Friday, July 8, 2011

Market Morning Review - July 8, 2011

Coming up Today (All Times GMT)
Thursday, the EURUSD fell to $1.4250 after the release of better-than-expected ADP payroll data. According to the report, US private sector employment advanced 157,000 in June - two times more than economists’ forecasts.

The news boosted market confidence and build a positive tone for the greenback. In the afternoon session, the euro recovered towards $1.4350, after the ECB confirmed a 0.25% increase in its benchmark rate.

Moreover, the central bank suspended its minimum credit rating threshold applicable to Portuguese debt instrument that it holds as financing collateral. This decision was taken after Moody’s downgraded Portugal’s sovereign rating below investment grade.

Today, all eyes will turn to the US nonfarm payrolls which will be released at 12:30 GMT. If the data fails to confirm the high expectations set by ADP figures, the EURUSD could test the $1.4400 resistance and the USDJPY could break below the 81.00 support. 

EURUSD Support/Resistance: 1.4250/1.4400
EURGBP Support/Resistance: 0.8940/0.9020

Despite a rebound in manufacturing output in May - which bode well after April’s contraction, the pound remained constrained all day in a bearish trend. Following strong ADP data and ECB’s rate hike, the cable bottomed to $1.5950 and declined to £0.9000 per euro.

The lack of buying interest for the pound may be the result of the recent diminution of inflation worries. Today, at 08:30 GMT, investors will pay attention to the month on month change in producer prices.

If the numbers show another decline due to the recent fall in energy prices, it could comfort the Bank of England in its wait-and -see strategy and bring further downside in the pound towards $1.5910.

Conversely, any break above the $1.6015 resistance could signal a return in bullish sentiment.

GBPUSD Support/Resistance: 1.5910/ 1.6015
GBPJPY Support/Resistance: 129.20 / 130.00

Published: 8 July, 2011
written by: Analysis Team