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Forex Trading: Asian Session Recap and Ranges

Posted by Akhilesh Ganti on Jul 3, 2013 11:05:00 PM

Australia buildingapprovals may2013

A very quiet Asian session as the markets await the ECB, BOE and Friday's US NFP. Ministry of Finance weekly transactions data for the past week showed that Japanese investors once again were net sellers of foreign stocks (38.9 billion yen) and bonds (965.9 billion yen). Australian building approvals fell by -1.1%, which was higher than the -1.5% estimates but was much lower than last month's revised +9.5% number. 

{chart:Bloomberg}(click to enlarge)

Despite the better than expected ADP and initial claims numbers the US Dollar ended yesterday's NY session lower against the majors. Perhaps it was the weaker non-manufacturing ISM data or the escalation of geopolitical tensions in Egypt that caused investors to become risk averse as they sought refuge in the Yen.

With the US markets out for their Independence day holiday, markets will probably be on tenterhooks ahead of the ECB and BOE monetary policy meeting announcements today. The ECB announcement and accompanying press conference will be watched closely as the events in Portugal will only serve to add to the uncertainty surrounding their projections. The BOE will be interesting as well as it will be the first one that their new governor Carney will have presided over.

EUR/USD managed to reclaim the 1.3000 level as concerns about Portugal abated slightly but downward pressure is still expected to emerge especially if Draghi proves to be more dovish than expected. Short term resistance for the pair is around the 1.3080 level. USD/JPY should continue to exhibit bullish tendencies, provided that there isn't a sudden rise in risk aversion, given that the FED and the BOJ are at the opposite ends of the stimulus spectrum. Near term support comes in at 99.30 with medium support at 98.70



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