USD Fails to Keep Post-Jobs Gains
The highly anticipated September labor report triggered a whipsaw reaction in the currency market with the greenback initially rallying sharply following the release. However, upon further analysis of the data, the currency quickly relinquished its gains to fall to fresh session-lows against the euro at 1.4156 and sterling at 2.0442.
The headline non-farm payrolls figure for September was higher than forecast, expanding by 110k compared with an upwardly revised August payrolls at 89k (prev -4k). The unemployment rate, however, crept up higher to 4.7% versus 4.6% from a month earlier – which is the highest level since July 2006. Closer inspection of the report reveals that the August revision was mainly seasonal reflecting higher government employment, specifically in education. The jobs report shifted market sentiment of upcoming Fed policy, with US interest rate futures pricing in approximately at 52% chance of a 25-basis point rate cut in October, compared with a 72% chance prior to the release.
The labor report quelled recessionary fears and tempered expectations for further aggressive easing from the FOMC. Our medium term outlook is for a weaker dollar and view this latest bounce higher to be short-lived. Next week’s US economic calendar is light on data, consisting of the September Federal Budget, August trade balance, weekly jobless claims, PPI, retail sales, business inventories and the University of Michigan consumer sentiment.
EURUSD holds near its session highs, around 1.4140 with initial resistance seen at 1.4180, followed by 1.42 and 1.4250. Support starts at 1.41, backed by 1.4030 and 1.40.
Thu 4 Oct 2007
FX Narrows Ahead of Payrolls
The major currency pairs will likely remain confined to a narrow range heading into tomorrow’s US jobs report. The data will have lasting implications on both the dollar and Fed policy. Consensus forecasts are calling for non-farm payrolls to improve to 94k in September, reversing sharply from the 4k decline in August. A significantly higher than expected reading, along the lines of 125k+, will likely dampen the prospects for more Fed rate cuts this year and stem further aggressive selling in the greenback. Meanwhile, a reading in NFP of beneath 50k would open the floodgates to dollar declines and heighten expectations for another 50-basis point cut at the end of the month. The unemployment rate for September is forecasted to creep up to 4.7% from 4.6% in August.
The ECB and BoE left policy unchanged today, with subsequent comments from ECB President Trichet triggering a whipsaw reaction in the euro. The dollar was initially stronger against the majors but quickly pared its gains on weak US economic data.
Weekly jobless claims edged up higher than forecasts at 317k. August factory orders and durable goods orders both declined by 3.3% and 4.9%, respectively.
Euro Rebounds
The ECB, as largely anticipated, held monetary policy unchanged when it announced its decision this morning, standing pat at 4%. The decision garnered a muted reaction from the currency market, but the subsequent press conference prompted a short-lived sell-off in the euro – hitting a session low at 1.4069 against the dollar.
ECB President Trichet walked a tightrope in his press conference as he carefully maintained a balance in assessing the risks to the Eurozone economy. Traders initially focused on Trichet’s economic outlook, saying that risks of growth are on the downside. He tempered fears though, by suggesting the fundamentals of the economy support a favorable medium term outlook – but that market volatility translates into more uncertainty. Trichet offset his dovish assessment on the economy, by maintaining that risks to inflation were still tilted toward the upside, adding that the Bank was prepared to act if necessary and to counter upside risks to price stability. He reiterated his stance on exchange rates, adding that the euro rate would be one factor in determining rate decisions.
Wed 3 Oct 2007
Technical Bounce Props USD
The greenback found some respite in the Tuesday session despite little positive news to alter the US economic outlook. The dollar rebounded from an 18-year low against the Aussie and recovered toward the 1.4140 level versus the euro. With another bout of dismal housing data, we perceive today’s move as a technical one and a pause to further decline over the coming weeks.
The August pending home sales report showed continued deterioration, falling by greater than consensus forecasts, down 6.5%, albeit an improvement from July’s 12.2% fall. Traders will look to tomorrow’s August non-manufacturing ISM reading, durable goods orders, jobless claims, and factory orders. We expect continued weakness in the aforementioned figures, deteriorating from the previous reading. The key highlight for the week continues to be Friday’s September labor report, with FOMC policy moves likely to be derived from the result.
Euro Relinquishes Gain on USD Bounce
The euro drifted against the dollar overnight to a session low at 1.4140 amid a technical dollar bounce from oversold levels. Economic data released from the Eurozone had little impact on the currency market as the outlook for the ECB decision later in the week remains unchanged. The August unemployment rate held steady near its lows at 6.9% while producer prices were in line with expectations at 0.1% m/m and 1.7% y/y.
The ECB is set to deliberate monetary policy on Thursday and is unlikely to change interest rates. The key highlight will be the subsequent press conference at 8:30 AM from Bank President Trichet to determine whether additional policy tightening can be expected.
In light of recent economic data, particularly the German Ifo, the impact of previous rate hikes are becoming evident in the reports and may prompt the ECB to adopt a less hawkish tone. It will also be interesting to note if any mention of exchange rates will be made — reinforcing the growing unease among Eurozone officials of the continued strengthening of the single currency, deemed to be detrimental to export competitiveness.
Economic data slated for release from the Eurozone in the coming session will see Germany service PMI, Eurozone service PMI, and August retail sales. The service PMI numbers for both Germany and the Eurozone are seen declining in September to 54.0 and 56.8, respectively. Retail sales, meanwhile are forecasted to improve on a monthly basis to 0.4% from 0.1% and stand pat on an annualized basis at 0.5%.
Aussie Pulls Off 18-year High
The Australian dollar retreated against its American namesake after advancing to an 18-year high at 0.8946, succumbing to a rebound by the greenback. The Aussie has staged a sharp rally in the past 3-months, appreciating by 16.6% from its August 17th trough at 0.7673, benefiting from a combination of robust global demand for commodities and overwhelmingly bearish sentiment surrounding the greenback.
The Reserve Bank of Australia is set to announce the results of its policy setting meeting at 7:30 PM, with the RBA seen holding interest rates unchanged at 6.5%. Inflation in Australia remains a key concern for the Bank and if the next round of CPI figures reveals another jump higher – the RBA will be largely expected to lift its benchmark lending rate by 25-basis points in November. Recall the annualized September CPI reading jumped up to the top of the RBA’s 2-3% target band at 3%, bolstering the prospects of another hike before year-end. We maintain our bullish outlook for the Aussie, with a medium-term target of 0.91.
Tue 2 Oct 2007
Dollar Recoups Amid Dearth of News
The greenback recouped some of its losses against the euro, and sterling but remains mired near its lows as the market prepares for a barrage of key economic events in the week ahead. The state of the US economy will remain the primary focus with traders assessing the prospects for further policy easing from the FOMC this year. Of particular importance will be Friday’s labor report given last month’s dismal results. Consensus estimates are calling for a strong rebound to 94k versus a 4k decline in August. Another disappointingly weak jobs report will fuel expectations for the Fed to cut by an additional 50-basis points in October and seal the dollar’s fate for the coming months.
Earlier in the session, the September manufacturing ISM fell to its lowest reading since March at 52, softer than expected and down from a month earlier at 52.9. The prices paid component slipped to 59.0, versus 63.0 from August while the employment index crept higher to 51.7 from 51.3.
Central bank policy decisions will also dictate currency market direction. Both the Bank of England and the European Central Bank are slated to release the results of their policy deliberations on Thursday. Although neither Bank are expected to change policy, last Friday’s speculation of a surprise BoE rate cut are fresh on traders’ psyches and will likely limit the sterling’s upside gains heading into the market. Also, ECB President Trichet’s post-meeting press conference will be closely scrutinized for clues into when the Bank will raise rates again.
Euro Firm Above 1.42
The euro retreated off its record highs against the dollar but holds steady above the 1.42-level. ECB President Trichet pushed the single currency lower overnight as he mentioned the US’ strong dollar policy in his comments. Trichet said he’s “noted with extreme attention that the US Treasury Secretary and … the Federal Reserve have said a strong dollar is in US interests”. The rise in the euro to record highs has prompted Eurozone government officials to express their unease with these levels, arguing that the current exchange rate is detrimental to exports.
In the session ahead, Eurozone economic data slated for release consist of August unemployment rate, and PPI. The Eurozone unemployment rate is forecasted to remain unchanged at 6.9% while PPI is forecasted to slip to 0.1% m/m and 1.7% y/y.
Fri 28 Sep 2007
Greenback Mired near Lows
The dollar sold off across the board to end the week at fresh record lows against the euro at 1.4277 and multi-week lows versus the sterling near 2.0450. Fundamentally, little has changed in the US economic and interest rate outlook but with sentiment biased toward further Fed easing, traders have been given the green light to dump dollars. The economy remains in a precarious state with the housing market yet to reach bottom and burgeoning fears of slipping into recession.
While the barrage of economic data released this morning was mixed, it had little impact in the foreign exchange market. Inflation reports showed the PCE price index softer than expected, with the headline reading at 1.8% y/y and down 0.1% m/m. The core reading edged up by 0.1% m/m, albeit weaker than anticipated while the annualized figure fell to 1.8% from 2.1%. August personal consumption rose by 0.6%, up from 0.3% while personal income drifted to 0.3% from 0.5%. The September NAPM index tumbled to its lowest level since November 2001, falling to 437.6 versus 445.0 from August. However, the Chicago PMI reading exceeded consensus estimates for a decline to 53.3, instead rising to 54.2 from 53.4 a month earlier. The University of Michigan sentiment survey unexpectedly fell to 97.9, coming short of forecasts for 99.0 and down from 98.4 from August. The sentiment survey echoes the Conference Board’s dismal consumer confidence survey from earlier this week and is indicative of deteriorating economic fundamentals and recent market volatility.
We continue to look for more dollar weakness in the near-term. Next week’s US economic reports will provide additional clues on the state of the economy. The data consist of September manufacturing ISM, pending home sales, services ISM, durable goods orders, factory orders, and the September jobs report. Recall last month, the greenback sold off sharply following an unexpectedly dismal non-farm payrolls number, which declined by 4k. The September NF payrolls reading are seen posting a dramatic improvement to 94k.
Traders will also focus closely on central bank policy decisions from the Bank of England and the European Central Bank. The sterling came under pressure in the New York morning amid rumors circulating trading desks that the BoE would come in with a surprise rate cut. The currency quickly recouped its losses against the yen and the dollar, but the prospect of a BoE rate cut will remain fresh on traders’ minds.
Also worth noting, St Louis Fed President Poole said that the 50-basis point Fed rate cut was justified in order to help markets to recover. However, he said it is a mistake for markets to bet on further easing and policy would be determined from meeting to meeting. Poole also added that inflation expectations are firm, but the core PCE figures released today were moving in the right direction.
Thu 27 Sep 2007
USD Struggles on Soft Reports
The beleaguered dollar found no reprieve in today’s US economic reports, with GDP and new home sales falling short of consensus estimates, sending the currency to another record low against the euro at 1.4188. Concerns of deteriorating conditions in the US economy continue to plague the greenback, raising expectations that the Fed will cut interest rates again by at least 25-basis points this year.
The final reading for Q2 GDP growth was weaker than initially anticipated, falling to 3.8% versus calls for a decline to 3.9% from 4.0% in the preliminary reading. However, PCE prices, the Fed’s preferred gauge on inflation, crept up higher than expected, with the headline at 4.3% from 4.2% while the core PCE reading rose to 1.4% versus 1.3%. The housing market continues to deteriorate, with more evidence revealing slowing activity as new home sales plunged by 8.3% to 795,000 units in August. Meanwhile, weekly jobless claims improved to 298,000, down from the previous week at 311,000.
The week concludes with a series of key US releases on Friday morning, consisting of August PCE, personal consumption, personal income, September Chicago PMI, and the University of Michigan consumer sentiment survey. Manufacturing is seen struggling, with the Chicago PMI expected to decline to 53.3 from 53.8. The University of Michigan consumer sentiment survey is forecasted to improve slightly to 99.0, up from the preliminary reading at 98.4. However, given this week’s surprise drop in the Conference Board’s consumer confidence survey to 2-year lows, it will be interesting to see if the University of Michigan survey is resilient to the recent financial market turmoil and can shrug off burgeoning fears of recession.
Euro Buoyed
The euro continued to forge ahead against the dollar and yen amid a combination of robust Eurozone economic data and renewed signs of a faltering US economy. The single currency jumped to a fresh all-time high versus the greenback just shy of the psychologically key 1.42-level at 1.4188.
Germany’s labor report improved better than anticipated with the unemployment rate for September unexpectedly falling to its lowest level in 14-years at 8.8%. Meanwhile, unemployment change in September declined by 50k to 3.694 million. The robust data adds further support for at least another 25-basis point rate hike by the ECB before year-end.
JPY Slumps Ahead of Data
A barrage of Japanese economic data is due out this evening and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.
Wed 26 Sep 2007
Dollar Shrugs off Soft Data
The dollar was little changed against the euro and sterling despite a sharply weaker than expected August US durable goods orders. The typically more volatile figure reversed its previous month’s gains, with the headline number falling by 4.9% versus a 6.0% increase from July. Meanwhile, the excluding transportations reading posted a 1.8% drop compared with a 3.8% gain in the previous month. The disappointing data however, were overshadowed by a strong opening in the US equity bourses after an agreement was reached between GM and UAW to end the strike of auto workers. Moreover, the yen weakened across the board amid gains in global equities.
Traders will turn to several key reports due out in the Thursday session, consisting of Q2 GDP, Q2 PCE, August new home sales, weekly jobless claims and Q2 corporate profits. The final GDP growth figure is seen softer at 3.9%, down from 4.0% in the preliminary reading. The Fed’s preferred gauge of inflation, the PCE is unchanged from the previous quarter – with the headline figure holding steady at 4.2% and the core PCE reading at 1.3%. Weekly jobless claims are seen creeping up slightly to 316k, from 311k last week.
Sterling Mixed
The sterling traded sideways against the dollar, hovering above the 2.01-level while edging higher versus the yen toward the 233-mark. Data released overnight revealed slightly stronger than expected economic growth from the UK for the second quarter, with the annualized figure edging out estimates for an unchanged reading at 3.0%, instead growing at 3.1% and the quarterly reading steady at 0.8%. The current account deficit was also smaller than anticipated at 9.1 billion sterling, shrinking from 12.2 billion sterling in the first quarter.
In the session ahead, UK data will include September nationwide house prices and CBI distributive trades. The pound continues to be weighed by fears of a UK credit crunch and its subsequent impact on the overall economy, thereby raising expectations that the next rate move by the Bank of England will be a cut.
Cable has retreated since testing the descending trendline resistance at 2.03 earlier in the week and holds steady above the 2.01-mark. We expect the pair to continue to trade sideways and lag in performance relative to the euro or Aussie against the dollar, as a result of tempered rate hike expectations. Support begins at 2.0120, followed by 2.01 and 2.0070. Additional floors will emerge at 2.0040, backed by 2 and 1.9970 and 1.9940. Gains will target initial resistance at 2.0180, followed by 2.02 and 2.0230. Subsequent ceilings are seen at 2.0275 and 2.03.
Tue 25 Sep 2007
USD Slumps on Data
The dollar was dragged lower in the Tuesday session on the heels of lackluster US economic reports, plunging to a new record low versus the euro at 1.4154 and again falling to parity against the Loonie. We expect the greenback to remain under pressure over the coming months amid persistent worries that the US economy may slump into recession and the increased prospects for additional rate cuts from the FOMC.
The data released earlier in the session reinforced the pessimism surrounding the US economy, with consumer confidence and housing reports pointing toward further weakness. The Conference Board’s consumer confidence index tumbled to its lowest level in nearly 2-years, at 99.8 for September down sharply from August at 105.6. The dismal confidence figure reflects heightened market volatility, growing uncertainties stemming from the housing market and worries over the prospects of a US recession. There was also renewed evidence of the slumping housing market with existing home sales down 4.3% at 5.49 million units, versus 5.75 million units in July.
Euro Climbs to Record High
The single currency jumped to another fresh all-time high against the greenback despite a softer than expected reading from Germany’s Ifo sentiment survey. The euro continues to benefit from fears of further deterioration in US economic fundamentals, and now sets its sights on the next key psychological resistance at the 1.42-level. Moreover, the outlook for interest rates between the Fed and the ECB also remains favorable for the euro, with the FOMC likely to further ease policy while the ECB is seen tightening by at least 25-basis points before the end of the year.
ECB Board member Liebscher reinforced the economic strength of the Eurozone. Despite the prevailing downside risks, Liebscher said the Eurozone economy is in a good state and that the economic expansion remains dynamic. Meanwhile, the ECB’s Garganas sounded a hawkish tone, suggesting that “upside risks to price inflation dominate any effects stemming from the appreciation of the euro”. He deems the main drivers of Eurozone inflation are domestic, but added that it was appropriate to await more information prior to taking additional action. Garganas also added that the primary impact of recent market turbulence would be higher risk perception and would otherwise not affect the main scenario.
Germany’s Ifo sentiment survey was lower than forecast, with the business climate index falling to 104.2, compared with calls for 105 and down from 105.8 a month earlier. The current conditions component slipped to 109.9, versus estimates for a smaller decline to 111.0 from 111.5, while the expectations index dropped to 98.7 and down from 100.4. The Ifo said that the initial signs of “brake to growth” emerging and that the retail sector climate has deteriorated considerably. However, it added there was no strong impact on export expectations from a stronger euro. The Ifo’s chief economist Nerb believes that the German business climate has been impacted by the market turbulence and foresees a softening in the Germany economic rebound rather than an end.
Eurozone economic data over the coming sessions will reveal further clues into the state of the region’s economy. The reports will include Eurozone money supply, Germany’s September labor report, Eurozone sentiment surveys, and the September Eurozone HICP.
Mon 24 Sep 2007
Dollar Mired Near Lows
The dollar continues to reel from last week’s 50-basis point Fed rate cut, falling overnight to a fresh record low against the euro at 1.4129 and stumbling versus the sterling to 2.0316. Renewed fears of a faltering US economy will continue to drive the foreign exchange market this week as concerns of a possible recession weigh on the greenback. However, given the abrupt nature of the Fed’s aggressive ease, traders must keep a close eye on US inflation data for fear that the 50-basis point rate cut may strengthen inflationary pressure over the coming quarters.Economic data slated for release this week will provide further clues on the US outlook, with reports to shed light on growth, the housing market, inflation, manufacturing, and consumer sentiment. On the whole, consensus estimates look for weaker data compared with the previous releases. The housing market slump will continue to lead the deterioration in US fundamentals, with August existing home sales seen falling to 5.49 million units, versus 5.75 million units previously and new home sales forecasted to drop to 830k units compared with 870k units in July. The final reading of Q2 GDP is estimated to be revised lower to 3.9%, from 4.0%, while the Fed’s preferred gauge on inflation is seen unchanged in Q2 with core PCE standing pat at 1.3%. Additionally, durable goods orders and Chicago PMI will provide more clues on the extent of the slowdown in manufacturing. Although durable goods orders are typically a volatile figure, estimates are calling for the number to fall by 3.1% in August, reversing the previous month’s 6.0% increase. The excluding transports reading is also seen declining, down by 1% versus a 3.8% gain a month earlier.With additional monetary policy easing expected from the Fed this year, particular emphasis will be placed on the outlooks for central bank decisions from the ECB, BoE and BoJ. Among the banks, only the ECB is expected to maintain its current tightening cycle with another 25-basis point rate hike before year-end. However, economic data from the Eurozone will be closely scrutinized to assess the impact thus far on the region’s economy from previous rate hikes. Traders will turn to Germany’s September Ifo sentiment survey, due out early Tuesday morning at 4:00 AM, and is seen softening from August. The September Ifo expectations component is seen declining to 99.5, down from 100.4, while the current conditions figure is forecasted to fall to 111 versus 111.5.Meanwhile, both the Bank of Japan and the Bank of England are expected to leave policy unchanged for the remainder of the year given the current global and domestic economic outlook. The BoE is even anticipated to cut rates given tightening credit conditions and the impact of global financial volatility on the UK economy. Later in the week, traders will digest Q2 UK GDP, seen unchanged at 0.7% q/q and 3.0% y/y.A barrage of Japanese economic data is due out this week and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.
Fri 21 Sep 2007
Euro Edged Lower after Weak PMI
After hitting a new record high at 1.4120 versus the dollar, the euro edged lower versus the dollar on weaker-than-expected manufacturing and services PMI reports from the euro zone. The Euro zone services PMI fell from 58 to 54 in September, below the estimate of 57.5. The manufacturing PMI dropped from 54.3 to 53.2, weaker than the expectation of 53.9. Euro zone current account balance shrank from 11.4 billion euros to 3.3 billion euros in July. The main reason behind the weak figures is the recent global financial market turbulence beginning from August. The dollar remains under pressure after the Fed cut half a percentage-point this Tuesday. Fed Chairman Ben Bernanke yesterday said credit market turmoil may make the housing recession more severe, adding to the worries over the nation’s economy. Interest-rate futures indicated traders bet a 70 percent chance of a quarter-percentage point cut to 4.50% at the Fed’s policy meeting on October 31. The Fed’s aggressive move lifted investors risk appetite and carry trades increased modestly. That is why the dollar weakened against most of its rivals except the yen after the rate cut. Besides, the sterling has been recovering from subprime crisis concern sparked by the Bank of England bailing out the nation’s fourth biggest home mortgage lender Northern Rock. The currency on Friday strengthened to around 2.02 versus the dollar. CAD Hit 31-yr High 0.9940 vs Dollar The Canadian dollar touched a 31-year-high at 0.9940 versus the dollar and it gave back some of its gains after a government report showed retail sales fell unexpectedly for a second month. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month. EURUSD will face interim resistance at 1.41, followed by 1.4120 and 1.4150. Additional ceilings will emerge at 1.4180, backed by 1.42. Support starts at 1.4050, backed by 1.40, 1.3980 and 1.3950. Subsequent floors are eyed at 1.39. USDJPY encounters interim resistance at 115.80, backed by 116 and 116.30. Subsequent ceilings will emerge at 116.50, followed by 116.80 and 117. On the downside, support begins at 115.30 and 115, followed by 114.70. Additional floors are eyed at 114.30, backed by 114 and 113.70. GBPUSD encounters interim resistance at 2.02, backed by 2.0220 and 2.0250. Subsequent ceilings will emerge at 2.0270, followed by 2.03 and 2.0320. On the downside, support begins at 2.0170, followed by 2.0150 and 2.0120. Additional floors are eyed at 2.01, backed by 2.0080 and 2.0050.
Thu 20 Sep 2007
Dollar Weakened to 1.41 vs Euro
The dollar extended its loss against its major rivals today on speculations that the Fed may continue to lower fed fund rates in the rest of the year. The euro touched 1.41 versus the dollar, while the yen strengthened to as low as 114 against the dollar. The dollar index fell to an all-time low at 75.73 yesterday. Interest-rate futures pricing indicated traders see an 80 percent chance that the Fed may cut a quarter-percentage point to 4.50% on its policy meeting at the end of October. In the early session, US weekly jobless claims fell 9k to 311k, beating the estimate of 321k. Philadelphia Fed business conditions index dropped from 0.4% to minus 0.6% in August, below the estimate of minus 0.2%. Fed Chairman Ben Bernanke today said in a congressional hearing that subprime mortgage delinquencies are likely to rise further, and the Fed is committed to prevent lending problems. He added the market tends to self-correct over time and subprime mortgage market has adjusting sharply. US Treasury Secretary Henry Paulson said the Fed’s move help stabilize market credit crunch. The dollar extended its loss after London’s Daily Telegraph newspaper cited that Saudi Arabia did not lower its interest rates in line with the Fed, though King Abdullah’s advisor said the country will not unpeg its currency from the dollar in the near future. CAD Reached Parity with USD The Canadian dollar rallied sharply on rising commodity prices. Crude oil surged to 83.46 dollars per barrel today. The currency equaled the dollar for the first time since November 1976. The market will pay attention to Canada retail sales report due tomorrow. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month. EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850. USDJPY encounters interim resistance at 114.70, backed by 115 and 115.30. Subsequent ceilings will emerge at 115.50, followed by 115.80 and 116. On the downside, support begins at 114.30 and 114, followed by 113.80. Additional floors are eyed at 113.50, backed by 113 and 112.70. GBPUSD encounters interim resistance at 2.01, backed by 2.0130 and 2.0170. Subsequent ceilings will emerge at 2.02, followed by 2.0220 and 2.0250. On the downside, support begins at 2.0050, followed by 2 and 1.9970. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.
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