MORNING BRIEFING: The sharp rise in EURUSD to 1.4081, close to the trend line at 1.4125. Buyer’s stop orders are seen above 1.4125.

[RTFX-Trading]

MORNING BRIEFING: Sharp rise in EURUSD to 1.4081, close to the trend line at 1.4125. Buyer’s stop orders are seen above 1.4125.

What’s new?
FED FOMC: The economy is significantly under its potential.
FED FOMC: Employment sector will remain bad for some time.
FED FOMC: Economic risks have decreased but remain high.
United States: Geithner repeated that the Dollar will remain the primary reserve currency.
United States: Industrial production declined less than expected in June.
United States: Retail prices up by 0.70% in June.
United States: “Empire State” index shows improvement in July.
China: Foreign exchange reserves exceed $2’000Bln.
United Kingdom: Unemployment rate at its highest since early 1997.
Euro zone: Retail prices decline by 0.10% in June.
Switzerland: Retail sales down 1.40% in May

Today:
08h45 France: HICP Final M/M June, exp 0.20%, previous 0.10%.
08h45 France: HICP Final Y/Y June, exp -0.50%, previous -0.30%.
11h00 Switzerland: ZEW Indicator July, previous 9.7.
14h30 United States: Weekly Jobless Claims, exp 565'000, previous 565'000.
15h00 United States: Net Long-Term TIC Flows May, exp 16.5B, previous 11.2B.
16h00 United States: Philadelphia Fed Business Index, exp -5.0, previous -2.2.

Overnight Rates and Indices:
EURUSD: 1.4116 – 1.4061.
USDCHF: 1.0779 – 1.0740.
GBPUSD: 1.6441 – 1.6373.
EURJPY: 131.17 – 130.46.
USDJPY: 94.44 – 93.78.
DowJones: 8'616 +3.07%.
NASDAQ: 1’862 +3.51%.
S&P 500: 932 +2.96%.
Nikkei: 9’379 +1.19%.
Gold: $936.30.
Crude Oil: $61.52.
 
Comments:

The market regains its confidence following reassuring US economic figures and results from large corporations that also reassure investors. The "carry trades" show significant increases, the GBPJPY is up to 154, the AUDJPY up to 75 and NZDJPY at 60. The Dollar, safe haven currency, pays the costs of recovery expectations, as it is in sharp decline against the Euro at 1.4081, at 1.0765 against the Swiss Franc and 1.6401 against the Pound.   
The minutes from the FOMC meeting in June were considered neutral, although generally the tone was pessimistic as expected: "It will take 5-6 years for the economy to return to its normal growth trend". Most members of the FOMC agreed to declare that the economy is clearly below its potential and that the employment situation will remain bad for some time.

The technology and finance sector will continue to drive the market today, with the results of IBM, Google and JPMorgan expected later on in the day. Satisfactory results should continue to support the "carry trades", which could lead to further rise in the EURUSD pair. The bearish trend line since July 2008 is currently at 1.4125. There is a huge amount of buyer’s stop orders above this zone.

Good Day.

Emman Xuereb
RTFX Ltd
Head Office
The Cornerstone Complex, 16th September Square | Mosta MST 1180 | Malta
Tel:  +356 23 31 00 00
Fax: +356 21 41 24 58
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