Forex Technical and Fundamental Analysis for November 1, 2011

EUR/USD Technical Analysis for November 1, 2011

The EUR/USD pairabsolutely fell apart during the Monday session as traders continue to scrutinize the EU bailout plans. The market sliced right through the potentially supportive 1.39 – 1.40 level, and this is a very bearish sign. However, the market did close in the middle of a massive cluster of candles from a few days ago. It appears that the 1.40 area may become a bit of an “inflection point” in this pair, and could be key overall. The market looks bearish, and headline risks could send this pair back down. However, the area we are in presently looks like it could offer some support, so a bounce is highly probable. We will more than likely see a lot of volatility over the next several days in this pair, and going forward for quite some time. With the ECB and Fed meeting this week, this could be the catalyst for a major move. At this point in time we are willing to see if the market breaks below the lows from Monday, and if so – we would sell. Otherwise, we could see selling in the near future, but would need to see a bounce first. Buying isn’t a thought at the moment.

EUR/USD Fundamental Analysis for November 1, 2011

With the start of a new busy week on Monday the EUR/USD was biased to the downside after the strong rally seen last week. The euro lost grounds with the flow of downbeat data and the creeping scepticism over the new plan. The dollar was mainly the winner on Monday especially after Japan’s intervention which bolstered the greenback not just against the yen but across the board. Inflation in the euro area held unexpectedly at 3.0% and unemployment worsened to a record 10.2% which reminded investors that the crisis is deep in the area and the slowdown is a big part of the problem. Reports from China suggested that the nation is not in a hurry to help Europe through the EFSF as previously suggested, yet Russia expressed the willingness to support Europe through the IMF. Those mixed comments only extended the volatility and added more pressure on the pair. We see the volatility to extend and investors now eye more details on the coming step and how the EFSF will be implemented with comments from the G20 leaders and whether they will indeed endorse the plan or not which will define if the efforts by Europe are going a waste or not. The lack of data from the euro area on Tuesday will keep the volatility ongoing and focus on the data to be released later in the week and most importantly the rate decision. The United States will start the day at 14:00 GMT with the construction spending figures for September, with expectations that the index will expand by 0.3% from the previous 1.4% expansion. The ISM manufacturing will also be released at 14:00 GMT, where the indicator is expected to show improvement to 52.3 from 51.6 in October.

USD/JPY Technical Analysis for November 1, 2011

USD/JPYhad an interesting day on Monday. The Bank of Japan intervened in the market, driving prices much, higher. The top of the move was 79.50 or so, and it should be noted that the 80 level wasn’t even touched. The move was also mentioned as being unilateral, and as such – it could be very short-lived. The fading of this move has already started. The pair cannot be bought now, it has simply moved too far too quickly. The selling of it can be done, as these unilateral moves tend to be selling opportunities, but the selling move should be carefully considered, and perhaps done with a smaller than usual position.

USD/JPY Fundamental Analysis for November 1, 2011

The USD/JPY pair soared to its highest level in 12 weeks, after the Bank of Japan intervened in the FX market for the third time this year, the move which came after the Japanese yen hit its highest level against the dollar at 76.54. The unilateral intervention from the central bank aims to contain the currency appreciation against the dollar and other major currencies, which hurt the economic recovery by reducing Japan’s exports. The BoJ explained that the recent increase in the Japanese currency was due to speculative moves, but today’s intervention pushed the dollar higher to cover all its previous losses against the yen. On the other hand, Japanese officials indicated that the door is still open for more intervention until the currency reflects the real economic situation. While other major currencies used this current weakness in the yen to record more gains. On Tuesday, the U.S. economy will issue the Construction Spending for September at 14:00 GMT, where it’s expected to come at 0.3% from the prior reading of 1.4%. The ISM Manufacturing for October will be released at the same time, and expected at 52.3 from the previous reading of 51.6.

GBP/USD Technical Analysis for November 1, 2011

GBP/USDfell hard during the Monday session, but bounced from the 1.60 level – an area that we said could produce support. The shape of the daily candle is a hammer, and this also shows that the market “prefers” a move to the upside. The area should support the market from here on forward. A break of the highs from Monday is a classic buy signal in the market. The breaking below of the lows from the Monday session would be massively bearish.

GBP/USD Fundamental Analysis for November 1, 2011

The pair slipped after lackluster report from the U.K. showing that U.K. mortgage approvals fell in September to 51,000 from 52,300 a month earlier. Still, the outlook for the British economy is worrying; noting that the latest announcements by BoE policymakers revealed that the economy could witness another contraction or recession in the coming quarters and the BoE may add further to stimulus after the current round is completed. Moreover, the pair was affected by the general sentiment which was fuelled by sceptics regarding the implementation of the measures announced by European leaders last week. Investors are keeping an eye lid on any details concerning the debt deal, where further details may divulged in the coming European finance minister’s meeting on November 7-8. Also, eyes will be on the G-20 leaders as they meet in Cannes, France, on Nov. 3-4 to continue their discussions on the repercussions of the financial crisis on global markets. Gurria said world leaders should coordinate their efforts and policies to pass the current hurdle phase which is surrounded with uncertainties. The dollar, on the flip side, was boosted against major currencies after the BoJ’s third intervention this year which took place on Monday. Amid interventions from central banks, concerns increase that world economies need a boost and thereby things are not going well. On Tuesday, the British economy will release important data starting with nationwide house prices for October, yet more focus will be at U.K. PMI manufacturing for Oct., due at 09:30 GMT, which is expected to show an ease in expansion to 50.0 from the 51.1 recorded in September. However, the main highlight of the day will be GDP advanced figures for the third quarter due at 09:30 GMT. The data may show that the U.K. expanded 0.3% in the third quarter compared with the 0.1% expansion in the second quarter, while on the annual basis the reading will record an expansion of 0.3 from the prior 0.6%. For the U.S., the main focus will be on ISM manufacturing for Oct., as of 14:00 GMT, which is predicted to show a widening expansion to 52.3 from 51.6 in September. Fundamentals from both economies is expected to have an impact on the pair’s movements as investors are now concentrating on the latest development in main sectors to see whether there is improvement in the fourth quarter after the sluggish growth pace which encountered global economies.

USD/CHF Technical Analysis for November 1, 2011

The USD/CHF rose during the Monday session as the 0.85 level continues to offer a psychological barrier for the sellers in this market. The pair is the inverse of the EUR/USDquite often, and as a result it rose as the EUR/USD fell. The Swiss National Bank is working against the rise of the Franc, so this move would certainly please them. The breaking of the daily candle from Thursday would be needed for us to get long again, as selling cannot be done with the present environment surrounding the SNB.

USD/CHF Fundamental Analysis for November 1, 2011

The pair rebounded for the second session amid worries regarding the implementation of the measures announced by European leaders last week. Investors are keeping an eye lid on any details concerning the debt deal, where further details may divulged in the coming European finance minister’s meeting on November 7-8. The outlook in the coming period will rely on the implementation of euro area officials to the measures announced last week to contain the debt crisis in addition to the monetary policy adopted by both Federal Reserve and ECB, Secretary General of the OECD Angel Gurria said. Eyes will be on the G-20 leaders as they meet in Cannes, France, on Nov. 3-4 to continue their discussions on the repercussions of the financial crisis on global markets. Gurria said world leaders should coordinate their efforts and policies to pass the current hurdle phase which is surrounded with uncertainties. Moreover, the dollar was boosted against major currencies after the BoJ’s third intervention on the FOREX market this year which took place on Monday. Amid interventions from central banks, concerns increase that world economies need a boost and thereby things are not going well. On Tuesday, the Swiss economy will release retail sales for the year ending Sep. at 07:15 GMT followed by PMI manufacturing for Oct., as of 07:30 GMT. In the U.S., the main focus will be on ISM manufacturing for Oct., as of 14:00 GMT, which is predicted to show a widening expansion to 52.3 from 51.6 in September. Data from both economies is expected to have an impact on the pair’s movements as investors are now concentrating on the latest development in main sectors to see whether there is improvement in the fourth quarter after the sluggish growth pace which encountered global economies.

EUR/CHF Technical Analysis for November 1, 2011

EUR/CHFfell on the session for Monday, and the first though someone has to have is that the Euro even managed to fall against the one currency that has its own central bank working against it. The pair has a “floor” at 1.20 as mandated by the Swiss National Bank, and doesn’t allow many to sell this pair, even though it has fallen again. With knowing all of this, we can’t sell from this level, and certainly can’t buy until there is confidence in Europe. At this point, there isn’t much – and as a result – this pair is very much neutral in our minds.

EUR/CHF Fundamental Analysis for November 1, 2011

The EUR/CHF pair remained biased to the downside with the start of the week as the euro lost the gains versus the dollar and the BoJ intervention affected the market. We still see that investors are not ready to replace their holdings for euro over the haven franc despite the SNB move. The pair is still reluctant to move and lacks major momentum and the focus remains on more from the European leaders and especially the G20 leaders this week to see what the outlook for the plan is since investors started to turn sceptic about the ability of the measures to contain the crisis. The data from the euro area reminded investors of the real weak economic situation at hand and accordingly the bets are still not favouring the euro over the franc. On Tuesday the lack of major fundamentals form the euro area will keep the weak momentum and appeal of the pair evident while focus turns to the data from Switzerland, though still for this week the main data from the Swiss economy will be the foreign reserves that define the SNB’s current movements. Switzerland will release the Retail Sales for the year to September at 08:15 GMT after the previous month it was reported with 1.9% drop. Also from Switzerland at 08:30 GMT we have the PMI Manufacturing for October hoping to see some improvement after the sector contracted the previous month as the index fell below 50 at 48.2.

AUD/USD Technical Analysis for November 1, 2011

The AUD/USD pairfell during the Monday session and even touched the 1.05 area that we have been watching so closely. The 1.05 level was once massive resistance, and it could now be support. The bounce wasn’t much, but it did hold. With the Reserve Bank of Australia meeting today, this pair could move quickly. The closing of the daily candle below the 1.05 level has us shorting this pair again, and a move up would have us buying again. Either way – trading on a central bank announcement can be bad news, so we will wait until after the session to let the market tell us where it “wants” to go.

AUD/USD Fundamental Analysis for November 1, 2011

The market has followed the BOJ’s intervention, which weakened after the Bank of Japan decided to enter the currency market to sell the yen over the rest currencies to stem the yen’s appreciation that recorded a fresh all time high against the American dollar. Meanwhile, the Australian dollar (Aussie) started the first trading day this week with a decline against its major counterparts on speculation that the Reserve Bank of Australia will cut the interest rates as the European crisis and slowing global growth weigh negatively on the economy. Higher yielding currencies continued their downside trend after investors shifted their investment to the dollar after the BOJ’s intervention which inclined sharply versus all major counterparts. On the other hand, IMF said that the global economy will enter a severe phase if European Leaders fail to control the crisis that threatens the recovery. Furthermore, the IMF also cut Australia’s 2012 growth forecast to 3.3% from the 3.5%. On Tuesday, the Australian economy will release critical economic data that have a medium and high impact on the Australian currency‘s movements, starting with the AiG Performance of Manufacturing Index at 22:30 GMT (Monday) after it recorded 42.3 the previous month. At 00:30 GMT Australia will release the quarterly reading for house price index for the third quarter, which had a prior reading of -0.1%. On the year it had a previous of -1.9%. At 03:30 GMT the RBA will announce the rate decision and the bank is expected to keep rates steady at 4.75%. At 05:30 GMT we have the monthly RBA Commodity Price Index for October that has a medium impact on the market, which had a previous reading of 115.4, along with the annual RBA Commodity Index SDR that inclined 26.6%. The U.S. economy will issue the Construction Spending for September at 14:00 GMT, where it’s expected to come at 0.3% from the prior reading of 1.4%. The ISM Manufacturing for October will be released at the same time, and expected at 52.3 from the previous reading of 51.6.

USD/CAD Technical Analysis for November 1, 2011

The USD/CAD pairrose on Monday as the Dollar got bought in mass by traders around the world. The “risk off” trade came back with a vengeance, and the USD/CAD rose as a result. The Canadian dollar is a “riskier currency” as it is tied to oil and with the oil markets falling – the CAD’s value fell as well. The pair is stopped just at the parity level, and this is considered to be our “line in the sand” in this pair. The daily close above this area has us long again, and the daily close below the Monday lows has us short again. Until then, we will watch the market and act accordingly.

USD/CAD Fundamental Analysis for November 1, 2011

The USD/CAD pair gained on Monday, as the U.S. dollar strengthened against major currencies after the Bank of Japan intervened in markets to weaken the Yen, which provided the U.S. dollar with strong bullish momentum, while jitters fromEuropecontinued to weigh down on higher yielding assets, which weighed down on the Canadian dollar. Better than expected growth in Canada as reported earlier on Monday supported demand for the Canadian dollar and pushed the USD/CAD pair to the downside, where Canada’s GDP expanded in August by 0.3% above median estimates, while compared with a year earlier, GDP expanded by 2.4% also above median estimates. Nonetheless, the worse than expected Chicago PMI spread pessimism again in markets, which pushed the U.S. dollar higher against the Canadian dollar. Traders will be eyeing the FOMC rate decision on Wednesday, where the majority of analysts expect the FOMC to leave the current monetary policy unchanged, while on Tuesday, traders will be following the ISM manufacturing index from the United States. Tuesday November 01: The United States will start the day at 14:00 GMT with the construction spending figures for September, with expectations that the index will expand by 0.3% from the previous 1.4% expansion. The ISM manufacturing will also be released at 14:00 GMT, where the indicator is expected to show improvement to 52.3 from 51.6 in October.

NZD/USD Technical Analysis for November 1, 2011

The NZD/USD got clobbered during the Monday session as the commodity markets all took a hit. The Kiwi is very sensitive to most commodities, and as a result it was always going to fall in value. The 0.8000 level still remains underneath, and would certainly be an area where the markets could offer massive support. The 0.79 area would have to be cleared to the downside in order for us to sell. If we can see a supportive candle, something like a hammer or large green one, near the 0.8000 level – we would buy.

NZD/USD Fundamental Analysis for November 1, 2011

The market has grabbed investors’ attention after the Bank of Japan intervened into the FOREX market to sell the yen, in another effort to stem the Yen’s gains that recorded a fresh all time high against the greenback, supporting the demand for US dollar over other currencies. New Zealand’s currency, nicknamed Kiwi, declined versus the American dollar after the NZ economy reported that its building permits index dropped in September by more than both the prior reading and the analysts’ forecasts. The New Zealand dollar continues to decline versus the American dollar as the demand on NZ’s currency was limited as investors followed the BOJ’s move, reducing demand on Kiwi. On Tuesday, at 21:45 GMT (Monday) NZD average hourly earnings for the third quarter is due after it recorded a 1.2% rise in the second quarter. The U.S. economy will issue the Construction Spending for September at 14:00 GMT, where it’s expected to come at 0.3% from the prior reading of 1.4%. The ISM Manufacturing for October will be released at the same time, and expected at 52.3 from the previous reading of 51.6.

 

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