Daily FX Market Outlook by AceTrader-4-7-2011

Market Review – 01/07/2011 20:07 GMT

Euro ends higher against greenback after intra-day volatile movements

The single currency ended higher against the greenback on Friday and climbed to a three-week high of 1.4553 in European morning before retreating as some investors unwound safe-haven positions in the aftermath of Greek votes on austerity measures earlier this week.

  
  
Earlier in Asia, euro resumed recent gain against the greenback after meeting renewed buying at 1.4467 at Asian open, price briefly penetrated Thursday’s high of 1.4538 to a 3-week high of 1.4553 in early European trading, however, profit-taking ahead of ECB rate decision next week limited intra-day gain and euro later dropped to a session low of 1.4437 before rebounding strongly, the pair closed near 1.4527 at New York closing.  
  
Versus other major currencies, the greenback jumped briefly but strongly agianst the yen and Swiss franc and rose to a sessions high of 81.15 and 0.8525 respectively after data showed business activity in the US manufacturing sector came in stronger than expected in June.  
  
U.S. reported manufacturing expanded at a faster pace in June with ISM manufacturing index rose to 53.3 from 53.5 in May, whilst US construction spending and University Michigan survey (Final) showed at a decrease of 0.6 percent in May and 71.5 in June respectively.  
  
Cable moved in a volatile manner on Friday with price initially rising to as high as 1.6096 at European opening and then tumbled to a session low of 1.5987 on speculation that Bank of England would keep interest rate at record lows in coming months after UK reported a weaker-than-expected manufacturing survey in June, however, cross-buying in sterling, especially versus euro emerged and price later rebounded strongly to around 1.6080/85 in New York before moving sideways. UK Manufacturing PMI in June came in at 51.3 versus 52.1 in last month.  
  
News quoted comments from Standard & Poor’s (S&P) that ‘S&P continues to hold view that there is 1 in 3 chance that ratings on Italy could be lowered within the next 24 months; far more substantial reforms will be needed in light of Italy’s weak growth, and Italy austerity plans generally credible but government could be overly optimistic on its fight against tax evasion’.  
  
Economic data to be released next week include:   
  
Switzerland Retail sales, EU Sentix Investor Confidence and PPI, UK PMI construction, and Canada PPI on Monday (US market holiday);  
  
Australia Trade balance and RBA rate decision, German Services PMI, EU service PMI and retail sales, U.K. Services PMI and and US factory orders on Tuesday;   
  
Japan Leading indicators, EU GDP (rev.), German factory orders, Canada Building permits, U.S. ISM non-manufacturing and New Zealand GDP on Wednesday;  
  
Japan Machine orders, Australia Unemployment rate, Swiss CPI, UK Industrial production, manufacturing production and BOE rate decision, German Industrial production, EU rate decision, US ADP employment and Jobless claims, and Canada New housing price index and Ivey PMI on Thursday;  
  
Japan Current account and Economic watch DI, Germany Trade data, U.K. PPI data, Canada Unemployment rate and Employment change, and US non-farm payroll, private payrolls, average hourly earnings, unemployment rate and wholesale inventories on Friday.

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