July 1st, 2010 14:37:19 GMT

USD/JPY sinking slowly in the east


Lower US yields are undercutting USD/JPY dramatically. The pair trades at its lowest level in nearly a year-and-a half.

A 87.00 barrier is in play, traders say and we are making a run for it now. Stops are seen in the 86.90 area.


July 1st, 2010 14:36:18 GMT

US Senate Fails To Pass UI Extension Before July 4th Recess


–Senate Democrats Fall One Vote Short On UI Bill Wednesday Evening
–Unclear If House Democrats Will Try To Pass UI Extension Bill

By John Shaw

WASHINGTON (MNI) – The Senate adjourned until after the July 4th
recess having failed Wednesday evening to pass a package that would
extend unemployment insurance and give homebuyers more time to qualify
for a tax credit by extending the deadline for closing on a home
purchase from June 30 to Sept 30.

Senate Majority Leader Harry Reid fell one vote short of the 60
votes he needed to limit debate on the package.

The Senate vote Wednesday evening was 58 to 38 to end the debate.
Once the outcome was clear, Reid switched his vote to ‘no’ in a
procedural move that would allow him to bring up the package again.

The bill would have retroactively restored UI benefits that lapsed
June 2 and extended them through Nov. 30.

After the measure stalled, the Senate passed by a voice vote the
House-approved homebuyer tax credit bill that has the same three-month
closing date extension in the Senate bill, but it differs in offsets.

The Senate has adjourned until July 12. Many senators will attend a
memorial service for former Sen. Robert Byrd in the Senate chamber
Thursday and then Byrd’s funeral Friday.

The Senate’s week-long Fourth of July recess begins Friday and
senators will not return until July 12.

That week the Senate is expected to take up a financial services
regulatory reform bill. The House passed that bill Wednesday evening.

The House could vote Thursday on a stand-alone bill to extend
unemployment benefits, but this measure could not be taken up by the
Senate until mid-July.

The House is expected to begins its July 4th recess Thursday

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

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July 1st, 2010 14:17:05 GMT

Dollar move should provide opportunites in crosses


Broad-based USD weakness today, there should be opportunities to sell Commodity currencies on bounces. Looks very much like a global double-dip lies ahead; at the very least, we should see a protracted period of sub-par growth.

Selling commodity currencies against JPY would be the obvious play. With USD/JPY and EUR/JPY ringing alarm bells in Tokyo, look for other avenues. Perhaps GBP?


July 1st, 2010 14:11:57 GMT

EUR sprints to 1.2451 after ISM


EUR/USD reached 1.2451 as traders revert to selling the dollar broadly on bad news for the first time in what feels like years. They’re still not 100% comfortable with the idea though, especially as stocks and oil fall further after the data.

The evidence of a faltering US recovery continues to mount while Europe’s woes and China coming off the boil add to fears of a global double dip. Tough to find a winner in this environment as investors have found in recent years.

I continue to like selling EUR/USD strength ahead of 1.2500 with a tight stops, like the rest of the world…  ;)

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July 1st, 2010 14:05:31 GMT

US May Construction Spending Falls 0.2% After Strong Gains


–Annual Revisions Included In May Data

By Kevin Kastner

WASHINGTON (MNI) – Spending on construction fell 0.2% in May after
solid March and April gains, with a drop in private construction more
than offsetting a third straight gain in public building, data released
by the Commerce Department Thursday morning showed.

Analysts in a Market News International survey had expected
construction spending to fall 0.7% for May, though forecasts ranged from
a 2.0% decline to a flat reading. Annual revisions were included in the

Private residential construction fell 0.4% in May, payback for the
5.0% surge in April. Single-family construction rose 0.8%, offset by a
6.3% drop in multi-family building. As a result, total new home
construction was up 0.1% in May, while home remodeling activity was down
0.8% based on a Market News International calculation.

Private nonresidential construction fell 0.6% in May, while public
construction was up 0.4%, led by a gain in state and local construction

** Market News International Washington Bureau: 202-371-2121 **


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July 1st, 2010 14:00:37 GMT

Dollar index looks to be the culprit


A quick peek at the dollar index chart shows a catalyst for this morning’s dollar weakness.

A break of 85.35 support this morning looks to have triggered a head and shoulders top that projects to 81.90 as a measured move objectives. Some of the more-high profile hedge funds like Tudor are big users of the dollar index, historically.

EUR/USD makes up about 60% of the index and closely correlated currencies like GBP and SEK another 15%…

As fundamentally bearish as I am on EUR/USD, I can’t ignore this chart…

7-1 usdx


July 1st, 2010 13:40:19 GMT

Here comes the set up


Rumors working through the market that ISM will come in weak at 55.0/55.1…

Now a weaker number than the economists forecast, say 57.0, looks good by comparison…

EUR/USD trades firm, near 1.2400.


July 1st, 2010 13:24:45 GMT

Oil sliding fast…


It’s not a risk-on day just yet despite the rebound in EUR/USD. Oil is under heavy pressure, trading down at $74.50, down 1.15 on the day. USD/JPY is off lows but still trading well south of 88.00.

On the bright side, US Treasury yields are off their lows (around 2.91% to trade now at 2.94%. Still very low yields by any measure, though.Stocks are flat after slipping a half-percent following the jump in jobless claims.

EUR/USD is consolidating gains, now at 1.2382.

1 Comment

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