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CHF weakens on reports SNB could intervene

Daily Outlook - 15th August 2011

Written by Zoe Fiddes, UK Branch Manager

CURRENCY TRADING SUMMARY 15/08/2011

Sterling / U.S Dollar (GBP / USD):

GBP/USD has been trading sideways capped around the 1.6300 big figure so far. Trading was frenzied in FX and other asset markets last week. It is a relatively quiet day on the financial news front. This afternoon at 13:00 GMT we have net long-term TIC flows from the US expected to be at $23.6 Bln.  This summarizes the flow of stock, bonds and money market funds to and from the US. Tomorrow morning at 08:30 UK CPI YoY will be the one to watch for expected to remain high at 4.3%. The next resistance for cable is 1.6328.

Euro / U.S Dollar (EUR / USD):

EUR/USD trended slowly upwards on Friday boosted by EUR/CHF buying after reports that the SNB will defend the 1.1000 level. There is no news expected from the Euro-zone today and the market awaits the Merkel-Sarkozy summit tomorrow. So far this morning euro-dollar buying has been capped around 1.4320 with the next critical resistance level at 1.4400.

U.S. Dollar / Japanese Yen (USD / JPY):

USD/JPY attempted to break 77.00 overnight following Japans Q2 preliminary GDP -0.3% q/q vs -0.6% consensus, -0.9% last; annualized Q2 GDP -1.3% vs -2.5% consensus, -3.6% last.  This rally ran out of steam as buyers became nervous and the pair dipped back into the 76.70s.  Sideways trading has taken hold since and 77.02 is reported as the resistance level.

Australian Dollar / U.S. Dollar (AUD / USD):

AUD/USD opened at 1.0340 and moved higher in the Asia session as safe-haven positions unwound especially those in CHF. Riskier assets and currencies were bought.  It made its way above 1.0400 with rumors of offers in the market around 1.0450 which may prevent the pair getting higher. RBA minutes are due out 01:30 GMT overnight.

Gold (XAU):

Gold (XAU) continued to pull back with sovereign debt fears subsiding. Moves up have so far been stumped by resistance around 1747.00.

Oil:

Oil remains volatile and surged above $87 before falling back to the key $85 level.

Technical Commentary:

Sup 2 Sup 1 Last Res 1 Res 2
GBP/USD 1.6168 1.6221 1.6287 1.6328 1.6411
EUD/USD 1.4072 1.4103 1.4310 1.4402 1.4432
USD/JPY 76.25 76.29 76.80 77.02 77.30
USD/CHF 0.7680 0.7792 0.7892 0.7954 0.7990
AUD/USD 1.0245 1.0340 1.0422 1.0455 1.0528
NZD/USD 0.8180 0.8219 0.8355 0.8406 0.8430
XAU/USD 1701.30 1722.00 1739.00 1746.40 1767.10
OIL/USD 82.24 83.81 85.27 85.59 88.94

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