Mid-Day Report: Dollar Extends Weakness, New Record Low Against Swissy
By admin | December 28, 2010
Dollar’s selloff extends further today and, in particular, reaches new record low against Swiss Franc. Treasury yields recover in early US session but gives little support to the greenback. Gold rides on dollar’s weakness and jumps back to above 1400 level while crude oil is steady above 91. Both are giving strong support to commodity currencies with AUD/USD heading towards 1.0181 record high while USD/CAD breaks below parity again. Nevertheless, Euro and Sterling are both relatively weak as selling pressures build up in respective swiss and yen crosses.
Data in US saw conference board consumer confidence unexpectedly dropped to 52.5 in December. S&P Case-Shiller 20 cities house price dropped more than expected by -0.8% yoy in October. Swiss Japan CPI improved slightly be remained negative at -0.5% yoy in November. Unemployment rate was unchanged at 5.1%. Household spending dropped -0.4%. Industrial production rose 1.0% mom, 5.8% yoy. Retail sales rose 1.3% yoy. Swiss UB consumption indicator dropped to 1.63 in November.
As noted above, Swiss franc is strong against other European majors. Safe haven flow is still in force in the markets. GBP/CHF reaches new record low of 1.4553 today as it resumes recent down trend. Outlook will remain bearish as long as 1.4890 resistance holds and we’d expect deeper decline to 100% projection of 1.6755 to 1.5089 from 1.6003 at 1.4337 in near term.
Daily Pivots: (S1) 0.9568; (P) 0.9607; (R1) 0.9639; More.
USD/CHF falls to as low as 0.9434 so far today and the break of 0.9462 low confirms that recent down trend has resumed. Intraday bias remains on the downside and further decline should be seen to next target of 100% projection of 1.2296 to 0.9916 from 1.1729 at 0.9349. on the upside, break of 0.9663 resistance is needed to confirm short term bottoming. Otherwise, outlook will remain bearish even in case of recovery.
In the bigger picture, the long term down trend is still expected to continue towards 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level. On the upside, break of 1.0065 resistance is needed to be the first signal to indicate reversal. Otherwise, outlook will remain bearish.
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:30 | JPY | Household Spending Y/Y Nov | -0.40% | 0.30% | -0.40% | |
| 23:30 | JPY | Unemployment Rate Nov | 5.10% | 5.10% | 5.10% | |
| 23:30 | JPY | Tokyo CPI Core Y/Y Dec | -0.40% | -0.40% | -0.50% | |
| 23:30 | JPY | National CPI Core Y/Y Nov | -0.50% | -0.50% | -0.60% | |
| 23:50 | JPY | Industrial Production M/M Nov P | 1.00% | 0.90% | -2.00% | |
| 23:50 | JPY | Industrial Production Y/Y Nov P | 5.80% | 5.50% | 4.30% | |
| 23:50 | JPY | Retail Sales Y/Y Nov | 1.30% | 0.40% | -0.20% | |
| 07:00 | CHF | UBS Consumption Indicator Nov | 1.63 | – | 1.72 | 1.71 |
| 14:00 | USD | S&P/Case-Shiller Composite-20 Y/Y Oct | -0.80% | -0.18% | 0.59% | |
| 15:00 | USD | Consumer Confidence Dec | 52.5 | 56.3 | 54.1 |
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