USD/CHF - 1.0086
Most recent candlesticks pattern : N/ATrend : Down
Tenkan-Sen level : 1.0073Kijun-Sen level : 1.0101Ichimoku cloud top : 1.0221Ichimoku cloud bottom : 1.0159
Original strategy :
Buy at 1.0005, Target: 1.0165, Stop: 0.9945
New strategy :
Buy at 1.0005, Target: 1.0165, Stop: 0.9945
The greenback has remained sidelined as suggested in our previous update and further sideways trading above the fresh 2009 low of 1.0033 formed last Friday would continue and although recovery to the Kijun-Sen (now at 1.0101) cannot be ruled out, as long as resistance at 1.0169 holds, recent decline should extend marginally towards chart support at 1.0011, however, as this move is losing downward momentum, suggesting sharp fall below there would not be repeated and reckon possible profit-taking would take place ahead of psychological support at 1.0000 and bring rebound later.
In view of the above analysis, we are venturing long on next decline. Above resistance at 1.0169 would suggest a temporary low is possibly formed and gain to the Ichimoku cloud bottom (now at 1.0201) but break of 1.0230-39 (previous resistance and current level of the Ichimoku cloud top) is needed to confirm.
Tuesday, October 27, 2009
Trade Idea: GBP/USD - Sell at 1.6520
GBP/USD - 1.6373
Most recent candlesticks pattern : N/ATrend : Sideways
Tenkan-Sen level : 1.6467Kijun-Sen level : 1.6472Ichimoku cloud top : 1.6263Ichimoku cloud bottom : 1.6077
Original strategy :
Sell at 1.6470, Target: 1.6250, Stop: 1.6530
New strategy :
Sell at 1.6520, Target: 1.6315, Stop: 1.6585
As cable has rebounded after intra-day fall to 1.6251, suggesting the first leg of decline from 1.6694 has ended there and consolidation would take place with mild upside bias for recovery towards 1.6472-87 (current level of the Kijun-Sen and previous support turned resistance). However, as top has been formed at 1.6694, reckon renewed selling interest should emerge around 1.6520/25 (approx. 61.8% Fibonacci retracement of the fall from 1.6694 to 1.6251) and bring another decline. Break of said support would extend weakness for a stronger correction of the rise from 1.5708 to 1.6201 (50% Fibonacci retracement of 1.5708 to 1.6694) but reckon support at 1.6121(previous resistance turned support) would remain intact.
In view of the above analysis, we are still looking to sell on further rise. Above 1.6585 would risk stronger rebound to 1.6635/40 but said resistance at 1.6694 should put a lid on sterling for the time being.
Most recent candlesticks pattern : N/ATrend : Sideways
Tenkan-Sen level : 1.6467Kijun-Sen level : 1.6472Ichimoku cloud top : 1.6263Ichimoku cloud bottom : 1.6077
Original strategy :
Sell at 1.6470, Target: 1.6250, Stop: 1.6530
New strategy :
Sell at 1.6520, Target: 1.6315, Stop: 1.6585
As cable has rebounded after intra-day fall to 1.6251, suggesting the first leg of decline from 1.6694 has ended there and consolidation would take place with mild upside bias for recovery towards 1.6472-87 (current level of the Kijun-Sen and previous support turned resistance). However, as top has been formed at 1.6694, reckon renewed selling interest should emerge around 1.6520/25 (approx. 61.8% Fibonacci retracement of the fall from 1.6694 to 1.6251) and bring another decline. Break of said support would extend weakness for a stronger correction of the rise from 1.5708 to 1.6201 (50% Fibonacci retracement of 1.5708 to 1.6694) but reckon support at 1.6121(previous resistance turned support) would remain intact.
In view of the above analysis, we are still looking to sell on further rise. Above 1.6585 would risk stronger rebound to 1.6635/40 but said resistance at 1.6694 should put a lid on sterling for the time being.
Trade Idea: USD/JPY - Sell At 92.90
USD/JPY – 91.97
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 91.95Kijun-Sen level : 91.41Ichimoku cloud top : 90.44Ichimoku cloud bottom : 89.84
Original strategy
Buy at 91.60, Target: 92.85, Stop: 91.00
New Strategy
Sell at 92.90, Target: 91.55, Stop: 93.50
Although the greenback resumed recent rise from 88.01 low this morning and gain to 92.65 (50% projection of 90.07 to 92.23 measuring from 91.57) cannot be ruled out, loss of near term upward momentum should prevent sharp move beyond there and reckon selling interest would emerge around 92.90 (61.8% projection) and bring retreat later. Below 91.33-41 (previous resistance turned support and current level of the Kijun-Sen) would confirm a top has been formed, then further fall towards the Ichimoku cloud top (now at 90.44) would follow.
In view of the above analysis, we are turning short on next upmove for such a retreat. Above 93.50 would risk stronger correction of recent decline to 94.05 (61.8% Fibonacci retracement of 97.79 to 88.01) before prospect of another strong pullback.
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 91.95Kijun-Sen level : 91.41Ichimoku cloud top : 90.44Ichimoku cloud bottom : 89.84
Original strategy
Buy at 91.60, Target: 92.85, Stop: 91.00
New Strategy
Sell at 92.90, Target: 91.55, Stop: 93.50
Although the greenback resumed recent rise from 88.01 low this morning and gain to 92.65 (50% projection of 90.07 to 92.23 measuring from 91.57) cannot be ruled out, loss of near term upward momentum should prevent sharp move beyond there and reckon selling interest would emerge around 92.90 (61.8% projection) and bring retreat later. Below 91.33-41 (previous resistance turned support and current level of the Kijun-Sen) would confirm a top has been formed, then further fall towards the Ichimoku cloud top (now at 90.44) would follow.
In view of the above analysis, we are turning short on next upmove for such a retreat. Above 93.50 would risk stronger correction of recent decline to 94.05 (61.8% Fibonacci retracement of 97.79 to 88.01) before prospect of another strong pullback.
Trade Idea: EUR/USD - Exit Long Entered At 1.4890
EUR/USD - 1.4902
Most recent candlesticks pattern : N/A
Trend : Up
Tenkan-Sen level : 1.4954Kijun-Sen level : 1.4954Ichimoku cloud top : 1.4925Ichimoku cloud bottom : 1.4834
Original strategy
Bought at 1.4890, Target: 1.5050, Stop: 1.4825
New strategy
Exit long entered at 1.4890
Despite rising marginally to another 2009 high of 1.5064 yesterday, the single currency tumbled from there in New York session on falling stocks and oil prices, suggesting a temporary top has been formed there and correction of recent upmove has taken place. Although euro found support above the Ichimoku cloud bottom and recovered from 1.4845, reckon upside would be limited to the convergence of Tenkan-Sen and Kijun-Sen (now both at 1.4954) and bring another decline later. Below 1.4834-45 (current level of the lower Kumo and previous support and also approx. 38.2% Fibonacci retracement of 1.4480 to 1.5064 at 1.4841) would extend weakness to 1.4772 (50% Fibonacci retracement) later.
In view of this, we are exiting our long position entered at 1.4890 with small profit and stand aside in the meantime. Only above 1.4980 (previous support) would bring another bounce to 1.5000 and possibly retest of 1.5064 which is expected to remain intact.
Most recent candlesticks pattern : N/A
Trend : Up
Tenkan-Sen level : 1.4954Kijun-Sen level : 1.4954Ichimoku cloud top : 1.4925Ichimoku cloud bottom : 1.4834
Original strategy
Bought at 1.4890, Target: 1.5050, Stop: 1.4825
New strategy
Exit long entered at 1.4890
Despite rising marginally to another 2009 high of 1.5064 yesterday, the single currency tumbled from there in New York session on falling stocks and oil prices, suggesting a temporary top has been formed there and correction of recent upmove has taken place. Although euro found support above the Ichimoku cloud bottom and recovered from 1.4845, reckon upside would be limited to the convergence of Tenkan-Sen and Kijun-Sen (now both at 1.4954) and bring another decline later. Below 1.4834-45 (current level of the lower Kumo and previous support and also approx. 38.2% Fibonacci retracement of 1.4480 to 1.5064 at 1.4841) would extend weakness to 1.4772 (50% Fibonacci retracement) later.
In view of this, we are exiting our long position entered at 1.4890 with small profit and stand aside in the meantime. Only above 1.4980 (previous support) would bring another bounce to 1.5000 and possibly retest of 1.5064 which is expected to remain intact.
Trade Idea: GBP/USD - Sell At 1.6520
GBP/USD - 1.6359
Most recent candlesticks pattern : N/A
Trend : Sideways
Tenkan-Sen level : 1.6323Kijun-Sen level : 1.6472Ichimoku cloud top : 1.6327Ichimoku cloud bottom : 1.6098
Original strategy
Sell at 1.6520, Target: 1.6315, Stop: 1.6585
New strategy
Sell at 1.6520, Target: 1.6315, Stop: 1.6585
As cable continued to find good support above yesterday's low at 1.6251, suggesting further consolidation would take place and recovery to the Kijun-Sen (now at 1.6472) cannot be ruled out, however, as top has been formed at 1.6694, reckon renewed selling interest should emerge around 1.6520/25 (approx. 61.8% Fibonacci retracement of the fall from 1.6694 to 1.6251) and bring another decline. Break of said support would extend weakness for a stronger correction of the rise from 1.5708 to 1.6201 (50% Fibonacci retracement of 1.5708 to 1.6694) but reckon support at 1.6121(previous resistance turned support) would remain intact.
In view of the above analysis, we are still looking to sell on further rise. Above 1.6585 would risk stronger rebound to 1.6635/40 but said resistance at 1.6694 should put a lid on sterling for the time being.
Most recent candlesticks pattern : N/A
Trend : Sideways
Tenkan-Sen level : 1.6323Kijun-Sen level : 1.6472Ichimoku cloud top : 1.6327Ichimoku cloud bottom : 1.6098
Original strategy
Sell at 1.6520, Target: 1.6315, Stop: 1.6585
New strategy
Sell at 1.6520, Target: 1.6315, Stop: 1.6585
As cable continued to find good support above yesterday's low at 1.6251, suggesting further consolidation would take place and recovery to the Kijun-Sen (now at 1.6472) cannot be ruled out, however, as top has been formed at 1.6694, reckon renewed selling interest should emerge around 1.6520/25 (approx. 61.8% Fibonacci retracement of the fall from 1.6694 to 1.6251) and bring another decline. Break of said support would extend weakness for a stronger correction of the rise from 1.5708 to 1.6201 (50% Fibonacci retracement of 1.5708 to 1.6694) but reckon support at 1.6121(previous resistance turned support) would remain intact.
In view of the above analysis, we are still looking to sell on further rise. Above 1.6585 would risk stronger rebound to 1.6635/40 but said resistance at 1.6694 should put a lid on sterling for the time being.
Trade Idea: USD/CHF - Buy At 1.0070
USD/CHF - 1.0154
Most recent candlesticks pattern : N/A
Trend : Down
Tenkan-Sen level : 1.0127Kijun-Sen level : 1.0117Ichimoku cloud top : 1.0218Ichimoku cloud bottom : 1.0141
Original strategy
Buy at 1.0005, Target: 1.0165, Stop: 0.9945
New strategy
Buy at 1.0070, Target: 1.0220, Stop: 1.0005
Yesterday's stronger rebound on falling oil and stock prices suggests a temporary low has possibly been formed at 1.0033 earlier and consolidation with upside bias is seen but break of resistance at 1.0230 is needed to confirm this view and bring retracement of recent decline to 1.0275/80, however, reckon 1.0358-60 (38.2% Fibonacci retracement of 1.0885 to 1.0033 and previous resistance level) would hold from here.
In view of the above analysis, we are looking to buy euro on retreat. Only below 1.0011 chart support would extend recent decline towards 0.9980 but reckon 0.9924 (61.8% projection of 1.1026 to 1.0170 measuring from 1.0453) would hold from here.
Most recent candlesticks pattern : N/A
Trend : Down
Tenkan-Sen level : 1.0127Kijun-Sen level : 1.0117Ichimoku cloud top : 1.0218Ichimoku cloud bottom : 1.0141
Original strategy
Buy at 1.0005, Target: 1.0165, Stop: 0.9945
New strategy
Buy at 1.0070, Target: 1.0220, Stop: 1.0005
Yesterday's stronger rebound on falling oil and stock prices suggests a temporary low has possibly been formed at 1.0033 earlier and consolidation with upside bias is seen but break of resistance at 1.0230 is needed to confirm this view and bring retracement of recent decline to 1.0275/80, however, reckon 1.0358-60 (38.2% Fibonacci retracement of 1.0885 to 1.0033 and previous resistance level) would hold from here.
In view of the above analysis, we are looking to buy euro on retreat. Only below 1.0011 chart support would extend recent decline towards 0.9980 but reckon 0.9924 (61.8% projection of 1.1026 to 1.0170 measuring from 1.0453) would hold from here.
USD/CHF
USD/CHF closed lower due to profit taking on Monday as it consolidated some of the last week's rally. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If it extends this week's rally, the 87% retracement level of he 2008-2009-decline crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that a top has been posted.
GBP/USD
GBP/USD posted a key reversal up on Moday as it consolidated some of Friday's decline. The mid-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are oversold but are turning neutral hinting that a short-term bottom might be in or is near. Closes above the 10-day moving average crossing would confirm that a short-term bottom has been posted. If it extends this today's rally, the reaction low crossing is the next downside target.
USD/JPY
USD/JPY closed lower due to profit taking on Monday as it consolidated some of the last week's rally. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If it extends this week's rally, the 87% retracement level of he 2008-2009-decline crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that a top has been posted.
Foreign Exchange Market Commentary
EUR/USD closed lower due to profit taking on Monday as it consolidated some of the last week's rally. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If it extends this week's rally, the 87% retracement level of he 2008-2009-decline crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that a top has been posted.
Friday, October 23, 2009
Euro takes full advantage of worn−out dollar
Long signal
Short signal
Buy a break of resistance level at 1.4970
Sell a break of support level at 1.4830
EUR/USD
Buy a break of resistance level at 1.5000
Sell a break of support level at 1.4675
Buy a bounce at 1.4830
Sell a failure of breaking the resistance 1.4970
Fundamental
The U.S. dollar will extend declines as the global economy’s recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world’s biggest bond fund. Fundamental forces are set to put downward pressure on the dollar as the recovery gathers momentum, Pimco’s strategic adviser Richard Clarida wrote on the company’s Web site. Those forces include massive budget deficits, bets the Federal Reserve will keep borrowing costs near zero for an extended period, and prospects for a double-dip recession in the U.S., he said.
Technical
Technical analysis shows the euro may continue its uptrend as MACD giving us a buying signal by crossing the signal line to MACD line upwards, RSI is in an uptrend. We have strong demand in the market as stochastic shows us the market movement and Bollinger gives us a bullish signal by closing the candle above the middle band.
EUR/USD (Daily Chart)
The primary tendency is in a clear uptrend.
EUR/USD (4 Hour Chart)
The pair bounced on Fibonacci 23.6% level.
EUR/USD (Hourly Chart)
The Minor trend forms a lower resistance.
Resistance1.49701.5000
Support1.48301.467
Short signal
Buy a break of resistance level at 1.4970
Sell a break of support level at 1.4830
EUR/USD
Buy a break of resistance level at 1.5000
Sell a break of support level at 1.4675
Buy a bounce at 1.4830
Sell a failure of breaking the resistance 1.4970
Fundamental
The U.S. dollar will extend declines as the global economy’s recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world’s biggest bond fund. Fundamental forces are set to put downward pressure on the dollar as the recovery gathers momentum, Pimco’s strategic adviser Richard Clarida wrote on the company’s Web site. Those forces include massive budget deficits, bets the Federal Reserve will keep borrowing costs near zero for an extended period, and prospects for a double-dip recession in the U.S., he said.
Technical
Technical analysis shows the euro may continue its uptrend as MACD giving us a buying signal by crossing the signal line to MACD line upwards, RSI is in an uptrend. We have strong demand in the market as stochastic shows us the market movement and Bollinger gives us a bullish signal by closing the candle above the middle band.
EUR/USD (Daily Chart)
The primary tendency is in a clear uptrend.
EUR/USD (4 Hour Chart)
The pair bounced on Fibonacci 23.6% level.
EUR/USD (Hourly Chart)
The Minor trend forms a lower resistance.
Resistance1.49701.5000
Support1.48301.467
USD holds gains, existing home sales surge 9.4%
USD: Higher, existing home sales surge 9.4%, equity markets trade lower as the data at fails to lift stocks
JPY:Lower, BOJ forecasts that deflation pressures will continue into 2011
EUR:Higher, existing home sales surge 9.4%, equity markets trade lower as the data at fails to lift stocks
GBP: Lower, UK Q3 GDP posts a surprise decline, early withdrawal of stimulus unlikely
CAD and AUD: AUD & CAD lower, Australia's import/export prices decline, BOC says intervention an option
OverviewUSD traded mixed Friday with GBP sharply lower and EUR trading at a new high for 2009. GBP was pressured by report of an unexpected decline in UK Q3 advance Q3 GDP and the EUR was supported by gains in cross trade to GBP and in reaction to report that EU composite PMI rose to a 22 month high. Today’s economic data from Europe shows that the UK economy is still in recession and the EU economy is emerging from recession. The unexpected decline in UK GDP may force the BOE to consider expanding quantitative ease. JPY traded lower pressured by a BOJ report which says that deflationary pressures will continue through 2011. Commodity currencies traded lower despite firmer equity trade in Europe with the CAD pressured by a statement from BOC Governor Carney that intervention is an option and AUD pressured by report of falling Q3 export and import prices. US existing home sales came in much stronger than expected. The USD traded higher in reaction to the strong housing data as the trade debates how much of an impact the expected expiration of the tax credit for first home buyers impacts existing home sales. Some may argue the strength of today’s existing home sale report reflects the pulling forward of home sales because of the tax credit and that when the tax credit expires demand for homes may drop in the same way the demand for autos declined after the expiration of the cash for clunkers program. Bloomberg reports that Nomura research warns that US risks a lost decade like Japan if stimulus is withdrawn too soon. Upcoming US auto and existing home sale data will be a good test of the efficacy of the Nomura warning. At some point the private sector will have to carry the US recovery as government incentives and low prices are the main reason exiting home sales have improved. USD may benefit from speculation that today’s strong US housing data increases the risk of an earlier Fed rate hike. The Fed’s Plosser said he will be one of the Fed members to call for an earlier rate hike.
Today’s US data: Existing home sales for September rose by 9.4% to 5.57 mln units, a reading of 5.35 mln was expected. Inventories of existing home sales dropped 7.5% to a 7.8 month supply. This was the lowest level of inventories in two and a half years. Average home sale price declined by 8.5% to 174,900k.
Upcoming US data: Next week's US economic calendar includes the October 27th release of Case Shiller August home price index expected at -12.1% compared to -13.3% last month. October consumer confidence will also be released on October 27th expected at 54.3 compared to 53.1 last month. On October 28th September durable goods will be released expected at 1.3% compared to -2.6% last month. September new home sales will also be released on October 28th expected 444k compared to 429k last month. October 29th initial jobless claims for the week ending 10/24 we released expected that 525k compared to 531k last week. Advanced Q3 GDP will also be released on October 29th expected at 3.2% compared to -0.7% last quarter. On October 30th September personal income and consumption will be released expected that 0.1% and -0.5% respectively along with Chicago October PMI expected 49.1 compared to 46.1 last month's and final October Michigan sentiment expected unchanged at 69.4
JPY:Lower, BOJ forecasts that deflation pressures will continue into 2011
EUR:Higher, existing home sales surge 9.4%, equity markets trade lower as the data at fails to lift stocks
GBP: Lower, UK Q3 GDP posts a surprise decline, early withdrawal of stimulus unlikely
CAD and AUD: AUD & CAD lower, Australia's import/export prices decline, BOC says intervention an option
OverviewUSD traded mixed Friday with GBP sharply lower and EUR trading at a new high for 2009. GBP was pressured by report of an unexpected decline in UK Q3 advance Q3 GDP and the EUR was supported by gains in cross trade to GBP and in reaction to report that EU composite PMI rose to a 22 month high. Today’s economic data from Europe shows that the UK economy is still in recession and the EU economy is emerging from recession. The unexpected decline in UK GDP may force the BOE to consider expanding quantitative ease. JPY traded lower pressured by a BOJ report which says that deflationary pressures will continue through 2011. Commodity currencies traded lower despite firmer equity trade in Europe with the CAD pressured by a statement from BOC Governor Carney that intervention is an option and AUD pressured by report of falling Q3 export and import prices. US existing home sales came in much stronger than expected. The USD traded higher in reaction to the strong housing data as the trade debates how much of an impact the expected expiration of the tax credit for first home buyers impacts existing home sales. Some may argue the strength of today’s existing home sale report reflects the pulling forward of home sales because of the tax credit and that when the tax credit expires demand for homes may drop in the same way the demand for autos declined after the expiration of the cash for clunkers program. Bloomberg reports that Nomura research warns that US risks a lost decade like Japan if stimulus is withdrawn too soon. Upcoming US auto and existing home sale data will be a good test of the efficacy of the Nomura warning. At some point the private sector will have to carry the US recovery as government incentives and low prices are the main reason exiting home sales have improved. USD may benefit from speculation that today’s strong US housing data increases the risk of an earlier Fed rate hike. The Fed’s Plosser said he will be one of the Fed members to call for an earlier rate hike.
Today’s US data: Existing home sales for September rose by 9.4% to 5.57 mln units, a reading of 5.35 mln was expected. Inventories of existing home sales dropped 7.5% to a 7.8 month supply. This was the lowest level of inventories in two and a half years. Average home sale price declined by 8.5% to 174,900k.
Upcoming US data: Next week's US economic calendar includes the October 27th release of Case Shiller August home price index expected at -12.1% compared to -13.3% last month. October consumer confidence will also be released on October 27th expected at 54.3 compared to 53.1 last month. On October 28th September durable goods will be released expected at 1.3% compared to -2.6% last month. September new home sales will also be released on October 28th expected 444k compared to 429k last month. October 29th initial jobless claims for the week ending 10/24 we released expected that 525k compared to 531k last week. Advanced Q3 GDP will also be released on October 29th expected at 3.2% compared to -0.7% last quarter. On October 30th September personal income and consumption will be released expected that 0.1% and -0.5% respectively along with Chicago October PMI expected 49.1 compared to 46.1 last month's and final October Michigan sentiment expected unchanged at 69.4
EUR/USDrent level-1.5024EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.4134 and 1.3523. Yesterday's slide to 1.4944 was corrective and the uptrend is renewed for 1.5104 key reversal area. Intraday support comes at 1.4986, followed by the crucial 1.4944.
Key Market Levels
Minor
Intraday
Major
Intraweek
Resistance
1.5060
1.5104
1.53+
1.6040
Support
1.4944
1.4880
1.4444
1.3746
__________
USD/JPY
Current level - 91.83A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 94.86 and 94.84.The overall positive bias has been sustained and the target remains in the 92.10-40 area. Intraday support comes at 91.70 and reversal around these levels will be confirmed with a break below 91.20.
Key Market Levels
Minor
Intraday
Major
Intraweek
Resistance
91.58
92.10
92.40
97.90
Support
91.20
90.80
87.12
83.25
__________
GBP/USDCurrent level- 1.6676The pair is in a downtrend after peaking at 1.7042. Trading is situated between the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258. Yesterday's test of 1.6490 support failed and as expected, the uptrend has been renewed towards 1.67+ resistance area. Current bias is positive, supported at 1.6660 and with a crucial level at 1.6619. The expected reversal below 1.6752 will be confirmed with a break below 1.6619.
Key Market Levels
Minor
Intraday
Major
Intraweek
Resistance
1.6696
1.6752
1.6752
1.7042
Support
1.6660
1.6619
1.6130
1.5706
Key Market Levels
Minor
Intraday
Major
Intraweek
Resistance
1.5060
1.5104
1.53+
1.6040
Support
1.4944
1.4880
1.4444
1.3746
__________
USD/JPY
Current level - 91.83A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 94.86 and 94.84.The overall positive bias has been sustained and the target remains in the 92.10-40 area. Intraday support comes at 91.70 and reversal around these levels will be confirmed with a break below 91.20.
Key Market Levels
Minor
Intraday
Major
Intraweek
Resistance
91.58
92.10
92.40
97.90
Support
91.20
90.80
87.12
83.25
__________
GBP/USDCurrent level- 1.6676The pair is in a downtrend after peaking at 1.7042. Trading is situated between the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258. Yesterday's test of 1.6490 support failed and as expected, the uptrend has been renewed towards 1.67+ resistance area. Current bias is positive, supported at 1.6660 and with a crucial level at 1.6619. The expected reversal below 1.6752 will be confirmed with a break below 1.6619.
Key Market Levels
Minor
Intraday
Major
Intraweek
Resistance
1.6696
1.6752
1.6752
1.7042
Support
1.6660
1.6619
1.6130
1.5706
This pushed many commodities higher
Overview
FX rates pushing boundaries amid generalised US dollar weakness, so much so that Brazil imposed a tax on foreign investment in domestic bonds and equities to stem hot money flows (the tax does not apply to foreign direct investment). This saw the real back up a tiny bit from its strongest this year at 1.697 per greenback, though other major currencies are trading at extremes: Swiss franc 1.0033, Euro $1.5061, Australian dollar $0.9330, Kiwi $0.7635; sterling and yen lagging. This pushed many commodities higher, LME Lead and Zinc the best performers among the metals, +11% this week alone, CBoT Wheat +12%, Nymex Crude Oil to $82.00 per barrel, and ICE Cocoa at $3412 per tonne its most expensive since the 1970’s. Most stock indices are up on the week, some to new highs for this year, but others have been rattled - obviously the Bovespa on the tax move and to a greater extent India –6.00% from last week’s peak, and Jakarta –5.00% (these three are of course among this year’s biggest gainers), also Italy’s MIB –3.75% on rumours of budget-minded economy minister Tremonti’s possible resignation on PM Berlusconi’s decision to cut taxes. Money market rates are unchanged though some are starting to wonder how things will turn out over year-end. Treasury yields backed up a little again but remain well within recent ranges.
Political and Economic Developments
Stock markets defy gravity, propelled by stimulus packages, while the so-called ‘real’ economy remains mired in debt and doubt. Mervyn King this week said, ‘to paraphrase a wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many’. Contrary to expectations UK Q3 GDP shrank by 0.4%, the sixth consecutive quarterly decline (the longest on record) so that annually the drop was ‘just’ -5.2% from –5.5% in Q2. Great! With VAT set to return to 17.5% in January, the boost from its reduction to 15.0% has been minimal, Retail Sales flat on the month to September as they were in August, though +2.4% Y/Y from May’s low of –2.3%. Next: the £400M ‘cash for bangers’ will run out. Meanwhile Royal Mail is on strike protesting management chaos.
Underlying Themes
Fat cats’ pay and banker bonuses castigated in the media and pounced upon by politicians trying to garner public support. Without a hint of irony UK MP’s, whose snouts have been in the expenses trough for a decade or more, appoint the unelected to arbitrarily decide on compensation. Ahead of a government-commissioned review of corporate governance the Confederation of British Industry issued a warning on pay and the reputational risk involved because, ‘unless they find some way of hitting the reset button over the next year or two, politicians around the world will attempt to do the job for them’. The US is no different with its ‘pay tzar’ (czar?) Kenneth Feinberg this week slashing top execs cash pay at TARP bailout firms by up to 94% and stopping country club membership fees among other perks. The rules are not retroactive and hadn’t some of these chaps already agreed to work for $1? Meanwhile not a peep as to what to do with Fannie Mae and Freddie Mac, the government sponsored agencies that are the rotten core at the very centre of this putrid barrel. The risk and reality is that vast swathes of US business have been nationalised and now there will be no really talented individuals who will want to work at these defunct industries because of political interference and an economic straightjacket. They are doomed to lumber on as inefficiently as any arm of a bureaucratic nightmare, needing regular intravenous top-ups of their drug of choice – taxpayers’ money.
What to watch for next week
Monday the 26th holidays in Austria, Hong Kong, Ireland and New Zealand and just UK October Hometrack Housing Survey and German November GfK Consumer Confidence. Tuesday US August CaseShiller Home Prices, EZ16 September M3 Money Supply, UK October CBI Distributive Trades and US Consumer Confidence. Wednesday Japan September Retail Trade and October Small Business Confidence, CPI for the various German states, US September Durable Goods Orders and New Home Sales while the Norges Bank decides on rates (expected +25 basis points to 1.50%). Thursday Japan September Industrial Production, Corporate Services Prices, UK Net Consumer Credit, Mortgage Approvals, Bank Lending and Money Supply, German October Unemployment, Eurozone Consumer Confidence, and US Q3 GDP. Friday Japan September Jobless, Household Spending, Housing Starts, Construction Orders, National CPI, Tokyo October CPI, UK GfK Consumer Confidence. Then German September Retail Sales, EZ16 Unemployment, US Personal Income and Spending, Core PCE, Q3 Employment Cost Index, October Chicago Purchasing Managers and final University of Michigan Confidence. Sunday November 1st All Saints Day with presidential elections in Tunisia and Uruguay; All Souls holidays the day after.
FX rates pushing boundaries amid generalised US dollar weakness, so much so that Brazil imposed a tax on foreign investment in domestic bonds and equities to stem hot money flows (the tax does not apply to foreign direct investment). This saw the real back up a tiny bit from its strongest this year at 1.697 per greenback, though other major currencies are trading at extremes: Swiss franc 1.0033, Euro $1.5061, Australian dollar $0.9330, Kiwi $0.7635; sterling and yen lagging. This pushed many commodities higher, LME Lead and Zinc the best performers among the metals, +11% this week alone, CBoT Wheat +12%, Nymex Crude Oil to $82.00 per barrel, and ICE Cocoa at $3412 per tonne its most expensive since the 1970’s. Most stock indices are up on the week, some to new highs for this year, but others have been rattled - obviously the Bovespa on the tax move and to a greater extent India –6.00% from last week’s peak, and Jakarta –5.00% (these three are of course among this year’s biggest gainers), also Italy’s MIB –3.75% on rumours of budget-minded economy minister Tremonti’s possible resignation on PM Berlusconi’s decision to cut taxes. Money market rates are unchanged though some are starting to wonder how things will turn out over year-end. Treasury yields backed up a little again but remain well within recent ranges.
Political and Economic Developments
Stock markets defy gravity, propelled by stimulus packages, while the so-called ‘real’ economy remains mired in debt and doubt. Mervyn King this week said, ‘to paraphrase a wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many’. Contrary to expectations UK Q3 GDP shrank by 0.4%, the sixth consecutive quarterly decline (the longest on record) so that annually the drop was ‘just’ -5.2% from –5.5% in Q2. Great! With VAT set to return to 17.5% in January, the boost from its reduction to 15.0% has been minimal, Retail Sales flat on the month to September as they were in August, though +2.4% Y/Y from May’s low of –2.3%. Next: the £400M ‘cash for bangers’ will run out. Meanwhile Royal Mail is on strike protesting management chaos.
Underlying Themes
Fat cats’ pay and banker bonuses castigated in the media and pounced upon by politicians trying to garner public support. Without a hint of irony UK MP’s, whose snouts have been in the expenses trough for a decade or more, appoint the unelected to arbitrarily decide on compensation. Ahead of a government-commissioned review of corporate governance the Confederation of British Industry issued a warning on pay and the reputational risk involved because, ‘unless they find some way of hitting the reset button over the next year or two, politicians around the world will attempt to do the job for them’. The US is no different with its ‘pay tzar’ (czar?) Kenneth Feinberg this week slashing top execs cash pay at TARP bailout firms by up to 94% and stopping country club membership fees among other perks. The rules are not retroactive and hadn’t some of these chaps already agreed to work for $1? Meanwhile not a peep as to what to do with Fannie Mae and Freddie Mac, the government sponsored agencies that are the rotten core at the very centre of this putrid barrel. The risk and reality is that vast swathes of US business have been nationalised and now there will be no really talented individuals who will want to work at these defunct industries because of political interference and an economic straightjacket. They are doomed to lumber on as inefficiently as any arm of a bureaucratic nightmare, needing regular intravenous top-ups of their drug of choice – taxpayers’ money.
What to watch for next week
Monday the 26th holidays in Austria, Hong Kong, Ireland and New Zealand and just UK October Hometrack Housing Survey and German November GfK Consumer Confidence. Tuesday US August CaseShiller Home Prices, EZ16 September M3 Money Supply, UK October CBI Distributive Trades and US Consumer Confidence. Wednesday Japan September Retail Trade and October Small Business Confidence, CPI for the various German states, US September Durable Goods Orders and New Home Sales while the Norges Bank decides on rates (expected +25 basis points to 1.50%). Thursday Japan September Industrial Production, Corporate Services Prices, UK Net Consumer Credit, Mortgage Approvals, Bank Lending and Money Supply, German October Unemployment, Eurozone Consumer Confidence, and US Q3 GDP. Friday Japan September Jobless, Household Spending, Housing Starts, Construction Orders, National CPI, Tokyo October CPI, UK GfK Consumer Confidence. Then German September Retail Sales, EZ16 Unemployment, US Personal Income and Spending, Core PCE, Q3 Employment Cost Index, October Chicago Purchasing Managers and final University of Michigan Confidence. Sunday November 1st All Saints Day with presidential elections in Tunisia and Uruguay; All Souls holidays the day after.
Tuesday, October 6, 2009
Dollar Weakens on Speculation Gulf States May Stop Using Greenback
Growing speculation over the potential end to Dollar-based trading in the oil market has pushed the USD down against 14 of its 16 major counterparts yesterday. A report on Tuesday in the Independent newspaper revived the idea of ending a huge volume of trade of the world's most liquid commodity - Oil in the U.S. Dollar, a potentially major sign of the greenback's fading status. The Dollar weakened after the U.K.-based Independent reported oil-producing Gulf nations are seeking to move to a basket of currencies to settle transactions. Analysts said ending the use of the Dollar as the currency used to settle oil trades between countries would be an easy task, but a move to replace the currency in which oil is priced would require a massive effort.
Forex Market Trends
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |
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| Weekly Trend |
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| Resistance | 1.4815 | 1.6125 | 90.00 | 1.0360 | 0.8940 | 0.9302 |
| 1.4765 | 1.6075 | 89.75 | 1.0340 | 0.8920 | 0.9260 | |
| 1.4735 | 1.6025 | 89.50 | 1.0310 | 0.8890 | 0.9230 | |
| Support | 1.4650 | 1.5900 | 88.60 | 1.0250 | 0.8800 | 0.9160 |
| 1.4600 | 1.5845 | 88.25 | 1.0220 | 0.8755 | 0.9120 | |
| 1.4565 | 1.5800 | 88.00 | 1.0190 | 0.8720 | 0.9080 |
Gold sets an all new record high
The precious metal appeal as an alternative investment got boosted today as optimism surged to the highest levels in commodities markets due to the slumping dollar and to follow the recent rally in stocks that started this week after dropping to the lowest levels in more than two weeks.
the Dollar index fluctuated in today’s trading session whereas its currently trading at 76.423 levels after reaching the lowest levels for today at 76.223 and the highest at 76.464, thus due to the inverse relationship between the dollar and gold the last surged and managed to reach a record high at $1036.23 an ounce from the opening price of $1016.92, gold is currently trading at 1031.40 as of 13.24 GMT.
From a technical point of view gold pricesare expected to decline slightly to the support level at $1025.00 and then to attempt to reach a new record high at the resistance levels that is set at 1040.54 as seen on the daily stochastic Oscillator.
USD Plummets as Recession Continues to Ease
The U.S. Dollar continued to plummet in Tuesday's trading, as the global recession continued to ease, with the leading economies, such as Canada, the U.S. and Australia continuing to show improving economies. The optimism in the markets was compounded earlier today when Australia unexpectedly raised Interest Rates to 3.25% from 3%. This raised optimism in both the equity market and the forex market. As a result, in some cases the USD went bearish, as traders ditched the greenback for riskier assets. Meanwhile, the GBP plummeted as British manufacturing slid to its lowest level in 17 years.
The highest the EUR/USD cross was trading today was at the 1.4747 level, which is over 40 pips higher for the day. The GBP/USD cross is actually trading lower today, due to the negative manufacturing data from the British economy that was released earlier today. Some of the USD's weakness may continue today, if investors remain bullish in the markets. It is recommended that you follow the release of the Ivey PMI from Canada at 14:00 GMT. Additionally, you should also pay close attention to the British Nationwide Consumer Confidence figures that are set to be released at 23:01 GMT.
Jobs Disappoints, FX Whipsaws
The dollar was initially higher following the September labor report, rallying to 1.4481 against the euro and 1.5806 versus the pound sterling before relinquishing its earlier gains by the New York afternoon. US equities also recovered from its losses in the morning session, clawing their way back into positive territory, with the Dow Jones and Nasdaq up marginally.
Although the September unemployment rate was on par with consensus estimates, the reading still touched a fresh 26-year high at 9.8% versus August at 9.7%. The most disheartening component of the labor data was the non-farm payrolls report, which defied expectations for an improvement to a loss of 180k jobs, instead revealing a considerably larger loss of 263k jobs for September compared with a revised 201k jobs shed in the previous month. Meanwhile, average earnings edged up by less than anticipated, increasing by 0.1% compared with an upwardly revised reading of 0.4% in August and average workweek drifted lower to 33.0 hours from 33.1 hours.
The economic calendar for Friday also included durable goods orders and factory orders. The headline durable goods report declined by 2.6% in August, deteriorating further from the prior month’s 2.4% decline while core durable goods orders fell by 0.3% versus a flat reading previously. Factory orders fell by 0.8% for August, missing estimates for an increase of 0.3% from 1.3% in July.
Although the September unemployment rate was on par with consensus estimates, the reading still touched a fresh 26-year high at 9.8% versus August at 9.7%. The most disheartening component of the labor data was the non-farm payrolls report, which defied expectations for an improvement to a loss of 180k jobs, instead revealing a considerably larger loss of 263k jobs for September compared with a revised 201k jobs shed in the previous month. Meanwhile, average earnings edged up by less than anticipated, increasing by 0.1% compared with an upwardly revised reading of 0.4% in August and average workweek drifted lower to 33.0 hours from 33.1 hours.
The economic calendar for Friday also included durable goods orders and factory orders. The headline durable goods report declined by 2.6% in August, deteriorating further from the prior month’s 2.4% decline while core durable goods orders fell by 0.3% versus a flat reading previously. Factory orders fell by 0.8% for August, missing estimates for an increase of 0.3% from 1.3% in July.
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