At 2:45 French July Unemployment (prev 9.0, exp 9.0), At 4:00 AM Germany Sept GfK Cons Conf (exp n/f, prev 7.5) At 6:00 AM E12 Aug HICP m/m (exp 0.1%, prev -0.2%) E12 Aug HICP y/y (exp 2.0%, prev 1.9%)
The dollar was little changed in Tokyo trade ahead of important economic data later in the US session. After a sharp selloff and recovery in NY trade, USD has maintained around 98.50 cents to the euro and 118.00 yen. Markets await a barrage of consumer data and words from Fed Chairman Greenspan for guidance on the state of the US economy later today. Recall, the sharp drop in consumer confidence on Tuesday set the stage for profit taking on Wall St and a sharp drop in the dollar. But the U of Mich sentiment survey for August is expected to show an upward revision for August to 88.3 from 88.1. Moreover, personal income and expenditure data is likely to confirm strong growth in July. Speaking from Jackson Hole, WY, Greenspan will deliver opening remarks at the economic symposium.Japan MoF's Mizoguchi said today that he did not expect the yen to continue to rise due to weakness in Japan compared with the strength of the US. Japan's GDP rose 0.5% in April-June, better than expected, but was offset by a downward revision of the previous quarter to 0% from an initial 5.7%. The data showed Japan's dependence on exports and a weak yen, said economists.
Nevertheless, USD/JPY is struggling to hold onto key support at 117.75, the 62% retracement of the 116.30 to 120.30 rally. Overnight, USD/JPY fell to a one-week low of 117.40 and is now struggling to regain the 117.75 base. USD needs to overcome the previous high around 118.35 to offset earlier damage. Failure to do so would likely target 117.40 lows ahead of 117.00 trendline support. Below here would likely trigger stops and accelerate a selloff towards the 116.30 lows. Key resistance is seen at 120.00, trendline resistance, followed by the previous highs of 120.30.
After a sharp rise to 98.85 cents, then a half cent plunge in NY trade, EUR/USD broke back above 98.45, the 38% retracement of the 1.02 to 96.20 decline. But the euro remains below key resistance at 98.70/90 area. Here marks the trendline from a three-week old consolidation pattern and above 98.70/90 would be bullish, but likely find immediate resistance at 99.10, the 50% retracement of the 1.02 to 96.20 decline. A break of these important levels would then aim at parity, and possibly beyond as it would signal that the 1.02 to 96.20 decline was a correction. But any major moves today are unlikely given the Labor day holiday on Monday. Key support lies at 98.20, previous resistance and 97.75.
Sterling held near an overnight 3-week high of 1.5500, right at the 50% retracement of the rally from 1.5143 (July 5) to 1.5866 (July 26). The pound has been a strong performer thus far this week, even after Q2 GDP for the UK was revised downward last Friday. Cable has rebounded from a 7-week low of 1.5161 last Friday and avoided a break of key support at 1.5160, which marks the 38% retracement of the 1.4043 to 1.5866 move. Further upside could run up against resistance at 1.5586, the 38% retracement of the aforementioned move. On the downside, support starts at 1.5470, followed by 1.5440/50 and 1.5370/75. //www.forexnews.com