Wednesday, July 27, 2011

Second bailout for Greece hurt the Euro

Previous session overview
Durable-goods orders fell for the second time in three months during June, indicating the sluggish economy is weighing on the nation's manufacturing sector. Manufacturers' orders for durables decreased 2.1% to a seasonally adjusted USD191.98 billion, the Commerce Department said Wednesday. 

Economists had forecast orders for goods designed to last at least three years would rise by 0.4% during June. 

The euro has fallen to session lows against the dollar, yen and Swiss franc as a sell-off that began overnight accelerates heading into the London close. 

Renewed concerns about the implementation of a second bailout for Greece and an overhaul of the common currency zone's bailout fund hurt the euro, say dealers. 

The euro is down to USD1.4421, a drop of more than 0.5% on the day. It hit a session low of JPY112.28 against the yen and CHF1.1552 against the Swiss franc.

The Australian dollar a currency backed by a resource-heavy economy and therefore tied to swings in global economic activity printed a new all-time high against the dollar Wednesday, trading as high as USD1.1083, even as some capital sought out lower-risk investments.

The Canadian dollar was little changed Wednesday, reversing some of its overnight gains, on soft U.S. data with investors watching for signs of an end to the debt ceiling impasse in the U.S. The U.S. dollar was at CAD0.9437, from CAD0.9442 late Tuesday. 

The Canadian dollar ticked lower after data showed durable-goods orders in U.S., Canada's biggest trading partner, fell for the second time in three months during June.
Market expectation
For EURJPY support is listed at JPY112.25 (Daily Low Jul 26), JPY112.11 (Tenkan-Sen Line) and JPY112.03 (Daily Low Jul 25). Above, resistance is placed at JPY113.23 (Session High Jul 27), JPY113.57 (Daliy High Jul 22) and JPY113.66 (Kijun-Sen Line), report technical analysts.

AUDUSD seems to have found support at the USD 1.1030 zone and it is currently trading around USD1.1040 where it is 0.68% above its opening price and near its new post-float record high struck earlier at 1.1078. Australian Dollar gains were propelled by higher-than-expected CPI figures published during the Asian session, which signal the RBA may need to further tighten monetary policy in the near-term, coupled with a broad-based weak Greenback. Analyst sees the first target to the topside between USD1.1225-USD1.1245, and then halfway between there and the USD1.1295 level, around USD1.1265 for further upside gains in the pair. Such a rally may first be prefaced with a throwback, but  expected any throwback to be a shallow one, said dealers.