Forex Technical and Fundamental Analysis for November 29, 2011

EUR/USD Technical Analysis for November 29, 2011

The EUR/USD pair rose initially during the Monday session as the rumour mill started out in full force over the weekend. Stories of supposed IMF bailouts of Italy and other such rumours pushed the value of the Euro higher. However, the end of the session saw that the Euro had pulled back massively. The ending daily candle printed as a shooting star, and it looks like the pair is weakening yet again. The pair still looks destined to reach 1.31, and we are selling rallies at this point in time. We simply will not buy the Euro under any circumstances at the moment.

EUR/USD Fundamental Analysis for November 29, 2011

The week started on Monday with a generally good run for the euro and improved market sentiment which was rather more an explanation to desperately needed relief after heavy selloff.

Investors saw hope that Europe is moving forward in containing its crisis. The spark was an unconfirmed report in Italian news paper La Stampa that the IMF is creating 600 billion euros loan for Italy with interest rate around 4 to 5 per cent if the crisis worsened. The triggered helped the market open with a bullish gap yet soon after started to lose momentum after Italy and the IMF denied the report.

Nevertheless, the support was still seen with progress being felt on the EFSF where a draft according to media reports suggested that the facility might as soon as possible start to raise funds to allocate around 10 billion euros in emergency reserves to respond timely to any emergency for any nation and also might go forward in securing 20 to 30 per cent of debt laden nations debt auction which will be in the form of tradable partial protection securities and will offer to expand the EFSF standing firepower by three times.

Those measures were presented to the finance ministers that are expected to start debating them on Tuesday when they meet in Brussels. The details will continue to flow our way and the relief rally needs more support from the finance ministers which will remain the focus on Tuesday.

They are expected to also discuss the next trance of 8.0 billion euros for Greece and that might also if approved help ease the tension over the political uncertainty in Greece over the opposition party’s stance.

We still see unstable market conditions evident especially after the OECD provided a bleak outlook for the global economy on the back of the debt crisis as stated that the euro area might already be in a mild recession.

In terms of fundamentals for Tuesday the euro zone will start the day at 10:00 GMT with the European Confidence data for November, where the business climate indicator could have dropped further to 0.23 from 0.18, while the consumer confidence final reading is expected to linger at -20.4, in the time the economic confidence could have retreated slightly to 94.0 from 94.8.

The industrial confidence is expected lower at -7.0 from -6.6, while the services confidence is expected to linger at 10.2.

TheUnited Stateswill join the session at 14:00 GMT with the S&P/CS 20 report for September, where the monthly S&P/CS 20 City index is projected to remain steady compared with the previous drop of 0.05%, in the time the annual S&P/CS composite-20 could have dropped 3.00% from the previous drop of 3.80%.

At 15:00 GMT the United States will announce the consumer confidence for November, with expectations it could have improved to 44.4 from 39.8.

As we said the data is not the highlight but the sentiment and the euro area finance ministers meeting in Brussels will be still the main focus for investors and accordingly choppy trading and volatility might return to be evident on the pair and might end the relief rally soon if they disappoint the market again with no conclusions.

USD/JPY Technical Analysis for November 29, 2011

The USD/JPY pair rose during the “risk on” rally Monday, but gave up some of their best gains towards the end of the session. The pair has come under pressure anytime it has risen, and we think that theme should continue going forward. In fact, it would take a rally to above the 80 handle for us to consider buying this severely beaten down currency pair. With this in mind, we are fading rallies and not buying at all.

USD/JPY Fundamental Analysis for November 29, 2011

The USD/JPY with strong movements and choppy trading as some hope was seen that Europe might act to stem the crisis which eased demand on haven currencies and on the Japanese yen.

With the current market sentiment, the risky assets have no reason to advance yet only move on the prevailing sentiment and the start on Monday was a good one for investors; the EU debt crisis still has it negative effect on other economies in addition to the pessimistic fundamental released about major economies. Nevertheless, comments from Japan hinting further intervention further weakened the yen.

On Tuesday at 23:30 GMT (Monday), Japan will release the annual Household Spending for October which had a prior reading of –1.9%. As for the Japanese Jobless Rate for October it had a previous reading of 4.1%.

At 23:30 GMT the Japanese economy will release the annual Retail Trade for October with a prior reading of –1.2%, while the seasonally adjusted Retail Trade for October it had a prior reading of –1.5%.

The U.S. economy will release the Consumer Confidence of November at 15:00 GMT, with a prior reading of 39.8 and it’s expected to come at 43.5. While the House Price Index for September it had a prior reading of –0.1%.

GBP/USD Technical Analysis for November 29, 2011

GBP/USD initially rose during the Monday session as hope sprung eternal in the markets. The rumours of EU fixes came back to the forefront, and the expectations came into play as the world sold off the Dollar. The pair smashed through the 1.55 resistance level, and looked very bullish at first. However, as the session wore on, the markets started to sell off the Pound, and the daily candle is a shooting star, and closing in the vicinity of the 1.55 level again. This is a very bearish turn of events, and we are willing to sell again if we can break through the bottom of the Monday range. We are not buying cable at this point.

GBP/USD Fundamental Analysis for November 29, 2011

On Monday, the pair rebounded after showing a significant drop over the past four weeks in the wake of the turbulences from the euro area which enhanced demand on the dollar as a refuge.

With some optimism and hopes that European leaders will intensify their efforts to ease the debt crisis, the pair showed a drop.

On Nov. 29, European finance ministers will meet to discuss the capability of the EFSF to insure from 20 per cent to 30 per cent of sovereign bonds, while will show that Greece will receive the next tranche of last year’s 110 billion euros aid package.

Also, Italian newspaper La Stampa mentioned that the IMF is preparing for a rescue fund forItalythat may reach up to 600 billion euros.

However, the pound gains were affected by the British Chambers of Commerce cut toU.K.growth forecasts and OECD predictions.

The BCC lowed growth forecasts to 0.8% and 0.9% this year and next instead of the prior estimates of 1.1% and 2.1% respectively.

The OECD, on the other hand, said the British economy will expand 0.5% next year and 1.8% the year after.

It is more likely that policy makers would expand non-standard measures by 125 billion pounds to raise its sum to 400 billion pounds in early 2012 to spur the weak growth pace to overcome the slowdown in global growth and turbulences from the euro area, according to the OECD.

On Tuesday, at 09:30 GMT, mortgage approvals, M4 money supply and net lending for Oct. will be due. At 23:01 GMT, theUKwill release Gfk consumer confidence for Nov. with expectations of seeing a drop to -34 from -32.

In theU.S., the main focus will be housing data starting with S&P/caseShiller, due at 14:00 GMT, followed by new home sales due at 14:00 GMT. At 15:00 GMT, consumer confidence is expected to soar to 44.4 in Nov. from 39.8.

USD/CHF Technical Analysis for November 29, 2011

The USD/CHF fell as traders sold off the Dollar around the world. The “risk on” trade is decidedly Dollar negative, and as a result, the pair fell. However, the pair didn’t manage any significant move down, and the daily candle is a bit of a hammer at resistance. (Not the best looking one, but certainly the same shape.) The 0.92 area offered support, and we feel that this pair should continue to rise over the longer term. The pair is a great example of a “buy the dips” market presently, as the Swiss National Bank is working against an appreciating Franc, and the Dollar is the last safe haven currency left.

USD/CHF Fundamental Analysis for November 29, 2011

On Monday trading, the pair showed a downside correctional movement after falling over the past four weeks on the back of the turbulences from the euro area which enhanced demand on the dollar as a refuge.

With some optimism and hopes that European leaders will intensify their efforts to ease the debt crisis, the pair showed a drop.

On Nov. 29, European finance ministers will meet to discuss the capability of the EFSF to insure from 20 per cent to 30 per cent of sovereign bonds, while will show that Greece will receive the next tranche of last year’s 110 billion euros aid package.

Also, Italian newspaper La Stampa mentioned that the IMF is preparing for a rescue fund forItalythat may reach up to 600 billion euros.

Moreover, last week, the OECD said it expects the franc’s advance against the euro to curb exports and growth as well as raise unemployment. The OECD expects the SNB to raise the borrowing cost gradually by the end of next year.

Swiss National Bank President Philipp Hildebrand said in an interview on Monday the franc is still “highly valued,” highlighting that “Europe now faces a difficult crisis, and sinceSwitzerlandis embedded inEurope, the coming years will be difficult.”

Thomas Jordan, SNB Vice President, saidSwitzerlandstill risks relapsing into recession despite the intervention in September when the bank put a cap on the franc against the euro at 1.20, noting that the bank is ready to act if the franc’s appreciation weighed on growth prospects.

On Tuesday, as of 07:00 GMT, the Swiss economy will release UBS consumption Indicator for the month of Oct., yet the release is expected to have slight impact on the pair’s movements.

In theU.S., the main focus will be housing data starting with S&P/caseShiller, due at 14:00 GMT, followed by new home sales due at 14:00 GMT. At 15:00 GMT, consumer confidence is expected to soar to 44.4 in Nov. from 39.8.

This week the main focus will be the infamous jobs report in theUnited Statesas well as housing, manufacturing and confidence data. On the flip side, the Swiss economy will release important data such as 3q GDP, retail sales and PMI manufacturing.

EUR/CHF Technical Analysis for November 29, 2011

EUR/CHF fell during the session on Monday as the Euro rose against almost all other currencies. The pair is supported by the Swiss National Bank, and as it couldn’t rise – shows just how weak the Euro is in general. The rise in the other pairs was pared back by the end of the session, and this pair looks like it is signaling a further decline in the overall value of the Euro. With the SNB having a “floor” at 1.20, we aren’t in this pair at the moment, but do use it as a barometer of underlying Euro strength or weakness.

EUR/CHF Fundamental Analysis for November 29, 2011

The EUR/CHF continued to fluctuate heavily on Monday with the mixed market sentiment and evident reconsideration ahead of the euro area finance ministers which forced them to remain cautious yet still cut their exposure on the euro on a needed correction and supported by hopes that they might be moving forward at least in finding a solution.

The pair declined yet after opening with a bullish gap and the coverage was merely normal as both the euro and the franc remain weak. We can surely see the rumours that suddenly emerged late Friday for direct SNB action to lift the floor to 1.25 wane especially after the SNB settled for stating that the economy faces a tough period and the bank is ready to act yet still did not take the expected action.

The OECD also stated that evident downside pressures are seen on the Swiss economy from the rising franc with slowing export growth and deflation threat and expected the SNB to keep rates near zero and remain ready to expand its liquidity operations and possibly raise the floor to protect the economy from deflation and further vulnerability which accordingly keeps the upside favour for the pair intact and makes the 1.25 look closer to the market.

On Tuesday we expect trading to remain choppy with the market turning to the euro area finance ministers meeting in Brussels with hope they can finalise the details of the EFSF. A draft according to media reports suggested that the facility might as soon as possible start to raise funds to allocate around 10 billion euros in emergency reserves to respond timely to any emergency for any nation and also might go forward in securing 20 to 30 per cent of debt laden nations debt auction which will be in the form of tradable partial protection securities and will offer to expand the EFSF standing firepower by three times.

As of 07:00 GMT, the Swiss economy will release UBS consumption Indicator for the month of Oct., yet the release is expected to have slight impact on the pair’s movements.

The euro zone will start the day at 10:00 GMT with the European Confidence data for November, where the business climate indicator could have dropped further to 0.23 from 0.18, while the consumer confidence final reading is expected to linger at -20.4, in the time the economic confidence could have retreated slightly to 94.0 from 94.8.

The industrial confidence is expected lower at -7.0 from -6.6, while the services confidence is expected to linger at 10.2.

The euro area finance ministers meeting in Brussels will be the highlight for our session.

AUD/USD Technical Analysis for November 29, 2011

The AUD/USD pair surged during the Monday session as rumours flew around the marketplace of bailouts and promises of IMF money for Italy. Even after the IMF denied this rumour, there were other hopes of various fixes. The markets then ran up to just under parity, and it was at that point that the sellers came back into the market. The selling was fairly strong, and it appears that we are going to struggle to get above that parity level. The market seems to have retained its bearish tone at this point, and as such we are selling rallies in the AUD/USD.

AUD/USD Fundamental Analysis for November 29, 2011

The AUD/USD surged early Monday on hope that Europe will present something this week to contain the crisis.

Most of the equities indices around the world witnessed losses during the last period, as the uncertainty regarding the global economy outlook and EU debt crisis eroded confidence from the financial market. Nevertheless, with the need for correction and broad rebounds in early trading on Monday with commodities and equities turning higher aussie found the needed room for correctional relief.

On Tuesday at 00:00 GMT the Australian economy is to issue the HIA New Home Sales for October, where the previous reading was down by 3.5%.

The U.S. economy will release the Consumer Confidence of November at 15:00 GMT, with a prior reading of 39.8 and it’s expected to come at 43.5. While the House Price Index for September had a prior reading of –0.1%.

USD/CAD Technical Analysis for November 29, 2011

The USD/CAD pair fell fairly hard during the Monday session as the oil markets took off. The “risk off” trade also added to the selloff in the Dollar, and as a result this pair had to fall. The 1.03 level held as support though, and the oil markets did sell off significantly in the afternoon New York time. The pair still looks bullish at this point, and the 50 pip bounce in the late part of the day certainly does nothing to dissuade that opinion. We are still buyers of dips at this point.

USD/CAD Fundamental Analysis for November 29, 2011

The USD/CAD pair extended its losses on Monday amid reports EU leaders are discussing strong measures to ease the European debt crisis, which pushed the U.S. dollar sharply lower against major currencies, providing the Canadian dollar with strong momentum to push the USD/CAD pair to the downside as a result.

Fears from Europe eased over the weekend after a report suggested the International Monetary Fund was working on a plan to help Italy, although the IMF denied any negotiations with Italy. Nonetheless, traders were optimistic that EU leaders are working on drastic measures to ease mounting concerns in markets over the outlook of the European debt crisis.

Moreover, the new home sales index was released from the United States for October, where new home sales rose by 1.3% to an annual rate of 307,000 units, compared with the prior estimate of 303K, but below median estimates of 315,000 units.

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. The EU finance ministers will meet on Tuesday in Brussels, where expectations signal that they will announce details of their plan to increase the firepower of the European Financial Stability Facility EFSF fund.

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 uncertainty remains the dominant theme in markets, 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 coming period.

Tuesday November 29:

Canada will release the current account for the third quarter at 13:30 GMT, where the current account deficit is expected to narrow to 11.1 billion CAD, compared with the prior deficit of 15.63 billion CAD.

TheUnited Stateswill join the session at 14:00 GMT with the S&P/CS 20 report for September, where the monthly S&P/CS 20 City index is projected to remain steady compared with the previous drop of 0.05%, in the time the annual S&P/CS composite-20 could have dropped 3.00% from the previous drop of 3.80%.

At 15:00 GMT theUnited Stateswill announce the consumer confidence for November, with expectations it could have improved to 44.4 from 39.8.

NZD/USD Technical Analysis for November 29, 2011

NZD/USD rose during the session on Monday as the “risk on” trade came back into focus. The Kiwi is highly correlated with riskier assets, so this wasn’t a big surprise. The breaking of the 0.75 handle was a big step forward, but the rest of the riskier currency pairs look a bit on the weak side. With this in mind, we are going to pass on a NZD/USD long position at this point. The selling off of the pair in the later part of the session could be a sign that the opening gap may get filled in the short term.

NZD/USD Fundamental Analysis for November 29, 2011

The NZD/USD pair slightly advanced with the beginning of the week, but still near its lowest level in eight months. The New Zealand currency lost ground against the greenback during the last period, with the bearish market sentiment in addition to the negative global economy outlook.

The EU debt crisis still has its negative effect on the financial market and on other economies, which fuelled fears of the global economy outlook and drove investors to abandon higher-yielding currencies. Nevertheless, hope over some measures to be taken by the EU this week helped a relief rally on Monday with focus on the finance ministers meeting Tuesday and Wednesday in Brussels.

Expectations remain for further losses for the pair, as risk aversion still dominate the FX market and reduce demand for the higher-yielding currencies.

On Tuesday, the U.S. economy will release the Consumer Confidence of November at 15:00 GMT, with a prior reading of 39.8 and it’s expected to come at 43.5. While the House Price Index for September had a prior reading of –0.1%.

 

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