Category: Countries & Regions

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Euro Sterling strengthen

The euro is testing the upper border of a large descending triangle against the greenback. Breakout is not expected as this is a bearish pattern, but would test resistance at its 2009 high of $1.50/1.51.

Euro - US Dollar

* Target calculation: 1.44 + ( 1.48 – 1.40 ) = 1.52

The pound broke resistance at $1.65 against the US dollar, immediately retracing to test the new support level. Respect would confirm an advance to $1.67. Penetration of the rising trendline warns of reversal to a down-trend, but 63-day Momentum is rising — continued respect of the zero line would be a bullish sign.

Pound Sterling - US Dollar

* Target calculation: 1.67 + ( 1.67 – 1.60 ) = 1.74

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Loonie turns

After breaking its long-term rising trendline against the greenback, followed by primary support at $1.01, the Canadian Loonie is testing resistance at $1.02. Weak economic data should increase selling pressure. Reversal below $1.01 would confirm the down-trend, offering a target of $0.96*.

Canadian Dollar - US Dollar

* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96

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Swiss Franc finds support

The Swiss Franc fell sharply before finding support at $1.25 as fears of SNB intervention subsided. Expect some consolidation, but recovery above $1.30 would indicate another test of $1.40.  Failure of support is unlikely, and would offer a target of $1.10*.

Swiss Franc - US Dollar

* Target calculation: 1.25 – ( 1.40 – 1.25 ) = 1.10

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Kiwi trend channel

The Australian Dollar is edging towards the upper trend channel against its Kiwi counterpart, but the primary trend remains downward. Respect of the upper channel (and resistance at $1.28) would signal a test of the lower border at the 2010 low of $1.21.

Australian Dollar - New Zealand Dollar

* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18

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Aussie dollar recovery is tentative

The Aussie Dollar recovered above the former primary support level at $1.04, testing resistance at $1.06. Breakout would indicate an advance to $1.10. But there are several question-marks over the latest advance. First, the rally has accompanied a similar recovery on the ASX 200 (to test resistance at 4500). If resistance holds, as expected, the AUD is likely to retreat.

Australian Dollar

* Target calculation: 1.04 – ( 1.10 – 1.04 ) = 0.98

Second, the CRB Commodities Index confirmed a primary down-trend with a sharp fall below 335. The primary trend is unlikely to reverse at this stage and another down-swing would drag the Aussie Dollar lower.

CRB Commodities Index

* Target calculation: 330 – ( 350 – 330 ) = 310

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US debt shrinkage slows

Having fallen by almost $1 trillion since its peak in 2009, the decline in US bank lending is slowing, with the annual rate of change approaching zero. A stable level of debt would reduce deflationary pressure and signal that residential and commercial real estate prices are bottoming.

US Bank Loans Leases and Securitised Loans

Most of the money pumped into the economy over the last year leaked straight back out, with excess bank reserves deposited with the Fed rising by more than $500 billion.

US Bank Assets

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UK austerity bites

UK bank lending to households jumped slightly in June 2011, but the annual rate of change remains negative at -3%.

UK Household Debt

Commercial loans continue to shrink at an annual rate of 7.5%, signaling a dearth of new investment and job creation by the private sector.

UK Commercial Debt

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Australian bank lending slows

Annual rate of change in Australian household debt is falling but remains in positive territory for the time being.

Australian Household Debt

Commercial debt, however, has fallen by more than A$100 billion since its peak in 2009, signaling a fall in new capital investment and job creation by the private sector.

Australian Commercial Debt

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