There is little to report from the Asian session with no data releases to brighten an otherwise lackluster day. The Dollar did continue its losses against the European currencies and rise against the Yen on open but this soon faded with a modestly solid reversal. However, the market too note of the strength in Asian equity markets this morning that saw the Nikkei rise by 0.52%, the Hang Seng by 1.97%, China by 11.17%, Taiwan by .19%, Korea by 0.99%, Australia by 1.34% and Singapore by 1.55%. Sentiment is beginning to see a reduction in the concerns about the credit crunch although most agree that we probably haven’t seen the end of the turmoil overall. There is little on the agenda for today as well with nothing due from Europe and just Existing Homes Sales from the States. While the Dollar may just slip a little further this shouldn’t see and aggressive move and most probably a Dollar low for the week against the Europeans. The following economic releases are due today: July
U.S. Existing Home Sales 5.70mn
U.S. Existing Home Sales (MoM) - 0.9% The Dollar-Yen peak at 117.12 has held firm so far with even a second attempt to move up towards there this morning failing to reach. I can’t rule out a retest later but I tend to feel that since it also represents a 50% pullback of the entire decline from 124.13 that we are unlikely to see this break right now. Later, this week is definitely possible though so it’s more a matter of timing. It seems that this inability for the Dollar to rise against the Yen may well be allowing the Dollar to deepen the correction against the Europeans. As of now there is no obvious sign of reversal but I think the corrective decline shouldn’t have much further to go. I suspect that once the Dollar finishes this decline then we’ll see it rally in tandem against both the Yen and the Europeans. Now, this weakness in the Dollar has moved beyond where I had thought it should stall. It does open up a number of possibilities but quite probably because the Dollar recovery is merely a correction that should run for a further 3-4 months only that we have only seen the first part of the correction. What comes next is a little more difficult to be sure of at this point. Against the Euro and Pound the correction appear to have come in 3-waves and this could suggest a longer sideways correction over the next 1-3 weeks. However, if I look at the Swissie I suspect that we should see the Dollar’s upside tested more directly and I’ll use this as a guide and will tend towards a new rally in the Dollar. This would tend to fit in with the position against the Canadian Dollar although the Ausise still seems to have further to rise over time and could be a reflection of the possible carry plays which the market now seems to think are possible. Anyway, I’ll be trying to fine-tune this over the week. Note important support and resistance areas: USDJPY EURUSD USDCHF GBPUSD
Res: 117.56-73 1.3746-84 1.2110-30 2.0317-25
Res: 116.77-12 1.3698-30 1.2018-50 2.0204-46 Spt: 116.00-10 1.3605-15 1.1947-65 2.0135-40
Spt: 115.52-75 1.3470-20 1.1890-08 2.0076-10 | 
