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ADP Reaction: GBP/USD tests 1.5650 resistances after weak data

 

 

 

 

FXStreet (New York) - The British Pound is extending its rally from 1.5525 against the US Dollar following the weak ADP employment report that showed a lower than expected number in July. GBP/USD is now testing the 1.56.50 area.

 

Ugly ADP report with 185K new private payrolls in July, well below the 215K expected by market. In addition, June data was revised 8K down from 237K to 229K. The dollar got a hit.

 

Currently, GBP/USD is trading at 1.5644, up 0.53% on the day, having posted a daily high at 1.5653 and low at 1.5526. GBP/USD spot is in overbought territory according to the hourly FXStreet OB/OS Index, while the FXStreet Trend Index is slightly bullish. 

 

GBP/USD levels

 

If the pair breaks above 1.5600, it will find next resistances at 1.5675 and 1.5690. To the downside, supports are at 1.5620, 1.5600 and 1.5570. 

 

 

 

 

 

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US trade deficit widens to USD 43.8 billion

 

 

 

 

FXStreet (Mumbai) - The US trade deficit in June widened largely due to higher imports of autos and drugs from the European Union. 

 

The trade deficit rose 7.1% to a seasonally adjusted USD 43.8 billion in June, beating the estimated rise to USD 42.7 billion from May’s USD 40.94 billion. The trade deficit with the EU hit a record high. Exports slipped 0.1% to USD 188.6 billion in June, the Commerce Department data showed on Wednesday. Imports rose 1.2% to USD 232.4 , leading to a wider trade deficit. 

 

The wider deficit is not be surprising since the government report on "goods" balance released last week showed a similar rise.

 

 

 

 

 

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Canada exports in June rose at fastest rate since 2006

 

 

 

 

FXStreet (Mumbai) - The official data in Canada released on Wednesday showed exports surged in June, rising at the fastest pace since 2006 as shipments to the US rebounded.

 

The trade deficit narrowed to $476-million, from $3.37-billion. The markets were calling for a $2.9-billion trade gap in June. Exports rose 6.6%, ending the five straight months of decline. Exports to the US jumped 7.1%, Imports fell 0.6%, due to a decline in shipments by the aircraft and energy sectors. 

 

 

 

 

 

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AUD/USD spikes to near 0.7400 after US ADP, trade balance

 

 

 

 

FXStreet (Córdoba) - After a corrective move, AUD/USD received a boost and spiked to fresh daily highs at the beginning of the New York session as the greenback weakened on the back of disappointing ADP employment report. 

 

Ahead of the eagerly awaited government employment figures, ADP reported US private sector added only 185K new jobs in July versus 215K expected. A wider than expected US trade deficit contributed to the USD weakness, which fell across the board (-43.8B vs -42.7 exp). 

 

AUD/USD jumped to a daily high of 0.7394, and it was last trading at 0.7383, virtually unchanged on the day.

 

On Monday, the Aussie strengthened broadly after the RBA removed its reference to a weaker currency needed from the monetary policy statement. 

 

AUD/USD levels to watch

 

As for technical levels, resistances could be found at 0.7427 (Aug 4 high) and 0.7449 (Jul 21 high), while immediate supports are seen at 0.7333 (Aug 5 low) and 00.7318 (10-day SMA). 

 

 

 

 

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GBP/USD: Bulls struggle to push above 1.5650

 

 

 

 

FXStreet (Mumbai) - The GBP/USD spot rose to a session high of 1.5650 after dismal US data, but is having a hard time extending gains above the same. 

 

US 2-year yield erases gains

 

The 2-year yield, which mimics rate hike expectations in the US, fell from 0.74% to trade largely unchanged on the day around 0.728% after the ADP data showed the private sector added far less jobs in July than estimated. Another set of data showed the trade deficit widened in June, with the deficit with Eurozone rising to record high.

 

The resulting weakness in the 2-year yield, helped the cable clock session high of 1.5650. The spot now trades just below 1.5639 (38.2% of June rally) as investors await the US ISM non-manufacturing report. Moreover, the Sterling has been on the rise since the European session ahead of tomorrow’s BOE Quarterly Inflation Report (QIR). 

 

GBP/USD Technical Levels

 

The immediate resistance is located at 1.5650 (daily high), above which a major hurdle is seen at 1.57 handle. On the flip side, support is seen at 1.56 and 1.5560 (50-DMA). 

 

 

 

 

 

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USD/JPY rallies to 2-month highs

 

 

 

 

FXStreet (Córdoba) - USD/JPY took a violent turn and pushed to fresh 2-month highs with no clear catalysts behind the move, after testing daily lows weighed by disappointing ADP employment report.

 

USD/JPY bottomed out at 124.00 as the knee-jerk reaction to private payrolls data but bounced sharply, overshooting previous highs. The pair picked up momentum following above-expectations July ISM services PMI for US (60.3 vs 56.2 exp) and climbed to a high of 124.86, last seen on Jun 8. 

 

At time of writing, the pair is trading at 124.60, recording a 0.19% gain on the day, the third in a row as investors gear up for the US government nonfarm payrolls report on Friday.

 

USD/JPY levels to watch

 

As for technical levels, USD/JPY could find next resistances at 125.00 (psychological level) and 125.67 (Jun 8 high). On the flip side, supports are seen at 124.00 (psychological level/Aug 5 low), 123.79 (Aug 4 low) and the 123.55/51 area (50-day SMA/Jul 31 low). 

 

 

 

 

 

 

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US ISM non-manufacturing index at decade high in July

 

 

 

 

FXStreet (Mumbai) - The service sector in the US economy expanded at a fastest rate in a decade with a sharp rise in employment, strengthening rate hike bets in the US. 

 

The Institute for Supply Management’s (ISM) non-manufacturing index to 60.3, the best reading since August 2005 and well above the June’s 56.00 reading. All major components of the gauge, including orders and employment ticked higher.

 

He details of the report reveal the employment gauge jumped to 59.6 from 52.7, the biggest one-month advance since records began in July 1997. The new orders measure rose to 63.8 from 58.3. Both measures were the highest since August 2005. 

 

2-year yield rises again


The two-year yield, which mimics rate hike expectations, has ticked higher by almost three basis points to 0.756%. The yield had dropped into losses earlier today after the ADP report showed the private sector job additions in July slowed down considerably. 

 

 

 

 

 

 

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EUR/USD revisits lows after ISM data

 

 

 

 

FXStreet (Córdoba) - EUR/USD came under pressure and fell to retest daily lows as the dollar pick up momentum following stronger-than-expected ISM services and composite PMIs.

 

EUR/USD pulled back from a high of 1.0932 scored on the back of disappointing ADP employment data but gains were offset by solid ISM figures. EUR/USD fell to 1.0849 but managed to hold barely above previous daily lows. At time of writing, the pair is trading at 1.0865, 0.13% below its opening price.

 

EUR/USD technical levels

 

As for technical levels, next supports are seen at 1.0847 (Aug 5 low), 1.0808 (Jul 20 low) and 1.0800 (psychological level). On the flip side, resistances could be found at 1.0932 (Aug 5 high), 1.0987 (Aug 4 high) and then 1.1025 (100-day SMA). 

 

 

 

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GBP/USD robust ahead of BoE - Scotiabank

 

 

 

 

FXStreet (Guatemala) - Eric Theoret, CFA, CMT, Currency Strategist at Scotiabank explained that GBP/USD was rising off support at the 50 day MA (1.5563), its momentum indicators hinting to a modestly bullish bias. Trend indicators are muted, and we await a break of the recent three-week range between 1.5467 and 1.5690.


Key Quotes:

 

"GBP is rising modestly vs. the USD and outperforming all of the G10 despite softer domestic PMI data, with strength driven by flows out of Europe as market participants look to relative policy ahead of Thursday’s BoE events—including the policy decision, concurrent release of minutes as well as the quarterly Inflation Report. 

 

The Bank Rate is widely expected to remain on hold at 0.5%, with focus centered on MPC members’ voting as well as the assessment of ‘inflation probabilities’ in light of recent concerns about the disinflationary impact of exchange rate strength." 

 

 

 

 

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EUR/JPY: 0.7186 downtrend in tact - CB

 

 

 

 

FXStreet (Guatemala) - Karen Jones, chief analyst at Commerzbank explained the technical conditions surrounding EUR/GBP.

 

Key Quotes:

 

"EUR/GBP has failed at the 55-day ma at 0.7127, and the 0.7186 2015 downtrend, and is back under pressure. The market has recently sold off to the base of a 6-year down channel and it is possible that this 0.6937/67 zone will again hold. This is key support – it will act as the break down point to the 0.6571/41 the 2007 low.

 

Downtrend at 0.7186

 

A longer term negative bias is entrenched below the 2015 downtrend, this is located at 0.7186." 

 

 

 

 

 

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WTI tumbles below $45.00

 

 

 

 

FXStreet (Edinburgh) - The barrel of West Texas Intermediate is testing session lows in the vicinity of the $45.00 handle on Wednesday.

 

WTI in multi-month lows

 

Crude oil prices have dropped to sub-$45.00 levels for the first time since march, as concerns over the global supply glut continue to be the exclusive driver behind the entrenched bearish sentiment surrounding crude oil.

 

In the data space, the EIA has reported another decrease in crude oil inventories during the week ended on July 31, this time by 4.4 million barrels. In spite of the drop, crude oil prices remained unable to gather any traction as the EIA has also informed of an increase in gasoline stocks, neutralizing any subsequent upside attempt in prices.

 

WTI levels to watch

 

At the moment WTI is down 1.66 % at $44.98 with the next support at $44.03 (2015 low Mar.18) followed by $43.83 (monthly low Feb.2009) and then $33.55 (monthly low Jan.2009). On the flip side, a break above $46.94 (high Aug.3) would aim for $48.62 (high Jul.31) and finally $49.52 (high Jul.29). 

 

 

 

 

 

 

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Euro Stoxx 600 pushed lower by weakness in energy and mining shares

 

 

 

 

FXStreet (Mumbai) - The Euro Stoxx 600 retreated on Monday due to the losses in the energy and mining shares, while investors await latest cues regarding the timing of the first rate hike in the UK. 

 

The index is down 0.3%, after rising 1.3% on Wednesday. The energy shares came under renewed selling pressure tracking the drop in the oil prices. 

 

Danish biotechnology company Novozymes; down 11.52% on the pan-European index after cutting its sales growth forecast. Shares in Deutsche post and Zurich Insurance Group also suffered more than 2% losses due to weak results. 

 

Weaker oil prices pushed shares in Tullow Oil lower by 5.43%. Mining firms like Anglo American, Antofagasta also suffered losses. Meanwhile, Shares in National Bank of Greece rose 23%, the top performer so far, after falling by the same margin on Wednesday. 

 

Among regional indices, France’s CAC 40 index was down 0.1% and the UK FTSE 100 index was 0.2% lower. Germany’s DAX index rose 0.1% after data showed an increase in German factory orders in June. 

 

 

 

 

 

 

 

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BOE MPC leaves interest rates unchanged

 

 

 

 

FXStreet (Mumbai) - The Bank of England (BOE) Monetary Policy Committee (MPC) on Thursday voted to maintain Bank Rate at 0.5% as expected. 

 

The Committee also voted to maintain the stock of the purchased assets financed by the issuance of central bank reserves at GBP 375 billion. The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. 

 

 

 

 

 

 

 

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BOE MPC vote split – 8:1 – for the first time in 2015

 

 

 

 

FXStreet (Mumbai) - The Bank of England (BOE) latest monetary policy minutes released on Friday showed monetary policy committee is divided for the first time this year over whether to raise interest rates from their historic low of 0.5%.

 

According to minutes, only one member - Ian McCafferty - voted in favour of a rate rise. Prior to the minutes' release, markets were expecting a 7-2 split. The last time the split in voting was seen in December 2014 when both Mr McCafferty and Martin Weale voted in favour of a 25 basis points increase. 

 

 

 

 

 

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GBP/USD creeps to fresh highs near 1.5530

 

 

 

 

FXStreet (Mumbai) - The British pound brushed off negative trade data and extended higher versus the American dollar in the European session, pushing GBP/USD beyond 1.55 handle, as sterling stood resilient to the rising US ahead of the key US labour market report due later in the session ahead. 

 

GBP/USD rises from 1.5503 levels

 

The GBP/USD pair trades 0.05% higher at 1.5520, easing-off fresh session highs reached at 1.5530 in last hours. The cable swung between gains and losses and now struggles to extend gains further as a series of negative events occurred lately continue to pressure the British currency versus the buck.

 

Earlier this session, the cable was sold-off on the back of BOE Broadbent’s dovish comments relating to the central bank rate-hike outlook and also on widening UK trade deficit news. Moreover, BOE coming out surprisingly dovish with its minutes and revising lower its inflation outlook on Thursday also keep the negative sentiment around the pound intact.

 

Markets now remain cautious and may favour the greenback ahead of the crucial US NFP numbers which may have major impacts on the pair.

 

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GBP/USD Levels to consider

 

The pair has an immediate resistance at 1.5552 (July 10 High) above which gains could be extended to 1.5638 (Aug 6 High) levels. On the flip side, support is seen at 1.5466 (Aug 6 Low) below which it could extend losses to 1.5449 (July 14 Low) levels.  

 

 

 

 

 

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Buy the dips towards 123.20 in USD/JPY – BBH

 

 

FXStreet (Edinburgh) - The research team at BBH sees buyers of the pair lining up in the area of 123.20.

 

Key Quotes

 

“The dollar made a new marginal high of almost JPY125.10”.

 

“However, there was momentum, and despite the constructive US employment data, the yield on the 10-year Treasury slipped”.

 

“Despite a number of attempts since early June, has only managed to close above JPY125 once. That proved to be a near-term top”.

 

“The dollar's technical condition deteriorated with the reversal after the US employment report. Initial support is seen near JPY 124.00, which also corresponds to the 20-day moving average. Look for better dollar buyers on a move toward JPY123.20”. 

 

 

 

 

 

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EUR/USD weaker, testing 1.0940

 


FXStreet (Edinburgh) - The single currency is now losing the grip vs. the dollar, dragging EUR/USD to daily lows in the 1.0940 area.

 

EUR/USD gains limited around 1.0980

 

The pair remains trading in a choppy mood at the beginning of the week, with gains appearing to be limited by recent tops in the 1.0980/85 band. Spot is losing upside momentum against a backdrop of scarce data releases in both Euroland and the US economy while market participants keep digesting the recent results from the US labour market.

 

Investor’s Confidence tracked by the Sentix Index and the US Labour Market Conditions Index are due later, ahead of the speeches by Fed’s Fischer and Lockhart.

 

EUR/USD relevant levels

 

As of writing the pair is retreating 0.23% at 1.0940 and a breach of 1.0855 (low Aug.7) would open the door to 1.0848 (low Aug.5) and then 1.0811 (low Jul.11). On the other hand, the next resistance lines up at 1.0990 (high Aug.4) ahead of the psychological level at 1.1000 and finally 1.1080 (high Jul.29).

 

 

 

 

 

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Cautious tone ahead of US Retail Sales – Westpac

 

FXStreet (Edinburgh) - Analysts at Westpac remain cautious when comes to bet on the upcoming Retail Sales in the US economy.

 

Key Quotes

 

“Retail sales disappointed in June, falling 0.3%. This result was partly attributable to weaker auto sales; however, core retail sales (ex autos and gas) still fell 0.2% in the month”.

 

“In annual growth terms, momentum has steadily edged lower in recent months, with the June prints for total and core retail sales growth of 1.4%yr and 2.7%yr well below their respective peak growth rates, of 5.7%yr (Jan-15) and 5.1% (Nov-14)”.

 

“A continued improvement in the labour market; robust consumer confidence; and firming expectations around incomes all point to stronger discretionary spending”.

 

“Yet, as has been the case throughout this recovery, caution is likely appropriate. In July we anticipate a moderate rebound from recent weakness, with headline growth of 0.4%”. 

 

 

 

 

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PLN gains capped near term – Rabobank

 

FXStreet (Edinburgh) - Strategist Piotr Matys at Rabobank believes the appreciation of the Polish zloty could be somewhat limited in the near term.


Key Quotes

 

“We were prepared to re-adopt our constructive view on the Polish zloty against the euro as the risk of Grexit diminished”.

 

“However, risk aversion has again increased on the back of Chinese growth concerns suggesting that scope for PLN appreciation is limited near-term”.

 

“In the coming weeks we will continue to monitor developments closely given that Greece faces the herculean task of fully implementing a very ambitious package of structural reforms in exchange of EUR 86bn funds”.

 

“Polish politics are another source of risk. If opinion polls imply that the largest opposition party, Law and Justice, is on track to win general election in October and, more importantly, may secure a parliamentary majority, the odds that populist measures will be implemented will increase, which in turn would be negative for the Polish currency”. 

 

 

 

 

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NZD, AUD risk further downside vs. USD – TDS

 

FXStreet (Edinburgh) - Strategists at TD Securities reiterated their bearish view on the Antipodean currencies against the greenback.

 

Key Quotes

 

“Overall while we note our end-Q3 forecasts for AUDUSD (0.74) and NZDUSD (0.66) are rather close to current levels, the near-term risks remain on the downside”.

 

“This is due, however, to broader trends in currency markets rather than the recent actions of the PBOC”.

 

“As commodity prices remain under downward pressure, our expectations for a September rate hike from the Federal Reserve is likely to remain the single dominant factor, we think, in FX markets in coming weeks”. 

 

 

 

 

 

Aug 11,2015

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EUR/CHF in fresh highs near 1.0870

 

FXStreet (Edinburgh) - The Swiss franc continues to depreciate vs. the single currency on Tuesday, lifting EUR/CHF to the area of 1.0870.

 

EUR/CHF in multi-month tops

 

The cross is trading in the highest level since the SNB has abandoned the peg in mid-January, advancing towards the upper-1.0800s following increasing outflows from the safe haven CHF.

 

The (kind of) solution in the Greek front following the agreement between the country and its creditors last month coupled with today’s pre-deal on a third bailout package has allayed fears amongst investors regarding a ‘Grexit’ scenario, favouring further positioning in the euro.

 

EUR/CHF relevant levels

 

As of writing the cross is up 0.24% at 1.0864 facing the next resistance at 1.09 and 1.10 (both psychological levels). On the flip side, a breach of 1.0760 (low Aug.10) would open the door to 1.0709 (low Aug.7) and finally 1.0676 (low Aug.6). 

 

 

 

 

 

 

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EUR/USD falters ahead of 1.1100

 

 

 

FXStreet (Córdoba) - The euro reached a fresh August high against the dollar on Tuesday after Greece and its creditors reached a bailout deal, but faltered ahead of the 1.11 mark.

 

EUR/USD reached its highest level since Jul 31 at 1.1087, but failed to stay at highs and pulled back to the 1.1030 zone. At time of writing, EUR/USD is trading at 1.1048, still up 0.27% on the day. 

 

Greece and international lenders struck a third bailout deal on Tuesday and the Eurogroup will reportedly meet on Friday to approve the agreement.

 

EUR/USD technical levels

 

As for technical levels, next resistances are seen at 1.1087 (Aug 11 high), 1.1093 (50-day SMA) and 1.1113 (Jul 31 high). On the other hand, supports could be found at 1.1032 (100-day SMA), 1.1000 (psychological level) and 1.0960 (Aug 11 low). 

 

 

 

 

 

 

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