U.S. Dollar. Our bias BEARISH, we’ll be looking to sell on rallies.
• S & P downgraded U.S. economy on Friday
• Investors concerned over forced liquidations of U.S. Treasury holdings and speculative fall-out
• Fed Funds Rate & FOMC statement due Wednesday
• Dollar rally from 9,322 is unfolding in 5 waves suggesting a major low is in place
Euro. Our bias BEARISH, we’ll be looking to sell on rallies.
• Spread between Italian and German bond yields grew last week to its widest in 15 years
• Pressure is on for the EMU in the week ahead, as it is shaping up to be a make-or-break time across financial markets
• How the U.S. Dollar reacts to the highly-anticipated U.S. FOMC rate decision and statement on Wednesday is likely to set the tone for the major currencies - particularly the Euro - in the remainder of 2011.
• EURUSD’s rally from the 2010 low is in 3 waves
• As long as price remains below the 26th July high of 1.4525, the bearish Euro outlook remains.
Japanese Yen. Our bias NEUTRAL, on the sidelines till a clearer picture develops.
• Last week's anticipated intervention from Japan's Ministry of Finance has had little effect on Yen strength
• Expected U.S. Dollar weakness raises the possibility of more central bank intervention in the week ahead
• A wait and see approach for the Yen is the best option at present.
• USDJPY needs to overcome 81.45 in order for the series of lower highs since April to be broken
• Skepticism of central bank intervention efforts remains as long as USDJPY trades below 81.45
British Pound. Our bias BEARISH, we’ll be looking to sell on rallies.
• Recent developments coming out of the U.K. dampening the outlook for future growth
• Bank of England Inflation report due Wednesday
• Credit Suisse Overnight Index Swaps for the BoE have dipped into negative territory
• Cables’ rally from the 2010 low is in 3 waves and may be complete
• We remain bearish Sterling in the week ahead.
Canadian Dollar. Our bias BEARISH, we’ll be looking to sell on rallies.
• Canadian Dollar was down against the U.S. Dollar last week following a mixed batch of economic data, an unwinding of riskier assets and the global sell-off in oil prices
• Uncharted waters for the Loonie, but risk aversion, declining oil prices and market uncertainty for the troubled Greenback bode ill for the Canadian currency in the week ahead.
• USDCAD has reached the 200 SMA
• Exceeding the June 0.9911 high would put a double bottom in place with the April and July lows and indicate a significant shift in the longer term down-trend.
Australian Dollar. Our bias BEARISH, we’ll be looking to sell on rallies.
• Aussie under increasing pressure last week with global sentiment taking a sharp turn to the downside
• Employment report due on Thursday
• AUDUSD has continued to plummet and is now almost 700 pips from its record high last week
• Next key support comes in at the 200 SMA by 1.0300 levels
• Expectations are for a snapback rally to 1.0520 (the underside of the rising trend-line from May 2010) or possibly 1.0680 before further declines to parity
New Zealand Dollar. Our bias NEUTRAL, on the sidelines till a clearer picture develops.
• Similar to its trans-Tasman neighbour, the Kiwi last week was also under pressure, falling some 500 points against the U.S. Dollar by Fridays close
• The Kiwi’s’ outlook over the coming week is admittedly unclear
• Kiwi price action will no doubt be determined by the broader global sentiment landscape, which doesn’t bode well for NZD
• NZDUSD has reached 0.8300, a level that is expected to provide strong support
• NZDUSD strength would encounter resistance at 0.8460 and 0.8540 levels before further declines.