Intervention by the BOJ had limited effect and the greenback is again testing support at ¥76.50. 21-Day Twiggs Momentum oscillating below zero is typical of a strong down-trend. Failure of support would offer a medium-term target of ¥73*.
* Target calculation: 76.50 – ( 80.00 – 76.50 ) = 73.00
The US Dollar strengthened against the South African Rand, testing resistance at R7.35 before retreating to support at R7.00. Respect of support would indicate another test of R7.35. In the long term, breakout above R7.35 would signal an advance to the 2010 high of R8.00.
* Target calculation: 7.35 + ( 7.35 – 6.50 ) = 8.20
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.
* 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.
* Target calculation: 1.67 + ( 1.67 – 1.60 ) = 1.74
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*.
* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96
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*.
* Target calculation: 1.25 – ( 1.40 – 1.25 ) = 1.10
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.
* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18
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.
* 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.
* Target calculation: 330 – ( 350 – 330 ) = 310
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.
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.
UK bank lending to households jumped slightly in June 2011, but the annual rate of change remains negative at -3%.
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.
China’s growth in bank lending has slowed to an annual rate of 15% from its peak of 35% in 2009, but indicates that further tightening is required to bring the inflation hangover under control.
