Oil prices have increased reaching $140 USD per barrel!
Good morning from Hamburg, and welcome to Varengold Daily FX Report. There has not been much change in the weather in Germany. It is still windy and a bit cold for the summer. However, Germans are very excited, as their national team qualified for the quarter final in the European Football Championship.
The market was expecting the Fed to increase its rate 3 or 4 times by the end of this year. However, according to its comments, these expectations are higher than what it is really going to happen. Even the 25 basic point increase of August would only occur in case of a deterioration of the inflation. Moreover, oil prices have increased reaching 140 USD per barrel. These two reasons have caused the USD to drop against other major currencies.
EUR/USD increased by 0.4% and reached 1.5537 after being at a 1 month low of 1.5303. USD loss is also due to ECB rate hike expectations next month. There is currently record inflation in the Euro-zone. This expectation caused a gain in EUR/JPY, reaching 167.84 which has been the highest level for 11 months. It is currently being traded at 167.51.
The pressure on USD led the NZD/USD to rise by 0.4% to 0.7561. However, this increase might only be a light increase, as the RBNZ is expected to lower its rate by September. We have been seeing the same effects on AUD/USD which went up 0.3% to 0.9425.
USD/JPY followed the same evolution as other currencies. It fell by 0.3% to 107.80 after hitting a 4 month high of 108.59.
Market Review
The market was expecting the Fed to increase its rate 3 or 4 times by the end of this year. However, according to its comments, these expectations are higher than what it is really going to happen. Even the 25 basic point increase of August would only occur in case of a deterioration of the inflation. Moreover, oil prices have increased reaching 140 USD per barrel. These two reasons have caused the USD to drop against other major currencies.
EUR/USD increased by 0.4% and reached 1.5537 after being at a 1 month low of 1.5303. USD loss is also due to ECB rate hike expectations next month. There is currently record inflation in the Euro-zone. This expectation caused a gain in EUR/JPY, reaching 167.84 which has been the highest level for 11 months. It is currently being traded at 167.51.
The pressure on USD led the NZD/USD to rise by 0.4% to 0.7561. However, this increase might only be a light increase, as the RBNZ is expected to lower its rate by September. We have been seeing the same effects on AUD/USD which went up 0.3% to 0.9425.
USD/JPY followed the same evolution as other currencies. It fell by 0.3% to 107.80 after hitting a 4 month high of 108.59.
AUD/JPY
Since the middle of May, the AUD/JPY has been trading in an upward trend channel. In spite of the climb, the currency resisted the 102.00 level three times. A cross through the resistance in the next trading days might give way to a new trend for long trades.
EUR/GBP
At the beginning of May, the EUR/GBP dropped down. Afterwards, the currency pair traded in a zigzag movement and rebounded twice from the resistance at 0.8032. We also could notice a higher level at the point of inflexion along the support line. The rising support level might help the EUR cross through the resistance.
| Currency | Support 2 | Support 1 | Pivotpoint | Resistance 1 | Resistance 2 |
| EUR / USD | 1.5269 | 1.5368 | 1.5442 | 1.5541 | 1.5615 |
| USD / JPY | 107.54 | 107.87 | 108.22 | 108.55 | 108.90 |
| GBP / USD | 1.9362 | 1.9496 | 1.9591 | 1.9725 | 1.9820 |
| USD / CHF | 1.0308 | 1.0383 | 1.0451 | 1.0526 | 1.0594 |
| AUD / USD | 0.9328 | 0.9363 | 0.9394 | 0.9429 | 0.9460 |
| CAD / USD | 1.0141 | 1.0193 | 1.0245 | 1.0297 | 1.0349 |
| NZD / USD | 0.7455 | 0.7491 | 0.7516 | 0.7552 | 0.7577 |
| EUR / AUD | 1.6298 | 1.6372 | 1.6431 | 1.6505 | 1.6564 |
| EUR / CAD | 1.5681 | 1.5760 | 1.5839 | 1.5918 | 1.5997 |
| EUR / CHF | 1.6052 | 1.6112 | 1.6152 | 1.6212 | 1.6252 |
| EUR / GBP | 0.7830 | 0.7854 | 0.7884 | 0.7908 | 0.7938 |
| EUR / JPY | 165.86 | 166.61 | 167.15 | 167.90 | 168.44 |
| GBP / CHF | 2.0250 | 2.0386 | 2.0466 | 2.0602 | 2.0682 |
| GBP / JPY | 209.36 | 210.90 | 211.85 | 213.39 | 214.34 |
| Date | Time (GMT) | Economic Indicator | Last |
| 17.06.2008 | 08:30 | GB CPI M/M | 0.80 |
| 17.06.2008 | 09:00 | DE ZEW economic sentiment | -41.4 |
| 17.06.2008 | 09:00 | EZ Eurostat trade. EUR | -2.3 |
| 17.06.2008 | 09:00 | DE ZEW current conditions | 38.6 |
| 17.06.2008 | 12:30 | US Building permits: number | 0.982 |
| 17.06.2008 | 12:30 | US Producer prices mm | 0.20 |
| 17.06.2008 | 12:30 | US PPI inflation y/y. NSA | 6.50 |
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