Contributed By: DailyFx

GBP/JPY: Although the cross remains locked in a broader downtrend, the latest bounce has been impressive with the market finally breaking above the daily Ichimoku cloud to suggest that we could in fact be on the verge of a major shift in the trend. Look for a daily close above the top of the cloud (113.70) to strengthen reversal prospects and potentially accelerate gains towards next resistance in the 135.00-1.38.00 area.

Contributed By: DailyFx

GBP/USD:At this point, the latest pullback from 1.6300 can only be classed as corrective, with the market seeking out a fresh higher low ahead of the next upside extension beyond 1.6300. There is however scope for additional weakness towards the 50-Day SMA at 1.5775 before bulls look to formally reassert. We will use the 50-Day SMA as our gauge for trend for now, and while the market holds above, the broader outlook is still constructive. A close below the 50-Day SMA will shift bias.

Contributed By: DailyFx

NZD/USD:We are finally starting to see some form of a top, with the multi-month gains stalling out just shy of critical psychological barriers by 0.8000 and reversing course. From here, there is plenty of room for additional weakness and we see scope for additional declines back towards previous resistance now turned support by 0.7650 over the coming sessions. Intraday rallies should be well capped ahead of 0.7900.

Contributed By: DailyFx

USD/CHF: We contend that the market is in the process of carving a material base by 0.9460, and any setbacks should be very well supported ahead of 0.9500 in favor of a sustained recovery. The market should in fact hold above the 0.9580 area on a close basis which represents a 78.6% fib retracement off of the latest move. Ultimately only back below 0.9460 would negate and give reason for pause. Look for a break and close back above 0.9770 to confirm and accelerate

Contributed By: DailyFx

GBPUSD is stalling below resistance at the midline of a rising channel established from mid-May, with negative divergence on weekly RSI studies hinting bullish momentum is fading and a move lower is ahead. I will look for confirmation on a close below the channel bottom (now at 1.5728) to look for selling opportunities.

USD Dollar (USD) – The Dollar traded mixed versus the major currencies after positive macro data showed that the Trade Balance came out -44B better than the expected -45B, and the Unemployment Claims came out 435k better than the expected 450k. The Federal Budget Balance came out -140.4B better than the expected -152B. The Stock Markets in the U.S closed positive with the Dow Jones adding 0.09% and the NASDAQ rising by 0.62%. Crude Oil jumped by 1.3% and closed near $88 a barrel. Gold (XAU) erased yesterday’s losses and moved back to trade above $1400 an ounce. Today, US banks will be closed in observance of Veterans Day.

Euro (EUR) – The Euro touched fresh 5 week lows against the dollar after it broke the 1.37 area but quickly recovered and back to trade around the 1.38 zone. By the end of the day, there was almost no change seen in the pair. Trading above the 1.38 support area, might push the pair back to 1.4 zones. Overall, EUR/USD traded with a low of 1.3670 and with a high of 1.3824. Today, the ECB Monthly Report will come out.

EUR/USD – Last:  1.3795

British Pound (GBP) – The Pound showed stability and gained versus the dollar after the BOE Inflation Report, signaling that the recovery is on track in the region. Trading above the 1.61 support area might push the pair back to 1.63 zones. Overall, GBP/USD traded with a low of 1.5959 and with a high of 1.6169. No economic data is expected today.

GBP/USD - Last: 1.6147

Japanese Yen (JPY) – The Dollar gained versus the Yen for a second day in Forex trading, as higher U.S. bond yields favored the selling of the Japanese currency. The Core Machinery Orders came out at -10.3%, worse than the expected -9.5%. Holding above the 82 support level keeps the momentum positive for the pair. Overall, USD/JPY traded with a low of 81.53 and with a high of 82.79. No economic data is expected today.

USD/JPY-Last: 82.16

Canadian dollar (CAD) – Canada's dollar gained versus the U.S. dollar on a rally in crude oil, the nation’s biggest export. The Trade Balance came out at -2.5B, worse than the expected -1.5B. Holding above the 0.9980 support level might cause a rebound once again in the pair. Overall, USD/CAD traded with a low of 0.9991 and with a high of 1.0090. Today, Canadian banks will be closed in observance of Remembrance Day;

USD/CAD - Last: 0.9997

Contributed By: DailyFx

 China’s Trade Balance surplus grew to $27.15 billion in October, above both the $25 billion expectation and the $16.88 billion in September. The number came out higher than anticipated due to the import side of the equation; China’s Imports in October rose 25.3%, below the 28.3% expectation. Exports, on the other hand, rose 22.9% from a year ago, close to the 23% analyst consensus. These figures will do little to dampen the frustration of China’s trading partners, and more calls for China to let the value of its currency rise are likely. Indeed, ahead of the G-20 meeting we see that China has allowed the Yuan rise to the highest level since 1993.

Contributed By: DailyFx

 Europe Session Key Developments

* Banks and Automobiles Led the Europe Stoxx 600 Lower
* German DAX Retreats from 2 Year High

European Stocks Closed Lower Amid Renewed Debt Concerns
European markets closed in negative territory at the end of the trading session on Wednesday amid renewed debt concerns. Banks fell throughout the day as the extra yield investors demanded to hold Irish government bonds compared to German bonds widened to a record high. The benchmark Stoxx Europe 600 dropped over half of one percent. The gauge has climbed 17 percent since May as company earnings topped estimates and the US Federal Reserve unveiled substantial monetary stimulus. Many investors are concerned that printing money will not be the ultimate solution to solving the tough economic problems plaguing countries throughout the globe. Overall, national benchmark indexes fell in all 18 western European markets.

FTSE 100 / 5,816.94 / -58.25 / -0.99%
The British benchmark gauge declined today as 9 out of 10 sectors closed in the red. UniCredit fell 4.8 percent to 1.73 Euros, the largest drop since June. The bank announced that third quarter profit declined 15 percent after lower trading income outweighed a drop in bad-loan provisions. The overall earnings’ results significantly underperformed expectations. BHP Billiton dropped 2.7 percent as copper, nickel, tin and zinc fell in London trading. Scottish & Southern Electricity Plc climbed 3.7 percent as the company announced earnings that beat estimates.

CAC 40 / 3,888.45 / -57.26 / -1.45%
All 10 sectors in the CAC 40 closed lower at the end of the day. Bouygues SA advanced 1.5 percent as the construction, television and telecommunications company said nine month revenue fell from a year earlier. Colas SA declined 2.8 percent as the organization announced third quarter sales that beat expectations. Meetic SA plunged 12 percent after announcing sales that advanced 23 percent. Dannone SA fell 1.3 percent after the owner of the Evian and Volvic bottled-water brands is talking with Japanese beverage makers about sale of parts or all of its water business.

DAX / 6,719.84 / -67.97 / -1.00%
The German index retreated from two year highs as the banking and automobile sectors led the broad based declines. Deutsche Bank AG fell 2.3 percent, its first drop in five days. Roth & Rau AG sank 11 percent after reporting a decline in nin-month earnings before interest and taxes. Henkel jumped 9.8 percent, climbing the most in the DAX Index, as the maker of glues increased its forecast for full-year profit and announced net income that substantially outpaced analysts’ consensus estimates. Bayerische Motoren Werke AG and Daimler AG lost 2.1 percent to 53.75 Euros and 1.7 percent to 49.18 Euros, respectively. European carmakers declined 2 percent today, the worst performance among all industry groups.

IBEX 35 10,235.40 -174.40 -1.68%
The Madrid benchmark index declined again today, making today’s loss the third fall in four days. Banco Santander SA slid 2.9 percent after Italy’s UniCredit SpA announced that third quarter profit declined 15 percent, substantially missing expectations. Coporacion Financiera Alba SA fell 2.7 percent, snapping four days of gains. The investment company was cut to “underweight” from “overweight” at Mirabaud Finanzas by equity analyst Hector Martinez. Indra Sistemas SA rose for a second day, gaining 1.1 percent as the company announced better than expected sales forecasts.

S&P/MIB / 21,671.63 / -476.80 / -2.15%
The Italian index experienced the steepest decline among the 5 major European benchmark indexes. Autogrill SpA rose 0.9 percent to 9.84 Euros. The world’s largest manager of airport and highway restaurants said third quarter profit grew 33 percent amid a recovery in the travel industry. Banca Popolare di Milano Scrl fell 3.3 percent to 3.14 Euros. The Milan-based cooperative bank announced third-quarter profit dropped 34 percent on the back of lower revenues. Sabaf SpA fell 2.9 percent. The maker of components for gas appliances was downgraded to “hold” from “accumulate” at Banca Akros.

Contributed By: DailyFx

 We have seen some pretty remarkable volatility since the FOMC's decision last week; and within that period, the dollar has put up a commendable advance. That being said, I am still very skeptical of the currency's ability to sustain a favorable trend. At this point, the greenback is burning off excess speculative interest - after the two months of consistent selling, it isn't too much of a stretch to suggest that the market is one sided. How much pent up speculative positioning needs to be unwound is a prominent question mark. There could be a wave of profit taking and speculative buying ahead of us. Then again, it could just be a modest correction to get back to 'fair value' before the market starts pricing in the troubles for the dollar a little later down the road. At the moment, it is up in the air. Placing trades on this is dangerous. Therefore, I will remain small, flexible and maintain close targets. I could change my outlook though should a bigger driver accelerate the move or generate momentum in a reversal. What has the necessary influence for such a drive: risk appetite trends, a revived stimulus forecast, financial crisis rumors or a definitive G20 policy.

Waiting for a bigger trend to confirm itself (technically and fundamentally), I am keeping my position few and small. That said, there are a number of potentials. For my live trades, I am sticking with my reduced USDJPY long. We are back up to 82; and a break here will encourage me to add to the position (but without a good fundamental backdrop for the move; I will take a more cautious build). My other live position is the CADJPY long I took on a pullback to 80.80. With a stop of 79.80 and first target of 81.80; a profit or stop should be turned over relatively quickly. Another position that I was close to taking was a short EURUSD on a break of a five week rising trendline at 1.3820; but I would rather wait for a more meaningful trend reversal below 1.37. That would necessarily require a more hearty fundamental driver.

Besides EURUSD, a more active potential is my USDCAD setup. Having held up that long-term rising trendline; it looks good for a true stop and reversal. I'm looking for a half size positon with a retest of 0.9990 (with a 60 point stop and first target). If we don't get back there within the next 36 hours though, I will cancel the order. As an offset to the Canadian dollar; I also have an order to short a reduced EURCAD position at 1.3940 with a 140 point first target and stop. This would be a pullback to former support to fresh resistance on a break of 1.3940. With a shorter time frame than my EURUSD view; I am also looking at AUDUSD as a dollar long setup. A drop below parity will encourage me into a smaller position size with an initial stop and target of 100 points; but that could get altered depending on volatility and fundamental developments.

Contributed By: DailyFx

 USDJPY is rebounding from key support marked by the intersection of a downward-sloping channel set from April’s swing high and a larger one that has defined price action since the second half of 2008. Meanwhile, weekly relative strength studies are turning higher from the most oversold levels since early 2009, we may be witnessing (at least) a corrective rebound in the near term. That said, the intensity of recent weekness argues for caution and I will opt to remain on the sidelines for now until prices issue a daily close above the minor channel top, now at 83.03.