Dollar posted 5-week gains against Euro

The Dollar jumped to a 6-month high against the Euro on Friday, helped by another drop in oil prices and growing views the US economic slowdown may be bottoming while growth in the euro zone stalls. It also posted a fifth week of gains as investors shifted their view on the global economy's ability to withstand a downturn initiated in the United States. Data in the US on Friday showed an unexpected rise in manufacturing activity in the New York state area and an increase in industrial output and consumer confidence. By contrast, reports on Thursday showed the euro zone economy contracted in Q2 for the first time since the common currency's inception. A steep drop in commodity prices also has lent support to the Dollar easing concern about the US economic outlook in the second half of the year. Crude oil prices slid further on Friday and ended 0.9% lower at 113.90 per barrel.

News and Events:


The Dollar jumped to a 6-month high against the Euro on Friday, helped by another drop in oil prices and growing views the US economic slowdown may be bottoming while growth in the euro zone stalls. It also posted a fifth week of gains as investors shifted their view on the global economy's ability to withstand a downturn initiated in the United States.

Data in the US on Friday showed an unexpected rise in manufacturing activity in the New York state area and an increase in industrial output and consumer confidence. By contrast, reports on Thursday showed the euro zone economy contracted in Q2 for the first time since the common currency's inception.

The Bank of England this week also warned of economic slowdown ahead and Japan said its economy contracted in Q2 at the sharpest rate in 7 years.

On Friday, EurUsd was down 0.55% to 1.4694 after falling as low as 1.4659 it’s lowest since February. UsdJpy reached a 7-1/2 month high at 110.67. It traded last up 0.67% to 110.53. GbpUsd touched a two-year 1.8515 low before ending unchanged at 1.8659. UsdChf posted 1.1010 6-months high and closed down 0.06% to 1.0960.

A steep drop in commodity prices also has lent support to the Dollar easing concern about the US economic outlook in the second half of the year. Crude oil prices slid further on Friday and ended 0.9% lower at 113.90 per barrel.






Today's Key Issues (time in GMT):


07:15 CHF June Retail sales 3.2% vs 7.4%
09:00 EUR June Euro-zone Eurostat trade €1.2b vs -€4.6b
12:30 CAD June Securities Canadians –C$6.09b
12:30 CAD June Securities Foreign C$10.72b
17:00 USD August NAHB housing market index 16 vs 16
22:45 NZD Q2 Producer prices 2.6% vs 2.3%
22:45 NZD Q2 Producer prices Index 2.1% vs 1.8%
The Risk Today:

EurUsd:
Market dropped as low as 1.4659 last week. Further weakness will put the focus on strong support 1.4366 22nd January low. Initial support holds 1.4659 Friday low. On the upside, only a return over 1.5000 and 1.5500 will release actual pressure and put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200.


GbpUsd:
Cable hit 2.0158 high 4-weeks ago and 1.8513 low on Friday. On the downside, recent market break below 1.9105 former support (50% retracement of 1.7049 – 2.1162 advance) looks still strong. Initial support holds 1.8619 Thursday low. On the upside, former support 1.9363 holds also strong resistance. Key level holds 2.0100 resistance


UsdJpy:
Last 3-weeks recovery pushed the market up to 110.67 high last week. Further advance would open the way toward 111.92 early January high. On the downside, a return below 108.59 former resistance will undermine the current advance. Profit taking might bring back down to 105 level and may open the way toward 102.73 support and 100 pivot point. Initial support holds 108.37 last week low.


UsdChf:
Continuous Dollar strength pushed over 1.0800 last week and hit 1.1010 high on Friday. On the downside, initial support holds 1.0863. Only renewed weakness below 1.0500 and 1.0375 would retest the 1.0000 pivot point and may open the way toward 0.9637 17th March low.



Resistance and Support:



By
Jean-Claude Braha
- ACM Advanced Currency Markets, Geneva, Switzerland
_____________________________________
Provided by ACM: http://www.ac-markets.com