Wednesday, August 3, 2011

Market Morning Review - August 4, 2011

Coming up Today (All Times GMT)

USD/JPY

One day after the Swiss National Bank cut its libor rate to halt the rise in the Swiss Franc, the Bank of Japan intervened last night to weaken the yen. This intervention pushed the USDJPY from ¥77.00 to ¥79.00 and revived investors’ interest for Japanese equities. This morning, traders will be following the BoJ press conference for more detail about the intervention. Any plan from the BoJ to add more stimulus in the economy could help the USDJPY advance further towards the ¥80.00 resistance level.

USD/JPY Support/Resistance: 78.50/80.00
EUR/JPY Support/Resistance: 112.00/114.00

EUR/USD

After a series of tense trading sessions marked by sharp fall in financial stocks, ECB officials will try today to reassure investors. With Italy and Spain now affected by the euro debt crisis, the need for a mechanism to cushion excessive volatility in the European debt market has become more and more relevant. In this context, any announcement from the ECB that it intends to buy bonds of weak EU members could remove some distrust and convinced investors to move out of safe-haven assets.

EUR/USD Support/Resistance: 1.4250/1.4360
EUR/GBP Support/Resistance: 0.8700/0.8770

GBP/USD

On Wednesday, a strong activity index in the British service sector pushed the GBPUSD pair above the $1.6400 level. Since the beginning of the month, the pair has been trading within a horizontal channel, with support at $1.6250 and major resistance seen at $1.6460. Today, all eyes will be watching the MPC interest-rate announcement. Any prospect that the BoE might revive its £200 billion asset purchase program to avoid stagnation of the UK economy could bring downside, while a clear break above $1.6460 would signal further advance.

GBP/USD Support/Resistance: 1.6300/1.6460
GBP/JPY Support/Resistance: 128.50 / 130.70

Published: 4 August, 2011
written by: Markets.com Analysis Team