29.07.2010 - XTB market snapshot

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Date: 2010-07-29 09:15

Slowdown confirmed / Euro holds up, Aussie may eye correction / Events to watch – claims, Japanese package.

Slowdown confirmed

Beige Book released yesterday by the Fed didn’t get a warm reception as it confirmed signs given by a broad range of macroeconomic indicators. While the June’s book signaled an expansions in all regions, the July’s pointed at a stagnation in two and moderation in others. Durable orders also disappointed, contracting by 1% m/m vs expected rise of 0,9%. In annual terms, orders were still up by nearly 16% in June but it stems mostly from the huge base effects. In real terms orders are still at the level seen in the first half of 2003. Given those poor releases investors will get anxious ahead of the next week’s payrolls and the ISM. At the moment, however, the impact on the markets is mitigated by another strong session in Asia.


Euro holds up, Aussie may eye correction

With a support from equity markets and narrowing premiums on PIIGS debt the euro resists to give up recent gain vs. the dollar. The EURUSD failed so far to rise above a resistance zone of 1,3050-1,3120 but despite some short-term negative technical signs (an evident H4 falling star on Tuesday for instance) it resisted a correction either. Now the move resembles triangle (which usually means continuation) – a small one on M30 and larger one on H4. In both cases a resistance of 1,3046 plays a critical role. The impulse might but doesn’t need to come from equities.


Meanwhile, the bulls try to negate a possible correction on the Aussie. Correction could result from a daily falling star followed by a long black candle in the area (potentially) closing a large harmonic formation (levels 0,9 – 0,91). If the market fails to negate this scenario, Aussie may be bound for a decent correction, confirmed by a pass of support at 0,860.

Events to watch – claims, Japanese package

Initial claims climbed last week to 464k, not leaving much room for comfort ahead of the monthly payrolls due next Friday. This week the markets consensus assumes an improvement but merely by 4k (8.30 ET, 14.30 CET). During the Friday’s Asian trade investors will look for the package of the Japanese macro, including CPI, output, PMI and unemployment rate.


Przemysław Kwiecień
Chief Economist

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