Forex Technical and Fundamental Analysis for Novemeber 30, 2011

EUR/USD Technical Analysis for November 30, 2011

The EUR/USD pair spiked originally during the session on Tuesday as traders reacted to the fact that the Italians actually managed to get their bond auction off. However, they are now paying almost 8% for the 10 year note. This dawned on the trading community and sold off the Euro in kind. The second printing of a shooting star on the daily chart shows just how much trouble the Euro is having overall. The market is simply a “sell the rallies” pair now. We are doing just that, selling short-term bounces like we have seen recently.

EUR/USD Fundamental Analysis for November 30, 2011

The EUR/USD fluctuated heavily on Tuesday as markets anticipated the outcome of the euro finance ministers with caution and the session was dominated in a mixed outlook between hope and fear whether they can contain the crisis.

The EFSF details are the matter of debate and not just how the facility will work but the market is anxious to see how it will find the finances need to reach the trillion leverage target! The market at first reacted positively to an Italian debt sale which stood at 7.5 billion of debt sold but with surging rates and below the maximum target of 8.0 billion where investors saw that the strong bid-to-cover ratio as a sign that the nation can still access capital markets and find demand opposed to Germany that failed to raise the needed!

Nevertheless, the rally failed to hold for long as jitters are evident ahead of the meeting and especially that the auction did not erase the reality that Italy is borrowing at dangerously high penalty rates from the market due to the lack of support behind it as the EU stall on the measures.

The market on Wednesday will continue the mixed and choppy trading and open to any remarks that the euro area finance ministers might have after their meeting today and as they prepare for the EU 27 finance ministers meeting as they need to agree and finalise the details ahead of the EU Summit on December 09.

Fears and growth woes are likely to resurface especially if the finance ministers fail to produce something solid to quell the jitters and labour data from the euro area and then the US will shift the focus back to the rising downside pressures and recession heading for the euro area and the spillover on the global economy.

Germany will start the session at 08:55 GMT with the unemployment report for November, where the unemployment figure is expected 7 thousands lower compared with the previous surge of 10 thousand jobs in unemployment. In addition, the unemployment rate is expected to linger at 7.0%.

The euro zone will join the session at 10:00 GMT with the annual CPI flash estimate for November, which is expected to remain steady at 3.0%.

The euro zone will also release the unemployment rate for October, with expectations that unemployment could have remained unchanged at 10.2%.

TheUnited Stateswill join the session at 13:15 GMT with the ADP employment change for November, which is expected to show that theU.S.private sector could have added 130 thousand new jobs compared with the previous addition of 110 thousands in October.

At 13:30 GMT theUnited Stateswill provide the nonfarm productivity and the unit cost labour indexes for the third quarter in a final reading, where the nonfarm productivity index is expected to expand by 2.6% from 3.1%, while the unit labour costs index could have dropped by 2.1% from the previous drop of 2.4%.

At 14:45 GMT theUnited Stateswill also release theChicagopurchasing manager indicator for November, with expectations the indicator could have slightly improved to 58.5 from 58.4.

At 15:00 GMT theUnited Stateswill end the session with the pending home sales indexes for October, where the monthly index could have expanded 1.2% from the previous drop of 4.6%, while the annual index previous reading was 7.9%

USD/JPY Technical Analysis for November 30, 2011

The USD/JPY pair fell during the Tuesday session as the recent surge ran into the 78.50 resistance area. The pair is undoubtedly in a downtrend, and this looks to remain the case until we can get over the 80 level. In fact, we aren’t buying at all until we get over that level. The pair falls every time it rallies, and as a result – we like fading these rallies at this point. The breaking of the lows on Tuesday sends this pair lower. We don’t buy at this point as it would be chasing the trade.

USD/JPY Fundamental Analysis for November 30, 2011

The USD/JPY pair retreated early Tuesday to end three sessions of gains, while the dollar is still losing momentum against most of its major counterparts. On the other hand, the rally in the global equities helped risk appetite to lead the way this week.

The Japanese yen reduced some of the pressure on the shoulders of the Bank of Japan after it drooped against the dollar with the beginning of the week, while the yen is trying to cover some of its previous losses using the dollar weakness.

Expectations that the EU leaders are working on new measures to prevent the crisis from spreading to other countries are feeding the risk appetite in the financial market, and open the way for the higher-yielding assets to record more gains.

On Wednesday at 23:50 GMT (Tuesday), Japan will issue the Industrial Production for October which had a previous reading of –3.3%, as for the annual Industrial Production it had a previous reading of –3.3%.

At 05:00 GMT, Japan will issue the annual Construction Orders for October with a previous reading of –9.3%, the Annualized Housing Starts for October was 0.745 million by –10.8%.

The U.S. economy will release the ADP employment change for November at 13:15 GMT, where it’s expected to come at 128 thousands from the previous reading of 110 thousands.

The U.S. Non-Farm Productivity for the third quarter is to be released at 13:30 GMT and expected to come at 3.1% inline with the previous reading, and the Unit labour Costs for the third quarter is also expected unchanged at -2.4%.

The Chicago Purchasing Manager for November will be released at 14:45 GMT and is expected to come at 58.5 from the previous 58.4. At 15:00 GMT the Pending Home Sales will be published and it’s expected to remain flat from the prior –4.6%.

GBP/USD Technical Analysis for November 30, 2011

GBP/USD rose on Tuesday as the “risk on” trade came back into vogue. The pair rose above the 1.56 level, and looks like it wants to build on those gains as the shooting star from Monday was violated. The move is strong and impressive, but one must keep in mind the trend is very bearish at this point. In fact, the USD probably shouldn’t be shorted at all in the markets as the headline risks are so great presently. One can take a short-term trade in this pair on the long side, but prudent traders will simply wait until we get signs of weakness in this pair in order to sell.

GBP/USD Fundamental Analysis for November 30, 2011

On Tuesday trading, the pair showed an upside 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.

As usual, eyes remained on the euro area where some hopes damped demand on refuges after the Italian treasury managed to sell bonds worth 7.5 billion euros in spite of having to raise yields to attract investors, where the yields on the three-year bond, 11-year notes and the 9-year bills exceeded 7%.

Later in the day, 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 thatGreecewill receive the next tranche of last year’s 110 billion euros aid package.

However, investors are still cautious due to the worsening outlook for the euro area and global economies.

European economic confidence retreated to 93.7 in Nov. compared with the prior 94.8, while Moody’s Investor Service said it will put European banks in 15 nations under review for possible downgrade.

This week, OECD said it expects the euro-area to grow 1.6% this year and only a 0.2% in 2012.

Moreover, the pound was slightly affected by the improvement seen in housing data as mortgage approvals rose to 52,743 in Oct. from 51,193 in Sep. and house price surged for the third month in Nov.

Yet, the sterling minimized its gains after Chancellor of the Exchequer in his autumn statement to commons said he predicts theU.K.to expand 0.7% in 2012 from previous forecasts of 2.5% after recording a growth of 0.9% in the current year from March’s estimates of 1.7%.

Unemployment, additionally, will rise to 8.7% in 2011, where the government plans longer austerity to meet its budget deficit target, according to Osborne.

On Wednesday, amid the absence of data from theU.K., eyes will be on MBA mortgage applications for Nov. 25 at 12:00 GMT, followed by ADP employment change at 13:15 GMT, where it is expected to increase to 130,000 in Nov. from the previous 110,000, then at 15:00 GMT pending homes sales for Oct. will be available. Finally, at 19:00 GMT, Fed’s Beige book will be out.

The data will probably affect the pair, yet it is expected to be more affected by the general sentiment which is tracking the latest developments in the euro region.

USD/CHF Technical Analysis for November 30, 2011

USD/CHF fell during the Tuesday session as the Dollar lost ground against many of the other currencies around the world. The safety trade was off on hopes of a bailout coming to the EU via the IMF, and as a result the Dollar lost. However, the end of the day saw a bounce in this pair that formed a hammer – suggesting a rise in price from here. The breaking of the highs from Tuesday is a buy signal, and a closing on the daily chart above the 0.93 level has this turning into a long-term buy and hold trade. With the Swiss National Bank working against the Franc, we aren’t selling this pair at all.

USD/CHF Fundamental Analysis for November 30, 2011

On Tuesday 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.

As usual, eyes remained on the euro area where some hopes damped demand on refuges after the Italian treasury managed to sell bonds worth 7.5 billion euros in spite of having to raise yields to attract investors, where the yields on the three-year bond, 11-year notes and the 9-year bills exceeded 7%.

Later in the day, 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. However, investors are still cautious due to the worsening outlook for the euro area and global economies.

European economic confidence retreated to 93.7 in Nov. compared with the prior 94.8, while Moody’s Investor Service said it will put European banks in 15 nations under review for possible downgrade. This week, OECD said it expects the euro-area to grow 1.6% this year and only a 0.2% in 2012. On the other hand, last week, the OECD predicted the franc’s advance against the euro to curb exports and growth as well as raise unemployment.

The OECD said 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,” noting that the bank is ready to act if the franc’s appreciation weighed on growth prospects.

On Wednesday, KoF Swiss leading indicator, available at 10:30 GMT, is estimated to retreat to 0.70 in Nov. from the preceding 0.80.

Thereafter, eyes will be on MBA mortgage applications for Nov. 25 at 12:00 GMT followed by ADP employment change at 13:15 GMT, where it is expected to increase to 130,000 in Nov. from the previous 110,000, then at 15:00 GMT pending homes sales for Oct. will be available.

Finally, at 19:00 GMT, Fed’s Beige book will be out. The data will probably affect the pair, yet it is expected to be more affected by the general sentiment which is tracking the latest developments in the euro region.

EUR/CHF Technical Analysis for November 30, 2011

EUR/CHF is a strange pair at the moment. During the Tuesday session, it continued to fall while Euro caught a bit of a bid in earlier hours against many other currencies. The Euro fell later, and this pair stayed quiet. However, the nature of the Swiss National Bank having a “floor” in this pair at 1.20 means that things have to be pretty bad in order to sell this pair. And this is exactly what happened on Tuesday as traders simply do not trust the Euro. While we don’t really advocate buying this pair yet, we are waiting to see a daily close above 1.25 in order to go long for the long-term in this market.

EUR/CHF Fundamental Analysis for November 30, 2011

The EUR/CHF remained marginally flat on Tuesday trading within a tight range as markets awaited the euro zone finance ministers meeting.

Investors are anxious and the uncertainty is high which is affecting the market with high volatility with on the one hand hope they can take action to contain the crisis and on the other fear that they will disappoint again and that it is too late for action!

This sentiment controlled the market in heavy fluctuations and that pressured the pair to remain confined awaiting more data, especially with the Swiss GDP still ahead in the week that might provide more clues over whether the SNB will act and raise the floor for the pair or not.

On Wednesday the pair is expected to remain within its tight range awaiting more comments from the finance ministers and another disappointment might put more downside pressure on the pair yet still will remain limited with the SNB ready to act.

Germany will start the session at 08:55 GMT with the unemployment report for November, where the unemployment figure is expected 7 thousands lower compared with the previous surge of 10 thousand jobs in unemployment. In addition, the unemployment rate is expected to linger at 7.0%.

The euro zone will join the session at 10:00 GMT with the annual CPI flash estimate for November, which is expected to remain steady at 3.0%.

The euro zone will also release the unemployment rate for October, with expectations that unemployment could have remained unchanged at 10.2%.

KoF Swiss leading indicator which is estimated to retreat to 0.70 in Nov. from the preceding 0.80 will be available at 10:30 GMT.

The EU finance ministers will meet in Brussels after the euro zone ministers and will be very important for the market and the euro.

AUD/USD Technical Analysis for November 30, 2011

The AUD/USD pair rose above the parity level on Tuesday as the commodity trade took off. The appetite for commodities was fuelled by hopes of an EU workout. The pair has lost a bit off the top, but is closing above the parity line. The trend is certainly down, but with this strong of a push higher – we certainly must be aware that this move is countertrend. The 50% retrace of the move down is roughly at 1.03, and area that has been resistive in the past. With this in mind, we are quick to take any profits on long positions. We actually prefer being short of this pair, but not until we get some price action showing weakness.

AUD/USD Fundamental Analysis for November 30, 2011

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The AUD/USD pair advanced for the third straight day as the US dollar dropped against major currencies, while the global equities rally supported the Aussie to cover some of its previous losses against the greenback.

The sentiment improved in the FX market and opened the way for higher-yielding currencies to record more gains, while greenback lost momentum after it has been in controlled of the market trading during the last period.

On Wednesday, the U.S. economy will release the ADP employment change for November at 13:15 GMT, where it’s expected to come at 128 thousands from the previous reading of 110 thousands.

The U.S. Non-Farm Productivity for the third quarter is to be released at 13:30 GMT and expected to come at 3.1% inline with the previous reading, and the Unit labour Costs for the third quarter is also expected unchanged at -2.4%.

The Chicago Purchasing Manager for November will be released at 14:45 GMT and is expected to come at 58.5 from the previous 58.4. At 15:00 GMT the Pending Home Sales will be published and it’s expected to remain flat from the prior –4.6%.

USD/CAD Technical Analysis for November 30, 2011

The USD/CAD pair fell on Tuesday and even managed to pierce the 1.03 support level before bouncing to sit right on it at the end of the session. The resulting daily candle looks very much like a hammer on support, which is a bullish sign in classic technical analysis. With the oil markets getting close to the tops of their ranges, a bounce in this pair wouldn’t be a big surprise. However, you should wait until we see a break of the top of Tuesday’s session in order to go long. We aren’t selling this pair at this point due to the strong overall trend in favour of the Dollar.

NZD/USD Technical Analysis for November 30, 2011

NZD/USD rose during the session on Tuesday as traders continue to trade on hopes of a workaround in the EU. The trend is most decidedly bearish in this pair, and as a result buying it could be risky. (Even if the short-term action looks bullish.) The latest low was lower than the one before it – and this shows a downtrend being confirmed. Because of this, we are willing to wait for weakness to sell, perhaps at 0.78, which is the 50% retrace of the most recent fall.

NZD/USD Fundamental Analysis for November 30, 2011

The NZD/USD pair soared for the third day after it has opened the week with a bullish gap, as the Kiwi is using the current market sentiment which supports the risk appetite.

The Kiwi used the current US dollar weakness to cover some of its previous losses, as investors increased demand for higher yielding currencies on expectations that the EU leaders are working on new measures to prevent the crisis from spreading to other countries.

On Wednesday at 21:45 GMT (Tuesday), New Zealand will release the Building Permits for October, which had a previous reading of –17.1%.

The U.S. economy will release the ADP employment change for November at 13:15 GMT, where it’s expected to come at 128 thousands from the previous reading of 110 thousands.

The U.S. Non-Farm Productivity for the third quarter is to be released at 13:30 GMT and expected to come at 3.1% inline with the previous reading, and the Unit labour Costs for the third quarter is also expected unchanged at -2.4%.

The Chicago Purchasing Manager for November will be released at 14:45 GMT and is expected to come at 58.5 from the previous 58.4. At 15:00 GMT the Pending Home Sales will be published and it’s expected to remain flat from the prior –4.6%.

 

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