightening bias. Comparatively, the US dollar seems weighted down by slower growth expectations to be shown through Fridays gross domestic product figures. However, some greenback support may be in the works ahead of tomorrows more optimistic durable goods orders report. Expected to climb by a whopping two percent, the figure is expected to reverse the dip seen in the previous month.
USDCHF
Swissie bidding reversed dollar gains over the last two sessions, sparked by a not-so-bad IFO report. The positive report triggered some stop orders in buying momentum, taking out the 1.2500, 1.2485 and 1.2450 levels before making a push to the 1.2400 figure on lower expectations of the Feds beige book report. According to the afternoon report, there were numerous individual reports pointing to evidence that the pace of growth has slowed. With a modest rise in wage costs, the report lends to a heavy bias that there will not be an eighteenth straight increase in the benchmark lending rates by the Federal Reserve. The notion is additionally likely to purport some week ending dollar weakness as the gross domestic product figure is still being eyed at 3.5 percent rather than the above 5 percent rate previously witnessed in the first quarter. The question now remains as to how slow the economy will pullback. As a result, traders can expect some increased volatility should the figure be on the outsides of the consensus expectation.
Bids are slow to emerge at the current 1.2400 figure with plenty of sellers on a pullback at 1.2435 with additional interest at 1.2450 and 1.2475 above. At this point, consolidation looks key as we enter the Asian session with a steadied pace until tomorrows New York open and monthly durable goods orders report.
A relatively in line IFO report gave the Euro some strength on the session as it keeps pace with the notion of higher benchmark rates in next months decision. Already pricing in another 25 basis point rate hike in the Euro zone, traders continue to see evidence to support the central banks assessment. Comparatively, on the flip side, the market is also seeing plenty of evidence for an interim halt in benchmark rates as the economy continues to cool down on most levels. The combination kept the Euro major bid throughout the session, making the largest point gaining position of our top three market movers. Stop triggering on the topside at the 1.2620 figure and above at 1.2665 kept momentum supported for a test of the even 1.2700 resistance with the weaker beige book sparking a final push above. Now with the fed funds contract pricing in a 43 percent probability of a rate hike, dollar weakness can be expected heading into Fridays reports, excluding some speculation higher on tomorrows durable goods expected increase.
Plenty of selling pressure can be expected at the test of the top side resistance at 1.2700. Technically speaking this coincides with a potential double top, leading to a mild decline, retracement rather, in the price action heading into the Asian session. However, with stops surfacing lightly, the sustained bid tone looks to prop the major for a move higher to 1.2750 before stalling.
