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Euro Power Continues ahead of GDP, Dollar Drags Further by Falling Yields

Dollar’s broad based selloff continues in Asian session today. There are increasing concerns that momentum of US economic recovery is starting to falter. The pessimism is somewhat reflected in persistent decline in treasury yields too. Though, Canadian Dollar is even worse as pressured by sharp decline in oil prices. Euro and Sterling continue to stay strong across the board. Euro will be facing some tests from GDP data today today, but it will likely survive downside surprises.

Technically, EUR/USD’s solid break of 1.1816 projection level suggests further upside acceleration. Next target will be 1.2216. EUR/CAD is on track to break through 1.5991 to resume near term rise from 1.4263. We’d be cautious on rejection by 1.6151 key resistance handle. But firm break there will be a key sign on medium term bullishness.

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In Asia, currently, Nikkei is down -2.28%. Hong Kong HSI is up 0.04%. China Shanghai SSE is down -0.02%. Singapore Strait Times is down -1.70%. Japan 10-year JGB yield is down -0.0088 at 0.011. Overnight, DOW dropped -0.85%. S&P 500 dropped -0.38%. NASDAQ rose 0.43%. 10-year yield dropped -0.038 to 0.541, broken April’s low at 0.543.

WTI crude oil defending 38.45 support for now, but looks vulnerable

WTI crude oil drops sharply to as low as 38.58 overnight, but recovery ahead of 38.45 support. Though there is no following buying for further recovery above 40 handle. 38.45 support now looks rather vulnerable. Sustained break of 38.45 should confirm rejection by 42.05 key resistance. Deeper fall should then be seen back towards structure support level at 31.23, to correct the rebound from April’s spike low.

Japan industrial production rose 2.7% in June, unemployment rate dropped to 2.8%

Japan industrial production rose 2.7% mom in June, above expectation of 1.2% mom. Annually, production dropped -17.7% yoy. Looking at some details, shipment rose 5.2% mom, inventories dropped -2.4% mom, inventory ratio dropped -7.0%. The data showed slight improvement after production hit its decade low in May. The METI also said manufacturers are expecting further rebound in production by 11.3% mom in July and 3.4% in August.

Also released, unemployment rate dropped to 2.8% in June, down from 3-year high of 2.9% in May, better than exp