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NEW YORK 16:26 |
LONDON 21:26 |
PARIS 22:26 |
FRANKFURT 22:26 |
HONG KONG 03:26 |
TOKYO 05:26 |
SYDNEY 06:26 |
Contributed by DailyFx
EUR/USD: The market is in the process of rolling over and carving out what could be the right shoulder of a major head & shoulders top. Key neckline support comes in by 1.3695, and a break below will confirm reversal prospects and potentially open a material decline back towards a measured move objective by the 1.3300 area which also loosely coincides with the 50-Day SMA. The 10-Day SMA is also looking like it could be on the verge of crossing the 20-Day SMA for the first time since early September when the market was trading in the 1.2700’s. For now, look for any intraday rallies to be well capped ahead of 1.4000.
Contributed by DailyFx
GBP/USD: As per our commentary in Tuesday’s analysis, rallies were indeed very well capped by 1.5900 and this keeps our bearish bias intact. Look for a lower top by Tuesday’s 1.5900 highs ahead of the next drop back below the vey well supported 50-Day SMA by 1.5650 and towards 1.5300 further down. Ultimately, only a close back above 1.6000 would negate outlook and give reason for pause.
Contributed by DailyFx
USD/CAD: As expected, the market was very well supported on dips below parity, with the latest sharp bounce back above 1.0200 solidifying our constructive outlook and opening the door for significant gains over the coming weeks. Look for continued appreciation towards the multi-week highs by 1.0700 over the coming weeks, with only a break back below 0.9970 to ultimately negate outlook and give reason for concern. A higher low is now sought out by 1.0155 ahead of the next major upside extension to be confirmed on a break back above key short-term resistance at 1.0375.
Contributed by DailyFx
USD/CHF: With daily studies finally crossing up from oversold and the market managing to close back above the 20-Day SMA for the first time since August, we are encouraged with the prospects for the formation of a major base by the recently established record lows at 0.9460. From here, look for any intraday setbacks to be well supported on dips towards 0.9700, with the market now eying a move towards next key resistance by 1.0000 over the coming sessions. Last week’s inability to extend declines to yet another record low below 0.9460, set up a strong bullish reversal week to end a sequence of 9 consecutive weekly lower highs. This further strengthens our constructive outlook and over the medium and longer-term we see significant upside risk.
USD Dollar (USD) – The Dollar strengthened versus most major currencies in Forex trading after U.S. consumer confidence rose more than expected in October, 50.2 vs. 49.3 forecast. This rise from a seven month low encourage investors to prefer the Dollar instead other assets. The NASDAQ and Dow Jones advanced by 0.26% and 0.05% respectively. Crude oil declined by 0.1%, closing at $82.55 a barrel and Gold (XAU) decreased by 0.1%, closing at $1338.60 an ounce. Today, Core Durable Goods Orders are expected to decline from 1.7% to 0.1%, and New Home Sales are expected at 295K vs. 288K prior.
Euro (EUR) – The Euro weakened against the Dollar for the first time in three days on speculation that an increase in debt purchases by the Federal Reserve will cause inflation to accelerate. The EUR/USD has been fluctuating around 1.3800 to 1.3900 levels during the past week, and therefore, the trend is not clear. Only if the pair crosses the 1.3950 line, will the Euro continue with its positive trend. Overall, EUR/USD traded with a low of 1.3825 and with a high of 1.3982. Today, German Prelim CPI is expected to rise from -0.10% to 0.10%.
EUR/USD – Last: 1.3811
Resistance |
1.3878 |
1.3982 |
1.4080 |
Support |
1.3750 |
1.3700 |
|
British Pound (GBP) – The Pound rose after the U.K. economy grew at double the pace economists had forecast for the third quarter, with GDP coming out at 0.8% vs. an expected 0.4%. The resistance of the GBP/USD on the one hour chart is 1.5900, and as long as the pair is trading below this level, the momentum is still negative for the pound. Overall, GBP/USD traded with a low of 1.5706 and with a high of 1.5896. No economic data is expected today.
GBP/USD - Last: 1.5822
Resistance |
1.5900 |
1.5945 |
|
Support |
1.5755 |
1.5685 |
1.5650 |
Japanese Yen (JPY) –The Yen slid from almost its strongest level in 15 years against the dollar amid concerns that Japanese authorities may renew action to weaken the currency. The USD/JPY has been trading around 81.00-81.50 area in the last few days and the main support line on the daily chart is located at 80.40. The momentum is still bearish as long as it‘s trading below the 10 moving average. Overall, USD/JPY traded with a low of 80.61 and with a high of 81.65. No economic data is expected today.
USD/JPY-Last: 81.74
Resistance |
82.00 |
|
|
Support |
81.30 |
80.80 |
80.45 |
Canadian dollar (CAD) – The Canadian Dollar weakened against the Dollar for the first time in three days as stocks and raw materials declined, reducing demand for currencies tied to economic growth. The support level of the USD/CAD on the daily chart is located at 1.0150, and if the USD/CAD breaks below this price level, a short position is preferred. Overall, USD/CAD traded with a low of 1.0181 and with a high of 1.0266. Today, BOC Gov Carney Speaks.
USD/CAD - Last: 1.0265
Resistance |
1.0300 |
1.0355 |
|
Support |
1.0210 |
1.0160 |
|
USD Dollar (USD) – The Dollar remained down against most of the major currencies despite home sales data being better the expected at 4.53M vs 4.25M forecast. The dollar continues to be in the shadow of the G20 summit, remaining weak against the majors in Forex trading. The NASDAQ and Dow Jones advanced by 0.46% and 0.28%, respectively. Crude oil gained 1%, closing at $82.52 a barrel, and Gold (XAU) increased by 1.1%, closing at $1340 an ounce. Today, CB Consumer Confidence is expected at 49.00 vs. 48.5 prior.
Euro (EUR) – The Euro strengthened against the dollar with Industrial New Orders exceeding expectation at 5.3% vs 2.1% prior, resulting in a stronger Euro. The last few days have seen the pair within a daily range, with a support of 1.3856 and a resistance of 1.4049. As long as the pair remains above levels of 1.3900, the trend will remain positive. Overall, EUR/USD traded with a low of 1.3935 and with a high of 1.4079. No economic data is expected today.
EUR/USD – Last: 1.39619
Resistance |
1.3972 |
1.4039 |
1.4080 |
Support |
1.3907 |
1.3856 |
|
British Pound (GBP) – The Pound strengthened against the dollar despite the Mortgage Approvals coming out worse than expected at 31.1K vs. 31.6K forecast. The buyers outweighed the sellers in search for higher yielding assets in the GBP. The momentum for the pound remains negative despite the pair’s efforts to break the daily moving average at around 1.5776. The trend continues to be bearish with a strong support of 1.5650. Overall, GBP/USD traded with a low of 1.5677 and with a high of 1.5772. Today, Prelim GDP q/q is expected 0.4% vs. 1.2% prior, and later on MPC Member Posen will speak.
GBP/USD - Last: 1.5731
Resistance |
1.5749 |
1.5772 |
|
Support |
1.5715 |
1.5689 |
|
Japanese Yen (JPY) –The Yen reached a 15 year high against the dollar. The dollar weakened against all the major currencies today, which only supported a stronger Yen. The Yen continued to strengthen against the dollar for the sixth consecutive day and reached highs that were last seen in 1995. The trend on the pair is still bearish, although we might see some minor corrections. Overall, USD/JPY traded with a low of 80.40 and with a high of 81.32. No economic data is expected today.
USD/JPY-Last: 80.78
Resistance |
80.83 |
80.90 |
|
Support |
80.65 |
80.40 |
|
Canadian dollar (CAD) – The Canadian Dollar strengthened to reach a weekly high against the US dollar as a result of government reports last week that hinted about inflation and retail sales exceeding economist expectations. The strengthened commodities support a strong Canadian dollar. The USD/CAD broke its moving average and entered its second day of negative performance; the trend continues to be bearish below the level 1.0220. Overall, USD/CAD traded with a low of 1.0154 and with a high of 1.0258. Today, BOC Gov Carney Speaks.
USD/CAD - Last: 1.0199
Resistance |
1.0208 |
1.0236 |
|
Support |
1.0178 |
1.0162 |
1.0154 |
USD Dollar (USD) – The Dollar was mixed in Forex trading on Friday, as investors waited to see the outlook of the G20 summit, which vowed in the end to avoid weakening currencies to encourage exports. The NASDAQ advanced by 0.80% and the Dow Jones weakened by 0.13%. Crude oil rose by 1.4%, closing at $81.69 a barrel. Gold (XAU) decreased by $0.50, closing at $1325 an ounce. Today, Fed Chairman Bernanke Speaks, and Existing Home Sales are expected to rise from 4.13M to 4.25M.
Euro (EUR) – The Euro rose against the Dollar after the Group of 20 finance ministers and central bankers vowed to refrain from weakening currencies to support exports. The EUR/USD has fluctuated around 1.3900 levels during the past week, and as long as it’s above 1.3900 levels, the momentum continues to be positive for the Euro. Overall, EUR/USD traded with a low of 1.3858 and with a high of 1.3972. Today, Industrial New Orders are expected at 2.1% vs. -2.0% prior.
EUR/USD – Last: 1.4033
Resistance |
1.4050 |
1.4160 |
|
Support |
1.3855 |
1.3700 |
|
British Pound (GBP) – The Pound traded its biggest weekly loss against the dollar since August. This comes on speculation that this weekend’s Group of 20 meeting in South Korea may result in an accord that will support the Dollar more than the pound. The trend of the GBP/USD on the daily chart has been bearish over the last few days, but still facing a support around 1.5600. Overall, GBP/USD traded with a low of 1.5651 and with a high of 1.5750. Today, BBA Mortgage Approvals are expected at 31.60K vs. 31.80K prior.
GBP/USD - Last: 1.5746
Resistance |
1.5878 |
1.6000 |
1.6110 |
Support |
1.5650 |
|
|
Japanese Yen (JPY) –The Yen closed almost unchanged against the Dollar after the resolutions of the G20. The USD/JPY has been trading around 81.00-81.50 area in the last few days. The main support line on the daily chart is located at 81.00 and the momentum is still bearish as long as it‘s trading below the 10 moving average. Overall, USD/JPY traded with a low of 80.99 and with a high of 81.50. No economic data is expected today.
USD/JPY-Last: 81.06
Resistance |
81.50 |
82.00 |
|
Support |
80.85 |
|
|
Canadian Dollar (CAD) – The Canadian Dollar fluctuated against the Dollar as the Bank of Canada signaled interest rate increases are on hold as the nation’s economic recovery may be weaker than expected. The support level of the USD/CAD on the daily chart is located at 1.0200, and if the USD/CAD breaks below this level, a short position is preferred. Overall, USD/CAD traded with a low of 1.0223 and with a high of 1.0302. No economic data is expected today.
USD/CAD - Last: 1.0210
Resistance |
1.0300 |
1.0375 |
|
Support |
1.0165 |
1.0090 |
1.0000 |
Contributed by DailyFx
* Dollar Finds Balance as Big Ticket Fundamental Threats - G20, GDP, FOMC - Approach
* British Pound Collapses as Market Recognizes the Threat of Austerity and Weight of Stimulus
* Euro Firm Despite a Drop in Economic Activity and Disappointing Auction for Spain
* Canadian Dollar Approaches another Fundamental Wave in Retail Sales and CPI
* Australian Dollar Falls in the Face of Stable Risk Trends as Chinese Economy Cools
* Japanese Yen: Economic Minister Warns a Collapse in Chinese Economy Would be Dire for Japan
Dollar Finds Balance as Big Ticket Fundamental Threats - G20, GDP, FOMC - Approach
It is interesting to see how influential policy officials’ comments can be on positioning. Ultimately, the impact their remarks have on the markets boil down to what the topic happens to be and the frequency with which it is brought up. For example, Japanese policymakers’ constant threats against the yen’s advance are interpreted as empty and impotent threats; while RBA Governor Steven’s select prognostications are often treated as the market’s own outlook. As for Treasury Secretary Timothy Geithner’s sway, constant and repetitive reflections on the economy and currency have lost their charm. Therefore, it is interesting that many analysts and financial media outlets attributed a sharp rally in the dollar prior to Thursday morning’s Chinese GDP release to suggestions made by Geithner that currencies are “roughly in alignment.” This is a vague comment; and he has not pursued any policy directly aimed at manipulating the dollar. Yet, in the pursuit of an easy explanation, this is something to hang onto. More realistic is the notion that the impending threat of volatility in the wake of heavy event risk encouraged an early break that took advantage of pre-release liquidity and the need to defuse a bigger decline after the actual data. This is consistent with the modest advance through the end of Thursday – the fourth in the past five active trading days – as risk trends edged lower and stimulus slipped.
Fundamental developments are only as market-moving as speculative interests say they are. Over the past 72 hours, risk appetite trends have proven themselves to be the most influential dynamic when it comes to the dollar’s bearings. China’s growth update would provide a clear measure of confidence in the global economy and in turn define the value of the greenback as a safe haven and direct investment alternative to the world’s second largest powerhouse. Coming largely in line with expectations, the ‘surprise’ factor that often produces the greatest level of volatility was dampened. On the other hand, the deceleration in the country’s remarkable performance (to a 9.6 percent rate of annualized growth) would nevertheless remind investors that global activity was cooling and the best performers (for growth and returns) held their own risk. Being reminded that China is not a risk-free alternative to the United States financial, fiscal and economic troubles goes a long way to disrupt popular capital flows. In the meantime, the US Leading Indicators composite for September wasn’t a great rebuttal as the 0.3 percent growth can largely be attributed to rising stocks, low market rates and to an extent an improvement in manufacturing.
A fundamental current that continues to lose its authority over speculative interests are stimulus forecasts. Thursday, St. Louis Fed President Bullard remarked that a stimulus decision would not be made until after the 3Q GDP release (which he said may be stronger than 2Q), that the FOMC was not there to “ratify what the markets think,” and that he supported a program that moved in $100 billion market increments. All of this is deflates the massive easing program the market had priced in. We’ll see what Hoenig and Plosser say tomorrow. In the meantime, we need to keep a mind to the G20 this weekend and US 3Q GDP next week. And, off the docket, the mortgage-backed securities market is coming back to haunt us as foreclosures pick up. According to the Fed, foreigners are already bailing with their MBS holdings falling to a three-year low.
Related: Discuss the Dollar in the DailyFX Forum, John’s Analyst Picks: GBPUSD Hits its First Target, EURUSD Taking Time to Develop
British Pound Collapses as Market Recognizes the Threat of Austerity and Weight of Stimulus
The full weight of the UK’s fiscal and economic position doesn’t seem to have fully set in – much like the US stimulus scenario was underappreciated until a month ago and Europe’s debt obligations are still ignored to this day. With the announcement of the government’s biggest spending cut (81 billion pounds) on record and the loss of nearly 500,000 public jobs, the United Kingdom is at significant risk of stalling in its recovery and in turn pinching its financial markets. As it stands, the consensus forecast for 3Q GDP growth is a sparse 0.4 percent. Chancellor of the Exchequer Osbourne recognizes this threat; and therein lies the reasoning for his comment that he would approve a “deployment” of stimulus from the BoE should activity stall. Through Thursday’s session, we see that mortgage approvals dropped to a 17-month low and retail sales were unchanged. The outlook for growth is diving, stimulus seems more likely and the argument for a rate hike is fading.
Euro Firm Despite a Drop in Economic Activity and Disappointing Auction for Spain
There are grander fundamental concerns for FX traders at the moment. This is no doubt why disappointing developments hold limited weight for euro price action. In the previous session, the Eurozone PMI figure hit a year low and Spain’s debt auction fell short of its maximum. Further off the beaten path, French strikes are going strong and Allied Irish subordinate debt holders are being asked to take an 80 percent loss.
Canadian Dollar Approaches another Fundamental Wave in Retail Sales and CPI
Once again, the Canadian dollar steps up for potential volatility when the rest of the calendar falls into a lull. However, how much can we expect from top tier economic indicators when the implications for interest rate expectations have been handicapped by the dovish turn from the BoC? The CPI data will tell us if there is any argument to be made for a rate hike while retail sales are still important to gauge economic activity.
Australian Dollar Falls in the Face of Stable Risk Trends as Chinese Economy Cools
Who stands to suffer most from a slower Chinese economy? While the cooling of the Asian giant is generally encouraging in the effort to curb an economic and asset bubble; the temperance means the imports of natural materials will necessarily drop as well. Australia happens to be one of the largest suppliers of metals and energy commodities to China. How well can Australia stand on its own in this volatile global market?
Japanese Yen: Economic Minister Warns a Collapse in Chinese Economy Would be Dire for Japan
Despite the simmering political tensions between Japan and China, policy officials understand the economic dependence between the two. This reliance is the basis for the Japanese Economic Minister and BoJ Governor to express their support for China’s decision to hike its benchmark rate to curb bubbles. It was the minister that said a crisis in China would cause severe problems in the island nation.
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