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Mid-Day Report: Dollar Mildly up against Yen, Swissy after Strong ISM Manufacturing Print E-mail
Action Insight Archives | Written by | Jul 01 11 15:02 GMT

Mid-Day Report: Dollar Mildly up against Yen, Swissy after Strong ISM Manufacturing

Manufacturing data is the main driver in the markets today. Risk appetite, as well as the greenback are given a boost by stronger than expected ISM manufacturing index. The index rose to 55.3 in May versus consensus of a fall to 51.5. Strength is seen broadly in most components, in particular with employment climbed from 58.2 to 59.9. The US recovery slowed a bit in Q2 but is possibly regaining momentum into Q3. DOW rose more than 100 pts with support from the data while the Japanese yen is broadly lower. Dollar is lifted mildly but there is no follow through selling so far.

Other manufacturing data released today saw UK PMI manufacturing dropped more than expected to 51.3 in June. Eurozone manufacturing PMI was unrevised at 52 in June. Swiss SVEM PMI unexpectedly dropped sharply to 53.4 in June. China Manufacturing PMI also dropped more than expected to 50.9 in June. Swiss franc is particularly weak after the data as it's already been pressured by fund flowing out from safe haven on easing Greece default concern.

Economic data from Japan saw unemployment rate unexpectedly dropped to 4.5% in May, household spending dropped more than expected by -1.9% yoy in May. Regarding inflation, National core CPI was unchanged at 0.6% yoy in May while Tokyo core CPI rose 0.1% yoy in June. The quarterly Tankan large manufacturing index dropped more than expected to -9 in Q2 while non-manufacturing index dropped to -5. However, the details showed that recovery in Japan might be turning around. Large companies said they will boost capital spending by 4.2% in this fiscal year, above expectation of 2.4%.

Regarding the situation in Greece, EU Economic and Monetary Commission Rehn affirmed that there is "sufficient consensus" for approving the fifth tranche of Greek loan package over the weekend.

Austrian Finance Ministry Austrian Finance Ministry said that Greece may get EUR 85b in the second bailout. Eurozone countries and private investors would contribute 70% of the fund while IMF covering 30%. German and French officials are believed to be targeting around EUR 30b from private investors. Finance ministers are trying to wrap up the new aid plan at a July 11 meeting in Brussels. And together with the EUR 110b fund from he original bailout a year ago, the total package will be up to EUR 195b.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.8318; (P) 0.8391; (R1) 0.8477; More.

USD/CHF rises sharply to as high as 0.8524 so far and intraday bias remains on the upside for 0.8550 resistance first. Break will put 55 days EMA (now at 0.8619) into focus. On the downside, though, below 0.8392 minor support will indicate that rebound from 0.8275 is possibly offer and will flip bias back to the downside for retesting this support.

In the bigger picture, long term down trend from 1.1730 remains in healthy status with USD/CHF staying well below falling 55 days EMA and daily MACD remaining negative. Next downside target will be 100% projection of 1.1730 to 0.9462 from 1.0065 at at 0.7797. On the upside, break of 0.8945 resistance is needed to be the first sign of medium term bottoming. Otherwise, we'll stay bearish.

USD/CHF 4 Hours Chart

USD/CHF Daily Chart

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
23:30 JPY Household Spending Y/Y May -1.90% -1.70% -3.00%
23:30 JPY Unemployment Rate May 4.50% 4.80% 4.70%
23:30 JPY Tokyo Core CPI Y/Y Jun 0.10% 0.20% 0.10%
23:30 JPY National Core CPI Y/Y May 0.60% 0.50% 0.60%
23:50 JPY Tankan Large Manufacturers Index Q2 -9 -7 6
23:50 JPY Tankan Non-Manufacturing Index Q2 -5 -4 3
01:00 CNY PMI Manufacturing Jun 50.9 51.5 52
07:30 CHF SVME-PMI Jun 53.4 57.8 59.2
08:00 EUR Eurozone PMI Manufacturing Jun F 52 52 52
08:30 GBP PMI Manufacturing Jun 51.3 52.3 52.1
09:00 EUR Eurozone Unemployment Rate May 9.90% 9.90% 9.90%
13:55 USD U. of Michigan Confidence Jun F 71.5 72 71.8
14:00 USD Construction Spending M/M May -0.60% 0.00% 0.40%
14:00 USD ISM Manufacturing Jun 55.3 51.5 53.5
14:00 USD ISM Prices Paid Jun 68 72 76.5

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