Daily Forex Snapshots

US Session - Dollar Rallies on Non-Farm Payroll Data

July 03, 2008 8:44 PM CEST

G10 Advancers and Decliners vs USD

	AUD	0.06
	CAD	0.04
	NOK	0.02
	CHF	0.01
	SEK	0.01
	JPY	0.01
	DKK	0.01
	NZD	-0.01
	EUR	-0.01
	GBP	-0.03

Global Indexes

Current Level

% Change

Nikkei 225 Index	13,265.40	- 0.15
Hang Seng Index	21,242.78	- 2.12
FTSE 100 Index	5,476.60	+ 0.92
CAC 40 Index	4,343.99	+ 1.10
DJIA Index	11,288.54	+ 0.65
S&P 500 Index	1,262.90	+ 0.10
NASDAQ 100 Index	2,245.38	- 0.27

World Markets

Current Level

% Change

Gold	934.35	- 1.14
Silver	18.29	- 0.48
VIX	24.76	- 4.47
Crude wti	144.36	+ 0.55
USD Index	72.76	+ 1.00

Todays Calender

Estimates

Country / GMT

No Additional Releases

Currency Tech

EURUSD
R 3: 1.6100
R 2: 1.6020
R 1: 1.5910
CURRENT: 1.5695
S 1: 1.5690
S 2: 1.5628
S 3: 1.5530

USDJPY
R 3: 108.43
R 2: 108.20
R 1: 107.22
CURRENT: 106.68
S 1: 105.78
S 2: 104.90
S 3: 104.40

USDMXN
R 3: 10.4697
R 2: 10.4690
R 1: 10.4220
CURRENT: 10.3615
S 1: 10.3590
S 2: 10.3010
S 3: 10.2828

Market Brief

The Usd rose in the European session based on better primarily on the Non-Farm payroll data, and comments by Trichet of the ECB. The EurUsd retracted from the low 1.59 level to the 1.57 price, while the UsdJpy moved from 105 to 106 based on dollar strength. The GbpUsd retreated from the 1.99 resistance level to 1.98 in response to the economic data out of the US. Equity markets are trading higher in the US and Europe, while commodities fell with oil at 144 and gold at 936. Bond yields widened in the US and Europe as traders sold off in 2yr and 10 yr securities.

The ECB hiked rates 25bps which was in line with market expectations. The Eur saw a major sell off across the G-10 particluarly against the Usd and Gbp. While the rate may have been priced in, investors were still listening intently to the tone of Trichet’s commentary. While addressing inflation as an issue, his comments were not as hawkish as usual sparing the dollar additional downside risk. News was light in the UK, as the cable fell against the dollar but moved up against the Euro. Services PMI came in lower than expected at 47.1 vs. 49.5, signaling a contraction in production for commercial businesses. While we are seeing a break in the downtrend of the cable, we shouldn’t expect this turnaround to continue in the long term based on weak economic fundamentals.

Asian Session - Markets Eye ECB

July 03, 2008 11:59 AM CEST

G10 Advancers and Decliners vs USD

	AUD	0.10
	NZD	0.08
	DKK	0.06
	SEK	0.04
	NOK	0.02
	CHF	-0.03
	EUR	-0.05
	CAD	-0.11
	JPY	-0.23
	GBP	-0.27

Global Indexes

Current Level

% Change

Nikkei 225 Index	13,297.99	+ 0.09
Hang Seng Index	21,741.23	+ 0.17
Shanghai Index	2,790.87	+ 3.38
FTSE futures	5,451.50	- 0.90
DAX futures	6,367.00	- 0.24
CAC futures	4,301.00	- 1.10
DJIA futures	11,231.00	+ 0.05

World Markets

Current Level

% Change

Gold	944.50	- 0.21
Silver	18.43	+ 0.03
VIX	23.98	+ 0.05
Crude wti	144.23	+ 0.46

Todays Calender

Estimates

Country / GMT

Riksbank Interest Rate Announcement	4.50%	4.25%	SW / 8.00
PMI Services (Jun Final)	49.5	49.5p	EZ / 9.00
PMI Composite (Jun Final)	49.5	49.5p	EZ / 9.00
CIPS/RBS Report on Services (Jun)	49.5	49.8	UK / 8.30
Retail Sales (May)	+0.6%(-0.7	-0.6%(-2.9	EZ / 9.00
Sedlabanki Interest Rate Announcement	15.50%	15.50%	ICE / 9.00
ECB Interest Rate Announcement	4.25%	4.00%	EZ / 11.45
Change in Non-Farm Payrolls (Jun)	-60k	-49k	US / 12.30
Unemployment Rate (Jun)	5.4%	5.5%	US / 12.30
Initial Jobless Claims (Jun 28th)	385k	384k	US / 12.30
ISM Non-Manufacturing Index (Jun)	51.5	51.7	US / 14.00
CPI (Jun)	+0.5%(+11.	+1.5%(+10.	TUR / 14.00

Currency Tech

AUDUSD
R 3: 0.9827
R 2: 0.9700
R 1: 0.9670
CURRENT: 0.9619
S 1: 0.9511
S 2: 0.9490
S 3: 0.9449

EURJPY
R 3: 170.00
R 2: 169.46
R 1. 168.60
CURRENT: 168.40
S 1: 166.09
S 2: 166.00
S 3: 165.52

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3790
CURRENT: 1.3583
S 1: 1.3560
S 2: 1.3506
S 3: 1.3470

Market Brief

Usd was stable in the Asian session as the market awaits today's ECB rate decision. EurUsd traded around the 1.5870 level while UsdJpy was able to hold above 106.00. We are expecting the ECB to raise rates to 4.25% in the European session while the US data should continue to paint an unsettling picture of the US domestic economy. Should our base scenario play out we expect the EurUsd to make a third attempt at the 1.6000 in the near term.

It's widely expected that the ECB will hike rates today (which was fully priced into the market) but the uncertainly will play out in the subsequent press conference. Should Trichet's tone continue to be hawkish and if he steers clear of recent comments that a rate hike would not necessary mean a string of moves upwards we should see gains in the Eur. This expectation is based on the logical conclusion that it would make little sense for the ECB to tighten rates just to dilute the impact.

In the US NFP will be critical. The ADP survey released yesterday suggests we could see a significant drop in today's payroll data. According to the usually optimistic ADP survey there is a downside risk to our already below-consensus forecast of a 100,000 drop. In addition, initial jobless claims are still moving north and such as the employment index in recent ISM manufacturing survey, are moving south.

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