Dollar extends today's gain against euro, swissy and Aussie in early US session but remain range bound against sterling and yen. The steep fall in commodity prices, triggered by sharp pull back in China stock markets, is the main driver in dollar's strength today. Crude oil is trading at 65 level after diving to as low as 64.98 while gold also dropped in lower 930 level. Stocks in US open mildly lower but remains in tight range only. There isn't any selloff in equities seen yet and thus yen crosses are generally in tight range too. Markets pay little attention to durable goods orders in US, which showed -2.5% contraction in Jun while ex-transport orders rose 1.1%. Sterling, on the other hand is lifted by better than expected mortgage approvals of 47.6k in June and rebounds strongly in crosses. Meanwhile, Euro is pressured by deeper than expected fall in German CPI by -0.1% mom, -0.6% yoy in July.

Dollar index continues to rebound further in early US session and is now staying well above 4 hours 55 EMA, with 4 hours MACD staying positive. A short term bottom should be in place at 78.32, after being contained by 78.33 low. However, it's still early to confirm if the index has reversed yet. Break of 79.66 resistance is still needed to indicate that the dollar index has bottomed out. Otherwise, another fall to 77.69 key support might still be seen.

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RBNZ rate decision will be the main focus in the coming Asian session. While it's widely anticipated that RBNZ will not change the cash rate from the current 2.5%, the focus is on the central bank's forecast on economic and monetary policy outlook. Since the last meeting in June, upside surprises in New Zealand's economy have been seen. Housing market improved with sales rose +40% yoy in 2Q09 while contraction in prices were moderated. Business and consumer confidence has been improved. PMI rose to 46.2 in June with new orders component soared above 50 for the first time since April 2008. Retail sales also have increased for 2 straight months in April and May. From these evolvements, we believe 2.5% is probably the trough of New Zealand's OCR in this easing cycle though the central bank should leave the door open and stated that the policy rate will stay 'at or below' current level until the end of 2010.

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USD/CHF Mid-Day Outlook

USD/CHF's break of 1.0816 resistance dampens the immediate bearish case and argues that fall from 1.0938 is over. Also, it's reviving the case that USD/CHF might have indeed bottomed at 1.0590 already. Intraday bias will remain on the upside as long as 1.0730 minor support holds and focus will now turn to 1.0938 resistance. On the downside, below 1.0730 will turn intraday outlook neutral again.

In the bigger picture, there is no change in the broader view that price actions from 1.2296 are consolidation to whole medium term rise from 0.9634 only, with fall from 1.1963 as the third leg. Indeed, the possible five wave structure of such decline from 1.1963 argues that it's the last leg of consolidation and is near to completion. At this point, another fall is still mildly in favor as long as 1.1021 resistance holds before such decline from 1.1963 completes. Nevertheless, in such case, downside should be contained by 61.8% projection of 1.1740 to 1.0590 from 1.1021 at 1.0310 and bring reversal. On the upside, above 1.0938 resistance will in turn argue that fall from 1.1963 has completed and break of 1.1021 will solidify the bullish case and pave the way for strong rebound.

USD/CHF