Daily Report: Dollar and Yen Soft but Momentum Shows Hesitation

Dollar and yen remain generally soft today but selling momentum is weak so far. Overnight's optimism in US stocks triggered by housing data and FedEx's earning forecasts was not carried through to Asian session. Major Asian indices are mixed while crude oil continues to struggle around 79 level. One thing to note is that while yen crosses, except dollar yen, are firm, they all lack decisive momentum o break through near term resistance yet. On the other hand, while dollar's weakness against commodity currencies is apparent, downside momentum against European majors seems to be diminishing mildly. After all, it looks like markets are hesitating to push dollar and yen lower for the moment.

On the data front, Japan corporate services price dropped -1.% yoy in June versus expectation of -0.9% yoy. Australian conference board leading indicator rose 0.3% in May. German Gfk consumer sentiment rose more than expected to 3.9 in August. Swiss UBS consumption indicator rose to 1.81 in June. Looking head, Eurozone M3 money supply, UK CBI distributive trades and US S&P Case-Shiller 20 cities house price will be released. But main focus will be on conference board consumer confidence, which is expected to drop further to 51.8 in July.

Dollar index's break of 82.08 support confirms that whole decline from 88.70 has resumed. As discussed before, such decline is treated as a correction to medium term rise from 74.10. Current fall should now target key support level of 80.04, which is close to 80 psychological level as well as 61.8% retracement at 79.73. Nevertheless, downside should be contained there to conclude the correction and bring rebound. Break of 83.45 will indicate that dollar index has bottomed and should then bring strong rebound towards 85.09/86.42 resistance zone.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.5424; (P) 1.5472; (R1) 1.5535; More.

GBP/USD breaches 1.5521 resistance briefly but is still struggling to take it out decisively yet. Nevertheless, intraday bias remains on the upside with 1.5348 minor support intact. Sustained trading above 1.5521 will confirm that whole fall from 1.7043 has completed at 1.4230 already and target 61.8% retracement of 1.7043 to 1.4230 at 1.5968 next. On the downside, below 1.5348 minor support will turn intraday bias neutral first. Also, note that failure at 1.5521, followed by break of 1.5123 support, will revive the case that fall from 1.7043 is still in progress and will flip intraday bias back to the downside for another low below 1.4230.

In the bigger picture, the sustained trading above medium term falling channel argues that whole fall from 1.7043 is finished at 1.4230 already. Break of 1.5521 resistance will confirm this bullish case. Also, this will indicate that rise from 1.4230 is the likely the third leg of the whole consolidation pattern from 2009 low of 1.3503. In such case, stronger rally would be seen to 1.7043 resistance and possibly above before long term down trend resumes. On the downside, failure below 1.5521 resistance and break of 1.4947 support will revive that case that fall from 1.7043 is still in progress for 1.3503 low.

Economic Indicators Update

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