ASIA session review (05.08.2013): Dollar weakens

Data released (actual, consensus, previous):  

01:30 GMT Australia Retail Sales s.a. (Jun) m/m  0.0%    0.4%    0.2%       

01:45 GMT China HSBC China Services PMI (Jul)  51.3  _      51.3        

07:48 GMT France Markit Services PMI (Jul)  48.6    48.3    47.2        

07:53 GMT Germany Markit Services PMI (Jul)  51.3    52.5    50.4        

07:58 GMT EMU Markit Services PMI (Jul) 49.8    49.6    48.3        

07:58 GMT EMU Markit PMI Composite (Jul)  50.5    50.4    48.7        

08:28 GMT UK Markit Services PMI (Jul)  60.2    57.2    56.9        

08:30 GMT EMU Sentix Investor Confidence (Jul) -4.9    -10.0    -12.6

The dollar declined for a second day against the yen as investors weighed when the Federal Reserve will slow the pace of bond purchases that have contributed to weakening the greenback.

The dollar has strengthened 5.4% in the past six months. The euro gained 2.9%, while the yen weakened 0.2%.

EURO:

The euro tries to recover, but holds capped.

Data released showed EU Markit Services PMI rose to 49.8 in July from 48.3 in June.

Separate report showed German PMI Services increased to 51.3 points in July, from 50.4 points in June.

EUR/USD consolidates below $1.3300. Initial resistance remains at $1.3340. Above gains will extend to and $1.3400/15 (Jun 18 highs). Below $1.3200 support comes at $1.3160 (Jul 25 lows).

POUND:

The pound rallied after the UK Markit/CIPS services PMI gained to 60.2 in July, while analysts predicted 57.2.

GBP/USD probes resistance around $1.5290/00, ahead of  $1.5416 (Jul 26 highs) and $1.5480 (Jun 25 highs). Strong support comes at recent lows on $1.5100 with a break under widens losses to $1.5080 (Jul 17 lows) and $1.5025 (Jul 15 lows).

YEN:

The yen strengthened against most of its major counterparts as Japanese stocks declined, spurring demand for safety.

USD/JPY is near session lows on Y98.40 now with a break under widens losses to Y97.60 (Jul 31 lows). Initial resistance comes at Asian highs on Y99.00/10, above - at Y99.95 (channel line from Jul 7) and Y100.80 (Jul 19 highs).

COMMODITY CURRENCIES

KIWI: New Zealand’s dollar dropped at least 0.4 percent against all of its 16 major peers after China halted imports of milk powder from Auckland-based Fonterra Cooperative Group Ltd.

Fonterra, the world’s largest dairy exporter, said Aug. 3 that three batches of a whey protein made at a New Zealand plant last year may contain bacteria that can cause botulism. Dairy products make up about a quarter of the South Pacific nation’s total overseas sales.

DATA AHEAD:

US ISM Non-Manufacturing PMI is due at 14:00 GMT  and is expected to rise to 53.0  from 52.2  in July.

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