EUR/USD Fundamental Analysis for November 8, 2011
With the start of the new week on Monday the EUR/USD was under heavy pressure and fluctuated strongly with the high uncertainty in the euro area and clearly leaving the higher hand for the dollar. Risk aversion was still dominant as some development in Greece was offset by growing instability in Italy. Greece reached to the consensus on the coalition government and Papandreou is to step down to make way for the new leadership to adopt the new bailout, yet investors await the final formation of the government and who will lead the next phase and worries remained evident as even with Greece moving closer to the bailout and avoiding default, they still will go into early elections that remain a source of agony. Italy was also more downside pressure as Berlusconi loses more support from his own allies asking him to step down ahead of a critical vote in parliament on Tuesday on the amended 2010 budget. Some reports suggested that he will step down which markets rather seemingly accepted and tried to recovery yet soon after his office dismissed the rumours as unfounded. On Tuesday the lack of major data will leave the focus on the Italian vote and the developments from the euro area finance ministers that might provide late Monday comments and updates. Tuesday will also see the EU finance ministers meeting to continue the discussions and they should continue the progress made by EU leaders and start to implement the means to expand the EFSF firepower which the market is still waiting on. More volatility is expected and surely without a clear political breakthrough from Greece and Italy the tensed environment will prevail and only pressure the euro further south. Germany will start the session at 07:00 GMT with the current account and trade balance figures for September, where the current account surplus is expected to improve to 12.3 billion euros from 7.0 billion euros. In addition, the seasonally adjusted exports index could have dropped to 0.5% from 3.5%, while the seasonally adjusted imports index is expected to expand by 0.4% from the previous steady reading. Furthermore, the trade surplus could have expanded to 12.5 billion euros from 11.8 billion euros.
USD/JPY Fundamental Analysis for November 8, 2011
The USD/JPY pair traded in a very narrow range early Monday near its highest level in three months, where traders are still testing the current market sentiment and confidence to determine the next move for the yen. The latest intervention from the Bank of Japan has weakened the yen by 4.7% against the dollar, but the USD/JPY pair did not try to continue rising since then as the effect of the intervention wanes. The Japanese yen has the lowest interest rate among all development countries, and Japan still able to achieve surplus which qualifies the yen to be the first save haven currency. Both economies will not release any data on Tuesday, where the pair’s movements will depend on the market sentiment.
GBP/USD Fundamental Analysis for November 8, 2011
The GBP/USD started the week on Monday affected by the sentiment and market jitters as the focus continued on debt laden nations in the euro area and the worsening outlook for the monetary union and accordingly global financial stability and growth. The jitters supported risk aversion and powered the dollar for gains versus sterling. Investors are worried over the outlook for the euro area and the deepening crisis that is only intensifying market strain and leading the global economy to risk falling in another recession. The UK economy will surely be affected further by the debt crisis and the slowing of global economic conditions and the BoE already started to take counter measures and last month expanded the APF last month. This week the BoE is expected to keep their monetary policy unchanged after to give the APF time to show effect, especially as inflation remains stubbornly high even as the bank expects that it will undershoot the target over the medium term. We have little data on Tuesday and the focus will remain on the euro area with the developments in Greece and Italy and also the EU finance ministers meeting that will increase the volatility further. At 09:30 GMT, the British economy will release industrial and manufacturing production for the month of Sep., where the U.S. has no releases.
USD/CHF Fundamental Analysis for November 8, 2011
The USD/CHF moved to the upside as the franc lost more grounds as the SNB president warned of the downside pressures on the recovery and that they are ready to count the franc’s gains. The comments from the bank came as a preemptive signal to markets for another move by the bank and that sent the pair to the upside, especially as the dollar was already gaining grounds on instability in Europe. Swiss National Bank President Philipp Hildebrand said that the bank is ready to take additional measures if the currency appreciates further or the economic status and deflation threats worsen. The data indeed supported the comments with the CPI dropping 0.1% on the year in October and falling 0.5% in EU harmonized terms while unemployment moved higher to 2.9% from 2.8%. We expect the volatility to remain dominant on Tuesday with the focus still on Europe and the developments in debt laden nations, Italy and Greece. The political instability in both nations is a source of agony and a sign to markets that Europe did not quell the crisis or contain it with the EU October measures. The focus is still on Italy’s vote on the budget amendments on Tuesday and the outlook for Berlusconi with rumours starting to rise over his possible resignation. At 06:45 GMT, the Swiss economy will release the last data this week which is SECO consumer confidence for Oct, where the U.S. has no releases.
EUR/CHF Fundamental Analysis for November 8, 2011
The EUR/CHF moved strongly to the upside on expectations that the SNB will move and extend the monetary loosening and steps to weaken the franc after the weak data and rising deflationary threats. Swiss National Bank President Philipp Hildebrand said that the bank is ready to take additional measures if the currency appreciates further or the economic status and deflation threats worsen. The data indeed supported the comments with the CPI dropping 0.1% on the year in October and falling 0.5% in EU harmonized terms while unemployment moved higher to 2.9% from 2.8%. This weakened the franc and drove the EUR/CHF to the upside on expectations for a move from the bank. The euro surely was not the leading support for the pair as it remained under pressure amid the high uncertainty in Greece and Italy and the political tension is further adding strain on the debt-laden economies and signaling to markets that the crisis is far from over or resolved with the lack of commitment and ability of nations to carry on with the fiscal fight. We expect more volatility and fluctuations on Tuesday for the pair, especially as we can see an opening gap for the pair that might be covered which will push the pair south, especially if the SNB does not act swiftly which will dip the expectations gradually for raising the floor for the pair.
AUD/USD Fundamental Analysis for November 8, 2011
The Australian dollar swings between gains and losses amid the rising European debt fears, where Aussie recovered slightly on news of a coalition government in Greece that will finalise the agreement on the second bailout yet the tension remains evident with the continued instability in Greece and also Italy. The Australian currency started the week with a decline against the greenback on speculation that European debt crisis is worsening and affecting the Italian economy, damping the demand of riskier currencies. Aussie declined slightly after a private report showed job notices fell in October for a fourth-straight month, while employment data this week is forecasted to show the jobless rate rose to 5.3 per cent in October from 5.2 per cent the previous month. On Tuesday at 23:30 GMT (Monday) Australia will release the Trade Balance for September, where it’s expected to show a surplus of A$ 3000 million compared to the previous A$3100 million surplus. NAB Business Confidence for October will be released at the same time, where it had a previous reading of –2, while the previous reading for NAB Business Conditions was 2.
USD/CAD Fundamental Analysis for November 8, 2011
The USD/CAD pair rebounded to the downside on Monday, as investors are focused on Italy and Greece, where the political instability in the nation is stalling the reform which is forcing the nation to remain vulnerable to speculation and market pressure which already sent its borrowing costs to record. The G20 leaders pressed Silvio Berlusconi to act quickly as he agreed to allow the monitoring of EU and IMF to the reforms to ensure their swift implementations. The focus remains on Europe and the ongoing crisis as the finance ministers meet inBrusselsand their decisions undermined by the ongoing uncertainty in Greece and now Italy. Moreover, jitters from Europe continued to dominate the global scene on Monday, where traders will still concerned that Greece could be heading into a disorderly default, and that possibility that the debt crisis could spread into other nations in the euro zone region, which put more negative pressure on the Canadian dollar to send the USD/CAD pair higher. Traders will continue to monitor the developments from Europe regarding the debt crisis, especially amid the lack of major economic data from Canada and the United States, but overall, we expect the USD/CAD pair to extend its gains over the coming period. Tuesday November 08: No economic data is scheduled for release from theUnited States. Canada will release the housing starts for October at 13:15 GMT, where housing starts are expected to reach 195.0K in October.
NZD/USD Fundamental Analysis for November 8, 2011
The New Zealand currency, nicknamed the Kiwi, declined against the American counterpart as stocks in Asia declined and the sentiment continued to be weak on prevailing debt and growth woes. The commodities prices are also losing ground, which supported the New Zealand’s to remain weak amid a wide wave of risk aversion with the political tension in Greece and Italy further adding downside pressure on growth and undermining Europe’s ability to contain the crisis. In the meantime, the investors are shifting away from risky assets as the investors watched the latest developments after European leaders failed to contain the crisis amid rising possibility of Greece leaving the single currency. Both economies will not release any data on Tuesday, where the pair’s movements will depend on the market sentiment.
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