Forex Technical and Fundamental Analysis for Nov 4, 2011

EUR/USD Technical Analysis for Nov 4, 2011

 

 

Even with an interest rate cut, the EUR/USD managed to rise at the end of the session. With the Greeks and their teenage-like drama unfolding, the markets are being held hostage by a completely dysfunctional government at this point. As the referendum was put to rest, the Euro suddenly spiked again. It literally depends on random statements out of the EU at this point. The 1.40 level above should still be resistive, and with all of this noise, only the most nimble of traders should even consider being involved in this pair now. We are sitting on the sidelines with not only the Non-Farm Payroll numbers coming out, but the G-20 summit wrapping up – there is real chance for extreme moves again for the Friday session.

 

EUR/USD Daily Fundamental Analysis for Nov 4, 2011

The EUR/USD fluctuated heavily on Thursday with a surprise ECB decision, G20 summit and ongoing developments in Greece that kept markets mixed all day.

Investors saw the ECB decision to offer support to the faltering recovery and the focus on hopes that Greece might scrap the referendum offset any downside pressure of the move.

Into Friday investors eye the developments mainly in Greece where news that Papandreou might resign or that he will not find backing in the confidence vote all was positive as it means the referendum will fall. Some news reports even suggested that the referendum will be called off once the opposition agrees to support the new bailout.

The confirmed final news from Greece will have the effect on market, as the return to the bailout deal that was provided by the EU leaders will as far as the opposition back the new bailout the referendum will be canceled thought the outlook for the Greek government survival is still in question pending the confidence vote that is still scheduled to be held on Friday.

Germany will start the day at 07:55 GMT with the final reading of the PMI services indicator for October, where the indicator is expected to linger at 52.1.

The euro area will join the session at 09:00 GMT with the final reading of the PMI composite and service for October, where the composite indicator previous reading was 47.2, while the PMI services is projected unchanged at 47.2.

At 10:00 GMT the euro zone will provide the monthly and annual PPI indexes for September, with expectations that the monthly index could have expanded by0.3% from the previous drop of 0.1%, while the annual index is expected lower at 5.8% from 5.9%.

At 11:00 GMT Germany will release the Factory orders index for September, where the annual non-seasonally adjusted index is expected to improve by 7.9% from 3.9%, while the seasonally adjusted monthly index is predicted steady from a 1.4% previous drop.

At 12:30 GMT the United States will join the session with the monthly jobs report for October, where the change in nonfarm payrolls is expected at 100 thousand new jobs from 103 thousands in September. In addition, the unemployment rate is expected unchanged at 9.1%.

AUD/USD Technical Analysis for Nov 4, 2011

 AUD/USD had a strong day on Thursday as traders celebrated the cancelling of the Greek referendum. The risk trade came back, and as always – the Aussie benefits. The 1.05 level above is still a massive resistance area, and as such – we aren’t willing to buy yet. In fact, we think the 1.05 level a great barometer as to which direction we want to trade this pair, but only after the Friday close. The session could be very important for the near-term future of this pair. The G-20 meeting will also produce chances for fireworks as well, and as a result, we feel it is better to wait until Monday to take a trade.

 

AUD/USD Daily Fundamental Analysis for Nov 4, 2011

The AUD/USD pair dropped to its lowest level in two weeks, as the pessimistic fundamentals from the Australian economy has weakened Aussie against the dollar and other major currencies especially as risk aversion is back to dominate the market.

Retail sales in September came at 0.4% from the previous of 0.6%, in addition to the building approvals for September which dropped sharply by 13.6% from the prior rise of 10.7%.

The weak data besides the downside momentum from the latest RBA decision to cut the interest rate drove the Aussie lower against the US dollar. The greenback also picked up momentum on haven demand amid worries over the outlook for Greece and the referendum that will define whether it will remain in the euro or drop the currency and announce default.

The United States of America will release the non-farm payrolls at 12:30 GMT, which is expected to show that the U.S. economy added 100 thousand jobs during the month of October compared with the previous reading of 103 thousand jobs.

Unemployment rate during the month of October is expected to be steady at 9.1%, while the yearly average hourly earnings index had a previous reading of 1.9%.

EUR/CHF Technical Analysis for Nov 4, 2011

 The EUR/CHF pair again managed to drift lower on a volatile session overall on Thursday. The pair isn’t very tradable at the moment, as the Swiss National Bank is currently defending a “floor” at 1.20 or so. But what this pair does tell us is that there may not be real underlying strength in the Euro, despite the moves seen in the EUR/USD pair. The ECB cut rates on the session, and the Euro managed to rise against the Dollar due to a dropping of the referendum out of Greece. However, the Euro can’t rally against a currency that is being weakened by its own central bank. This chart is a great relative strength indicator, but at the moment – nothing more.

 

EUR/CHF Daily Fundamental Analysis for Nov 4, 2011

Despite all the mixed news and the ongoing volatility across the board the EUR/CHF continued to move in a tight range and was not affected by the news that Greece might call off the referendum or the surprise cut from the ECB.

The pair clearly lacks momentum as the SNB remains the sole player for the pair and it is surely defending its set floor by strong arsenal.

On Friday the focus will continue to be on Greece and on the G20 in Cannes to see the next step for the nation, especially as news started to suggest Greece will call off the referendum once the opposition announced its support to the new bailout which accordingly will restore Greek funding and by that avoid default and a euro disaster.

Also the news for Switzerland will have a big effect on the market and increased reserves will surely signal how much the SNB is committed to fighting the franc’s appreciation which might be the trigger to the pair to move higher on expectations the SNB might move again.

Switzerland will end the week with the foreign currency reserves for October at 08:00 GMT after it rose to a record the previous month of 282.4 billion.

As for the euro area, the week will end with the final PMI Services for October at 09:00 GMT which is expected steady at 47.2 and the Composite PMI which is also expected to remain unrevised at 47.2.

The euro area September producer price index is due at 10:00 GMT and expected with 0.3% rise on the month after 0.2% drop and on the year to ease to 5.8% from 5.9%.

NZD/USD Technical Analysis for Nov 4, 2011

 The NZD/USD pair had a strong day as the “risk on” trade was back in vogue for the previous 24 hours. This pair is absolutely subservient to the whims of this sentiment, and as such – it has been a tough pair to trade lately. The overall picture still looks a bit bearish to us, as the bottom of the recent consolidation is still being tested at the close of the session. This look like it could be a classic “break and retest” of the area, and if we cannot rise above the 0.8000 mark, this could be a great selling opportunity. The Non-Farm Payroll numbers will certainly move this pair, and as such it will be difficult to trade on Friday. The closing price is everything to us, and if we close lower on the day, we are strongly bearish. If we close higher – we need to see 0.8000 closed above to think about buying.

 

NZD/USD Daily Fundamental Analysis for Nov 4, 2011

The NZD/USD pair drooped after disappointing jobs data from the New Zealand economy, which reduced demand for the Kiwi, opening the door for more gains for the greenback.

The Unemployment Rate rose in New Zealand during the third quarter to 6.6% from the previous 6.5%, which reflect the continued slowdown in the labour market in New Zealand due to the negative effect of the EU debt crisis on the business sector.

The FOMC also increased risk aversion after the Feds downgraded their outlook for growth and employment and the debt crisis in Europe is still deepening with Greece now threatened with leaving the euro and announcing default, all supporting the appeal of the dollar as a safe haven.

The United States of America will release the non-farm payrolls at 12:30 GMT, which is expected to show that the U.S. economy added 100 thousand jobs during the month of October compared with the previous reading of 103 thousand jobs.

Unemployment rate during the month of October is expected to be steady at 9.1%, while the yearly average hourly earnings index had a previous reading of 1.9%.

USD/JPY Technical Analysis for Nov 4, 2011

 The USD/JPY hasn’t moved much over the last three sessions as the Bank of Japan has recently intervened. However, these unilateral interventions tend to fail, and we feel that a slow grind south is the most likely path going forward. We are willing to sell her for roughly 100 pips. We understand it might take some time, but history is certainly on our side, especially if we don’t break the 80 handle.

 

USD/JPY Daily Fundamental Analysis for Nov 4, 2011

The USD/JPY pair retreated early Thursday, while it still trading within the range nears its highest level in three months. The FOMC decision surprised no one, where the Fed maintained the interest rate between 0.0% and 0.25%.

The FOMC members decided to leave the Operation Twist program unchanged, yet they added downside pressures to the market with the downside revision to growth projections and higher unemployment amid the current European debt crisis.

The Japanese currency recorded some gains against the dollar and other major currencies after the meeting, as the unclear strategy from the Fed about the third round of quantitative easing drove the dollar to fluctuate which helped the yen to be more stabile.

On Friday, the United States of America will release the non-farm payrolls at 12:30 GMT, which is expected to show that the U.S. economy added 100 thousand jobs during the month of October compared with the previous reading of 103 thousand jobs.

Unemployment rate during the month of October is expected to be steady at 9.1%, while the yearly average hourly earnings index had a previous reading of 1.9%.

GBP/USD Technical Analysis for Nov 4, 2011

 GBP/USD moved higher and above the 1.60 level during the Thursday session as the risk trade came back on. The Greeks have dropped their referendum ideas, and this was accepted as a good sign. However, the pair is still within the consolidation area, and we feel that it still looks a bit on the toppy side at this point. We are waiting to see the reaction to the Friday Non-Farm Payroll session in order to place a trade. Above 1.60 – we like buying, a close below it – we would like to sell.

 

GBP/USD Daily Fundamental Analysis for Nov 4, 2011

The pair rebounded as split among Greek policymakers regarding a referendum on receiving an EU/IMF bailout and expectations of government collapse eased default concerns, thereby damping demand on the dollar as a favourite safe haven.

With the current split that will be mainly changed from accepting the bailout to staying in the euro area or not, hopes increased that the Greek government might fall in tomorrow’s Parliament vote which mean that the referendum will probably be postponed.

Greek PM assured that the country’s membership in the euro area was never in question.

This managed to offset the impact of the ECB decision to cut interest rate by 25 basis points which boosted the dollar before it retreated. Some investors interpreted the cut positively as it will bolster the economy amid the current anemic recovery.

Moreover, data from theU.K.showed decline in services to 51.3 in Oct. from 52.9, according to the PMI gauge.

In theU.S., ISM non-manufacturing composite for theU.S.slipped to 52.9 in Oct. from 53.0 in Sep., yet factory orders showed 0.3% advance in Sep. from the revised 0.1%.

On Friday, amid the absence of data from theU.K., the main focus of the week which is the awaited non-farm payrolls report from theUnited Stateswill be due at 12:30 GMT. Expectations refer that change in non farm payrolls will retreat to 100,000 in October, lower than the previous 103,000 while unemployment will stagnate at 9.1%.

The awaited non-farm report will provide clues about the labour market and therefore is predicted to impact the pair’s movements.

On Tuesday, the Fed lowered growth forecasts and raised estimates for unemployment, whilst revealing that purchasing mortgage-backed securities is a valid option for the Fed to boost the slackening recovery.

USD/CAD Technical Analysis for Nov 4, 2011

 The USD/CAD pair fell on Thursday as oil managed to climb by the end of the session. The parity level still holds as support, and the market couldn’t break through. This area is where we need to see either a buy or sell signal. The Non-Farm Payroll number will certainly push this pair, and if it is a bad number, this pair will probably rise as the Canadian economy is so dependent on the US for its market. If the number is good – it will send this pair down. The parity level is crucial, and depending on which side of parity we close on – this could be you cue for the pair going forward into next week.

 

USD/CAD Daily Fundamental Analysis for Nov 4, 2011

The USD/CAD pair extended its losses on Thursday, after the European Central Bank announced a surprise rate cut to the benchmark interest rates by 25 basis points to 1.25%, where markets were expecting the ECB to leave rates unchanged. Moreover, hopes that Greece will avoid holding a referendum boosted demand for the Canadian dollar earlier on Thursday. Nonetheless, the ISM services index slowed in October opposite to projections, which weighed down on demand for higher yielding assets, as the USD/CAD pair erased some of its earlier losses.

Traders will be eyeing the Canadian and American jobs reports on Friday, where Canada’s net change in employment is expected to rise by 20,000 jobs, while the U.S. Nonfarm payrolls are expected to rise by 95,000 jobs in October. Moreover, traders will be also eyeing the G20 meeting to see whether they will offer more support to Europe to help solve the EU debt crisis. We should expect Greece to remain in the focus throughout the coming period as well.

Friday November 04:

Canada will release the jobs report for October at 11:00 GMT, where the unemployment rate is expected to remain unchanged at 7.1% in line with the prior estimate, and the net change in employment is expected to increase by 20.0K jobs in October, compared with the prior rise of 60.9K jobs in September.

Canada will release the building permits for September at 12:30 GMT, where building permits fell by 10.4% in August.

At 12:30 GMT the United States will join the session with the monthly jobs report for October, where the change in nonfarm payrolls is expected at 95 thousand new jobs from 103 thousands in September. In addition, the unemployment rate is expected unchanged at 9.1%.

Canada will release the Ivey PMI for the month of October at 14:00 GMT, where the Ivey PMI is expected to ease to 54.5 from the prior estimate of 55.7 back in September.

USD/CHF Technical Analysis for Nov 4, 2011

 The USD/CHF pair fell during the Thursday session, as the USD got sold off against the Euro. The Greeks have called off their referendum, and as such – the market treats the news as good news, but with the almost unlimited opportunities for negative headlines, the USD should continue to find a bid overall. With the Franc being capped in growth by the SNB, it makes sense that this pair will rise overall. The pair still looks like a “buy on the dips” pair to us, and we feel that the 0.85 level should be massively supportive.

 

USD/CHF Daily Fundamental Analysis for Nov 4, 2011

The pair slipped, paring earlier advance, as split among Greek policymakers regarding a referendum on receiving an EU/IMF bailout and expectations of government collapse eased default concerns, thereby damping demand on the dollar as a favourite safe haven.

With the current split that will be mainly changed from accepting the bailout to staying in the euro area or not, hopes increased that the Greek government might fall in tomorrow’s Parliament vote which mean that the referendum will probably be postponed.

This managed to offset the impact of the ECB decision to cut interest rate by 25 basis points which boosted the dollar before it retreated. Some investors interpreted the cut positively as it will bolster the economy amid the current anemic recovery.

Moreover, ISM non-manufacturing composite for theU.S.slipped to 52.9 in Oct. from 53.0 in Sep., yet factory orders showed 0.3% advance in Sep. from the revised 0.1%.

On Friday, the Swiss economy will release foreign currency reserves at 08:00 GMT, and then the main focus of the week which is the awaited non-farm payrolls report from theUnited Stateswill be due at 12:30 GMT. Expectations refer that change in non farm payrolls will retreat to 100,000 in October, lower than the previous 103,000 while unemployment will stagnate at 9.1%.

The awaited non-farm report will provide evidence about the labour market and therefore is predicted to affect the pair’s movements.

On Tuesday, the Fed lowered growth forecasts and raised estimates for unemployment, whilst revealing that purchasing mortgage-backed securities is a valid option for the Fed to boost the slackening recovery.

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