LET US TALK ABOUT FOREX AT IT`S BEST

DAILY MARKET COMMENTARY
4 August 2008

Monday

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5630 level and was supported around the $1.5555 level. The common currency gave back most of its intraday gains as traders continued to position themselves ahead of this week’s interest rate decisions. First, the Federal Open Market Committee is expected to keep interest rates unchanged tomorrow with many Fed-watchers expecting at least one rate-setter calling for higher rates. Second, the European Central Bank’s interest rate decision will be announced on Thursday and policymakers are expected to keep the ECB’s main refinancing rate unchanged. Policymakers at both central banks have to contend with heightened inflation pressures and decelerating economic growth. Data released in the U.S. today saw June core personal consumption expenditures up 0.3% m/m and 2.3% y/y. Also, June factory orders were up 1.7% with the ex-transportation component up 2.3% while June consumer spending and personal income were up 0.6% and 0.1%, respectively. In eurozone news, the International Monetary Fund is predicting EMU-15 inflation will fall sharply next year. EMU-15 June producer price inflation rose 0.9% m/m and 8.0% y/y, above expectations. Euro bids are cited around the $1.5585/ 1.5230 levels.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥108.25 level and was supported around the ¥107.45 level. The pair recovered from Friday’s sell-off and came within 30 pips of establishing a new multi-month high. Prime Minister Fukuda reshuffled his Cabinet last week and called on his government to formulate a fiscal stimulus package to assist companies who are hurting from inflation. Most traders believe Bank of Japan will keep the overnight call rate unchanged at 0.50% for the foreseeable future. New finance minister Iuka warned Japan may be facing the risk of cost-push stagflation on account of rising raw materials. The Nikkei 225 stock index lost 1.23% to close at ¥12,933.18. Dollar bids are cited around the ¥106.40 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥168.70 level and was supported around the ¥167.30 level. The British pound came off vis-à-vis the yen as sterling tested offers around the ¥212.05 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥103.40 level. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8515 in the over-the-counter market, up from CNY 6.8425. A government policymaker reported China ’s macroeconomic control policies are having a positive impact and there is no longer a need to promote slower economic growth. Goldman Sachs estimates July CPI growth eased to 6.6% y/y.

₤

The British pound fell sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9600 figure and was capped around the $1.9760 level. Technically, today’s intraday high and low were right around the 38.2% and 23.6% retracements of the move from $2.0395 to $1.9365, respectively. The Independent reported Halifax will report an annual house price decline of more than 10% this week. July construction PMI fell to 36.7, the weakest since at least 1997. Bank of England’s Monetary Policy Committee is expected to keep interest rates on hold on Thursday. Cable bids are cited around the $1.9360 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7945 level and was supported around the ₤0.7880 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0435 level and was capped around the CHF 1.0505 level. Data released in Switzerland today saw the July purchasing managers’ index fall to 54.1 from 54.9 in June, a three-year low while costs soared. U.S. dollar offers are cited around the CHF 1.0515/ 1.0625 levels. The euro and British pound weakened vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6310 and CHF 2.0530 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.5617 1.5630, 1.5553
USD/ JPY 107.98 108.27, 107.45
GBP/ USD 1.9698 1.9762, 1.9653
USD/ CHF 1.0446 1.0505, 1.0433
AUD/ USD 0.9335 0.9343, 0.9282
USD/CAD 1.0294 1.0307, 1.0258
NZD/USD 0.7321 0.7332, 0.7267
EUR/ JPY 168.67 168.72, 167.29
EUR/ GBP 0.7927 0.7928, 0.7879
EUR/ CHF 1.6319 1.6346, 1.6308
GBP/ JPY 212.73 212.87, 212.14
CHF/ JPY 103.34 103.41, 102.49

Support Resistance Support Resistance

EUR/ USD USD/ JPY

L1. 1.5225 1.5645 101.95 106.60

L2. 1.5035 1.5840 100.60 109.95
L3. 1.4805 1.6020 98.75 113.30

GBP/ USD USD/ CHF

L1. 1.9520 1.9760 1.0135 1.0565

L2. 1.9395 1.9880 0.9990 1.0730

L3. 1.9100 2.0000 0.9875 1.1040

AUD/ USD USD/ CAD

L1. 0.9380 0.9655 0.9870 1.0175

L2. 0.9215 0.9735 0.9715 1.0370

L3. 0.9005 1.0115 0.9465 1.0520

NZD/ USD EUR/ JPY

L1. 0.7700 0.8105 160.60 166.65

L2. 0.7595 0.8420 158.35 167.75

L3. 0.7275 0.8665 154.80 168.95

EUR/ GBP EUR/ CHF

L1. 0.7740 0.8120 1.5975 1.6250

L2. 0.7555 0.8310 1.5855 1.6470

L3. 0.7440 0.8570 1.5730 1.6760

GBP/ JPY CHF/ JPY

L1. 200.60 208.50 98.70 103.30

L2. 197.55 211.35 97.00 105.40

L3. 192.70 217.15 95.85 107.70

SCHEDULE

Sunday, 3 August 2008

all times GMT

(last release in parentheses)

N/A Japan July official reserve assets (¥1.001 trillion)

2245 NZ Q2 average hourly earnings (1.1% q/q)

2245 NZ Q2 private sector labour costs (0.7% q/q)

2245 NZ Q2 private wages, ex-overtime (0.7% q/q)

2330 Australia July performance of service index (45.4)

2350 Japan July monetary base (0.4% y/y)

Monday, 4 August 2008

all times GMT

(last release in parentheses)

N/A Japan July machine tool orders

N/A UK July HBOS house price index

0130 Australia July ANZ job advertisements (-3.0% m/m)

0130 Australia Q2 house price index (1.1% q/q)

0130 Australia Q2 house price index (13.8% y/y)

0300 NZ July ANZ commodity price index (0.0%)

0730 CH July PMI (54.9)

0830 UK July PMI, construction (38.8)

0830 Eurozone August Sentix investor confidence (-9.3)

0900 Eurozone June producer price index (1.2% m/m)

0900 Eurozone June producer price index (7.1% y/y)

1130 US July Challenger job cuts (46.7% y/y)

1230 US June personal income (1.9%)

1230 US June personal spending (0.8%)

1230 US June personal consumption expenditures, core (0.1% m/m)

1230 US June personal consumption expenditures, core (2.1% y/y)

1230 US June personal consumption expenditures deflator (3.1% y/y)

1400 US June factory orders (0.6%)

Tuesday, 5 August 2008

all times GMT

(last release in parentheses)

0430 Australia Reserve Bank of Australia interest rate decision

0745 Italy July PMI, services

0750 France July PMI, services

0755 Germany July PMI, services

0800 Eurozone July PMI, services

0830 UK June industrial production (-0.8%)

0830 UK June industrial production (-1.6% y/y)

0830 UK June manufacturing production (-0.5% m/m)

0830 UK June manufacturing production (-0.8% y/y)

0830 UK July PMI, services (47.1)

0900 Eurozone July retail sales (1.2% m/m)

0900 Eurozone July retail sales (0.2% y/y)

1300 US Federal Open Market Committee meeting begins

1400 US July ISM, non-manufacturing (48.2)

1815 US Federal Open Market Committee interest rate decision

2301 UK July NIESR GDP estimate (0.2%)

2301 UK July Nationwide consumer confidence

2330 Australia July performance of construction index

Wednesday, 6 August 2008

all times GMT

(last release in parentheses)

0130 Australia June home loans

0130 Australia June investment lending

0500 Japan June leading index

0500 Japan June coincident index

0930 UK July BRC shop price index

1000 Germany June factory orders (-0.9% m/m)

1000 Germany June factory orders (-2.0% y/y)

1100 US MBA mortgage applications

1400 Canada July Ivey PMI (69.6)

2245 NZ Q2 unemployment rate (3.6%)

2245 NZ Q2 employment change (-1.3% q/q)

2245 NZ Q2 employment change (-0.2% y/y)

2350 Japan June machine orders

2350 Japan Foreign purchases of Japanese equities and bonds

2350 Japan Japanese purchases of foreign equities and bonds

Thursday, 7 August 2008

all times GMT

(last release in parentheses)

N/A Germany July wholesale price index

0130 Australia July unemployment rate

0130 Australia July employment change

0600 Germany June trade balance

0600 Germany June current account

0645 France June trade balance

0800 Italy June industrial production

1000 Germany June industrial production (-2.4% m/m)

1000 Germany June industrial production (0.8% y/y)

1100 UK Bank of England Monetary Policy Committee interest rate decision

1230 US Weekly initial jobless claims

1230 US Continuing jobless claims

1230 Canada June building permits (1.1% m/m)

1400 US June pending home sales (-4.7% m/m)

1730 US July ICSC chain store sales

1900 US June consumer credit

2350 Japan July M2+CD money supply (2.3% y/y)

2350 Japan July bank lending (1.8% y/y)

Friday, 8 August 2008

all times GMT

(last release in parentheses)

N/A Japan July economy watchers’ survey, current (29.5)

N/A Japan July economy watchers’ survey, outlook (32.1)

0545 CH July unemployment rate (2.3%)

0800 Italy Q2 GDP (0.5% q/q)

0800 Italy Q2 GDP (0.3% y/y)

0900 Eurozone August industrial confidence

1100 Canada July unemployment rate

1230 US Q2 non-farm productivity (2.6%)

1230 US Q2 unit labour costs (2.2%)

1400 US June wholesale inventories (0.8%)