Forex Technical and Fundamental Analysis for November 3, 2011

EUR/USD Technical Analysis for November 3, 2011

The EUR/USDmanaged a decent rally for most of the session, but pulled back later in the day. The massive fall over the past several sessions begged for a bounce, and it got it. However, with all of the uncertainty surrounding the EU bailout and the situation in Greece, the markets are decidedly skittish, and especially in this pair. The reactions to bad news show just how much fear there really is. Because of this – we like selling rallies until we get a daily close well above the 1.40 area.

EUR/USD Fundamental Analysis for November 3, 2011

The EUR/USD fluctuated heavily on Wednesday with upside tendencies as the correctional move continued after the heavy selloff seen since the start of the week. Investors saw that the EU leaders are likely to counter the Greek surprise and use political pressure to undo the damage as they summoned Papandreou for talks in France ahead of the G20 summit in which they are expected to tell him Greece has no other way but to take the bailout as the consequences are disastrous on the euro are and the global economy. On Thursday investors will surely react to any news from the meeting and also trading will be cautious and within tight ranges and volatility ahead of the ECB rate decision. Despite that median estimates are for steady rates from the ECB at 1.50% some are still preparing for a surprise by the bank. Nevertheless, the main focus will still be on Mario Draghi as he chairs his first policy meeting and his press conference which the market expected to include a signal for a rate cut in December to revive growth after macroeconomic data confirmed the deteriorating pace of growth with main sectors contracting. The G20 two-day summit also will start in France and investors are also closely watching any comments or decision from global leaders. The bets are on the IMF and how the fund will be used to contain the crisis with the discussion of direct credit lines to nations that might ease the market, yet for now investors see that it is only temporary relief especially that the loans might be very little to cover the huge debt load from Italy or Spain! The United States will start the day at 12:30 GMT with the nonfarm productivity for the third quarter in a preliminary reading, which is expected to expand by 2.5% from the prior drop of 0.7%. In addition, the unit labour costs for the same period is expected to drop by 0.4% from the previous expansion of 3.3%. The United States will also provide markets with the initial jobless claims (October 28), which was 402 thousand in last week. At 12:45 GMT the European Central Bank will announce interest rates, which is expected unchanged at 1.50%. The focus will be on Mario Draghi and the press conference at 13:30 GMT for signals over the coming move from the ECB. At 14:00 GMT the United State swill release the ISM non-manufacturing composite for October, which could have improved to 54.0 from 53.0. Moreover, the United States will release the factory orders index for September, with expectations for 0.1% further drop from the previous 0.2%.

USD/JPY Technical Analysis for November 3, 2011

The USD/JPY pairfell on Wednesday as the trading community knows the intervention was unilateral. The unilateral interventions by the Bank of Japan in the past have failed, but it is rarely a direct fall in this pair, rather a slow grinding downwards. Because of this, we are currently short of this market, and will continue to be until we hit lower areas. Longs aren’t considered up at these levels as it is the top of the range.

USD/JPY Fundamental Analysis for November 3, 2011

The USD/JPY pair dropped early Wednesday but still trading within the range near its highest level in three months. The weak dollar and the uncertainty in the financial market increased demand for the yen, in addition to the current correction after Monday’s incline. The greenback retreated against most of its major counterparts before the FOMC meeting, while all market participants are waiting for hints from the Fed about the third round of quantitative easing. The USD/JPY pair is expected to continue trading in a range before the FOMC meeting, where all the bets today will be for the US dollar, and the reaction will come from the Japanese currency. On Thursday at 12:30 GMT, the U.S. economy will release the Non-Farm Productivity for the third quarter, where the preliminary reading is expected to come at 2.5% from the prior reading of –0.7%. The Unit labour Costs for the third quarter is expected to come at –0.4% from the previous reading of 3.3%. At 12:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 402 thousand last week. The U.S. ISM Non-Manufacturing Composite for September will be released at 14:00 GMT, where it’s expected to come at 54.0 from the prior reading of 53.0.

GBP/USD Technical Analysis for November 3, 2011

The GBP/USD pairrose above the 1.60 level during the Wednesday session, only to be repelled by it over the course of the trading day. The failing at 1.60 does cause a case for bearishness, but there was also a shooting star-shaped candle printed at the end of the day as well. Because of this, we feel if the market trades below the bottom of the 1.59 area, this pair is going to fall. The 1.60 area is obviously very resistive, and we would have to close above it on the daily chart to get bullish at this point.

GBP/USD Fundamental Analysis for November 3, 2011

The pair rebounded after two days of decline after the release of a report showing that construction sector expansion widened to 53.9 in Oct. from 50.1 a month earlier.

The optimistic report offset the drop in U.K. PMI manufacturing to 47.4 in Oct. from the prior expansion of 51.1 in Sep, before the release of the services gauge on Thursday which will show a drop to 52.0 in October from the prior 52.9, as of 09:30 GMT, according to median estimates.

Moreover, the pair was affected by hopesU.S.policy makers to announce in their two-day meeting some details about a third round of stimulus.

On the flip side, data released on Wednesday showed that theU.S.private sector employment grew by 111,000 last month, beating estimates of 100,000 while September’s reading was upwardly revised to 1116,000 from the initial 91,000.

The report provided some good signs about the status of the labour sector before the release of the infamous non-farm payrolls on Friday.

Hence, the dollar was affected by the upbeat report as the improvement in the sentiment dampened demand on the greenback as a safe haven on the one hand and as talks about further QE pushed it down, as more money printing will cause it to depreciate due to excess supply, on the other.

Nonetheless, the dollar’s losses were minimized as concerns stemming from Greece raised doubts about the European plan announced last week.

Greek Prime Minister George Papandreou mentioned that a referendum on the latest euro area bailout out package will determine the future of his country in the euro.

Fears reignited in markets since in the case of rejecting the bailout in the referendum, the debt-mired economy would be prone to a disorderly default which might end its membership in the euro.

Also, the European rescue fund has delayed the issuance of a 3 billion euro bond to finance Ireland’s bailout package as a result of the turmoil in markets, according to news report released today.

On Thursday, the U.S. economy will release initial jobless claims for the week ended Oct. 28 and continuing claims for the week ended Oct. 21 will be available at 12:30 GMT, followed by ISM non-manufacturing for Oct., as of 14:00 GMT, which is predicted to show widening expansion to 54.0 from the prior 53.0.

The reports are expected to be watched carefully as investors will wait for another clue for the improvement in the labour sector before the jobs report while making sure the services sector is showing progress, especially after the drop in manufacturing.

USD/CHF Technical Analysis for November 3, 2011

The USD/CHF pairfell a bit on Wednesday, but managed to recover some of its losses towards the end of the session. The pair is being supported by the threat of Swiss National Bank intervention, and as such we have been saying that we prefer to buy dips. If you listened to this advice during the session, you should be profitable. The 0.9000 level above will more than likely cause a bit of resistance, but we feel it is only a matter of time before this pair climbs above it as the Dollar is the only “safety currency” left as the Franc is being worked against, as well as the Yen. We like buying dips still.

USD/CHF Fundamental Analysis for November 3, 2011

The pair slipped after three consecutive sessions of advance before the Fed meeting as some investors expectU.S.policy makers to announce in their two-day meeting some details about a third round of stimulus. Although the recent data from theU.S.is showing improvement, yet the economy needs a strong push to boost recovery. Data released on Wednesday showed that theU.S.private sector employment grew by 111,000 last month, beating estimates of 100,000 while September’s reading was upwardly revised to 1116,000 from the initial 91,000. The report provided some good signs about the status of the labour sector before the release of the infamous non-farm payrolls on Friday. Thus, the dollar was affected by the upbeat report as the improvement in the sentiment dampened demand on the greenback as a safe haven on the one hand and as talks about further QE pushed it down, as more money printing will cause it to depreciate due to excess supply, on the other. However, the dollar’s losses were minimized as concerns stemming fromGreeceraised doubts about the European plan announced last week. Greek Prime Minister George Papandreou mentioned that a referendum on the latest euro area bailout out package will determine the future of his country in the euro. Fears reignited in markets since in the case of rejecting the bailout in the referendum, the debt-mired economy would be prone to a disorderly default which might end its membership in the euro. Also, the European rescue fund has delayed the issuance of a 3 billion euro bond to finance Ireland’s bailout package as a result of the turmoil in markets, according to news report released today. On Thursday, the Swiss economy release UBS real estate bubble index at 07:00 GMT, yet it is not expected to have a slight effect on the pair’s movements. On the other hand, the U.S. economy will release initial jobless claims for the week ended Oct. 28 and continuing claims for the week ended Oct. 21 will be available at 12:30 GMT, followed by ISM non-manufacturing for Oct., as of 14:00 GMT, which is predicted to show widening expansion to 54.0 from the prior 53.0. Data from the U.S. is expected to be watched carefully as investors will wait for another clue for the improvement in the labour sector before the jobs report while making sure the services sector is showing progress, especially after the drop in manufacturing.

EUR/CHF Technical Analysis for November 3, 2011

The EUR/CHF pairfell a bit during the Wednesday session as the pair continues to sit still. The SNB is below, and willing to defend the 1.20 level as a “floor” in this pair. The fact that this pair cannot gain any traction just shows how weak the underlying strength of the Euro is in general. Because of this, we are watching this pair for longer-term signals to buy. The day you see this pair rise rapidly is the day you know the Euro crisis is over.

EUR/CHF Fundamental Analysis for November 3, 2011

The EUR/CHF is still caught within a tight trading range and lacks momentum to move with the high uncertainty and volatility seen in the market. Thursday will be dedicated to the first ECB, where new President Mario Draghi will chair his first policy meeting and the bank is expected to keep rates at 1.50% and the decision will be announced as usual at 12:45 GMT. The decision will be followed by the usual press conference, but this time will be for Mario Draghi at 13:30 GMT as investors will be looking for any signals from the new president and the rhetoric that he will take from now on. We do not expect the pair to move strongly on the news, especially that any signal for a rate cut from Draghi that the market awaits limits the scope for the pair to move lower with the strong SNB grip. Nonetheless, the dollar strength would return and might pressure swissy further to the downside and that might affect the pair, yet all in all we still see the limited range movement dominant for the pair.

AUD/USD Technical Analysis for November 3, 2011

The AUD/USD pair initially rose during the Wednesday session before falling again in the afternoon. The pair remains under the 1.05 level, and it appears sellers have stepped into the pair once we got close to it. With this in mind, we think the bias is still to the downside, and a breaking of the bottom of this shooting star-shaped candle would have us considering selling. It should be noted however, there is a set up in the GBP/USDthat looks very much the same, but with a clearer path to the downside. We won’t buy until the daily chart closes well above the 1.05 level.

AUD/USD Fundamental Analysis for November 3, 2011

The Australian dollar remained under pressure on Wednesday yet started to correct the strong bearishness seen with the start of the week. Aussie had reached to the lowest level in more than six days versus the dollar after the Reserve Bank of Australia cut rates by 25 basis points to to 4.50%. The bank’s decision reflects a decline in the nation’s underlying inflation rate to the weakest in 14 years as Europe’s debt crisis dims prospects for the world economy. On the other hand, Australian home-building approvals declined in September by the most since November 2002 as permits granted for apartments and renovations slumped. Aussie continues to trade with high volatility and weakness versus the US counterpart as the decision by the Greek Prime Minister to call a surprise referendum on the latest terms of the bailout for his country has caught his fellow European politicians, as well as the markets, completely by surprise. On Thursday, at 22:30 GMT (Wednesday) Australia will release the AiG performance of service index for October which recorded 50.3 the previous month. At 00:30 GMT we the Retail Sales for September, which had a prior reading of 0.6%, along with the quarterly reading for retail sales excluding inflation for the third quarter, while it had a prior reading of 0.3%. On Thursday at 12:30 GMT, the U.S. economy will release the Non-Farm Productivity for the third quarter, where the preliminary reading is expected to come at 2.5% from the prior reading of –0.7%. The Unit labour Costs for the third quarter is expected to come at –0.4% from the previous reading of 3.3%. At 12:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 402 thousand last week. The U.S. ISM Non-Manufacturing Composite for September will be released at 14:00 GMT, where it’s expected to come at 54.0 from the prior reading of 53.0.

USD/CAD Technical Analysis for November 3, 2011

The USD/CAD pairfell a little during the Wednesday session as the massive move got pulled back from the Tuesday rally. The parity level still serves as a pivot of sorts, and we only trade in the direction that we are from there – meaning that in this case, we like buying on signs of support or new highs. The 1.03 level will serve as resistance, but the market will certainly move on headline news, of which there will be quite a bunch of. The pair looks bullish as the breakout, pullback, and retest has signaled. However, the pair could be choppy as the price of oil can greatly effect the price of the CAD as well.

USD/CAD Fundamental Analysis for November 3, 2011

The USD/CAD pair rebounded to the downside on Wednesday, as the U.S. dollar fell against major currencies after the ADP employment change report showed the U.S. private sector added 110,000 jobs in October, above median estimates of 100K jobs, which spread optimism in markets and provided the Canadian dollar with strong momentum to push the USD/CAD pair to the downside. The FOMC left the benchmark interest rates unchanged as they finished a two-day meeting on Wednesday, where the FOMC also left the current monetary policy unchanged in line with median estimates. Traders will be eyeing the jobless claims and ISM services from the United States on Thursday. Nonetheless, the main focus will turn to Europe, as the European Central Bank will announce its decision on interest rates, as the ECB is expected to leave the benchmark interest rates unchanged at 1.50% Thursday November 03: The United States will start the day at 12:30 GMT with the nonfarm productivity for the third quarter in a preliminary reading, which is expected to expand by 2.5% from the prior drop of 0.7%. In addition, the unit labour costs for the same period is expected to drop by 0.4% from the previous expansion of 3.3%. The United States will also provide markets with the initial jobless claims (October 28), which was 402 thousand in last week. At 12:45 GMT the European Central Bank will announce interest rates, which is expected unchanged at 1.50%. At 14:00 GMT the United States will release the ISM non-manufacturing composite for October, which could have improved to 54.0 from 53.0. Moreover, the United States will release the factory orders index for September, with expectations for 0.1% further drop from the previous 0.2%.

NZD/USD Technical Analysis for November 3, 2011

The NZD/USD pair fell again on Wednesday as traders sold off the Kiwi in general. This was interesting as the global markets actually rose – which is normally good for the Kiwi. With most of the commodity marketsraising as well, this is particularly ominous for the New Zealand dollar. The breaking of the consolidation bottom wasn’t accomplished, but the market is sitting right there. Because of this, we aren’t keen to buy at this point, but would be very interested in selling if we break the bottom of the Wednesday range.

NZD/USD Fundamental Analysis for November 3, 2011

The New Zealand’s dollar, nicknamed Kiwi weakened against most of its 16 major peers as declines in commodity prices and Asian stocks damped demand for riskier assets. Nevertheless, we saw some correction attempts across markets as investors focused on the EU leaders meeting with Papandreou in France that might solve the crisis. Asian equities fell as Asian markets are pressured amid negative global conditions that threaten the global economy due to the decision by the Greek Prime Minister to call a surprise referendum on the latest terms of the bailout for his country which caught his fellow European politicians, as well as the markets, completely by surprise. On Thursday eyes will be focused on the most important data this week from New Zealand. The unemployment figures for the third quarter at 21:45 GMT. Unemployment is expected to fall to 6.4% from 6.5% and employment change is expected to rebound with 0.6% after it remained unchanged the previous quarter. At 12:30 GMT, the U.S. economy will issue the Non-Farm Productivity for the third quarter, where the preliminary reading is expected to come at 2.5% from the prior reading of – 0.7%. The Unit labour Costs for the third quarter is expected to come at –0.4% from the previous reading of 3.3%. At 12:30 GMT, U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 402 thousand last week. The U.S. ISM Non-Manufacturing Composite for September will be released at 14:00 GMT, where it’s expected to come at 54.0 from the prior reading of 53.0.

 

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