Forex News and Events:
With the EURCHF heading towards the 1.5000 level, perhaps the main event in European session will be the SNB's announcement. There is little room for a surprise rate change of 3-mth Libor target, so speculation revolves around if the SNB will increase the scale of its QE and/or continue its efforts to weaken the CHF. Originally, the SNB announced its unsterilized FX intervention policy would be directed at steady deprecation of the CHF. However, since then it seems that the national bank is focused on protecting the 1.5000 level. The Euro saw a reversal after reaching as high as 139.69, on global growth concerns. A rise in construction activity for a second month by 0.6% in April added to the signs that the economy is stabilizing. Meanwhile, the trade balance for April saw its surplus increase to 2.7B from 1.8B, despite expectations for a deficit of 1.5B. The decline in imports outpaced a slowdown in exports, as local demand remains weak. The Eurozone may start to see a pickup in demand for its products, as global demand improves but domestic growth may be slow to recover, which could limit the recovery process. Resistance levels are at 140 and 140.80, while supports are at 139.10 and 138.50 levels. This afternoon, markets will be focused on the US data and specifically Philly's Fed index reading. While markets are expecting a slight increase, the recent erosion in economic optimism and disappointing data creates a risk of a weaker than expected figure.
Today's Key Issues (time in GMT):
01:30 AUD RBA bulletin published
07:30 CHF SNB Interest rate announcement, % Q2 0.0 - 0.50 exp, 0.0 - 0.75 prior
08:30 GBP BoE publishes Trends in Lending report Jun
08:30 GBP Retail sales, % m/m (y/y) May 0.4 (-0.2)exp
08:30 GBP PSNB, £bn May 8.5 prior
08:30 GBP PSNCR, £bn May 5.1 prior
08:30 GBP BoE provisional M4 growth, % m/m (y/y) May 0.1 (17.4) prior
08:30 GBP BoE provisional M4 lending growth, % m/m (y/y) May -0.5 (10.4) prior
10:00 GBP CBI industrial trends survey, total orders, net balance Jun -48 exp
11:00 CAD CPI, % y/y May -0.2 exp
11:00 CAD Bank of Canada core CPI: % y/y May 1.6 exp
12:30 USD Initial jobless claims, thous (4wk mvg avg) Jun 601 (622) prior
12:30 EUR ECB non-policy meeting
14:00 USD Leading indicators, % (y/y) May 0.9 (-2.1) exp
14:00 USD Philadelphia Fed Index Jun -18.0 exp
23:50 JPY BoJ minutes published
The Risk Today:
EurUsd dollar is still constructive as focus is now on the financial stability of the Euro zone and S& P downgrades. We maintain our bullish dollar stance (short term) but see a cap at 1.4042 with an initial resistance at 1.3750.
GbpUsd Sharp reversal at 1.6240 horizontal support. Initial resistance stands at 1.6640 Re-kindled worry for European economy points to a bearish trend forming with initial support at 1.6305 and a floor in at 1.620.
UsdJpy Risk aversion creeps back into markets as the dollar gains across the board and Yen out performs the dollar. Rapid decline to 96.08 wednesday cleared out short term support. Further downside likely towards 95.33 ahead of 94.45 reaction low.
UsdChf Erratic trading has seen the pair actually trade a virtual double bottom (as opposed to a S-H-S formation like the EURUSD). Initial resistance at 1.0952 with a breakout level at 1.0988. On the downside 1.0650 is floor, with crucial (previous necklines) levels at 1.0750 and 1.0650. For now the pair is broadly bullish.
Resistance and Support:
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot|