GBP Interest Rate Announcement & US Unemployment Claims on tap.
Economical News
USD
The greenback has been pushed off the headlines as most of the significant economic information has been coming in the form of interest rate releases from the rest of the world.
The Australian Interest Rate was left unchanged at 6.25% on Tuesday night, followed by the European rate Hike to 4.00%. The New Zealand Interest rate was also hiked by a 0.25% to 8.0% which is an unbelievable 9 year high. The EUR/USD was not heavily influenced by the Rate hike, in contrary to the AUD and Kiwi which continued the ongoing appreciation we have been seeing for many months now. As for domestic news from the US we saw the release of the Unit Labor Costs yesterday which exceeded expectations and came out at 1.8% with a 1.3% consensus. Today the US calendar is once again relatively light with the exception of Unemployment Claims which is expected to grow by 5K to 315K. US Retail Sales release is expected tomorrow and should seal this economic week with relatively no price movement coming from the United States. It looks as if the greenback's fate is at the hands of other markets, at least until the end of this week.
EUR
The ECB hiked the Interest rate yesterday by 0.25% to 4.00%. The rate hike was widely expected and the market reacted with a slight EUR depreciation that is still trading near 1.3500. The near future of the EUR and the ECB is vague as monetary policy keeps the EUR and the GBP in a very tight range with no sharp price movement.
As for today the Bank of England is expected to release the Interest Rate decision, and although it is widely expected to remain unchanged, the BOE might surprise and hike it by 0.25%. If a hike will indeed occur, we might see the GBP/USD testing the 2.0000 levels and even 2.0050. As a whole it looks like the USD is not going to make a significant move this week and will allow the European currencies to continue the strengthening move, at least on a local scale.
JPY
The JPY is the showing the first sign of strength in a long time, probably due to profit taking of the carry trades. The USD/JPY has made a 120 pip correction yesterday as it dropped from 122.00 to 120.80 very much like the EUR/JPY's move to 163.10 from a 164.40 peak yesterday. It looks that the profit taking correction is just temporary, and the JPY will continue its ongoing weakening course we have been seeing for several months now. The Core Machinery Orders is expected to be released tonight and jump from negative ground of -4.5% into positive 4.5% which might give the JPY its final push before going back the carry trades course.
Technical Analysis
EUR/USD
On the 4H chart, a bullish pennant is establishing and implies a possible breakout of the 1.3523 support level which tested yet hasn't been breach in last 4 days In the upcoming days this breakout is more than a reasonable assumption. The preferable strategy may be going long in any value below 1.3500.
GBP/USD
Daily chart note of an upcoming reversal when RSI 66 with negative divergence and Slow Stochastic crossing at 84 are suggesting taking this forex pair to consolidate at 1.9850.
USD/JPY
The weekly chart is bearish and suggesting a reconsolidation at 120.00 in the upcoming weeks. Hourlies are bullish and still have a lot of steam keeping this positive momentum, it looks like this pair will touch the 121.05 and then try his third try at 3 days to breach the 121.30 level.
Preferable strategy is going long on dips 121.05 and to take profit on tops 121.30.
USD/CHF
A falling wedge is observed on the 4 H chart which signals an upcoming bullish trend that may breach the 1.2200 later today. We are to opine that the 1.2168 level would be an attractive entry point for going long.
Wild Card
USD/CAD
An amazing bearish channel is shown on this forex pair daily chart, this channel which was established in the last 3 months is waiting to be breached , however we need to find the right signal which will "inform" us of on the upcoming reversal.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
 |
|
|
|
 |
| Weekly Trend | |
|
|
|
|
|
| Resistance | 1.3674 | 2.0000 | 122.10 | 1.2225 | 0.8590 | 0.6880 |
| 1.3525 | 2.0068 | 121.78 | 1.2210 | 0.8534 | 0.6833 | |
| 1.3504 | 1.9930 | 121.60 | 1.2190 | 0.8500 | 0.6804 | |
| Support | 1.3434 | 1.9900 | 121.60 | 1.2161 | 0.8400 | 0.6757 |
| 1.3400 | 1.9880 | 121.20 | 1.2135 | 0.8364 | 0.6730 | |
| 1.3356 | 1.9840 | 120.77 | 1.2097 | 0.8925 | 0.6700 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 06/07/07 | 12:00 | GBP | Interest Rate Announcement | 5.50% | 5.50% |  | |
| 06/07/07 | 13:30 | USD | Unemployment Claims | 310K | 315K |  | |
| 06/07/07 | 15:00 | USD | Wholesale Inventories | m/m | 0.3% | 0.3% |  |