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| Posted: 26 Jun 2009 01:57 AM PDT
FX Daily
Written by RetailFX Dealing Desk
In the US, the revised GDP figure for Q1 published on Thursday, pointed a -5.5% contraction in an annual pace for the quarter. Although the figure still points a rapid contraction in the US economy, the figure was slightly better than market assessments of a -5.7% contraction. The Core consumer expenditure and real consumer expenditure, figures which reflect the status of the consumer to some extent and play a role in the assessments of inflation, were up 1.6% and 1.5% respectively which was generally in line with market expectations and most importantly did not surprise for the worst .Initial Jobless claims rose to 627,000 which was higher than the market expectation of 602,000 and up by 19,000 published a week ago, showing unemployment is still expanding in a rapid pace and still does not point any significant signs of improvement in the Job market. However, market sentiment was largely unaffected as markets have got used to high unemployment figures and furthermore the unemployment is still considered a lagging indicator, which continues to expand for some time after the economy has stylized.
In the Euro zone, the industrial new orders figure fell -35% YoY and -1% MoM as the process of inventory reduction continues .The market expectation was lower- 32.8% .contraction could mean GDP growth for the year could also surprise for the worst, with the Euro zone economy still deteriorating rather than stabilizing.
Overall the market sentiment was rather mixed with the US equities closing higher and in Europe the equities trade was mixed. The Dollar was slightly lower losing some of it gains from a day before and depreciated against most of the majors the Euro traded rather flat against the Dollar the Yen and the Swiss Franc and depreciated around 0.5% against the Sterling.
Support/Resistance
EUR/USD
After toping around 1.43 the pair has entered a flat trend with a range of 1.43 to 1.38. By reviewing the average of 20 days versus the average of 5 days, it is evident the pair has lost some of the bullish momentum which the pair has traded since March. Although the loss of momentum does not necessarily indicate a change in the trend, a loss of momentum after a consistent trend makes a cyclical bearish adjustment for a retest of the support at the trend line very likely. By comparing the last adjustment, which took place at the end of march and generated an 800 pips swing, we can assume the pair is aiming for a retest of the bullish trend line at the 1.35 which is about 800 pips from 1.43.However, attention should be given to the brake of the 1.37 area which posses strong support.
GBP/USD
The pair is currently trading within the range of the 1.665 resistance to the 1.572 support. The Pair which is in a steady uptrend from around the end of March has moved to sideways trade. Although it is uncertain yet which direction the pair will eventually take, a break of each of the levels, weather the 1.665 resistance or the 1.57 support, direction is expected to create a strong swing of around 500 pips. However, as the pair has currently attempted to break the 1.62 support for several times and failed with strong bounces back and acted similarly with the 1.66 resistance, attention should be given to the daily close since only a daily close outside the range can indicate the sustainability of the break. Daily Events
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