Forex Technical and Fundamental Analysis for November 23, 2011

EUR/USD Technical Analysis for November 23, 2011

EUR/USD continues to be the epicentre of the storm as traders went back and forth on Tuesday. The pair rose during the session, but finished the day to form a shooting star at the 1.35 area. The pair is decidedly bearish, but there seems to be a ton of support between 1.35 and 1.34 – based upon the bounces that we have seen. The debt markets in the EU continue to weigh heavily on this pair, but the grind lower have been very slow and brutal. If you are to short this pair, be prepared to be very patient. A bounce in this pair invites more selling if we get it.

EUR/USD Fundamental Analysis for November 23, 2011

The EUR/USD fluctuated on Tuesday in cautious trading, yet mainly was biased to the upside on eased jitters and a needed relief for the pair.

The correctional movements were generally seen across the board as investors saw the confirmed steady rating for the U.S. and the ongoing efforts in Europe to contain the crisis as some room for relief, not on good news, yet on the lack of major downbeat news.

The outlook has not changed dramatically yet we can see caution across the board on the needed correction, where the debt crisis is ongoing and Spain short-term bills auction on Tuesday resembled the headwinds with record yields.

Investors are holding their horses and await some comments from the meetings in Brussels and Monti and Papademos meet European officials on Tuesday with hope for remarks to be seen my Wednesday.

Germany will start the session at 08:30 GMT with the PMI manufacturing and service for November in an advanced reading, where the PMI manufacturing is expected to decline further to 48.4 from 49.1, while the PMI services could have slipped to 50.0 from 50.6.

At 09:00 GMT the euro zone will join the session with the PMI Composite for November in an advanced reading, as the PMI composite is expected to contract further reaching 46.2 from 46.5, while the PMI manufacturing could have contracted further to 46.5 from 47.1, in the time the PMI service is expected lower at 46.0 from 46.4.

At 10:00 GMT the euro zone will provide the industrial new orders figures for September, where the non-seasonally adjusted annual index could have expanded by 8.0% from 6.2%, while the seasonally adjusted monthly index could have dropped by 2.6% from 1.9%.

At 13:30 GMT the United States will join the session with the durable goods figures for October, where durable goods orders could have fallen 1.0% from the previous drop of 0.8%, while durable goods excluding transportation index is expected unchanged, noting that the previous expansion was 1.7%.

TheUnited Stateswill also release the income report at 13:30 GMT, with expectations that the personal income index could have improved 0.3% from 0.1%, while the personal spending index could have expanded by 0.3% from 0.6%. Furthermore, the annual PCE Deflator could have expanded by 2.7% from 2.9%, while the monthly PCE core could have improved 0.1% from the previous zero expansion, in the time the annual PCE core is expected higher at 1.7% from 1.6%.

In addition, the United Stateswill provide markets with the initial jobless claims figure for the 19th of November, where the number of claims could have eased to 385 thousands from 388 thousand.

At 14:55 GMT the United States will end the session with University of Michigan confidence for November in a final reading, where the confidence could have improved slightly to 64.5 from 64.2.

USD/JPY Technical Analysis for November 23, 2011

USD/JPY rose during the session on Tuesday, only to fall again and form a shooting star at the close. The pair is decidedly bearish, and as a result, traders took the spike upwards during the session as a chance to sell the pair again. The Bank of Japan is sitting below, so long-term sell and holds are going to be very difficult. However, rallies can be sold in this pair as it simply will not stop falling. The pair could be intervened in by the BoJ again, but not likely until we get close to 75.

USD/JPY Fundamental Analysis for November 23, 2011

The USD/JPY pair gained early Tuesday as the credit ratings agencies confirmed the steady rating for the United States despite the impasse at the supercommittee, which increased risk appetite in the financial market and reduced demand for safe haven.

The pair’s upside movement did not last for long, as the U.S. congress still failed to reach a decision which fuels uncertainty over the government’s ability to support weak growth as the downside pressure from the debt crisis in Europe grows.

Investors also remain jittery amid the critical situation in Europe as they watch the next step from officials and eye surging borrowing costs that threatens the spill of the crisis into other economies including Spain and France for now.

On Wednesday at 13:30 GMT, the U.S. economy will release the Durable Goods Orders for October, which is expected to come at –1.0% from the previous –0.8%.

Also the Personal Income for October will be released at the same time and expected to improve to 0.3% from 0.1% while the U.S. Personal Spending is expected to slow to 0.3% from 0.6%.

The annual Personal Consumption Expenditure Core for October is expected to come at 1.7% compare to the previous reading of 1.6%.

At 13:30 GMT, the U.S. economy will issue its weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance fell to 388 thousand last week.

Finally, the U.S. economy will release the University of Michigan Confidence for November at 14:55 GMT, where the final reading is expected to come at 64.5 from the prior reading of 64.2.

GBP/USD Technical Analysis for November 23, 2011

The GBP/USD pair had a wild day on Tuesday, swinging back and forth between gains and losses, only to print a long-legged doji at the end of the day. The pair is decidedly bearish at the moment, and the 1.55 level does in fact seem to be calling. However, a bounce could come as the support actually starts at the 1.56 level, and the market has been very volatile lately – adding to the odds of a bounce. The pair should be sold on rallies in our opinion, and will continue to suffer at the hands of the “risk off” attitude of the markets.

GBP/USD Fundamental Analysis for November 23, 2011

On Tuesday trading, the pair showed decline for the second day, despite the improvement in the general sentiment, on expected boost in the Asset Purchase facility by the BoE to spur economic growth and after the release of downbeat U.S. growth data and

The recovery in risk appetite damped demand on the dollar as a safe haven earlier on Tuesday as the three top rating agencies S&P, Moody’s and Fitch kept their rating for the U.S. unchanged despite the failure of the Congress to reach an agreement on budget cuts, where the spending reduction will be at $1.2 trillion.

However, the pound weakened on expectations the BoE minutes, due on Wednesday, will show that the bank is ready to pump more money to bolster the anemic growth. David Cameron mentioned on Monday that theU.K.is “well behind” where it needs to be on economic growth.

The pound retreated despite the data showing thatU.K.’s budget deficit narrowed in October on the back of the cut in spending, especially at government departments. Net borrowing excluding support for banks slipped to 6.5 billion pounds from the revised 13.0 billion pounds and 7.7 billion pounds a year earlier. Yet, net debt jumped to 966.6 billion pounds, or 62.3 per cent of gross domestic product, to put pressure on the government that aims to slash the deficit of 9 per cent of economic output by the year 2015.

In theU.S., growth data missed analysts forecasts as the second estimate for the annualized Gross Domestic Product for the third quarter of 2011 was downwardly revised to 2.0% from the compared with the first reading and median estimates of 2.5%.

Meanwhile, the main focus this week has shifted to theU.S.after remaining on the euro zone over the past few weeks. Yet, investors remain alert to the latest developments in the euro area especially amid the political changes encountering some of the region’s highly indebted countries.

Standard & Poor’s rating agency said the results of the Spanish general elections which witnessed the win of the Popular party with an overwhelming majority will not affect the country’s credit rating, yet it maintained its negative outlook due to the bad economic situation.

On Wednesday, attention will be toward BoE minutes, due at09:30 GMT, which may show a split among policy makers as some may have supported more stimulus to boost the economy amid the sluggish recovery pace. At the same time, U.K. BBA loans for house purchase for the month of Oct. will be released.

For theU.S., eyes will be on MBA mortgage applications for Nov. 18 at12:00 GMTwhile will be followed by durable goods and personal spending at13:30 GMT. Durable goods report is predicted to show a drop of 1.0% in Oct. from the prior 0.8% drop, while personal spending will signal a drop to 0.3% in Oct. from 0.6% in Sep.

Due to thanks giving holiday on Thursday, initial jobless claims for the week ending Nov. 19 and continuing claims for the week ending Nov. 11 will be available at13:30 GMT. Thereafter, at14:55 GMT,UniversityofMichiganconfidence will show a rise to 64.5 in Nov. from the prior 64.2.

USD/CHF Technical Analysis for November 23, 2011

The USD/CHF pair fell slightly during the session on Tuesday, but did bounce slightly during the later hours of the session in US trading. The area above is the recent highs, and will be resistive. However, the bullish momentum is great, and we expect it to break above that area. (0.93 or so.) If it does – the trend has changed. The USD is the last “safe haven currency” now, and as a result – a move up from here makes perfect sense to us. We like buying dips until we break below the 0.85 level.

USD/CHF Fundamental Analysis for November 23, 2011

On Tuesday, the pair showed some decline with the improvement in the general sentiment and after the release of upbeat Swiss trade data.

The recovery in risk appetite damped demand on the dollar as a safe haven as the three top rating agencies S&P, Moody’s and Fitch kept their rating for the U.S. unchanged despite the failure of the Congress to reach an agreement on budget cuts, where the spending reduction will be at $1.2 trillion.

The main focus this week has shifted to theU.S.after remaining on the euro zone over the past few weeks. Yet, investors remain alert to the latest developments in the euro area, especially amid the political changes encountering some of the region’s highly indebted countries.

Standard & Poor’s rating agency said the results of the Spanish general elections which witnessed the win of the Popular party with an overwhelming majority will not affect the country’s credit rating, yet it maintained its negative outlook due to the bad economic situation.

Also inSpain, the Spanish Treasury sold 3 billion euros of short-term bills today with yields rising again to records.Spainsold 0.97 billion euros of 6-month bills, where the yields climbed to 5.227% from 3.302% in the last auction that took place in October. Also, 2.01 billion euros of 3-month treasury bills with yields of 5.11% from 2.292% a month earlier were sold.

Moreover, data fromSwitzerlandshowed improvement as Swiss trade surplus widened to 2.15 billion francs from 1.85 billion francs in September. Exports rose 1.3% from a revised of 4.3%, while imports soared 1.4% compared with a revised of 0.7%.

On the other hand, data from theU.S.showed deterioration as the second estimate for the annualized Gross Domestic Product for the third quarter of 2011 was downwardly revised to 2.0% compared with the first reading and median estimates of 2.5%.

On Wednesday, eyes will be on MBA mortgage applications for Nov. 18 at12:00 GMTwhile will be followed by durable goods and personal spending at13:30 GMT. Durable goods report is predicted to show a drop of 1.0% in Oct. from the prior 0.8% drop, while personal spending will signal a drop to 0.3% in Oct. from 0.6% in Sep.

Due to thanks giving holiday on Thursday, initial jobless claims for the week ending Nov. 19 and continuing claims for the week ending Nov. 11 will be available at13:30 GMT. Thereafter, at14:55 GMT,UniversityofMichiganconfidence will show a rise to 64.5 in Nov. from the prior 64.2.

EUR/CHF Technical Analysis for November 23, 2011

EUR/CHF fell during the session on Tuesday as traders bought the Franc against many currencies. At the moment, this pair really isn’t tradable as the overhead resistance at the 1.25 level seems very strong, and the SNB has been very active in working against the value of the Franc. With this in mind, we are simply waiting for the 1.25 level to be closed above, and then we would be willing to buy this pair for the long term. Until then – we can only watch.

EUR/CHF Fundamental Analysis for November 23, 2011

The EUR/CHF continues the tight ranged trading and was biased mainly to the downside since the beginning of the week with the ongoing euro crisis and needed correction as the pair is comfortable trading above 1.20 floor.

The pair’s movement is not connected to the euro news as much as to the sentiment and the weaker dollar gave the franc a boost to attempt to correct some of the recent losses after surging from around 1.22 areas towards 1.24 areas and with the expectations for the SNB to raise the floor to 1.25 losing momentum the pair has space to move south to test SNB waters, yet in a clearly cautious and tight ranged move.

We continue to monitor the developments from Switzerland and the euro area to see if there is any major change in the sentiment that might affect the outlook for the pair or help the euro recover some losses as otherwise the franc remains the winning bet.

Germany will start the session at 08:30 GMT with the PMI manufacturing and service for November in an advanced reading, where the PMI manufacturing is expected to decline further to 48.4 from 49.1, while the PMI services could have slipped to 50.0 from 50.6.

At 09:00 GMT the euro zone will join the session with the PMI Composite for November in an advanced reading, as the PMI composite is expected to contract further reaching 46.2 from 46.5, while the PMI manufacturing could have contracted further to 46.5 from 47.1, in the time the PMI service is expected lower at 46.0 from 46.4.

At 10:00 GMT the euro zone will provide the industrial new orders figures for September, where the non-seasonally adjusted annual index could have expanded by 8.0% from 6.2%, while the seasonally adjusted monthly index could have dropped by 2.6% from 1.9%.

AUD/USD Technical Analysis for November 23, 2011

AUD/USD fell again on Tuesday, albeit only by a small amount. The pair looks vulnerable at the moment, and the “risk off” attitude of the global markets will not be very conducive to the buying of the Aussie dollar. However, we do see a lot of support between present levels and the 0.95 level, and therefore will be selling rallies, not shorting here. Buying isn’t possible with all of the headline risks out there presently.

AUD/USD Fundamental Analysis for November 23, 2011

The AUD/USD pair witnessed some gains after more that three weeks of losses, where the greenback lost momentum against most of its major counterparts, opening the way for the Aussie to record more gains.

The risk aversion eased after the credit ratings agencies confirmed the steady rating for the United States despite the impasse at the supercommittee, which increased risk appetite in the financial market and reduced demand for safe haven.

On Wednesday at 23:00 GMT (Tuesday), the Australian economy will release the Conference Board Leading Index for September, where it had a previous reading of –0.1%.

At 00:30 GMT, Australia will issue the Construction Work Done for the third quarter, which had a prior reading of 0.7%.

On Wednesday at 13:30 GMT, the U.S. economy will release the Durable Goods Orders for October, which is expected to come at –1.0% from the previous –0.8%.

Also the Personal Income for October will be released at the same time and expected to improve to 0.3% from 0.1% while the U.S. Personal Spending is expected to slow to 0.3% from 0.6%.

The annual Personal Consumption Expenditure Core for October is expected to come at 1.7% compare to the previous reading of 1.6%.

At 13:30 GMT, the U.S. economy will issue its weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance fell to 388 thousand last week.

Finally, the U.S. economy will release the University of Michigan Confidence for November at 14:55 GMT, where the final reading is expected to come at 64.5 from the prior reading of 64.2.

USD/CAD Technical Analysis for November 23, 2011

USD/CAD fell during the session on Tuesday, but did manage to bounce a bit to form a hammer at the top of the recent upward move. This suggests that more buying could be coming, and the breaking above the 1.03 level really was a bullish sign. The pair will move with the safety trade, and as long as the markets are nervous – it will favour the upside. Also, oil markets can often dictate the value of the Canadian dollar as well, and falling oil prices would put further upward pressure on this pair. We are willing to buy and hold on a breakout above the 1.07 level, and like buying pullbacks above the 1.03 level.

USD/CAD Fundamental Analysis for November 23, 2011

The USD/CAD pair fell on Tuesday, as fears eased over the outlook of the U.S. budget after rating agencies Standard & poor’s and Moody’s Investors Service confirmed they won’t downgrade the credit rating of U.S. debt, which overshadowed the slower than expect growth in U.S. GDP, where the U.S. economy expanded in the third quarter by 2.0% down from the prior estimate of 2.5%.

Moreover, Canada released the retail sales index for September, as retail sales rose by 1.0%, above median estimates of 0.5%, while retail sales excluding autos rose by 0.5%, also above median estimates of 0.4%, which provided the Canadian dollar with bullish momentum that pushed the USD/CAD pair to the downside.

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 how U.S. lawmakers will tackle the budget deficit. Moreover, traders will be eyeing the income report, which is expected to show that personal income and spending continued to improve in October, while the University of Michigan confidence index is expected to show slight improvement in November.

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, as a flurry of data is due to be released on Wednesday ahead of the Thanks Giving holiday on Thursday, and that could 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.

Wednesday November 23:

At 13:30 GMT the United States will join the session with the durable goods figures for October, where durable goods orders could have fallen 1.0% from the previous drop of 0.8%, while durable goods excluding transportation index is expected unchanged, noting that the previous expansion was 1.7%.

TheUnited Stateswill also release the income report at 13:30 GMT, with expectations that the personal income index could have improved 0.3% from 0.1%, while the personal spending index could have expanded by 0.3% from 0.6%. Furthermore, the annual PCE Deflator could have expanded by 2.7% from 2.9%, while the monthly PCE core could have improved 0.1% from the previous zero expansion, in the time the annual PCE core is expected higher at 1.7% from 1.6%.

In addition, the United Stateswill provide markets with the initial jobless claims figure for the 19th of November, where the number of claims could have eased to 385 thousands from 388 thousand.

At 14:55 GMT the United States will end the session with University of Michigan confidence for November in a final reading, where the confidence could have improved slightly to 64.5 from 64.2.

NZD/USD Technical Analysis for November 23, 2011

The NZD/USD pair fell again on Tuesday, but did manage to bounce a bit towards the end of the session. The pair is sitting just below the all-important 0.75 level at the close. With this in mind, a bounce isn’t impossible, but would more than likely be considered an excuse to sell this pair off again. The pair is highly risk-sensitive, and as a result will more than likely continue the downward grind over time, but will give bounces as opportunities to sell even more. The pair has made a fresh low during the session, and as a result looks very weak at the moment.

NZD/USD Fundamental Analysis for November 23, 2011

The NZD/USD pair traded in a range early Tuesday despite the US dollar’s slight decline against other major currencies, where the inflation expectations for the New Zealand economy fuelled expectations that the RBNZ will keep the rates steady till the end of the year.

The two-year inflation expectations for New Zealand indicated that inflation risks are slowing which could help the Reserve Bank of New Zealand to keep the rate steady in the upcoming period, which reduced demand for the Kiwi and prevented the chance for recovery as seen in the market on the advantage of a softer dollar in Asian trading.

On Wednesday at 13:30 GMT, the U.S. economy will release the Durable Goods Orders for October, which is expected to come at –1.0% from the previous –0.8%.

Also the Personal Income for October will be released at the same time and expected to improve to 0.3% from 0.1% while the U.S. Personal Spending is expected to slow to 0.3% from 0.6%.

The annual Personal Consumption Expenditure Core for October is expected to come at 1.7% compare to the previous reading of 1.6%.

At 13:30 GMT, the U.S. economy will issue its weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance fell to 388 thousand last week.

Finally, the U.S. economy will release the University of Michigan Confidence for November at 14:55 GMT, where the final reading is expected to come at 64.5 from the prior reading of 64.2.

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