Download Thursday, June 26th, 2014 Dollar Greenback fell against major

Thursday, June 26th, 2014
Dollar
Trend
Support
Currency
DXY
Resistance
Exp.Range
Weekly
Fortnightly
Down
Down
79.20-80..90
Spot
S3
S2
S1
79.20
79.50
79.80
80.17
R1
R2
R3
80.40
80.63
80.84
Greenback fell against major currencies on Wednesday after U.S. economic data came in
below expectations, suggesting the recovery has further to go before the Federal Reserve will
raise interest rates. Dollar broke the level of 80.20 and marked a low of 80.09 before closing
at 80.20 levels yesterday. Currently it is quoting at 80.17.
US first-quarter 2014 annualized gross domestic product growth indicated an even greater
annualized decline of -2.9% relative to the previously estimated drop of -1.0% and higher
against the expectation of -1.8%. The sizeable decline is due to surplus imports than exports
and low consumer spending due to harsh winter.
The durable goods order fell to -1.0% against 0.6% earlier suggesting an anticipated rebound
in growth this quarter could fall short of expectations, even as a measure of business capital
spending plans rose which added pressure on dollar.
However, Flash service PMI came on a strong footing marking at 61.2 from 58.1 in May 2014
as there was an increase in service output and new business levels, service sector job creation
hits nine month high.
The poor numbers prompted investors to buy U.S. Treasury, Bond yields, which move
inversely to prices, fell accordingly and dragged down the dollar.
Benchmark Dow Jones ended on a positive note up by 0.29% at 16,867.51 despite of weak
economic releases along with Nasdaq and S&P 500 which was tad higher at 0.67% and
0.49% at 4379.76 and 1959.53 respectively.
Later today, Unemployment claims, for the week ended 20th June is set to release today
along with Core PCE and Personal Spending and income which will be crucial for dollar.
DXY: Greenback has broken the range of 80.20-80.45 in which it was trading for past 3 days.
The recent break below 80.20 indicates weakness in this index and now the immediate support
comes to 79.80 levels as far as the level of 80.42 is intact on the upside. RSI and MACD both are
exhibiting negative signals as both are below their respective equilibrium.
Euro
Trend
Support
Currency
EURO
Resistance
Exp.Range
Weekly
Fortnightly
Up
Up
1.3535-1.3720
Spot
S3
S2
S1
1.3535
1.3550
1.3580
1.3632
R1
R2
R3
1.3654
1.3680
1.3720
The single currency yesterday marked a high of 1.3651 and ended near the day’s high at
1.3627 against US dollar up by 0.16% as the economic releases came with good numbers.
Italy retail sales in April 2014 increased by 0.4% with respect to March 2014 suggesting that
the Euro zone’s third largest economy is improving in terms of consumer spending which
directly relates to increase in retail sales.
ECB Governing Council Luis Maria Linde hinted that they might start asset purchasing
program despite the financial markets is on the brink to break. ECB policymaker, Jens
Weidmann urged to refrain to purchase securitized debt as it can hurt the economy.
European markets opened lower on Wednesday, falling for the fourth straight day amid
downside pressures of the geopolitical tension in Iraq and renewed concerns about the crisis
in Ukraine. France's CAC 40 fell 0.50% to 4,487.16 and German DAX fell to 0.66% to
9872.97.
There is no impactful data is set to release today and so Euro is expected to take cues from
US who is set to come out with unemployment data.
EUR/USD: The single currency has started forming a higher high and higher low formation and
it is moving in a channelized formation suggesting a strong upward momentum. As far as this
channel is intact Euro can move up till its next hurdle which is placed at 1.3680-1.3720 levels.
The immediate support will come to 1.3599 followed by 1.3580.RSI has given further positive
signal by crossing its equilibrium which is 50 and MACD remains above the trigger line.
Sterling
Trend
Support
Currency
Pound
Resistance
Exp.Range
Weekly
Fortnightly
Down
Up
1.6922-1.7066
Spot
S3
S2
S1
1.6922
1.6939
1.6963
1.6993
R1
R2
R3
1.7010
1.7037
1.7066
Cable ended on a flat note against the USD and closed at 1.6985, amid lack of major
economic releases in the UK economy. Pound marked a low of 1.6952 after making a high of
1.7004.
The pair restricted its losses and regained some momentum later yesterday as the data in US
disappointed the market participants and as a result pound ended flat.
Confederation of British Industry (CBI), in its monthly distributive trade survey, reported
that its UK retail sales balance index declined to a reading of 4.0% in June from previous
month's reading of 16.0% which can slew down the pace of UK’s economy.
The FTSE 100 was down by 0.79% ending at 6733.62 on the back of weak economic releases
in Euro zone dragging its indices and FTSE down.
Today all eyes of market participant will be fixed on the speech of BOE Carney and the
financial stability report which is going to be released today. The interest rate has not been
hiked and as a result it generates concerns over the financial stability which will be crucial
for sterling.
MFSL
Confidential
Page 2
of 3
GBP/USD: Cable yesterday formed a doji pattern but it requires a confirmation on the following
day as it failed to give previously. However, RSI has reversed from the overbought zone
accompanied with negative divergence which suggests loss of momentum and MACD is on its
way to give a sell signal. Failure to protect 1.6963 will drag prices lower till 1.6922. The
resistance comes to 1.7010.
Please contact your Mecklai advisor to best understand how the information and analysis contained in this document should be
used, given your specific exposures. If you do not have an existing advisor please write to [email protected] to set up the
relationship. The information and analysis contained in this document come from sources believed to be reliable and our own
internal research; however, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness
or correctness of this information. Nothing contained in this publication shall constitute an offer to sell/purchase or an invitation/
solicitation to do so for any currency, security, commodity or equity. Mecklai Financial Services Ltd. accepts no liability
whatsoever for any loss, howsoever arising, from any use of this document, its contents or otherwise arising in connection
therewith. No part of this document can be circulated or reproduced in any form without prior approval of Mecklai Financial
Services Limited.
MFSL
Confidential
Page 3
of 3