Forex

The Asian markets began with a shock as the Reserve Bank of New Zealand unexpectedly cut interests by 25 basis points to 8%.  Kiwi promptly broke lower from the .7500 area to below .7450 and has had trouble getting back over that level since then.  To add fuel to the fire, the RBNZ, based on the economic and inflation outlook, expects to cut further. While the USD was well bid during the NY session and against NZD, we saw the USD drift lower albeit not at the same pace of selling we [visit website]

Will the US Dollar Continue to Rally? Euro Could Come Under Further Pressure on German IFO Report New Zealand Dollar Hits 6 Month Low After RBNZ Rate Cut For the first time in 5 years, the Reserve Bank of New Zealand cut interest rates by 25bp to 8 percent and signaled that rates will be cut even further. The futures curve is pricing in 5 rate cuts over the next 12 months and this is the first of the five. The New Zealand economy has been struggling and could be headed for a recession. The [visit website]

News and views The offshore session saw the USD continue to regain ground, though more modest in scale. The story was more of the same from Tuesday night, with commodities continuing their recent softness and equities up again, albeit not by much. Oil prices probed above 8 but were firmly rebuffed, slipping to the low 4s in late NY trade, fresh lows since 5 June. The New Zealand dollar was soft throughout, spending most of the session just above 0.7500, in countdown mode ahead of the [visit website]

--------------------------------------------------------- INTRA-DAY AUD/USD OUTLOOK :                        0.9589 Updating time : 24 Jul 2008 04:34 GMT Aussie's weakness in line with the selloff in kiwi suggests recent decline fm 0.9851 is likely to extend to 0.9565/70 but near term loss of momentum shud limit downside to 0.9545, yield a corrective bounce later. Stand aside for now n [visit website]

The US dollar extended gains against the yen and euro as crude oil prices continue to slide. The greenback hit a 1 month high to the Japanese currency and a 2 week high to the euro following recent hawkishness from Treasury officials and Federal Reserve board members. Philadelphia Federal Reserve President Charles Plosser commented that rising inflation continues to be a problem and could force the Fed to raise interest rates even before labor and financial markets fully recover. Equity [visit website]

Current weakness in the Market Vectors Gold Mining ETF (AMEX: GDX) is imbuing the larger chart pattern with a very ominous look -- of a major, multi-month top forming. Furthermore, if the price structure presses beneath critical support between 42.50 and 41.50, the massive top formation will trigger significant sell signals that project a target of 37 to 34 thereafter. [visit website]

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Drop from 1.6040 broke below daily channel bottom off 1.5302 (1.5864 today) and Double Top off 1.5782 (see graph): 1st Support area at 1.5671/ .5662 (current reaction low off 1.6040/ 50% 1.5285 to 1.6040), with next levels at 1.5644/ .5625 (23.6% 1.4365 to 1.6040 broken monthly channel top off 2005 low/ daily envelope bottom daily Bollinger bottom) and 1.5611 (July 07 low): tough on 1st attempts. Resistance at 1.5732/ .5748 (breakdown hourly/ daily envelope top), with next levels at [visit website]

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Please find enclosed today's WEEKLY FOREX FOCUS EUR/USD - USD/JPY GBP/USD - USD/CHF USD/CAD - AUD/USD EUR/JPY - EUR/CHF EUR/GBP - DOLLAR INDEX [visit website]

The dollar surged on Tuesday in part because Treasury Secretary Paulson paid lip service for the currency and the Federal Reserve Bank of Philadelphia president said interest rates should be raised. Alternating up and down days make it difficult to stay long on a position. The medium-term outlook remains bearish for the dollar, but the Fed fear of inflation could translate in a more sustained upmove. Euro/dollar Euro/dollar fell to a 12-day low this my model went short. The medium-term [visit website]

Reserve Bank of New Zealand cuts rates for first time in 5 years Oil price down to USD 124 Japan exports fall for first time in nearly 5 years Today’s main events: SEK Producer Price Index & Unemployment Rate DEM IFO Business Climate GBP Retail Sales USD Initial Jobless Claims & Existing Home Sales American Time Zone: U.S. equities rose for a 2nd day U.S. stocks rose for a second day as oil retreated, lawmakers moved closer to shoring up the mortgage industry and earnings reports from [visit website]

Quote: ‘ Too bad that all the people who know how to run the country are busy driving taxicabs and cutting hair.’ George Burns (1896-1996) The News: All Fed reporting districts said price pressures were elevated or increasing. The Numbers: British Summer Time, with expectations and previous figures in brackets. (22:00) NZ Reserve Bank of New Zealand trims Official Cash Rate by 25 basis points to 8.00%; first cut in 5 years. 00:50 JP June Trade Balance 138B yen versus 362B May; exports drop for [visit website]

Overview The USD again rallied overnight, hitting one-month highs against the Yen, and a 2 week high against the EUR. The dollar was helped in part by the Beige Book survey, showing price pressures increasing, although growth was slowing. The Stagflation genie has been let out of the bottle folks!!! Crude oil continued to slide, now over off its all time highs, made less than 2 weeks ago. Gold and silver followed suit, and could fall further still before the week's out. As [visit website]

Key German data on tap. USD recovery extends a bit - what now? AUDUSD at big support zone now after bout of weakness. MAJOR HEADLINES – PREVIOUS SESSION New Zealand RBNZ cut its Official Cash Rate for the first time in 5 years, by 25 bps, bringing the rate to 8.00% Japan Jun. Adjusted Merchandise Trade Balance out at ¥135.4B vs. ¥342.7B expected THEMES TO WATCH – UPCOMING SESSION Key Risk Events (All times in GMT) Germany Jul. Preliminary PMI Manufacturing and Services (0730) Germany Jul. IFO [visit website]

EUR Comment: Retreating by a bit more than we had allowed for, neither the weakest currency overnight (New Zealand dollar) or the strongest (South Korean won). Hopefully the Ichimoku ‘cloud’ will form an interim base for what we see as an A, B, C-type pullback where C equals A. Strategy: Attempt small longs at 1.5695; stop below 1.5600. Cover longs between 1.5950 and 1.6020. EUR/JPY Comment: Despite inching to a new all-time high (169.97) one-month at-the-money implied volatility has collapsed [visit website]

Today’s comment Majors & Scandies By the Majors & Scandis Team Overnight the Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate by 25 bps to 8.00% after having kept rates unchanged for a year. Market participants had been split on the outcome of the monetary policy meeting as the central bank faces the difficult dilemma of an economy headed towards recession and rapidly rising inflation. However in a statement the central bank said that it expects the downturn in activity to [visit website]

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Action Insight Daily Report Kiwi Tumbles on RBNZ Cut, Key Data from EZ, UK Featured Kiwi was the biggest mover overnight after RBNZ's surprised 25bps cut in OCR and a rather dovish statement. In the accompanying statement , RBNZ noted that "economic activity is likely to remain weak over the remainder of 2008," and "provided that the outlook for inflation continues to improve and there is no excessive exchange-rate depreciation, we would expect to lower the OCR further." NZD/USD fell sharply [visit website]

Market overview A day is a long time in the FX markets. Sometimes because nothing is happening and it feels like a week, others because sentiment can turn on a cent. At the start of the week it seemed clear that the dollar was building for another break into lows, but no less than a day later, equities are rallying, gold has dropped (led through platinum) and oil ignored a raft of bullish news to complete an interim top. Soft commodities continue to retrace and all of a sudden the market [visit website]

*************************************************** Update Time:     23 Jul 2008 07:26GMT DAILY AUD/USD OUTLOOK - 0.9675 Despite present anticipated resumption of the corrective decline fm last week's top at 0.9851, near term o/sold condition shud prevent steep fall below 0.9645 n reckon sup at 0.9596 wud hold, yield recovery later. Wud be prudent to exit short n stand aside. Abv 0.9739 wud signal low is made, 0.9760/70...    Rate:     0.9675    [visit website]

Markets: Fixed Income On Wednesday, global bonds traded weak in the European and early US sessions, but found their composure later on and closed the session with small, insignificant losses and the shape of the curve little changed. The European data were uneventful and the US eco calendar even empty. In the morning, trading was dominated by the presence of the key support level (109.65) in the Bund that was nearly tested in early session, after which the market stabilized at slightly higher [visit website]

EURUSD: EUR followed through to the downside on its Tuesday losses breaking below its daily 200 ema to close at 1.5683 on Wednesday.The fact that momentum indicators and price action are pointing lower now suggest a trade towards its LT trendline currently residing at 1.5636 which within the vicinity of its .50 Ret (1.5302- 1.6037 rally) at 1.5647.This zone is envisaged to provide a strong support and turn the pair higher again but if a failure of there occurs lower prices could be seen [visit website]

Previous session overview On Wednesday, the dollar was lifted for a second day by falling oil prices and repeated talk about an eventual need for U.S. interest rate hikes to curtail inflation. Factory orders in the euro zone dropped at their sharpest rate in five years in May, adding to other news Wednesday of slowing demand and rising prices. The euro is steady, with oil a bit lower and gold slightly higher. Dollar strength is the primary reason why the Euro is trading close to a 2 week low; [visit website]

Crowded trades have a tendency to unwind in a violent manner. This process is currently underway, as oil and the much-maligned financial stocks are seeing a huge reversal of fortunes. Over the last two months, all of us have been aware of the surge in oil prices because it has affected us directly, in the way of higher gasoline prices. Also, when depositors - who were not certain how the FDIC (Federal Deposit Insurance Corporation) works - started hearing rumors that IndyMac bank was on the [visit website]

The latest Beige Book’s assessment (summarized by the Kansas Fed) of eco activity was modestly weaker than the previous Book six weeks ago. The Book said that the pace of eco activity slowed somewhat since the previous report whereas in the previous Book described economic activity as remaining generally weak. Five districts noted a weakening in their economies, whereas Chicago spoke about a sluggish economy and Kansas noted a moderation in growth. St-Louis said activity was stable and San [visit website]

Good morning from wonderful Hamburg and welcome to Varengold Bank’s Daily FX Report. The weather looks great in Hamburg and hopefully the summer will come back with some warm summer days. Some interesting business data will come out today in the Euro zone that could move the markets, which is a good sign for an exciting trading session with very good market opportunities. Market review The USD hit a one month high against the JPY this morning, caused by the drop in oil prices and signs of [visit website]

Headlines Currencies: Czech koruna extends losses Fixed Income: CE bond markets will look at EMU and US releases Currencies The Czech koruna lost more ground yesterday, as a verbal intervention from CNB’s governor Tuma the day before continued to hit the currency. Hence, the EUR/CZK pair despite very strong hedging activity of stressed Czech exporters, still managed to move higher and set up fresh three weeks high at 23.83. Meanwhile the local press brings more and more stories, illustrating [visit website]

Comment: Money market interest rate futures contracts appear to have formed interim highs and look set to drift lower over the next couple of weeks. Eurozone Libor rates for all maturities over one month are well above Schatz and Bund yields, while in the UK everything over one week yields more than any Gilt. This is not the case in Japan and the US where only twelve month Libor is comparable to ten-year Treasury rates. If consensus opinion is correct in guessing the credit crunch will only [visit website]

June trade figures released overnight confirmed that Japanese export engine has been turned off as export growth has slowed sharply in Q2 08. Net foreign trade has been a substantial drag on growth in Q2 and we now feel confident that GDP growth will be negative in Q2 and likely more negative than our current fore-cast of -0.1% q/q GDP growth in Q2. Based on today´s trade figures -0.3% q/q seems more likely. [visit website]

As has often been the case, the weekly US oil inventories affected the oil price in Wednesday's trading. The DOE report showed a mixed picture of consumption in the US for the past week. The stocks of crude oil - which market participants have been following closely in recent weeks - showed a fall of 1.6 million barrels. The weak imports did not suffice to maintain stocks, which have fallen comparatively consistently over the summer. But market sentiment is not in favour of the bulls at the [visit website]