Forex Technical and Fundamental Analysis for October 13, 2011

EUR/USD Technical Analysis for October 12, 2011

 

EUR/USD had a very bullish day on Wednesday as traders continue to press forward with their belief that the EU has a solution coming in the near term. In the mean time, there really hasn’t been much news flow to prove or disprove this, but recent history suggests that the expected solution may or may not necessarily be impressive.

The pair rallied to the gap from a couple of weeks ago, topping out near the 1.38 level. The fact that the pair failed at that area suggests the next move could be down, and the 1.38 area also is the site of the 50% Fibonacci retracement, a common entry point. With all of this combined, we simply cannot buy the pair at this time. In fact, we are looking for weakness to get short at this point.

EUR/USD Daily Fundamental Analysis for October 12, 2011

The EUR/USD continues to trade positive and was supported on Wednesday with the upbeat news and continued support and progress to end the debt crisis.

The Slovak setback did not hold the gains much for the euro as the market soon rebounded supported by European Commission President Jose Barroso presented plans to recapitalize banks and said that governments must maximise the capacity of the EFSF.

Slovakia’s political parties also reached a deal on the EFSF and that the next vote due also this week will see the ratification of the new powers of the EFSF which also helped sustain the gains for the euro and fuel the relief rally.

The focus remains on the debt crisis and although there was are no reviled concrete plans till now on how to capitalise banks the progress is supporting the ongoing optimisms.

At 08:00 GMT the ECB will release the monthly report which has little impact on the market since it reiterates the assessment presented following the meeting from Trichet.

The U.S. trade figures are due at 12:30 and the trade deficit in August is expected to widen to $46.0 from $44.8 billion.

The weekly jobless claims are also due at 12:30 GMT after last week they rose to 401 thousand.

AUD/USD Technical Analysis for October 12, 2011

 

AUD/USD rose on Wednesday as traders took on more risk due to hopes of a solution to the EU’s debt crisis. However, the pair has stopped as the first significant resistance area above the parity level. The daily candle is long and green, and certainly looks healthy, but the fact that it stopped at the first sign of strong resistance suggests that the underlying strength might be questioned over the short-term. We think that a pullback is very possible as a result, and wouldn’t want to take on new positions to the long side. On a shorter timeframe chart, we would be willing to sell on signs of exhaustion at this level, at least down to the parity area.

If we give the parity level back up, this pair will almost certainly continue its drive south, and we would be overly aggressive in our selling at that point as it would show real signs of negativity on all things risk-related in the markets.

AUD/USD Daily Fundamental Analysis for October 12, 2011

The market continues to fluctuate heavily, where the Australian dollar extended the rally on hopes that the EU is moving forward and will be able to contain the debt crisis.

Australian currency declined against its major counterparts in early trading hours on Wednesday as the negative outlook for the global economic growth and fear that Greek bondholders have to accept larger write-downs increased demand for safe haven currencies such as the Yen that rose against the common currency.

The current financial crisis needs to time to cool as the European debt crunch has extended to the critical dimensions, while this crunch has moved to many countries in Euro-Zone, reducing the demand for higher yielding currencies.

On Thursday, the Australian economy at 00:30 GMT will report a number of important data, where the nation is to release its unemployment rates for September which is expected to remain steady at 5.3%.

Moreover, the employment change for September is expected to show 10.0 thousand added jobs after it shed 9.7 thousand workers in August.

The U.S. economy will release the Trade Balance for August at 12:30 GMT, where it’s expected to show a widening deficit to $46.0 billion from $44.8 billion.

Also at 12:30 GMT, the U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 401 thousand last week.

EUR/CHF Technical Analysis for October 12, 2011

 

The EUR/CHF pair fell on Wednesday as traders continue to trade this market in a tight range. The Swiss National Bank is actively working against the appreciation of the Franc, and as a result we cannot sell. The market is basically good for just a handful of pips at any given moment, as in order to buy you would have to believe that EU and its problem are solved. Few truly believe this in our estimation – or the pair would absolutely take off. In the mean time, we are very much flat of this pair.

 

EUR/CHF Daily Fundamental Analysis for October 12, 2011

The pair continued to fluctuate within the same range where the franc had the upper hand and drove the pair to the downside despite the euro’s strength.

The franc’s appreciation against the dollar and other major currencies supported the EUR/CHF to move to the downside despite the spread optimism that the EU is moving forward and will be able to contain the debt crisis.

The Slovak setback did not hold the gains much for the euro as the market soon rebounded supported by European Commission President Jose Barroso presented plans to recapitalize banks and said that governments must maximise the capacity of the EFSF.

Slovakia’s political parties also reached a deal on the EFSF and that the next vote due also this week will see the ratification of the new powers of the EFSF which will help sustain the gains for the euro in the coming period versus the franc.

On Thursday Switzerland will release the Producer & Import Prices for September at 07:15 GMT after it was reported with 1.2% drop in August and with 1.9% drop on the year.

NZD/USD Technical Analysis for October 12, 2011

 

The NZD/USD pair had a strong day on Wednesday as traders bought any and everything risk-related. The Kiwi is highly correlated with global risk, and the happiness around the globe got the Kiwi market excited. However, the pair did fall and fail at the all-important 0.80 level. This level was a spot where we told you the pair would have to prove itself, and until we can stay above it on a close, we aren’t willing to buy this pair. The daily candle is impressive, as it is long and green – but it still struggled at this all-important area.

We are buying on a daily close above that mark, but aren’t willing to do anything with it form the buy side until then. Shorter time frames actually suggest that the next move could be to the downside, and this would be a continuation of the down trend that we have seen recently. We are willing to put on a short position at this point, as the stops could be tight and just above the 0.8000 mark.

NZD/USD Daily Fundamental Analysis for October 12, 2011

The New Zealand’s currency (the Kiwi) fell as Asian stocks extended a global slump, while the demand for New Zealand currency was also curbed as a faltering U.S. recovery and Europe’s debt crisis prompted investors to favour safer bets than emerging-market assets. Nevertheless, as the market recovered into the European session kiwi returned to the upside.

The New Zealand dollar (Kiwi) plunged versus the US dollar after the NZ’s economy reported that its manufacturing volumes dipped for the first time in three quarters and food prices declined.

Still, the market focus remains on Europe and with expectations that a new plan will be presented to help capitalise banks and contain the Greek threat the positive sentiment returned and supported kiwi to the upside.

The NZ performance of manufacturing index for September is due at 21:30 GMT (Wednesday) after 52.9 in August.

The U.S. economy will release the Trade Balance for August at 12:30 GMT, where it’s expected to show a widening deficit to $46.0 billion from $44.8 billion.

Also at 12:30 GMT, the U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 401 thousand last week.

USD/JPY Technical Analysis for October 12, 2011

 

The USD/JPY shot straight up during the Wednesday session as traders got enthusiastic about the rallying stocks markets. The Bank of Japan is threatening intervention any time this pair falls too much, so buying has been the only real way to trade this pair, and as a result – we have been buying at the 76.25 level or so. The pair also has had a ceiling at the 77.50 area, and the session on Wednesday proved to be more of the same when it came to this. The market is still exceptionally range bound at this point, and should continue to be so. Because of this, we think the next move is down in this pair, and wouldn’t be willing to buy at this point in time.

 

USD/JPY Daily Fundamental Analysis for October 12, 2011

The USD/JPY pair dropped early Wednesday even after Japan announced a better than forecasted numbers regarding Machine Orders for August, as the dollar weakness prevent the pair from recording any gains.

Machine Orders in August came at 11.0% compared to the previous drop of 8.2%, the improvement in the Machine Orders reflect the strong capital spending in Japan, which in turn showed the recovery in the Japan’s manufacturing sector.

Optimism is still seen across financial markets after the EU leaders pledged to contain the debt crisis, which open the way for investors to increase demand for higher-yielding currencies trying to cover some of the previous losses.

On Thursday at 23:50 GMT (Wednesday), the Bank of Japan will release the minutes for its September 6-7 meeting.

At 23:50 GMT, Japan will issue the Tertiary Industry Index for August, where it had a previous reading of –0.1%.

The U.S. economy will release the Trade Balance for August at 12:30 GMT, where it’s expected to show a widening deficit to $46.0 billion from $44.8 billion.

Also at 12:30 GMT, the U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance increased 401 thousand last week.

GBP/USD Technical Analysis for October 12, 2011

 

The GBP/USD rose rapidly during the Wednesday session, as the global risk attitude of traders increased. Also, there certainly would have been some short-covering by traders as the pair bounced. The pair has broken above the significant 1.57 area, but as we look at the daily charts we see that the gap from a few weeks ago got filled during Wednesday. This is often a massive barrier, and we can’t help but notice that it pushed back against cable. The pair looks like it could pullback, and this would be with the longer term trend. If we find ourselves dipping back below the 1.57 level for anything over an hour, we would be willing to sell this pair as it would be likely to continue the down move.

 

GBP/USD Daily Fundamental Analysis for October 12, 2011

On Wednesday, the GBP/USD rose after the improvement in the sentiment which prompted investors to buy high-yielding currencies at the expense of refuges.

European Commission President Jose Barroso will unveil comprehensive plan on Wednesday which will include banks recapitulation, situation inGreece, the EFSF and private sector participation in bailouts to contain the European debt crisis. Commissioner Oli Rehn said on Wednesday the debt crisis could be resolved, providing hopes there is utmost determination from European officials to solve the debt problem.

Even after the rejection of the Slovak Parliament to the EFSF expansion, there are hopes that sooner or later the plan will be ratified. Slovak parties gathered on Wednesday to reach an early agreement to boost the EFSF.

On the other hand, data from theU.K.while showing a significant rise in unemployment in the three months ended August to 8.1%, the highest level in 15 years, jobless claims retreated to 17.5 thousands in September, below 20.3 thousands recorded in August and projections of 24.0 thousands to make some balance.

On Thursday, at 08:30 GMT, theUKwill release trade balance report for the month of August which is expected to show a narrowing deficit to 8700 million pounds from 8922 million pounds, according to the visible trade balance index.

At 12:30 GMT, the U.S economy will release trade balance report which is expected to show a widening deficit of $46.0 billion in August from $44.8 billion deficit a month earlier. At the same time, initial jobless claims for the week ended October 7 and continuing claims for the week ended October 1 will be available.

The data is predicted to have an impact on the pair, yet the main focus remains on the euro area to see the latest developments of the European debt woes.

USD/CAD Technical Analysis for October 12, 2011

 

USD/CAD fell hard during the session on Wednesday, breaking several stops along the way. The pair is typically tied to the oil markets, and as a result – we normally will watch both simultaneously. Something odd happened today – the CL contract was very flat, suggesting that this pair should have been very quiet.

With the CL struggling at the $85 mark, this should give pause to selling this pair. The parity level below is our real gauge as to the strength of the downdraft, and this pair hasn’t reached that yet. Quite often this pair will react a couple of days late in the oil markets, so watch the CL and COIL contracts to see future direction as both of those oil contracts look a bit weak at the moment. This would suggest this pair should rise.

However, you would be smart to look for a signal to go long such as a hammer on a shorter time frame before buying. It is at an area that was supportive before, so it will be interesting to see what happens. If we can break the 1.07 over the next few days – this pair goes much, much higher – probably as a result of global bearishness in most markets.

USD/CAD Daily Fundamental Analysis for October 12, 2011

The USD/CAD pair extended its losses on Wednesday, as hopes EU leaders will reach a solution to ease the European debt crisis overshadowed the Slovak Parliament’s rejection of expanding the size and power of the European Financial Stability Facility, which boosted confidence in markets and encouraged investors to target higher yielding assets, which pushed the USD/CAD pair to the downside.

We advise traders of extreme caution in trading over the coming period, since the recent rally in markets is based on hopes and optimistic expectations, however, if EU leaders fail to assure markets, we expect risk aversion to dominate markets once again, however, given the recent change in sentiment, it seems that the USD/CAD pair could extend its downside wave, but we remain extremely cautious over the outlook.

Thursday October 13:

Canada will release the international merchandise trade balance for August at 12:30 GMT, where the trade deficit is expected to widen to 1.00 billion CAD from the prior deficit of 0.75 billion CAD.

The U.S. trade figures are due at 12:30 and the trade deficit in August is expected to widen to $46.0 from $44.8 billion.

The weekly jobless claims are also due at 12:30 GMT after last week they rose to 401 thousand.

USD/CHF Technical Analysis for October 12, 2011

 

The USD/CHF pair fell hard on the session for Wednesday. The pair reflected the Dollar negative attitude around the markets, but one cannot be too aggressive in buying the Franc as the Swiss National Bank is working against appreciation of its currency.

The 0.90 large number gave way, but looking at the charts, we can see this support area have been as low as 89.00, so these 100 pips are important. With the SNB working against the Franc, we can only buy this pair, but are presently waiting to see if we get some kind of supportive candle in order to do so. The SNB is more worried about the EUR/CHF pair as a measuring stick of the Franc’s strength, but the USD/CHF pair will react to the move if they intervene again. Because of this – we can only buy, and the USD is now the only real “safe haven” as the Franc can no longer be held for any real length of time.

USD/CHF Daily Fundamental Analysis for October 12, 2011

On Wednesday, the USD/CHF fell on mounting speculations the Swiss National Bank will not adjust the franc’s ceiling against the euro. Meanwhile, the Swiss franc is to some extent separated from factors affecting the market as the several interventions by the SNB made investors wary of buying it as a safe haven, where the pair is much affected by the dollar’s movements.

Also, the improvement in the general sentiment has prompted investors to leave the dollar as a favourite refuge in the recent period. European Commission President Jose Barroso will unveil comprehensive plan on Wednesday which will include banks recapitulation, situation in Greece, the EFSF and private sector participation in bailouts to contain the European debt crisis. Commissioner Oli Rehn said the debt crisis could be resolved, providing hopes there is utmost determination from European officials to solve the debt problem. Even after the rejection of the Slovak Parliament to the EFSF expansion, there are hopes that sooner or later the plan will be ratified.

Slovak parties gathered on Wednesday to reach an early agreement to boost the EFSF. On Thursday, the Swiss economy releases the only data for the week, which is producer and import prices, at 07:15 GMT. At 12:30 GMT, the U.S economy will release trade balance report which is expected to show a widening deficit of $46.0 billion in August from $44.8 billion deficit a month earlier. At the same time, initial jobless claims for the week ended October 7 and continuing claims for the week ended October 1 will be available. The data is predicted to have an impact on the pair, yet the main focus remains on the euro area to see the latest developments of the European debt woes.

 

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