ACT: Mid-Day Report: Forex Markets Mixed, Dollar Pared Gains
The forex markets are a bit mixed today. Dollar extends rise against sterling and yen but pared back some gains against other major currencies. The greenback maintained a near term bullish outlook but upside momentum is diminishing much. Commodity currencies are mildly higher on recovery and the selloff in commodities stabilized. Also, Euro recovered against the greenback and yen. In other markets, Gold is hovering around 1100 handle while crude oil gyrates around 50. There is no clear sign of a new round in selloff in both. European stocks are mildly lower after failing to extend early gains. Meanwhile, US stocks open sharply lower with DJIA losing 18000 again.
In Greece, prime minister Alexis Tsipras submitted the legislation needed for securing the new three year bailout to parliament today. The parliament is expected to vote on the measures tomorrow evening. Also, there is a new draft legislation to bring Greek bank resolutions rules in line with EU law. ECB welcomed that draft law and said "it strengthens the tools and procedures available to the Bank of Greece to carry out effective preventive, early intervention and effective resolution measures.
Released earlier today, the RBA minutes for the July meeting maintained a mildly easing stance, despite comments about improvements in the employment market. Besides domestic economic developments, the minutes briefly discussed the huge volatility of China's stock markets. The central bank believed that sharp fall in equities should not have material impact of China's growth outlook. RBA left the cash rate unchanged at 2% in July. More in RBA Saw Improvement In Labor Market.
Intraday bias in USD/JPY remains on the upside for the momentum. Firm break of 124.43 resistance would likely extend the larger up trend through 125.85 high. On the downside, break of 122.91 support is needed to confirm completion of the rebound. Otherwise, outlook will stay cautiously bullish in case of retreat.
In the bigger picture, whole medium term up trend from 75.56 is still in progress. Sustained break of 124.13 key resistance should pave the way to 135.20/147.68 key resistance zone. On the downside, firm break of 118.88 support would argue that the medium term trend is reversing and would at least bring a correction back to 115.55 support and below.
