7 Jul 2009

GU Analysis:
The day was actually quiet from a fundamental perspective, with only the US ISM non-manufacturing was released at 2200SGT and the index rose more than anticipated to 47.0 in June from 44.0. ISM index held below 50 - the point of neutrality for the index - for the ninth straight month, signaling a continued contraction, though at a slower pace.

GU went down to hit EMA21 at 1.61 during the US trade session. However, a bounce in stocks that pushed the DOW and S&P 500 into positive territory by the market close. GU rebound to 1.627 this morning and regain much losses.

Today, output by industrial producers in the UK is forecasted to have risen for the second straight month in May at a rate of 0.2 percent, which may help to push the annual rate of growth up to -11.3 percent from -12.3 percent. Other measures of activity in the sector, such as manufacturing PMI, have risen steadily between March and June, but since the index has held below 50 since May 2008, the results simply suggest that the contraction in the sector has slowed, rather than abated completely. As a result, there are some downside risks for this upcoming release of industrial production, and a surprise month-over-month decline could weigh on the British pound upon release. The news will be released at 1630SGT.

Based on the first leg down from 1.6745 to 1.6095, a fib 50% retracement will be to 1.64175. That incidentally is the rebound up above the EMA21 on the daily chart. Therefore this 1.642 will be a good resistance, before the next round of direction decision.

Support still at EMA21 (daily chart) at 1.612.

Trend:Up due to retracement, but a possible swing towards EMA21 is also possible.