Swiss franc opens strong; kiwi falls back

Swissie opens strong; kiwi falls back

The Swiss franc tops the performance charts an hour into U.S. trade, advancing more than 0.50% against the greenback. Risk appetite started to taper off early in the session after June existing home sales disappointed with a read of -0.8% m/m, missing calls for a gain of 1.9% m/m. The dollar has remains on the defensive, falling against all of its major counterparts save the kiwi as lawmakers scramble to reach a consensus on the budget debate ahead of the August 2 deadline. Accordingly have flows have sought refuge in the swissie and the yen which continued to outperform the reserve currency. The Swissie, which has come under pressure over the last two sessions, encountered resistance at the 100% Fibonacci extension taken from the June 15th and July 1st crests at 0.8250, before settling just above the 0.82-figure. A likely break here eyes downside targets at 0.8180, backed by 0.8160 and 0.8120. Interim resistance is seen holds at the 100% extension followed by 0.8280 and the 76.4% extension at 0.8315. Look for the dollar to possibly find some buyers on a decision to raise the debt ceiling or a breakthrough in negotiations on Capitol Hill.

Key Levels/Indicators Swiss franc

Level/Indicator

Level

50-Day SMA

0.8492

20-Day SMA

0.8322

10-Day SMA

0.8252

2011 CHF High

0.8038

The kiwi was the only major counterpart to fall against a weaker dollar after failing to break through interim resistance at t 0.8560. Market sentiment has started to shift ahead of the EU meeting in Brussels where officials hope to reach a consensus over how to contain the debt crisis that seems to be taking root in the periphery nations. Traders continue to take profit after the NZDUSD hit record highs yesterday, with the pair falling more than 0.25% early in the New York session. A break below the 38.2% Fibonacci extension taken from the July 12th and 15th troughs sees further losses for the pair with subsequent floors seen at the 0.85-figure, the 23.6% Fib extension at 0.8475, and 0.8440. Topside gains are limited by the 50% extension at 0.8575, with a breech eyeing targets at the 0.86-handle and the 61.8% Fib extension at 0.8620.

Key Levels/Indicators New Zealand dollar

Level/Indicator

Level

50-Day SMA

0.8160

20-Day SMA

0.8300

10-Day SMA

0.8396

2011 NZD High

0.8557

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets.
E-mail: mboutros@fxcm.com

Twitter: @MBForex
WEB: www.fxcm.com

About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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