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Chart of the day: USD back into downtrend v CAD

The US Dollar now encounters its short term downtrend (since March) against the Canadian Dollar after rallying from the lows seen earlier in the month. The currency pair has seen an oversold correction and a rally on the 11th to now encounter resistance at its 50-day and 200-day MA lines.

We anticipate a downtrend reassertion from here back towards its recent lows. However, a break above the 50-day and 200-day MAs would suggest a potential base and further upside towards the next horizontal level at 1.09.

Daily Comment:

The Euro continues to test its recent June lows against the US Dollar, having fallen sharply from the key horizontal level at 1.37 at the beginning of the month below both the 50-day and 100-day MAs.

However, while the pair remains weak, we note that our 14-day RSI momentum indicator now nears oversold territory. We therefore watch for a break of the current level but recognise that downside may be limited beyond the January-June floor at 1.35.

Last week saw a significant weakening of the South Korean Won on speculation of a potential interest rate cut, with the USD/KRW ratio rallying from lows not seen since 2008. We now note that it encounters resistance at the 100-day MA and the April breakdown level near 1036. We watch for a further retreat back towards the 1020 level as the pair unwinds from short term overbought.

The US Dollar reasserted its short term top formation against the Indonesian Rupiah to retest the May breakout level of 11600, below the 50-day MA. We watch for a break of this level and a move towards support at the 200-day MA (dependent on tomorrow's newsflow).

The recent strength of the Rupiah has come on speculation that official election results (due tomorrow) will confirm Joko Widodo as the next president.

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
BRLGBPBrazilian Real/Pound Sterling0.2628+1.2%
TWI TYSPTurkish Lira Trade Weighted64.29+0.8%
AUDJPYAustralian Dollar/Japanese Yen95.165+0.6%
TWI ADSPAustralian Dollar Index137.22+0.5%
AUDEURAustralian Dollar/Euro0.6946+0.5%
Top 5 Losses.
SymbolStockClose% Change
BRLUS$/Brazilian Real2.2262-1.4%
EURZAREuro/South African Rand14.3991-1.1%
GBPZARGBP/South African Rand18.193-1.1%
ZARUS$/South African Rand10.6476-1.1%
AUDBRLAustralian Dollar/Brazilian Real2.092-0.9%
    
The FX Model Portfolio
Foreign Exchange Model Portfolio Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
3 Jul 2014 GBP/Japanese YenGBPJPY Long 174.85 173.155 -0.97%172
Foreign Exchange Model Portfolio Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
21 May 2014 New Turkish Lira per 1 US DollarTRY Short 2.0949 2.1243 -1.40%2.155
4 Jul 2014 Philippines Peso per 1 US DollarPHP Short 43.475 43.51 -0.08%44.25
Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexHolds the July rally towards the June barrier.80.524+0.0% 79.74/79.97681.02
EUREuro/US DollarContinues to test support at the Jan-Jun floor near 1.35.1.3524-0.0% 1.34/1.34771.3993/1.37
GBPUSDBritish Pound/US DollarRetraces the 'Trough' KDR of 15 July, testing the recent lows at 1.707-08.1.7085-0.1% 1.6923/1.7061.7631
CADUS$/Canadian DollarEncounters March downtrend after correcting oversold, below resistance at 50-day and 200-day MAs.1.0733-0.3% 1.0561/1.06211.1279/1.0961
JPYUS$/Japanese YenRanging between the Dec/Jan peak area and support near the 200-day MA. Retests support at the lower boundary.101.34+0.2% 100?/100.76102.8/102.27
ZARUS$/South African RandRanging beneath the 'Peak' KDR of 18 June. Retests support at 50-day MA.10.6476-1.1% 10.2728/10.530110.9779/10.8626
KRWSouth Korean Won per 1 US DollarOverbought recovery slows into April breakdown level near 1036.1029.320.00% 995.85/1008.551082.9/1044.66
CHFUS$/Swiss FrancExtended the Jul rally to the early-June high, testing resistance at the 200-day MA.0.8985+0.1% 0.8857/0.88980.9156/0.9037
EURGBPEuro/Pounds SterlingDowntrend becoming oversold.0.7916+0.1% 0.7755/0.78130.8034/0.7981
EURJPYEuro/Japanese YenExtends the fall towards the Feb floor at 136.6. RSI low.137.08+0.2% 134.11/136.23140.09/139.28
EURCHFEuro/Swiss FrancFinds short term support at 1.214.1.2151+0.1% 1.20625/1.210441.22975/1.22607
GBPJPYGBP/Japanese YenMay be finding support at 50-day MA.173.155+0.1% 172.382/172.967181.4/175.37
GBPCHFGBP/Swiss FrancOverbought uptrend to the 2012 peak slows.1.5352+0.0% 1.5139/1.52151.5692/1.5488
CHFJPYSfr/Japanese YenBroke s-t range support at the May/June floor. Points to the Feb low.112.799+0.0% 108.883/111.7117.864/114.959
AUDJPYAustralian Dollar/Japanese YenRemains in short term top formation below the Apr ceiling. Points to the May floor.95.165+0.6% 93.043/95.171102.94/96.515
AUDNZDAustralian Dollar/New Zealand DollarExtends rally above recent support, testing s-t resistance at the 50-day MA.1.081+0.2% 1.0493/1.06241.1036/1.0838
AUDAustralian Dollar/US DollarPauses the 2014 uptrend.0.9394+0.0% 0.9203/0.93220.9543/0.9505


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