Weaker Income and ho hum Spending send GBPUSD down

The weaker Personal Income (unchanged vs 0.1% gain expected) and as expected Personal Spending (+0.2%)  has led to a drift lower in the GBPUSD below the support at the 1.6336 level as traders exit some of the risker trades and buy the dollar.   Although the prior month was revised higher for both income and spending, the market may be focusing on 3Q and the revisions will influence 2Q but does nothing for the current quarter. 

The drift lower has reached a low of 1.6325.  The  next support comes in 1.6317. This should solicit some buying support.  Watch for a move back above 1.6335 or for a move below 1.6317 to define the next phase. 

Admittedly, after the move higher in early NY trade, the drift lower is a bit of a concern.  Activity does seem to be light.

EURCHF and USDCHF testing low levels

The USDCHF is back testing the old lows (before yesterdays new 2009  low of 1.0531) at the 1.0552 level.  Meanwhile the EURCHF is back testing the key 100 day MA currently at the 1.5160 level. Many traders think this is a level that gets the SNBs attention.

A week ago SNBs Weber commented that the SNB was comfortable with a EURCHF rate between 1.5000 and 1.5300.   The 1.5160 level is roughly half way between the two levels. So there should be some midpoint support.  Of note in the chart as well is the 100 day moving average has been flatlining at that price for nearly a month suggesting the market is most comfortable at the level as well.  It also suggests that perhaps some break is imminent. We will see. 

Last  week the pair tried moving lower but was supported by the 200 day moving average currently at the 1.5135 level (green line in the chart above) .  A move below the 1.5160 level is likely to wander on down toward this 200 day support level again. A break below this level should lead to further selling in the pair with the chance of a move toward that bottom floor for the SNB at the 1.5000 level.  At which point a test of the SNB resolve will be pushed and the market will see how serious they really are.  It is a risky move to try and stir the sleeping bear but sometimes the market gets the urge to stir the pot a bit.  Be aware of the increased risk.

Personal Income and Spending due at 8:30

Consumption accounts for 70% of GDP.  Today the July Personal Spending will be released for the 1st month of the 3Q.  The expectation is for a gain of 0.2%.  This is down from the 0.4% gain seen in June.   Although modest, the market is still starving for positive economic news to suggest the economy is coming out of recession (other than inventory replenishment). Yesterday Consumption showed a decline of -1.0 in the GDP data for 2Q.  This was better than the -1.3% expectation.

At the same time  the spending data will be released, Personal Income will be announced. Herein lies the problem as slower employment  and slower income growth is not good for spending down the road. Although Income is expected to increase by 0.1% it comes on the back of a -1.3% decline last month. Although that figure was a give back from an oversized gain of +1.3% in May (due to government stimulus payments apparently), it still represents stagnant income growth. 

So the report has the potential to be a good news/bad news report which should keep the activity fairly contained.  Stock market and Friday squaring should provide more of a catalyst for trading absent a big surprise in this data this morning.

Bobbys Corner-Open Market-Aug.28.2009

Good Morning:

The JPY along with bonds dropped as earnings by Dell and L’Oreal were stronger than expected.  better earnings is another sign that the economic recovery forging ahead.

Asian equity markets were mostly higher.  European markets along with US Futures are also higher this morning.
Oil, metals and most commodities rose, and copper hit it’s highest intraday price since October 2008.

Oil:$73.09                         Gold:$952.40 

Today’s data:
Personal Income:         exp: .1%         prior: -1.3%
Personal Spend:            exp: .2%         prior: .4%
U of Mich Conf:              exp: 64.0      prior: 63.2

HAVE A GREAT DAY-GREAT WEEKEND & GOOD LUCK

I will be on holiday thru Labor Day-Be Safe & Good Luck

EURUSD finds upside resistance today against the 1.4377 level. Lots of additional resistance against 1.4411

The sharp rise in the EURUSD took the pair up to a high of 1.4405.  The last high on August 7th saw the pair trade at 1.4412.  The high close price for 2009 has also been 1.4411.  SO it is not a wonder why the market stalled against the level initally at least. 

The market correction overnight took the pair down to the a low of 1.4325.  The 38.2% correction of the move up from Thursdays low came in at the 1.4329 level.  The market tends to slow trend type moves like we saw yesterday against a more modest correction level. The 38.2% test and move higher is standard operating procedure for the price action and the market price has bounced from there. 

The pair is running into some resistance against the highs for the day and the high on the next hourly bar after the peak at the 1.4405 level. That level comes in at the 1.4377 level .  Four hourly bars since the peak have stopped at this level. The more times it holds, the greater the significance of the area.  Needless to say, a move above this level is needed to confirm a likely move back toward a test of the key and strong resistance above the 1.4400 level.  Expect some profit taking sellers against the 1.4411 area however on the first move above as there is alot of congestion and market participants are still scratching their heads on the catalyst for the move higher yesterday.

In the meantime, look for selling against the 1.4377 level with inital support at 1.4342 – the close from yesterday - and then the low at 1.4325-29 area.

GBPUSD moves higher as NY enters the scene. Support now against the 1.6336 area.

GDP in the UK was better than expectations this morning (as was Polish GDP by the way) and the follow up from yesterday has kept the GBPUSD better bid.  The London morning saw the price move above the key 1.6317 level which not only was the low close level for most of the June -August period, but also corresponded with the 100 hour MA (at 1.6316).  However, it stalled at the 38.2% retracement of the move down from the August 21st high (this level comes in at 1.6336 – high reached 1.6335). 

NY has entered the fray and decided to extend the move back above the 100 hour MA and above the 38.2% retracement level at the 1.6336 level .  The pair is now moving toward the next key resistance price up at the 50% retracement of the last move down which comes in at 1.6391.  Addtional resistance comes in at the 200 hour MA at 1.6406 level.  The high so far has reached 1.6380.  Look for some slowing of move higher, but I would look for support on a corrective dip against the 1.6336/43 area today (i.e. the 38.2% retracement and against the London original high at the 1.6335 level – see 5 minute chart below).  

Swiss KOF

KOF Swiss leading indicator came in at 0.4, stronger than the 0.6 expected. Good number for CHF. At time of release both Usd/Chf and Eur/Chf both were trading close to lows of session with Usd/Chf at 1.0571 and Eur/Chf at 1.5184.

Eurozone confidence figures mixed

Eurozone business climate indicator came in at -2.21, stronger than the -2.5 expected

Consumer confidence came in at -22, weaker than the 21 expected.

Industrial confidence came in at -26, stronger than the -28 expected

Services confidence came in at -11, stronger than the -17 expected

Mixed numbers from Eurozone with consumer confidence usually the emphasis. Eur/Usd did get a lift prior to figures and bullishness continues as it trades at 1.4363.