Forex Market Updates & Commentary

Gold Reaches For Even Loftier Levels
Bobbys Corner-Open Market-Aug.2.2011
US Data Weaker
US PCE, Personal Income & Spending Data Due at 8:30AM
US Treasury Secretary Geithner on the Wires
EU says its keeping an eye on financial markets at the moment – confident Spain will take all necessary steps.
EU’ Van Rompuy
EOCD sees Greek debt at 100% of GDP by 2035 under baseline scenario, with below target privatization.
Eurozone PPI (June) 0.0%; worse than the 0.1% survey.
UK construction PMI (m/m) 53.5 vs. 53.0 expected.
Euro rebounding modestly after selling through most of the session
Swiss PMI (July) 5.3 vs. 52.2 expected.
Swiss retail sales (June) 7.4% vs. -4.1% previous.
Japan’s fin. min. says they will not talk about JPY rate range for intervention.

Posted: 02 Aug 2011 07:03 AM PDT

Gold (daily chart) as of Tuesday (8/02/2011) has once again established yet a new all-time high, which has been occurring regularly for the past three weeks, this time around the 1640 price region. This occurs within the context of a very clear and strong bullish trend on multiple timeframes — long-term, medium-term, as well as short-term. The 1635 price region, which price has just slightly surpassed, represents the 161.8% Fibonacci extension target of the last major bearish correction (from the early-May previous all-time high at around 1575 to the early-July correction low around 1478). Now that price action has reached its upside target and established yet a new all-time high, another correction could be impending before a potential resumption of the strong overall bullish trend. Downside support within the context of the current uptrend resides around the previous 1575 all-time high price region. In the event of a resumption of the current trend, a breakout above the new 1640 high could go on to begin targeting further uncharted upside around the 1730 price region, which represents the 261.8% Fibonacci extension of the noted last major bearish correction.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

Bobbys Corner-Open Market-Aug.2.2011

Posted: 02 Aug 2011 06:05 AM PDT

Good Morning:

With the debt ceiling deadline looming-the US Senate is set to vote on the bill at noon today. On Monday the House of Representatives voted and passed the bill even though liberal Democrates and conservative tea party members had their seperate idealologies.
The agreement falls short of the savings that both the Republicans and the White House were looking for.
This agreement must get to President Obama’s desk today to eleviate a US default.

Even with this agreement-there is no guarantee that the USA’s AAA rating will remain steady-and we may see a downgrade-as the rating agencies have called for savings of over $4 trillion over 10 years-far more than the $2.4 trillion offered in this package.

Unfortunately, just at the time that the faltering US economy needs another round of stimulus (as the last few rounds have not spurred the US economy enough)-the federal government will be looking for continued spending cuts, along with the need to increase taxes in the next decade. This is not a good formula for economic growth-and I think that the near term impact will be minimal- but within 1 year the US will notice a drop in growth, as stimulus funds dry up-and spending cuts increase.

Dow futures lower at this time. Gold and silver are higher, oil is a touch softer at

HAVE A GREAT DAY & GOOD LUCK

US Data Weaker

Posted: 02 Aug 2011 05:31 AM PDT

Personal Income: Survey: 0.2% Actual: 0.1% Prior: 0.3% Revised: 0.2%

June vs. May 2011
Personal Income: 0.1% vs 0.2%
Compensation: 0.0% vs 0.2%
Wage & Salary: 0.0% vs 0.2%
Disposable Inc: 0.1% vs 0.2%

Personal Spending: Survey: 0.1% Actual: -0.2% Prior: 0.0% Revised: 0.1%

PCE Deflator: Survey: 2.6% Actual: 2.6% Prior: 2.5%

PCE Core(MoM): Survey: 0.2% Actual: 0.1% Prior: 0.3%

PCE Core(YoY): Survey: 1.4% Actual: 1.3% Prior: 1.2%

US PCE, Personal Income & Spending Data Due at 8:30AM

Posted: 02 Aug 2011 04:27 AM PDT

US Treasury Secretary Geithner on the Wires

Posted: 02 Aug 2011 04:23 AM PDT

Says:

‘We don’t have unlimited resources’
Deal wont cost U.S. jobs
Economy is slower than thought
Confidence was damaged
Doesn’t see risk of economy slipping back to recession
‘Not my judgement’ on U.S. credit rating
Doesn’t know if credit downgrade more likely
U.S. strength is long-term strength
He hasn’t made decision whether to leave post

EU says its keeping an eye on financial markets at the moment – confident Spain will take all necessary steps.

Posted: 02 Aug 2011 03:14 AM PDT

Adds that a rescue plan for Spain is not on the table.

EUR firmer in recent trade; EUR/USD currently at the 1.4200 handle.

EU’ Van Rompuy

Posted: 02 Aug 2011 02:31 AM PDT

Greek debt still high however not exceptional.
Private sector involvement limited to Greece.
Ireland and Portugal are well on the path to recovery.
EFSF has sufficient resources for new tolls.
Eurozone states ready if more resources are needed.
He is confident national Parliaments will approve new tools.
Markets are not pricing Spain and Italy risks on fundamentals.

EOCD sees Greek debt at 100% of GDP by 2035 under baseline scenario, with below target privatization.

Posted: 02 Aug 2011 02:29 AM PDT

Greece must step up structural reforms, urgently improve tax collection.
Banks should envisage mergers with foreign banks.

Eurozone PPI (June) 0.0%; worse than the 0.1% survey.

Posted: 02 Aug 2011 02:01 AM PDT

EUR slightly softer on the release.

UK construction PMI (m/m) 53.5 vs. 53.0 expected.

Posted: 02 Aug 2011 01:30 AM PDT

Euro rebounding modestly after selling through most of the session

Posted: 02 Aug 2011 01:01 AM PDT

After receeding against the USD following news that an agreement has finally been reached over the US debt ceiling, the EUR/USD rebounded trading back up until finding resistance from the 38.2% retracement line on the move from yesterday’s high to low. Since then, the pair has retreated over fears of a double-dop downturn on Italy. After making a fresh low of 1.41572 we are back re-testing the lows around 1.41838; if support holds we look back to 1.42174 (an old low).

From a daily perspective we find additional support here at the 50.0% line on the move from July 12th lows to the high on the 27th.