Forexpros.com Daily Analysis - 28/07/2008

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Overnight Asia/Europe

• Volumes lighter and ranges tighter

• Russians buy EURO, Swiss buy & Sell

• Technical action dominates

 

Today’s Economic Reports

All times EASTERN (-5 GMT)

• 12:00pm USD FOMC Member Mishkin Speaks

Very light calendar for everyone on Monday

 

Looking Ahead to Tuesday

All times EASTERN (-5 GMT)

• 9:00am USD S&P/CS HPI Composite-20 y/y

• 10:00am USD Consumer Confidence Index

 

Summary

The USD is mixed to start the week in light trade; volumes have been thin and traders report a lot of technical trading. The Greenback managed to score a new one-month high against the Yen in Asian dealings aided by demand for non-USD Yen crosses; sterling-yen rallied and spillover strength was seen in other pairs. High prints in the USD/JPY at 108.08 failed to trigger large stops said to be resting above the 108.00/10 area mixed with hefty offers; traders note that option defense may be playing a role in aggressive selling above the 108.00 handle but also note solid exporter offers in size. A rally past the 108.20 area most likely will expose some degree of stops with the majority rumored to be resting in the 108.50 area and beyond; above the 2008 highs. Forex traders note that dips have shown buyers suggesting that the rate has good interest from both sides at current prices; a breakout to the upside could have a lot of momentum behind it. EURO saw an early dip reverse to make highs in European trade; Russian bids apparently the driver in Asia and early Europe. Swiss private bank bids as well as offers suggest that the EURO has short-term interest and is possibly going to range trade. Traders note that the offers were layered between 1.5720 and 1.5770 all the way through stops at 1.5750 in size; the rate has a high print in early New York at 1.5765 but volumes have been low. Cable is weaker driven by Yen crosses overnight; high prints at 1.9927 and low prints at 1.9838 leaving less than a 100 pip range so far. GBP is under pressure this morning but has an inside-range day to start suggesting price direction is inconclusive. In my view, a low-volume rally in GBP combined with sympathy buying from upward pressure in EURO will result in a retreat by Cable as the day wears on; technical buying/selling usually can’t break a rate out of established ranges but poor economic news can. Due in the UK tomorrow is news that most certainly will be Pound-Bearish. Aggressive traders can hold their GBP shorts through the mid-week area as downward pressure is still due in my view. Look for the USD to remain range-bound today and rotated higher after lows hold today, I don’t think there is enough interest in the downside to attract sellers in size without news due on Wednesday. Look for the USD to consolidate for the most part.

 

 

Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

 

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