The dollar index quickly recovered in the early session of the Asian market, currently quoted at 74.06. High-interest currencies such as the euro and Australian dollar have retreated from their highs. Safe-haven currencies like the Japanese yen and Swiss franc remain strong. However, due to Japan's foreign exchange market intervention and a somewhat reduced expectation for the US QE3, the market remains volatile.
The U.S. Commerce Department reported yesterday that orders for durable goods in the U.S. increased by 4.0% in July, reaching $201.45 billion, higher than the expected increase of 2.0%. The U.S. Congressional Budget Office stated that it has lowered its estimate of the U.S. budget deficit mainly due to the agreement on deficit reduction and lower interest rate levels.
The French government now expects GDP growth for 2011 to be 1.75%, down from the previous forecast of 2.00%. It also cut its GDP growth forecast for 2012 from 2.25% to 1.75%. Data released by Eurostat showed that industrial orders in the Eurozone fell by 0.7% in June month-over-month, against an expected rise of 0.5%; year-on-year it rose by 11.1%, compared with the expected increase of 12.1%. German Chancellor Angela Merkel once again rejected the proposal for common Eurozone bonds in her speech, stating that common Eurozone bonds would be no help to the current crisis facing the Eurozone.
Euro/USD: The overnight volatility of the euro was extremely limited, maintaining a medium-term downward trend and short-term oscillation pattern. There is a high possibility of trend trading next week. For today, it is suggested that EUR/USD can adopt a strategy of selling high and buying low within the range of 1.4470-1.4370, with a stop-loss of 40 pips if the effective breakout occurs.
USD/JPY: USD/JPY has seen slight improvement, rebounding near 77, but the narrow-range oscillation pattern has not been broken. For today, it is suggested that USD/JPY can buy at the lower limit of the range of 77.50-76.60, with a stop-loss of 40 pips if the effective breakout occurs, aiming for the upper limit of the range.
AUD/USD: The AUD continues its two-steps-forward-one-step-backward pattern in the short term, maintaining its short-term upward channel, but the medium-term upward trend has yet to form. For today, it is suggested that AUD/USD can sell at the upper limit of the range of 1.0510-1.0400, with a stop-loss of 40 pips if the effective breakout occurs, aiming for the lower limit of the range.