Risk currencies remain supported amid weak US data

The kiwi tops the performance charts for a second consecutive day, advancing more than 0.75% an hour into North American trade. The gains come despite losses in the equity markets which fell on a weaker than expected print on the August consumer confidence report which hit its lowest level since April 2009 with a read of 44.5. Higher commodity prices continue to support risk currencies however, with the NZD/USD pair holding above the 61.8% Fibonacci extension taken from the June 16th and August 8th troughs at 0.8476. Interim support rests here with subsequent floors seen lower at 0.8440 and the 50% extension at 0.8380. Topside resistance targets are eyed at 0.8530 with a breach eyeing targets at 0.8575 and the 76.4% extension at the 0.86-figure. Investors will be eyeing data out of New Zealand overnight with the August NBNZ activity outlook and business confidence surveys on tap.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8381

20-Day SMA

0.8335

10-Day SMA

0.8328

2011 NZD High

0.8841

The sterling was the worst performer early in US trade, with the pound sliding 0.75% against the greenback. Although UK data was mostly in line with expectations, a weaker than expected net consumer credit print weighed on the sterling, fueling speculation that the BoE may implement further easing measures to spur growth. The GBP/USD broke below the 76.4% Fibonacci extension taken from the August 7th and 19th crests at 1.6335 in pre-market trade with interim support seen at the 100% extension at 1.6246. This level is likely to hold for now, noting subsequent floors at lower bound trendline support of the encompassing wedge formation dating back to the August 10th lows and the 1.62-figure. Topside resistance now stands at 1.6335 backed by the 61.8% extension at 1.6390 and 1.6430. Overnight the GfK consumer confidence survey is expected to show further deterioration in confidence with consensus estimates calling for a print of -33, down from a previous read of -30.If the report comes in at consensus, it will be the lowest read on confidence since February of 2009 and is likely to weigh further on the battered pound.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

1.6090

20-Day SMA

1.6300

10-Day SMA

1.6270

2011 GBP High

1.6745

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.

Twitter: @MBForex
WEB: www.DailyFX.com

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