GBP/JPY's sharp fall and sustained break of medium term rising channel last week confirmed that the cross has topped out at 162.56. Though, strong recovery after hitting 146.75 suggests that some consolidation could now be seen before decline resumption. Initial

AUD/USD dipped further to as low as 0.7722 last week but struggled to take out 55 days EMA as well as 0.7710 cluster decisively and turned sideway. Initial outlook is neutral this week and some consolidation might be seen. While

USD/CHF continued to gyrate inside range of 1.0630/1.1021 last week without making any progress. At this point, we're still treating price actions from 1.1021 as consolidation to rise from 1.0630 only. Hence, while some more sideway trading might be seen

GBP/USD dived sharply to as low as 1.5983 last week before turning into sideway trading. With an intraday low in place, some consolidation might be seen initially this week. However, note that we're favoring the case that GBP/USD has already

USD/CAD edged higher to 1.1723 last week but failed to sustain above 38.2% retracement of 1.3063 to 1.0784 at 1.1655. Upside momentum is clearly diminishing. But after all, another rise is still mildly in favor as long as 1.1542 minor

EUR/CHF's choppy pull back from 1.5380 continued last week and at this point, further decline might still be seen. But after all, we'd continue to expect downside to be contained above 1.5011 support to complete such correction. ABove 1.5192 minor

EUR/JPY's sharp fall and sustained trading below medium term rising trend line last week confirmed that a medium term is formed at 139.21. Though, subsequent recovery from 127.08 argues that some consolidation might be seen before fall resumption. Hence, initial

USD/JPY's strong break of 93.53/84 support zone and steep dive to 91.79 last week invalidated our bullish view and indicates that USD/JPY has indeed topped out at 101.43 already. With an intraday low in place at 91.79, initial outlook is

EUR/GBP's rebound was limited at 0.8670 last week and turned into range trading since then. After all, the strength of the rise from 0.8399 is still rather unconvincing, and EUR/GBP even failed to take out 55 days EMA (now at

EUR/USD turned into sideway trading after dipping to 1.3832 last week. From a short term angle, initial outlook is neutral this week and some consolidation might be seen. But after all, we's still favoring the bearish case that fall from

Hard data beating soft data The real positive surprise this week was a sharp increase in both German factory orders as well as German industrial production (See Flash Comment - Euroland: German orders beat all expectations). Factory orders rose 4.4%

Perhaps it is the contrarian nature of economists. It is interesting to note that financial markets have softened up quite noticeably in the last couple of weeks. This is just as the cumulative impact of better-than-expected economic data since March

Highlights The reflation trade is under pressure JPY strength raises intervention risk Bank earnings and implications for the US dollar UK CPI outlook could determine course of quantitative easing Key data and events to watch next week The reflation trade

Financial market review - foreign exchange Foreign exchange markets have been marked by another week of range trading. GBP/USD, closing today at 1.6184 has held in the $1.58-$1.6750 range for 6 weeks now. Likewise EUR/GBP remains firmly within its (£0.84-£0.8870)

The events of this week have persuaded us that the prospects for further rate cuts in Australia have diminished to the point where we have revised our forecasts to eliminate rate cuts from our view. We now expect that rates

Sunday, Jul 12, 2009 Jul 13, 2009 Jul 14, 2009 Jul 15, 2008 Jul 16, 2009 Jul 17, 2009

Overview Equity indices for once looked reality in the face and shuddered, hardest hit Russia -9.5% this week, followed by Argentina and Egypt -7.0%, oil stocks looking surprisingly vulnerable. More worryingly many are testing important support having lost almost one

Highlights Equity markets are nervous in the run-up to quarterly earnings reports Industrial new orders and production in Germany pick up significantly in May China keeps the debate on international currency system reform going Yen and Dollar Rise on Growth

Expectations of Recovery Continue to be Scaled Back A slight rise in the ISM non-manufacturing survey and another weak ICSC Chain Store sales report highlighted this week's economic calendar. Unemployment claims fell sharply in early July but the drop was