Monday, August 15, 2011

Market Afternoon Overview - August 15, 2011

Previous session overview
The dollar weakened modestly on a much weaker-than-expected Empire State Mfg. Index. EURUSD ticked to an intraday high, at USD1.436 from USD1.4250 late Friday.

The Dollar weakened across the board after the release of US economic data and following ECB data about last week bond purchases. The USDCHF retreated further from CHF0.7995, 2-week high, and reached a fresh session low at CHF0.7815 after breaking below CHF0.7860.

Gold was near flat as investors watch for deterioration in equity markets and Europe's sovereign debt problems. The most actively traded contract, for December delivery, was recently 20 cents higher at USD1742.80 a troy ounce.

The Canadian dollar was little changed early Monday, as concerns over the U.S. economic outlook outweighed the impact of investors warming up to riskier assets. 

Gains made by the Canadian currency were negated by soggy New York manufacturing activity, which contracted for the third month in row in August, disappointing investors looking for signs of a rebound in economic activity. 

The U.S. dollar was at CAD0.9879 from CAD0.9883 late Friday.
Market expectation
The Swiss National Bank is expected to announce Wednesday further measures to weaken the franc, which, if successful, are likely to dim the safe-haven appeal of CHF and put more pressure on the yen, according to analysts.

For EURUSD Resistance levels, above here, lie at USD1.4400 (Aug 9/10 high) and USD1.4435/50 (4-month trend line resistance/Aug 1 high) and USD1.4535 (Jul 27 low). On the downside, support levels are on the downside, support levels lie at USD1.4260 (session low), and below here, USD1.4200/10 (intra-day level) and USD1.4150 (Aug 12 low).

On the longer-term, the pair is trading on a wedge formation, between support at the 200-day MA and downtrend resistance line from early May highs at USD1.4930, currently around USD1.4440.

The downtrend at USD1.4447 in EURUSD is rapidly coming into view as dual hopes for a CHF peg and an agreement to issue Euro-area bonds lift risk appetites, dealers said.