The dollar was lower against the euro but higher against the yen on Thursday. The IMF raised its 2010 global GDP growth forecast from 4.2% to 4.6%. US initial jobless decreased more than expected and consumer credit dropped for a fourth straight month. The S&P 500 rose 9.98 to 1,070.25, its first 3-day rally since April. The yen fell. Japan's core machinery orders declined more than expected. The euro traded modestly higher. The European Central Bank kept its key interest rate at 1.00%, as expected, and said its monetary stance was appropriate with balanced risk and inflationary expectations anchored. ECB President Jean-Claude Trichet said fears over eurozone economic growth have been overdone, noting that indicators suggest that a strengthening in economic activity took place during the spring. Sterling declined modestly. The Bank of England maintained its benchmark rate at a record low of 0.50%, as forecast, and did not expand its quantitative easing program. The Canadian dollar was supported by higher oil prices.

The AUD/USD rose to a 2-week high as a 45.9K jump in June Australian employment increased speculation that the Reserve Bank of Australia will resume hiking interest rates. The pair broke its 0.86-area resistance. We expect to the AUD/USD to consolidate gains between the 0.88-area resistance and 0.86-area support.

Financial and Economic News and Comments

US & Canada

  • US consumer credit fell a more-than-expected $9.1 billion in May, a fourth consecutive monthly fall, to $2.415 trillion, after a revised $14.9 billion drop in April that was initially reported as a $1.0 billion increase, figures released by the Federal Reserve showed. May consumer credit plunged 98.5 billion from a year earlier.

US initial jobless claims in the week ending July 3 fell a more-than-expected 21,000 to 454,000 from the previous week's upwardly revised 475,000, according to data from the Labor Department. The 4-week moving average declined 1,250 to 466,000. Continuing claims in the week ending June 26 dropped 224,000 to 4,413,000, the lowest level since November 2008, from the preceding week's upwardly revised 4,637,000. The 4-week moving average of those continuing claims fell 18,750 to 4,554,000. The insured unemployment rate for the week ending June 26 declined to 3.4% from the prior week's 3.6%.

Europe Germany's seasonally adjusted exports increased 9.2% m/m to €77.5 billion ($98.3 billion) in May, the third gain in four months, after a revised 6.3% m/m decline in April, figures from the Federal Statistical Office showed. Seasonally adjusted imports, rising faster than exports, jumped 14.8% m/m to €67.7 billion, the fifth rise in six months, following April's revised 7.2% m/m decrease. Exports gained 28.9% y/y in May; imports surged 34.2% y/y. The trade surplus narrowed to €9.7 billion in May from a downwardly revised €13.1 billion in April. The current-account surplus shrank to €2.2 billion from April's downwardly revised €11.3 billion.

Germany's seasonally adjusted industrial production grew a more-than-expected 2.6% m/m in May, a third consecutive monthly increase, after an upwardly revised 1.2% m/m advance in April, according to data from the Federal Ministry of Economics and Technology. May industrial production rose 12.4% y/y nsa wda, a fifth straight year-on-year rise, following an upwardly revised 13.9% y/y April gain.

UK industrial production increased a more-than-expected 0.7% m/m in May, the third gain in four months, after a revised 0.7% m/m decline in April, data from the Office for National Statistics showed. May industrial production rose 2.6% y/y, a third consecutive year-on-year rise, following a downwardly revised 1.0% y/y April increase. Manufacturing production was up 0.3% m/m in May, the third advance in four months, after a revised 0.8% m/m decrease in April. May manufacturing production grew 4.3% y/y, a fourth successive year-on-year gain, following a downwardly revised 3.0% y/y April rise.

Asia-Pacific Japan's private-sector machinery orders, excluding volatile ones, fell a more-than-expected 9.1% m/m to ¥692.9 billion ($7.8 billion) in May, the first fall in three months, after a 4.0% m/m increase in April, according to data from the Cabinet Office. Core machinery orders increased 4.3% y/y, a third consecutive year-on-year gain, following April's 9.4% y/y advance.

Australia's seasonally adjusted employment jumped a more-than-anticipated 45,900 to 11,100,700 in June, a fourth straight monthly advance, after a downwardly revised 22,800 increase in May, figures from the Australian Bureau of Statistics showed. Payrolls surged 104,500 in the three months through June, the largest quarterly employment gain since 2006. The June unemployment rate was at a 17-month low of 5.1%, unchanged from May's downwardly revised 5.1%. Full-time employment grew 18,400 to 7,794,700 in June, a 10th straight monthly gain. Part-time employment rose 27,500 to 3,306,000. The participation rate increased to 65.2% from May's 65.1%.

FX Strategy Update

 
EUR/USD
USD/JPY
GBP/USD
USD/CHF
USD/CAD
AUD/USD
EUR/JPY

Primary Trend
Negative
Neutral
Negative
Positive
Negative
Neutral
Negative

Secondary Trend
Neutral
Negative
Neutral
Negative
Neutral
Neutral
Negative

Outlook
Neutral
Positive
Positive
Positive
Positive
Neutral
Neutral

Action
Short
Buy
None
None
Long
None
None

Current
1.2693
88.39
1.5162
1.0493
1.0430
0.8772
112.21

Start Position
1.4628
87.75
N/A
N/A
1.0247
N/A
N/A

Objective
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Stop
1.2725
85.75
N/A
N/A
1.0075
N/A
N/A

Support
1.2150
86.50
1.4800
1.0450
1.0400
0.8600
107.50

1.1900
85.00
1.4450
1.0300
1.0200
0.8300
106.00

Resistance
1.2700
90.00
1.5200
1.0750
1.0750
0.8800
113.00

1.2950
92.00
1.5400
1.1000
1.1000
0.9000
120.00

 
EUR/USD
USD/JPY
GBP/USD
USD/CHF
USD/CAD
AUD/USD
EUR/JPY

Primary Trend
Negative
Neutral
Negative
Positive
Negative
Neutral
Negative

Secondary Trend
Neutral
Negative
Neutral
Negative
Neutral
Neutral
Negative

Outlook
Neutral
Positive
Positive
Positive
Positive
Neutral
Neutral

Action
Short
Buy
None
None
Long
None
None

Current
1.2693
88.39
1.5162
1.0493
1.0430
0.8772
112.21

Start Position
1.4628
87.75
N/A
N/A
1.0247
N/A
N/A

Objective
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Stop
1.2725
85.75
N/A
N/A
1.0075
N/A
N/A

Support
1.2150
86.50
1.4800
1.0450
1.0400
0.8600
107.50

1.1900
85.00
1.4450
1.0300
1.0200
0.8300
106.00

Resistance
1.2700
90.00
1.5200
1.0750
1.0750
0.8800
113.00

1.2950
92.00
1.5400
1.1000
1.1000
0.9000
120.00