ASIA session review

The Dollar Index fell, extending a third-straight weekly decline, on speculation the Federal Reserve will reassure investors at next week’s meeting that policy will remain accommodative.

 

The U.S. currency has dropped versus 15 of its 16 major counterparts since July 19 before reports next week predicted to show economic expansion in the second quarter and jobs growth in July slowed. Fed Chairman Ben S. Bernanke told Congress last week that any reduction in stimulus would depend on the economy’s performance.

 

A July 31 report will probably show U.S. annualized gross domestic product grew 1% in the April-to-June period, slowing from 1.8% in the previous three months. Employers added 184,000 jobs this month, after 195,000 additional positions were created in June, a separate survey forecast before the Aug. 2 data release.

 

EURO:

In Germany, the Ifo institute’s business climate index, based on a survey of 7,000 executives, rose to 106.2 in July from 105.9 in June. Economists predicted an increase to 106.1.

 

EUR/USD trades under $1.3300. Support is around $1.3250, ahead of  $1.3160 (yesterday’s lows). Below support comes at $1.3070/60 (Jul 18 lows). Resistance is near yesterday’s high on $1.3230. A break above would expose $1.3255 (high Jun 21) and $1.3300 (Jun 6 high).

 

POUND:

The pound remains volatile.

 

GBP/USD erased all of yesterday’s losses. Resistance remains at $1.5390/00 (Jul 22-23 highs and 61.8% Fibo of the $1.5750 - $1.4810 decline). Initial support remains at daily lows on $1.5260, then - at $1.5180 (Tuesday’s lows) with a break lower widens losses to $1.5150 (Jul 18 lows) and $1.5080 (Jul 17 lows).

 

YEN:

The yen gained against its major peers as Asian stocks slumped, boosting demand for the haven currency. The yen rose versus the dollar as MSCI Asia Pacific index of stocks dropped 0.7 %, sliding for a third day, while Japan’s Topix index fell 2.9 %.

 

“The dollar will be more vulnerable to downside surprises in the data, because bullish positions have been built up so much,” said Noriaki Murao, a New York-based managing director of the marketing group at the Bank of Tokyo-Mitsubishi UFJ Ltd. “The market consensus is a September start to tapering, and it’s hard to imagine it would happen earlier than that, but there’s a good chance it could happen later.”

 

USD/JPY holds at Y100.00, above the channel support line from Jun 13 at Y99.40 with a break under widens losses to Y98.20 (Jul 11 lows). resistance is around  Y100.50 (Jul 15 highs), then - at Y101.00 and Y101.50 (Jul 7 highs).

 

DATA AHEAD:

At 13:55 GMT Jul Reuters/Michigan Consumer Sentiment Index is due to come.

 

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