Thursday, August 2, 2007

USDCHF,USDCAD Dollar continues to show positive dynamics, but alarms around it are still kept...

19:28 08/01/2007

So, yesterday's releases on economy of the USA were again positive. As a result it also brought at first to end of correction of the European currencies against dollar, and then, at the Asian session and since the beginning of European one today to dollar growth against the basic currencies.

Weakness of the American currency is still kept only against low-yield currencies such as the Japanese yen and the Swiss franc, which continued their growth. Here it is necessary to note nevertheless that the situation in the world stock markets continues to be stabilized, that, as a result, will most likely lead not only to delay of strengthening of the Japanese currency, but also will point out the end of fortnight correction of the basic currencies against yen and franc.

As a result, if today's data on business activity and on home sales for June in the USA will not bring unexpected surprises appeal of carry trade again will make yen cross-rates upward.

Let's remind, that yesterday's data on consumption and incomes for June in the USA, having been almost at a level of forecasts, did not lead to any change of a situation in the market.

So, an index of personal consumption in the USA made +0.1 % for June, at the forecast of +0.1 %, and the previous value of +0.5 %.

And the labor cost index in the USA for the second quarter made +0.9 %, at the forecast of +1.0 %, and the previous value of +0.8 %.

However, a pleasant surprise for dollar bulls became index of consumer confidence Conference Board in July which showed not only growth above predicted values, but also reached maximal values for last six years.

So, the parameter reached a level of 112.6 points, at the forecast of 105 points. And the previous value was also revised upwardly, from 103.9 points in June up to 105.3.

And components of the survey also supported a dollar exchange rate. We remind that the index of expectations in July made 94.8 points in comparison with 88.8 points, and the index of a current situation made 139.2 from 129.9 earlier. Thus, the index of annual expectations unexpectedly demonstrated decrease to 5.1 % from 5.4 % in June.

"A fly in the ointment" was the publication of Chicago PMI which was considerably below forecasts. We remind that a parameter in July achieved 53.4 points, at the forecast 58.0 and the previous value of 60.2.

However, many components of the report showed positive dynamics. For example, the index of the paid prices made 73.1 in comparison with 68.1 earlier, and the index of employment grew from 52.7 up to 61.6 points.

And the index of new orders continued its decrease and reached 53.4 points against 65.7 in June and 71.1 in May. Also the index of production demonstrated drop, having dipped to 59 points in July against 66.5 earlier. And the index of stocks decreased from 55.9 up to 55.1 points.

As a result, we do not exclude some correctional growth of euro and pound against dollar. And it, in turn, will allow dollar/franc "dive" more deeply under key levels 1.1960 - 1.2020, and to collect stops. The purpose of such movement is 1.1860.

At the rate the dollar/Canadian correctional movement downwards was ripened also. We recommend to sell the pair from the levels close to 1.0670 with stop, placed above 1.0700. The purpose of this correction id a level 1.0500.


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