Forex Technical and Fundamental Analysis for November 22, 2011

EUR/USD Technical Analysis for November 22, 2011

The EUR/USD pair fell during the session on Monday again, only to bounce again. The 1.35 area seems to be attracting massive buying and the pair simply will not stay under the 1.35 level for long. Because of this, we don’t sell this pair at the moment, and we certainly cannot buy it with the problems coming to the forefront against the Euro in general. If we want to sell the Euro, we need new lows. Or, we can just go ahead and sell it against a currency like the Yen.

EUR/USD Fundamental Analysis for November 22, 2011

The EUR/USD started a week with a lot of developments yet failed to escape the downside pressure and ongoing fear that kept the dollar favoured on its haven appeal.

The euro lost grounds even as we expected the new government in Spain to give the euro some support. The People’s Party won outright majority in the general elections and the new leadership that will take charge to the end of next month already promised more austerity and spending cuts to ensure fiscal health yet also promised to revive growth, something that should be positive to the market yet the ongoing pressures prevented that reaction.

Moody’s warned France of the worsening outlook and that it could lose its AAA rating, Hungary reflected southern European pain and applied for IMF aid and all ensured the spreading contagion. The US suppercommittee also failed to reach agreement on the debt cuts which all ended in a toxic effect on the sentiment and fuelled risk aversion.

Tuesday will see further volatility and choppy trading and we still hope for some relief from Europe which all depends on the outcome of the late meetings in Brussels as both Mario and Papademos independently head to meet EU officials to outline the new plans which we hope might offer any details the might calm investors and ease surging yields.

Spain also is scheduled to auction 3-month and 6-month bills which investors will track for the yields and will be cautious of any ECB action which as we saw last week kept supporting relief spikes from time to time. In terms of data there is nothing major from the euro area as the eyes will be on the US GDP which will further increase the volatility.

The euro zone will start the session at 15:00 GMT with the consumer confidence indicator for November in the advanced reading, where the indicator stood at -19.9 in the previous month.

At 13:30 GMT the United States will join the session with the GDP figures for the third quarter in a second reading, where the quarterly annualized GDP index could have lingered at 2.5%, while the personal consumption index could have stood at 2.4%, in the time GDP price index is expected unchanged at 2.5%. Finally, the quarterly core PCE is projected steady at 2.1%.

At 19:00 GMT the Federal Reserve will release the Minutes of FOMC last meeting.

USD/JPY Technical Analysis for November 22, 2011

The USD/JPY pair rose during the session on Monday, showing signs of support just below the 77 level. The candle from Friday was a hammer, and shows just how well supported this area could be for the pair. The Bank of Japan has been intervening in this pair over the last several months, and could be tempted to do it again if we drift lower from here. Because of that, we can’t sell, but the trend is firmly down – so we can’t buy at this point. We like buying much lower, around the 75 handle – a place where the BoJ might step in again.

USD/JPY Fundamental Analysis for November 22, 2011

The USD/JPY pair traded with thin volume near its lowest level in three weeks with the beginning of the week, where the yen and the dollar still have the market attention as safe haven currencies, which drove the pair to move in a limited range.

The merchandise trade balance in Japan recorded an unexpected deficit in October, as a result of the strong yen which eroded any recovery in the nation’s exports.

On the other hand, the Bank of Japan failed to offer any new clues during the last meeting, where investors found no new measures from the BOJ to prevent the yen from recording more gains against the dollar and other major currencies.

The EU debt crisis has a great pressure on the yen, where investors avert risk and head to low yielding funding currencies such as the yen which open the way for the Japanese currency to make profits.

On Tuesday at 13:30 GMT, the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where it’s expected unrevised at 2.5%.

The Personal Consumption for the third quarter is also expected unrevised at 2.4% as well as the Core Personal Consumption Expenditure to hold at 2.1%.

GBP/USD Technical Analysis for November 22, 2011

GBP/USD fell precipitously on Monday, just as expected. The Bank of England should be talking about more quantitative easing later this week, and as a result the cable pair has fallen. Add to that the fact that the UK is so heavily exposed to the EU, and the pair will be weak over time. The pair is just now hitting the top of support, but the real support lies in the 1.55 area, and we think this is where this pair goes. The 1.53 is below and could be supportive as well. Buying this pair isn’t possible yet, as we haven’t seen any signs of larger support yet.

GBP/USD Fundamental Analysis for November 22, 2011

The GBP/USD started the week on Monday under evident downside pressure, especially as the lack of major fundamentals fuelled the focus on ongoing debt developments in Europe and the U.S. which supported risk aversion and dollar strength.

The sentiment was weak with the start of trading as the supercommittee in the US failed to reach an agreement on how to cut the $1.2 trillion debt and the euro area continued to sink in its woes of rising yields and difficulty in accessing dollar funding, further assuring that the crisis is worsening.

France was warned by Moody’s and Hungary asked for IMF support all assuring the contagion is spread and that kept the sentiment negative and biased to dollar favour.

More downside pressure on sterling was after house prices dropped and Cameron said that UK is falling behind. Nevertheless, the prime minister did pledge more support to spur growth and a credit easing program to help companies finances and said Osborne will announce the details in the Autumn Statement scheduled for November 29 which if confirmed might offer some interim relief for UK that is struggling amid the downside pressure from the euro debt crisis and slowing global growth.

The volatility will continue to be evident on Tuesday on hope that action in the euro area might offer any relief for traders that are surely avoiding any term of risk. The UK data will add to the volatility with the budget figures and certainly the GDP data from the US will be closely watched and any change might fuel more pessimism.

At 09:30 GMT, public finance excluding interventions will be due with expectations referring to a narrowing in deficit to 6.6 billion pounds in Oct. from the prior 14.1 billion pounds.

In theU.S., the main focus will be on the main highlight of the week which is GDP annualized for the third quarter (second reading), which is predicted to remain unrevised at 2.5%, where it will be available at 13:30 GMT. Thereafter, the concentration will shift to minutes of the FOMC meeting due at 19:00 GMT.

USD/CHF Technical Analysis for November 22, 2011

The USD/CHF pair had a very quiet day on Monday as the resistance in the 0.93 area shows just how hard the next leg up could be in this pair. However, as the USD is the last safety trade available to currency traders, this pair is still primed to rise over time, and we would welcome pullbacks as buying opportunities as long as the 0.85 isn’t broken down through. The Swiss National Bank isn’t allowing the Franc to appreciate too much, so selling this pair is impossible at this point.

USD/CHF Fundamental Analysis for November 22, 2011

The week started with clear favours to the dollar amid mounting debt and growth woes that helped the USD/CHF maintain the upside bias.

The U.S. suppercommittee did not reach any agreement on cutting the debt and that means that the automatic spending cuts will come in action and might restrict the government’s efforts to stimulate growth amid the worsening outlook for the economy.

Further agony from Europe also weighed on the sentiment, especially after Moody’s warned France that the outlook might be worsening and it risks losing its top AAA rating.

The volatility remained evident and the M3 data from Switzerland did little to change the overview as it actually improved from the revised previous.

We still expect the choppy trading to continue on Tuesday with the eyes turning to the US GDP amid ongoing focus on any developments in Europe especially after Mario and Papademos head to Brussels to meet with EU officials.

At 06:00 GMT, the Swiss economy will release its most important data for the week which is trade data for Oct. with exports and imports during the month.

In theU.S., the main focus will be on the main highlight of the week which is GDP annualized for the third quarter (second reading), which is predicted to remain unrevised at 2.5%, where it will be available at 13:30 GMT. Thereafter, the concentration will shift to minutes of the FOMC meeting due at 19:00 GMT.

EUR/CHF Technical Analysis for November 22, 2011

EUR/CHF fell slightly during the Monday session as the Euro got hit against many of the world’s currencies. The pair is supported by the Swiss National Bank and its “floor” at the 1.20 level. Because of this, the downside in this pair is very limited, and it can only be bought at this point in time. However, the 1.25 level has been massive resistance. We like buying for a long-term buy and hold trade once we get clear of 1.25 or so. Until we get that, we aren’t trading this pair.

EUR/CHF Fundamental Analysis for November 22, 2011

The EUR/CHF held the tight trading range with a choppy trading session as the focused remained on the worsening state of the global economy.

Weak industrial figures from Japan started the day in fear and the downbeat news continued to stream of there leaving the pair without any appeal for investors, especially considering the fragile state of the euro.

Moody’s warned France of the worsening outlook and that it could lose its AAA rating, Hungary reflected southern European pain and applied for IMF aid and all ensured the spreading contagion. The US suppercommittee also failed to reach agreement on the debt cuts which all ended in a toxic effect on the sentiment and fuelled risk aversion.

Tuesday will see further volatility and choppy trading and we still hope for some relief from Europe which all depends on the outcome of the late meetings in Brussels as both Mario and Papademos independently head to meet EU officials to outline the new plans which we hope might offer any details the might calm investors and ease surging yields.

At 06:00 GMT, the Swiss economy will release its most important data for the week which is trade data for Oct. with exports and imports during the month.

The euro zone will start the session at 15:00 GMT with the consumer confidence indicator for November in the advanced reading, where the indicator stood at -19.9 in the previous month.

AUD/USD Technical Analysis for November 22, 2011

AUD/USD fell hard on Monday as traders continued to sell of the risk trade. The Aussie will always be sensitive to sentiment, and sentiment is poor at best lately. With this in mind, we sell rallies, and have no real interest in buying the Aussie at all. The area below is still in the massive support zone down to 0.95, and could produce pops in the market. Those we continue to be sold by us in the near-term.

AUD/USD Fundamental Analysis for November 22, 2011

The AUD/USD pair dropped to its lowest level in six weeks, as the US dollar gained against most of its major counterparts due to the risk aversion that controlled the FX market.

On the other hand, most of the global burses have ended last week with losses, which reduced demand for higher yielding assets such as the Aussie and increased demand for safe haven currencies.

On Tuesday at 13:30 GMT, the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where it’s expected unrevised at 2.5%.

The Personal Consumption for the third quarter is also expected unrevised at 2.4% as well as the Core Personal Consumption Expenditure to hold at 2.1%.

USD/CAD Technical Analysis for November 22, 2011

USD/CAD Fundamental Analysis for November 22, 2011

The USD/CAD pair rallied to the upside on Monday, where the U.S. dollar gained strong momentum against major currencies on mounting concerns over the fiscal health of the United States after the “supercommittee”, which is responsible for delivering budget cuts of at least $1.2 trillion over the next decade by Nov. 23, was reported to have failed to reach an agreement amid difference between Democrats and Republicans over raising tax revenues, while fears from Europe continued to dominate traders as well, which boosted demand for lower yielding assets, leading the U.S. dollar to rise and putting strong negative pressure on dollar denominated assets including gold.

Traders will continue to monitor the developments from Europe regarding the debt crisis, where rising yields in Europe suggest investors are concerned amid the uncertainty that is surrounding the outlook of the EU debt crisis. Traders will be also eyeing the latest developments regarding the budget deficit deal and whether U.S. lawmakers will be able to reach an agreement or not. Moreover, traders will be eyeing the second GDP estimate for the third quarter of this year from the United States, while finally, the FOMC Minutes are due to be released later on Tuesday. Canada meanwhile, will release the retail sales index for September.

The USD/CAD pair should still be able to rise if concerns from Europe continue to dominate global markets, but we still expect volatility to continue to dominate trading, especially as the credit rating outlook for the United States could be in jeopardy amid the failure to reach an agreement to reduce the deficit, and that should also lead to high levels of fluctuations for the USD/CAD pair. But overall, we expect the pair to extend its gains over the course of this week.

Tuesday November 22:

At 13:30 GMT, Canada will release the retail sales for September, where retail sales are expected rise by 0.5% in line with the prior rise in August, while retail sales excluding autos are expected to rise by 0.3%, compared with 0.4% in August.

At 13:30 GMT, the United States will join the session with the GDP figures for the third quarter in a second reading, where the quarterly annualized GDP index could have lingered at 2.5%, while the personal consumption index could have stood at 2.4%, in the time GDP price index is expected unchanged at 2.5%. Finally, the quarterly core PCE is projected steady at 2.1%.

At 19:00 GMT the Federal Reserve will release the Minutes of FOMC last meeting.

NZD/USD Technical Analysis for November 22, 2011

NZD/USD fell on the day Monday as traders sold off riskier assets around the globe. The situation in the EU still concerns the markets, and as long as it does – the Kiwi will be hard to own as the currency is so risk-sensitive. The 0.75 level has been violated, and if we break below the lows on Monday, we think this pair could go much lower. The later hours of the session did produce a bounce of sorts, but very shallow. The next 100 pips in this pair could be the most important for the next several weeks.

NZD/USD Fundamental Analysis for November 22, 2011

The NZD/USD pair continued its free fall to reach its lowest level in six weeks, with the focus turned to low-yielding currencies such as the yen and greenback, making it hard for the Kiwi to compete.

The EU sovereign debt crisis eroded investors’ confidence and turned the market sentiment to safe haven assets, where the New Zealand dollar lost momentum with the ongoing risk aversion.

On the other hand, the New Zealand currency lost the local support after concerns increased regarding the nation’s current account deficit, in addition to the decline in raw material demand from China is considered the number one trade partner for New Zealand.

On Tuesday at 02:00 GMT the Reserve Bank of New Zealand will release the 2-year Inflation Expectations for the fourth quarter, where the previous reading was 2.9%.

At 13:30 GMT, the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where it’s expected unrevised at 2.5%.

The Personal Consumption for the third quarter is also expected unrevised at 2.4% as well as the Core Personal Consumption Expenditure to hold at 2.1%.

At 19:00 GMT, the Federal Reserve Bank will release its minutes for the Nov. 1-2 FOMC meeting.

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