The greenback is hovering near record low against the Swiss franc formed yesterday at 0.7733 on safe-haven demand, the Swiss franc itself also surged to a record high versus the single currency above 1.1000 (where option barrier was triggered) to all time high of 1.0985. Investors found both U.S. and eurozone have serious debt problems and even U.S. just passed the U.S. debt ceiling bill in the House of Reps by 269-161, concerns remain over the U.S. top credit rating will face an inevitable downgrade by major rating agencies such as Standard & Poor's and Moody's. At the same times, rising bond yields in Italy and Spain reflected that investors are still not convinced the second Greek bailout package is sufficient to stop the debt crisis from spreading to the two countries which raised safe-haven demand. Although Siwssy rebounded initially in Asia to 0.7857 after falling to record low of 0.7733 yesterday, the pair slipped again throughout the European session on fresh buying for Swiss franc, the release of better-than-expected Swiss economic data (including retail sales and PMI) also helped pushing Swiss franc higher, EUR/CHF also hit record low below 1.1000, stops below barrier there were triggered. Good size offers are reported at 0.7800 and option barriers at 0.7700 and stops below 0.7690 are in focus.
The single currency fell to an intra-day low of 1.4151 on worries over eurozone debt crisis contagion and partly due to the release of slightly lower-than-expected eurozone PPI data, however, euro found decent demand from big Asian names just above 1.4150 (related to rumors that an Asian central bank was buying Spanish debt), later on a UK clearer and Eastern European names joined bids and pushed euro higher in New York morning back to around 1.4265/75 (stops above 1.4220/25 and 1.4260 were triggered).
At the moment, we heard offers remain at the region of 1.4280-1.4300 and further out at 1.4350 whist bids from same parties are raised to 1.4220, 1.4200 and 1.4180 with stops building up below 1.4150.
The British pound also slipped below yesterday's low of 1.6238 to 1.6224 on stop-hunting, however, the pair recovered some ground as traders booked profit on their short after the release of slightly better-than-expected UK CIPS construction (53.5 vs consensus of 53.1). First layer of offers are tipped at 1.6300 and mixture of offers and stops is located at 1.6325-30 but better offers should emerge around 1.6360-70, on the downside, still see more stops below 1.6220 and 1.6200 with bids ahead of both levels.
The greenback traded in relatively narrow range against the Japanese yen as traders are getting nervous after seeing the rebound from yesterday's low of 76.29 to 77.85 and fresh warnings from Japanese officials earlier also helped stabilizing USD/JPY. More and more analysts believed that BOJ will step in on behalf of MOF to sell Japanese yen once price drop below historical low of 76.25 formed in March after the 9.0 earthquake and tsunami. Bids from real money accounts at 77.40 and 77.20 were absorbed but some bids are noted at 76.90-00 and intervention worries should limit downside, first offers are reported at 77.40 and further out at 77.60-80 with stops only emerging above 78.10-20.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 0.7725; (P) 0.7839; (R1) 0.7947; More...
Intraday bias in USD/CHF remains on the downside and current fall is expected to continue to 161.8% projection of 0.8519 to 0.8081 from 0.8277 at 0.7568 next. On the upside, above 0.7855 minor resistance will turn bias neutral again. But after all, recovery should be limited by 0.8081 support turned resistance and bring down trend resumption.
In the bigger picture, long term down trend from 1.1730 is still in progress and there is no signal of reversal yet. Such decline is expected continue and sustained trading below 100% projection of 1.1730 to 0.9462 from 1.0065 at at 0.7797 will pave the way to 138.2% projection at 0.6931 which is close to 0.7 psychological level. On the upside, break of 0.8519 resistance is needed to be the first sign of medium term bottoming or we'll stay bearish in the pair.
Economic Indicators Update
|23:50||JPY||Monetary Base Y/Y||15.00%||18.10%||17.00%|
|01:30||JPY||Labor Cash Earnings Y/Y||-0.80%||0.40%||1.00%|
|01:30||AUD||House Price Index Y/Y||-1.90%||-3.00%||-0.20%|
|01:30||AUD||Building Approvals M/M||-3.50%||3.00%||-7.90%||-6.30%|
|01:30||AUD||House Price Index Q/Q||-0.10%||-1.00%||-1.70%||-1.10%|
|04:30||AUD||RBA Rate Decision||4.75%||4.75%||4.75%|
|07:15||CHF||Retail Sales Y/Y||7.40%||1.60%||-4.10%|
|09:00||EUR||Eurozone PPI M/M||0.00%||0.10%||-0.20%|
|09:00||EUR||Eurozone PPI Y/Y||5.90%||5.90%||6.20%|
|12:30||USD||PCE Core M/M||0.10%||0.20%||0.30%|
|12:30||USD||PCE Core Y/Y||1.30%||1.40%||1.20%|
|12:30||USD||PCE Deflator Y/Y||2.60%||2.50%|