Forex Fundamental Analysis for September 14, 2011

EUR/USD Daily Fundamental Analysis for September 14, 2011

Choppy trading and mixed sentiment prevailed on Tuesday with the EUR/USD fluctuating in line with the sentiment, where eased woes slightly unburdened the euro yet overall the negativity prevails. We saw that the heavy selling pressures on the euro eased with comments from Trichet and Merkel that tried to ease the strain. Merkel dismissed talks of the nation preparing itself for Greek default and restated her commitment to ensure the euro area’s stability while Trichet from his part assured central bankers readiness to support slowing growth where the outlook is for slowing recovery yet not recession. Still, fears of Greek default are evident and even now with the worsening status in Italy the market tension is still high. News of Italian talks with China did little to the sentiment as the market was not convinced of the investment talks especially as Italy dismissed expectations that China will be buying Italian bonds. With the light load of euro area data investors will keep their eyes on the progress in Greece and the debt talk. The euro area industrial production for July is due at 09:00 GMT and expected with 1.6% rebound from 0.7% drop and on the year to expand 4.8% following 2.9%. The focus will also turn to the debt crisis with the EU Parliament debating economic conditions and the debt crisis which might hint for the coming move from the region to support debt-laden nations and break the deadlock in the bailout for Greece. Any comments from officials might have its effect on the market so investors will remain vigilant for that possibility to assess any sign for the next step for Greece. As for the United States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also due at 12:30 GMT will be the Retail Sales for August which are expected with a slowing 0.2% rise after 0.5% advance in July. Business Inventories for July will be released at 14:00 GMT and expected with 0.5% rise from 0.3% the previous month.

AUD/USD Daily Fundamental Analysis for September 14, 2011

The Australian dollar slumped against the American dollar as the Greek crisis escalates again, meaning that the global economy may suffer from the outbreak of a new financial crisis, pushing investors to sell higher yielding currencies. Moreover, the Australian dollar (Aussie) fell to the lowest level in a month versus the greenback after business confidence in August dropped to -8 from positive 2 in July. The Reserve Bank of Australia sees that the economy needs time to recover, adding that the Bank won’t increase borrowing costs until the end of the year, in an effort to support the economic recovery. Australian economy faces external obstacles (the European debt crisis and US sluggish growth) which dampen Australian exports, as the economy still suffers from the first quarter natural disaster. On Wednesday, at 00:30 GMT Australia will report the Westpac consumer confidence for September after it dropped by 3.5% in August. The U.S. economy will release the PPI index for August at 12:30 GMT, where the previous reading was up by 0.2% and expected at – 0.1%, while the annual reading is expected to come at 6.4% from the prior reading of 7.2%. At 12:30 GMT, the U.S. economy will release the advanced retail sales for August, where the previous reading was 0.5% and expected to come at 0.2%. The U.S. business inventories for June will be released at 14:00 GMT, where it had a previous reading of 0.3% and expected to come at 0.5%.

EUR/CHF Daily Fundamental Analysis for September 14, 2011

The EUR/CHF is barely moving and is still trading within a limited trading range where the franc is resisting the euro’s weakness and the mixed market sentiment for the euro prevailed amid officials’ attempts to ease the jitters. We can see that the heavy selling pressures on the euro eased with comments from Trichet and Merkel that tried to ease the strain. Merkel dismissed talks of the nation preparing itself for Greek default and restated her commitment to ensure the euro area’s stability while Trichet from his part assured central bankers readiness to support slowing growth where the outlook is for slowing recovery yet not recession. The mixed sentiment did little to affect the pair as it trades still around the critical 1.20 areas and holding still above the floor set by the SNB. On Wednesday we expect the same sentiment to be dominant with the pair stripped of major momentum and trading in the aftermath of the SNB move. Switzerland will start the day at 07:15 GMT with the Producer & Import prices for August where the index is expected to drop 0.4% following 0.7% drop and on the year to decline 1.1% following 0.6% drop. The euro area industrial production for July is due at 09:00 GMT and expected with 1.6% rebound from 0.7% drop and on the year to expand 4.8% following 2.9%. The focus will also turn to the debt crisis with the EU Parliament debating economic conditions and the debt crisis which might hint for the coming move from the region to support debt-laden nations and break the deadlock in the bailout for Greece.

NZD/USD Daily Fundamental Analysis for September 14, 2011

The New Zealand dollar (Kiwi) plunged versus the US dollar after the NZ’s economy reported a drop in manufacturing volumes for the first time in three quarters and food prices declined. Moreover, the Kiwi fell against greenback as concern that Greece may default sapped demand for higher-yielding assets. On the other hand, the New Zealand dollar is to gain support against majors as the New Zealand economic recovery is on the track supported by strong terms during the period. Economic growth in New Zealand has entered the recovery curve before the June earthquake, and still gives positive signs for the economic rebound. However, consumer confidence in New Zealand rose this quarter along with the expanded manufacturing sector to the fastest level in about a year. On Wednesday, the U.S. economy will release the PPI index for August at 12:30 GMT, where the previous reading was up by 0.2% and expected at – 0.1%, while the annual reading is expected to come at 6.4% from the prior reading of 7.2%. At 12:30 GMT, the U.S. economy will release the advanced retail sales for August, where the previous reading was 0.5% and expected to come at 0.2%. The U.S. business inventories for June will be released at 14:00 GMT, where it had a previous reading of 0.3% and expected to come at 0.5%.

USD/JPY Daily Fundamental Analysis for September 14, 2011

The USD/JPY pair dropped for the second day as the Japanese yen returned to gain momentum against the dollar and other major currencies, where investors abandoned higher yielding currencies due to the current financial situations. The instability in equities across the board and the pessimistic developments in the Eurozone drove investors to sell higher yielding currencies, shifting their investments to safer currencies such as dollar and yen. Speculations that Greece is nearing default in addition to the signs of spreading European debt crisis drove the 17-nation currency to its lowest level in more than 10 years against the yen. On the other hand, Japan’s economy contracted during the second quarter, opening the way for more concerns regarding the negative effect of the strong yen on the nation’s recovery. The Japanese economy will release the final reading for the industrial production index for July at 04:30 GMT, where the previous reading was up by 0.6%. As for the annual reading it had a previous reading of –2.8%. The U.S. economy will release the PPI index for August at 12:30 GMT, where the previous reading was up by 0.2% and expected at – 0.1%, while the annual reading is expected to come at 6.4% from the prior reading of 7.2%. At 12:30 GMT, the U.S. economy will release the advanced retail sales for August, where the previous reading was 0.5% and expected to come at 0.2%. The U.S. business inventories for June will be released at 14:00 GMT, where it had a previous reading of 0.3% and expected to come at 0.5%.

GBP/USD Daily Fundamental Analysis for September 14, 2011

On Tuesday, the pair resumed its bearish direction as fears in the markets thatGreecemay default damped demand on high-yielding currencies. Data from the U.K. added to concerns that theU.K.may be prone to stagflation as the high inflation, which is expected to rise further, coincides with a sluggish growth pace. On Wednesday, at 08:30 GMT, the U.K. will release jobs report where ILO unemployment for the three months ended July will linger at 7.9% while jobless claims will show a decline to 35.0 thousands in August compared with 37.1 thousands in July.  As for the United States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also at the same time Retail Sales report for August is expected to slow to 0.2% compared with the 0.5% advance posted in July. Business Inventories for July will be released at 14:00 GMT and expected to show 0.5% rise from 0.3% the previous month.

USD/CAD Daily Fundamental Analysis for September 14, 2011

The USD/CAD pair fell on Tuesday, as the U.S. dollar weakened against major currencies, which provided the Canadian dollar with momentum to push the USD/CAD pair to the downside. Moreover, rising equity markets in Europe and the United States amid optimism China will buy Italian bonds, boosted demand for higher yielding assets, which put negative pressure on the USD/CAD pair. We should expect the USD/CAD pair to extend its gains if pessimism continues to dominate markets, where the EU debt crisis and signs of slowing global growth are still hammering confidence levels all around the globe. Wednesday September 14: The focus will turn to the debt crisis with the EU Parliament debating economic conditions and the debt crisis which might hint for the coming move from the region to support debt-laden nations and break the deadlock in the bailout for Greece. At 12:30 GMT, Canada will release the capacity utilization rate for the second quarter, where capacity utilization increased to 79.0% in the prior estimate. As for the United States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also due at 12:30 GMT will be the Retail Sales for August which are expected with a slowing 0.2% rise after 0.5% advance in July. Business Inventories for July will be released at 14:00 GMT and expected with 0.5% rise from 0.3% the previous month.

USD/CHF Daily Fundamental Analysis for September 14, 2011

On Tuesday, the USD/CHF pair showed decline for the second as speculations that Greece will face a default increased demand on the franc as a favourite safe haven amid no new interventions from the SNB, where the dollar will probably remain under some pressure till the Fed’s Sep. 20-21 meeting as expectations are in favour of seeing a third round of stimulus to boost the sluggish growth pace. On Wednesday, at 07:15 GMT, the Swiss economy will release producer and import prices for August, where analysts expect 1.1% drop on the year and 0.4% fall on the month from both prior readings of -0.6% and -0.7% respectively. As for the United States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also at the same time Retail Sales report for August is expected to slow to 0.2% compared with the 0.5% advance posted in July. Business Inventories for July will be released at 14:00 GMT and expected to show 0.5% rise from 0.3% the previous month.

 

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