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Daily Analysis for MONDAY - JULY 23rd

Published: Jul. 23 2007, 10:46 GMT

USD weakening again


JPY crosses getting hit, lost momentum. Stocks looking weak, going into the European session.



Overnight News Bullets

  • UK GDP QoQ/YoY (2Q) out at 0.8%/3.0%, while 0.7%/2.9% expected, 0.7%/3.0% prior.
  • UK Index of Services 3mth/3mth (MAY) out at 0.9%, while 1.0% expected, 1.0% prior.
  • US Baker Hughes U.S. Rig Count (JUL) out at 1790, while 1791 prior.
  • UK Rightmove House Prices MoM/YoY (JUL) out at 0.6%/11.2%, while 0.3%/10.3% expected, 0.8%13.2%.
  • AU Producer Price Index QoQ/YoY (2Q) out at 1.0%/2.3%, while 0.8%/2.0% expected, 0.0%/2.8% prior.
  • JN Supermarket Sales YoY (JUN) out at -1.5%, while -0.6% prior.

Markets

  • FX: JPY marginally stronger, USD range bound. EUR marginally weaker, but remains range bound.

O/N Data Heat map:

EU US JP UK SZ AU CA NZ NO SE FR
- - -



Calendar

Today's Highlights:

Time (GMT) Region Release Consensus
12:00 HU Interest Rate Announcement 7.75%

This and Next Week’s Highlights:

Date Region Release
24 July EC Euro-Zone Current Account, PMI Composite, Industrial New Orders.
24 July CA Retail Sales.
24 July US Richmond Fed. Manufaturing Index, ABC Consumer Confidence.
24 July JN Merchands Trade Balance, Adjusted Merchands Trade Balance.
25 July AU Consumer Prices, RBA Trimmed Mean, RBA Trimmed Median.
25 July UK Nationwide House Prices.
25 July SW Unemployment Rate, Trade Balance.
25 July US Existing Home Sales, DOE U.S. Crude Oil Inventories, Fed’s Beige Book.
25 July NZ RBNZ Official Cast Rate.



What's going on?

  • Turkish election: AK Party (moderate reform islamists) wins with 52%. TRY is benefitting from this.
  • No economic releases today, only a couple of ECB representatives talking.
  • EURUSD again trading at new highs due to USD weakness. JPY strengthening a tad. Japanese 6-months rates edging higher by the day. We might see a dip in JPY-crosses today.
    Subprime Update: Previously BBB-rated tranches of Subprime Mortgage Bonds are now trading at 50 cents to the dollar and default swaps for high yield bonds have risen 125 bps. this month (from 275 to 400). Scary stuff, but it still looks contained in terms of spill-over effects to the broader economy and the labor market.



FX

USDJPY looking weakest among JPY-crosses

http://www.saxobank.com/__DotNet/Site/Analysis/GetImage.aspx?ResUID=bd024e5c-b83d-49a2-94a4-9d6dab6b3007

EUR USD JPY GBP CHF AUD CAD NZD NOK SEK PLN
+ - + + +

FX Trading Strategies

Pair Supp. Resis. Comments
USDJPY 120.67 122.50 USDJPY starting to look very soft, despite other carry crosses looking
more supportive, which leads to dollar foucs for this break to likely
happen. A break below 120.65-70 lows from May 17th along with 38%
retracement (from 115.16-124.16) to accelerate the downside.



Risk warning

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