Buy the dollar or sell the dollar? 

  • The Dollar was volatile yesterday with USD strength on the back of risk aversion in Europe which later reversed as US housing data weakened further. July Existing Home Sales fell 27% as the effect of the removal of the housing credit continues to be felt. On a more positive note however we saw the Richmond Fed Manufacturing survey come in better than expected. USDJPY price action was impressive yesterday as the JPY made new 15 year highs as global risk aversion sparked a flight to safety. The USDJPY traded between 85.72 - 83.57. Looking ahead, July Durable Goods and July New Home Sales. These 2 pieces of data will be closely watched as traders look for more clues on a pending US slowdown. Ben Bernanke's speech on Friday will also be a market mover as the Fed Chairman will try and explain why the Fed decided to reinvest the maturing debt and maintain its large balance sheet.

    The Euro tested 1.2600 as EUR/JPY followed USD/JPY to fresh decade lows and stock markets around the globe fell. Some weak US data allowed a bounce to 1.2700 but a S&P downgrade of long term debt from Ireland sent the Euro lower in late US trade. EUR/USD traded with a low of 1.2586 and a high of 1.2721 before closing at 1.2660. Looking ahead, German IFO Business Climate forecast at 105.7 vs. 106.2 previously. 

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.2720 with a preference to enter into Short positions at 1.2710
  • § The USDJPY pivot point is at 84.60 with a preference to enter Short positions at 84.55               

Today's calendar and market movers:

  • § Germany IFO Business Climate for Aug expected at 105.7
  • § United States Durable Goods Orders for July expected at 2.8
  • § United States New Home Sales for July expected at 0.33 mio 

Equity Markets: 

  • US equities closed negative yesterday with the S&P500 at -1.45% and the DJIA at -1.32%. The European bourses were negative with the FTSE down -1.51% the DAX and the CAC closing at -1.26% and -1.75% respectively. The NIKKEI and the HSI at the time of writing is -1.93% and -0.43% respectively.