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UFXBank Forex Outlook: Building Permits Halt Dollar's Rally

Written by UFXBank Research Team
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USD Dollar (USD) – The dollar weakened slightly against most of the major currencies as Building Permits came out worse than expected at 0.55M vs. 0.57M that was expected. Housing Starts came out negative at 0.52M vs. 0.59M, as well as the CPI, which was also below expections at 0.0% vs. 0.1%. The Stock Markets in the U.S. closed with the Dow Jones weakening by -0.14% and the NASDAQ increasing by +0.25%. Crude Oil continued to weaken and reached a four week low closing at $80.44 a barrel. Gold (XAU) continued it’s down momentum and fell by -0.1% and closed at $1336.90 an ounce. Today, Unemployment Claims are expected at 442K vs. 435K prior. The Philly Fed Manufacturing Index is expected at 5.1 vs. 1.0 prior. Natural Gas Storage is also to be released and is expected at 11B vs. 19B.

Euro (EUR) – The Euro strengthened slightly against the dollar as economic data from the US favored the Euro.  No firm decision regarding Ireland’s debt seemed to cap the EUR/USD around the 1.3500 levels. The pair is above its moving average on the hourly chart. As long as the pair remains above 1.3525, we may see the beginning of a positive momentum for the pair. Overall, EUR/USD traded with a low of 1.3460 and with a high of 1.3565. Data regarding the Current Account is expected to be released at -2.2B vs. -7.5B, and later on in the day, ECB president Trichet is expected to speak.

EUR/USD – Last: 1.3584

Resistance

1.3545

1.3508

1.3460

Support

1.3590

1.3641

1.3687

British Pound (GBP) – The Pound regained lost ground against the dollar in Forex trading and spiked to around 1.5950 only to be knocked to lower levels. The Claimant Count Change came out much less than expected at -3.7K vs. 6.00K prior and prevented further gains. The pair barely managed to hold above 1.5900 levels and traded within a small range of less than 100 pips. Despite the minor recovery as long as the GBP/USD remain below its 1.5950 trend line, the trend is deemed bearish. Overall, GBP/USD traded with a low of 1.5854 and with a high of 1.5948. Today, Public Sector Net Borrowing is expected at 9.0B vs. 15.6B, retail sales are also expected at 0.5% vs. -0.2% prior, later on in the day MPC Member Posen is expected to speak.

GBP/USD - Last:  1.5908

Resistance

1.5920

1.5950


Support

1.5890

1.5870

1.5838

Japanese Yen (JPY) – The yen weekend against the dollar as economic data from the US came out negative, and  put an end to the pairs  6 day positive rally. Although the pair dipped strongly on the daily chart, the pair’s ability to break levels above 83.00 shows the strength of the rally and buying in the dips may be a preferred strategy. As long as the USD/JPY remains above the 82.70 level, the momentum remains positive for the pair. Overall, USD/JPY traded with a low of 83.03 and with a high of 83.55. No economic data is expected today.

USD/JPY-Last: 83.30

Resistance

83.41

83.55

Support

83.10

82.85

82.70

Canadian dollar (CAD) – The Canadian dollar continued to weaken against the dollar as commodities continue to weaken, specifically crude oil which reached a four week low, making currencies linked to commodities and economic growth seem less attractive. The pair is still strongly above its moving average on the four hour chart and continues to be in a positive trend as long as the USD/CAD remains above the 1.0180 levels. Overall, USD/CAD traded with a low of 1.0181 and with a high of 1.0261. Today, Foreign Securities Purchases is to be released and is expected at 81.6B vs. 11.09 prior. Wholesale sales m/m are expected at 0.1% vs. 1.2%.

USD/CAD - Last: 1.0199

Resistance

1.0234

1.0254

Support

1.0180

1.0129

1.0070