Analysis by Pepperstone

U.S. Dollar. Our bias BULLISH, we’ll be looking to buy on dips

• U.S. Dollar closed last week lower by 0.63% after Philadelphia Fed survey which plummeted to -30.7 vs the expected 4.0
• End of week Jackson Hole Symposium will determine Greenbacks fate for 2011
• Dollar Index rally from 9,323 suggests that at least one more bull leg should unfold
• Expectations are for a test of 9,680 and possibly 9,765
• We maintain a bullish Dollar bias in the week ahead and will look to buy dips.

Euro. Our bias BEARISH, we’ll be looking to sell on rallies

• Last week, the Euro squeezed out some modest gains against the weakening U.S. Dollar despite the German DAX being nearly 30% off its multi-year highs
• French, German, Euro PMI and ZEW surveys due Tuesday and the German Ifo Business Climate report due on Wednesday
• Friday’s price action saw a failed test of 1.4450 and the trend line connecting the May, June and July highs
• Near term price action, the picture is confused
• A failed rally to 1.4500 levels would be a sell signal for setbacks to 1.4000 key support before the eventual push to 1.5000
• We maintain a bearish Euro bias in the week ahead and will look to sell rallies

Japanese Yen. Our bias NEUTRAL, on the sidelines till a clearer picture develops

• Last week, the Japanese Yen rose against the Kiwi, Franc, Loonie and U.S. Dollar, while depreciating against the Sterling, Euro and Aussie
• The week ahead has no significant Japanese economic data, apart from Thursdays CPI report for July
• Looking forward, an intervention is becoming an increasingly likely scenario
• Friday’s price action saw USDJPY touch new record lows at 79.95
• The looming threat of BoJ intervention will see us on the sidelines with Yen pair’s until a clearer picture develops.

British Pound. Our bias NEUTRAL, on the sidelines till a clearer picture develop

• Last week, saw Sterling strength against most of its major counterparts mainly due to a large £7B
acquisition of British firm Autonomy
by
American giant Hewlett Packard
• Sterling remains significantly correlated with the S&P 500 - a proxy for investors’ risk appetite
• The longer term bullish bias remains valid but near term GBPUSD weakness is expected
• Weakness to 1.6290-1.6250 levels would offer buying opportunities
• We maintain a neutral Sterling bias in the week ahead.

Canadian Dollar. Our bias BEARISH, we’ll be looking to sell on rallies

• Weak U.S. growth forecasts taking a toll on Canadian Dollar
• Canadian economic data implies zero to negative activity rates for Q2 2011 as a whole
• End of week Jackson Hole Symposium is expected to have a significant impact on the Loonie for the remainder of 2011
• Last weeks price action stalled shy of a trendline that extends off of the 2010 highs
• We maintain a bearish Loonie bias in the week ahead and will look to sell Loonie rallies.

Australian Dollar. Our bias BEARISH, we’ll be looking to sell on rallies

• RBA minutes last week, revealed a dovish outlook
• Australian economic data is turning soft
• Expectations are for a test of the recent low by 0.9930 levels
• 1.0435-1.0475 is key resistance and rallies to these levels would offer selling opportunities
• We maintain a bearish Aussie bias in the week ahead and will look to sell on rallies

New Zealand Dollar. Our bias BEARISH, we’ll be looking to sell on rallies

• Last
 week
 saw 
NZ milk 
powder 
prices 
fall 
back
 to a 
1 
year 
low 
as
 supplies 
rose 
and
 bullish
growth 
projections
 were
 scaled
 back
• NZ commercial 
deposit 
rates 
signalling
 that 
the
 next 
move 
in
rates 
is 
not higher, 
but 
lower.
• Expectations are for a test (or break) of the 9th August low at 0.7960
• 0.8300-0.8340 is near term resistance and rallies to these levels would offer selling opportunities
• We maintain a bearish Kiwi bias in the week ahead and will look to sell rallies.