Forex Technical and Fundamental Analysis for October 14, 2011

EUR/USD Technical Analysis for October 14, 2011

The EUR/USD pair fell fairly hard during the Thursday session as traders continue to react to news in a skittish way. The market rebounded in the US session though, and saw the pair for a hammer at the top of the recent run up. This candle could either signal that we are about to run much higher, or that it is a “hanging man”, which is a very bearish signal indeed.

A breaking of the bottom of this candle gets us aggressively short of this pair, and a breaking of the top has us buying, but only until we get closer to the 1.40 level, which we see as massive resistance. We would also be quick to move stop losses to break even, as the pair has run up so fast, and there is always going to be danger of bad news hitting the wires that could send this pair straight back down.

 

EUR/USD Daily Fundamental Analysis for October 14, 2011

The EUR/USD retreated on Thursday as the market started to lock on profits amid generally eased woes over the outlook for the euro area where investors returned to focus on the weak data and the fragile state of the global economy.

Investors remain upbeat on the prospect for a resolution to the debt crisis and see leaders walking in the right path, especially after EC President Jose Barroso presented a broad plan to contain the crisis including economic governance, bank recapitalization, utilization of the EFSF, and helping Greece contain its crisis.

The market though remain tensed as the plans to recapitalize banks is still not clear and with the end of the week on Friday the eyes will turn to the G20 finance chiefs meeting as they will surely discuss the development in Europe and how to contain the crisis including the focus on the banking sector.

On Friday the euro area will end the week with inflation figures for September at 09:00 GMT where the CPI index is expected with 0.8% rise on the month following 0.2% gain and on the year to come in line with the flash estimate at 3.0% after 2.5% in August. Core CPI inflation is expected to rise to 1.5% from 1.2%.

As for the August trade balance that data is also due at 09:00 GMT and investors will assess if exports are helping the euro area growth and whether the trade improved from July’s seasonally adjusted 2.5 billion euro deficit.

The U.S. economy will end the week with heavy data starting at 12:30 GMT with the September Retail Sales as the index is expected to rise moderately by 0.2% less autos after 0.1% gain in August and excluding gas and auto sales are also expected with 0.2% rise after 0.1%.

At 13:55 GMT the University of Michigan confidence for October is expected with a rise to 60.0 from 59.4; and finally at 14:00 GMT Business Inventories for August are expected to hold at 0.4%.

AUD/USD Technical Analysis for October 14, 2011

AUD/USD rose on Thursday, as it continues to defy gravity. The pair looks overly bullish, but is slowing down the acceleration as it enters the 1.02 – 1.03 resistance area. This move has been parabolic, and these types of moves normally end poorly when they are counter trend, such as this one. The biggest issue with this rally is that it is based upon the idea that Europe might agree to do something about their situation, but the biggest issue is that they haven’t actually come up with a plan. Until they do, there is considerable risk to the downside in all risk-related assets.

With this in mind, we are not buying this pair presently and are looking for weakness to signal a selling opportunity. Until we get it, we will be on the sidelines as this market will certainly struggle over the next 100 or so pips anyway.

 

AUD/USD Daily Fundamental Analysis for October 14, 2011

The Australian dollar returned to record more gains versus the American counterpart as Australia’s economy recovers with the rebound in the industrial sector alongside the government’s efforts to support the economy.

Meanwhile, Aussie increased sharply versus its major counterpart the US dollar as the Australian economy reported positive employment data, which confirmed the nation’s recovery.

Australia’s dollar advanced against its U.S. counterpart by the most in three weeks as global stocks rose amid increased demand for riskier assets.

On the other hand, the market rebounded as Slovakia is set to approve Europe’s enhanced bailout fund this week, completing the ratification across the 17 euro countries, increasing demand for higher yielding currencies.

The Australian economy is to end the week without any fundamental data, while at 12:30 GMT, the U.S. economy will issue the Import Price Index for September, where it had a previous reading of – 0.4% and expected to come at – 0.5%, while the annual Import Price Index had a prior reading of 13.0%.

The Advance Retail Sales for September will be also due at 12:30 GMT as the index is expected to rise moderately by 0.2% less autos after 0.1% gain in August and excluding gas and auto sales are also expected with 0.2% rise after 0.1%.

At 13:55 GMT the University of Michigan confidence for October is expected with a rise to 60.0 from 59.4; and finally at 14:00 GMT Business Inventories for August are expected to hold at 0.4%.

EUR/CHF Technical Analysis for October 14, 2011

 The EUR/CHF pair rose on Thursday, but only just. The pair is being manipulated by the Swiss National Bank at this point as the self-declared “floor” at 1.20 still has traders scared of selling this pair. The pair is therefore only a one-way trade, but that would rely on the Euro being a safe currency to buy.

As things stand with the EU right now, the uncertainty makes owning the Euro especially unattractive to most traders. The recent run up in it against the USD could simply be a short-covering rally, as it hasn’t truly been tested by massive support yet. Because of all of this, we are avoiding this pair at the moment, but wouldn’t hesitate buying it if it fell closer to that 1.20 level.

EUR/CHF Daily Fundamental Analysis for October 14, 2011

The EUR/CHF continues to move within the same trading range since the beginning of the week and with the eased debt woes the euro gathered the pace, especially as the franc declined against a strong dollar as the market unwinds from the strong relief rally seen in the past sessions.

More weakness for the franc was seen from the reported drop in producer and import prices, where on the year prices fell 2.0% in September which further raised deflation fears for Switzerland and accordingly the risk of further SNB measures to weaken the franc.

Nevertheless, investors remain upbeat on the prospect for a resolution to the debt crisis and see leaders walking in the right path, especially after EC President Jose Barroso presented a broad plan to contain the crisis including economic governance, bank recapitalization, utilization of the EFSF, and helping Greece contain its crisis.

The market though remain tensed as the plans to recapitalize banks is still not clear and with the end of the week on Friday the eyes will turn to the G20 finance chiefs meeting as they will surely discuss the development in Europe and how to contain the crisis including the focus on the banking sector.

The euro area will end the week with inflation figures for September at 09:00 GMT where the CPI index is expected with 0.8% rise on the month following 0.2% gain and on the year to come in line with the flash estimate at 3.0% after 2.5% in August. Core CPI inflation is expected to rise to 1.5% from 1.2%.

As for the August trade balance that data is also due at 09:00 GMT and investors will assess if exports are helping the euro area growth and whether the trade improved from July’s seasonally adjusted 2.5 billion euro deficit.

NZD/USD Technical Analysis for October 14, 2011

 

The NZD/USD pair fell on Thursday, only to bounce in late hours to form a hammer at the top of an up move. The 0.8000 resistance level sits just above, and it looks like the market will try to break through it again. However, until it does – one has to assume it will hold.

With all of the global risk out there, the Kiwi could be susceptible to selling at times as bad news hits the wires. The area looks like a massive resistance zone, and we are not willing to buy into it until it close above it on a daily chart. Until then, we are on the sidelines, unless of course the market breaks the bottom of this candle – which would make it a “hanging man”, which of course is massively bearish.

NZD/USD Daily Fundamental Analysis for October 14, 2011

The New Zealand dollar swings between gains and losses as the Chinese data showed September’s trade surplus narrowed and China’s imports declined more than expected, reducing demand for the New Zealand dollar, where the Chinese market is the largest for New Zealand products.

Furthermore, New Zealand home prices increased in September to the highest since November 2009, which supported Kiwi’s upside movement slightly against major currencies.

Meanwhile, Kiwi maintained the upside momentum against the American dollar, as Asian stock markets extended a global equities rally, spurring demand for higher yielding currencies.

On Friday at 12:30 GMT, the U.S. economy will issue the Import Price Index for September, where it had a previous reading of – 0.4% and expected to come at – 0.5%, while the annual Import Price Index had a prior reading of 13.0%.

The Advance Retail Sales for September will be also due at 12:30 GMT as the index is expected to rise moderately by 0.2% less autos after 0.1% gain in August and excluding gas and auto sales are also expected with 0.2% rise after 0.1%.

At 13:55 GMT the University of Michigan confidence for October is expected with a rise to 60.0 from 59.4; and finally at 14:00 GMT Business Inventories for August are expected to hold at 0.4%.

USD/JPY Technical Analysis for October 14, 2011

The USD/JPY pair fell from the higher end of its consolidation on Thursday. The pair looks like it is ready to continue the range bound trading, and this latest moves solidifies that appearance. The pair is being held up by the threat of intervention by the Bank of Japan, as the central bank doesn’t want a Yen that appreciates too quickly. The actions have mainly been of the “jawboning” type at the moment, but as recent as August this central bank had intervened. Because of this we don’t sell for any real length of time, and prefer buying at the bottom of the range, given a choice. Buying at 76.25 has worked out quite well for a while, as long as you are willing to take profit at 77 or so. Knowing this, we are going to continue to scalp this market by doing just that.

 

USD/JPY Daily Fundamental Analysis for October 14, 2011

The USD/JPY pair advanced early Thursday to trade near its highest level in four weeks, where the Bank of Japan board members cleared through September 6-7 meeting minutes that the current economic situations in Japan may force the policy makers to take extra steps to ease the monetary policy.

The Japanese yen retreated against the dollar and other major currencies after the BOJ’s minutes showed more downside risks to the Japanese economy, which could result in further policy easing.

However, the Japanese yen soon recover its losses against the dollar and its major counterpart after the markets absorbed the BOJ’s announcement, and the current market sentiment returned to control the movements to push the yen higher once again as a safe haven.

On Friday at 12:30 GMT, the U.S. economy will issue the Import Price Index for September, where it had a previous reading of – 0.4% and expected to come at – 0.5%, while the annual Import Price Index had a prior reading of 13.0%.

The Advance Retail Sales for September will be also due at 12:30 GMT as the index is expected to rise moderately by 0.2% less autos after 0.1% gain in August and excluding gas and auto sales are also expected with 0.2% rise after 0.1%.

At 13:55 GMT the University of Michigan confidence for October is expected with a rise to 60.0 from 59.4; and finally at 14:00 GMT Business Inventories for August are expected to hold at 0.4%.

GBP/USD Technical Analysis for October 14, 2011

The GBP/USD pair fell on Thursday, but bounced later in the session as traders continue to go back and forth in the risk trade. Volumes are extremely light in most stock markets, so one can only assume the currency markets are the same. This would explain the whipsaw action we have been seeing lately.

The pair is setting up to print a hammer on the daily, but if we break the bottom of it – it then becomes a hanging man, which is horribly bearish. Because of this, we need to pay attention to the direction that the market breaks, and follow it. To the upside, we see 1.60 as the next massive barrier, and the 1.55 area as support.

 

GBP/USD Daily Fundamental Analysis for October 14, 2011

On Wednesday, the GBP/USD dropped as investors resorted to the dollar as a refuge after a Chinese report which showed that exports grew by the weakest pace in seven months, which raised concerns the sluggish global growth pace would continue. Chinese trade surplus narrowed to $14.51 billion in September from $17.76 billion in August as exports slowed to 17.1%, the weakest pace in seven months, from 24.5% and imports slipped to 20.9% from 30.2%. In the meantime, investors are still cautious that European leaders would not be able to contain the debt crisis ahead of the important European Council meeting on October 23.

The ECB said the participation of private-sector banks in bailing out debt-trapped nations would yield in financial instability, noting that the turn is now on the European governments after the ECB had supported banks from collapsing since the start of the financial crisis. On the other hand, the improvement in U.K. trade data could not give a strong upside push to the pair which remained affected by the general sentiment. U.K. visible trade deficit narrowed to 7768 million pounds in August from the revised 8156 million pounds deficit in July.

Exports surged 0.6% to 25.5 billion pounds while goods imports slipped 0.7% to 33.3 billion pounds. Still, there are speculations that the BoE may need to add more to the Asset Purchase Facility to bolster growth which is weighing on the pound. On Friday, the week ends with the release of some fundamentals from the U.S. which are retail sales for July, University of Michigan confidence for August and business inventories for June at 12:30 GMT, 13:55 GMT and 14:00 GMT respectively, while the U.K. lacks fundamentals.

USD/CAD Technical Analysis for October 14, 2011

The USD/CAD pair rose during most of the day on Thursday, only to fall late in the session. The result is a shooting star at the bottom of a recent down move. The candle could be the start of further weakness in this pair, as the USD finds itself on the back foot against most other currencies. The resulting set up is if the bottom of the candle gets broken – it should see lower prices. The oil markets have proven especially resilient lately as well, and this could continue to drive demand for the Canadian dollar. The parity level could continue to be very supportive though, and we would expect a bit of a reaction to it. A breaking of the top of this shooting star-shaped candle would be massively bullish.

 

USD/CAD Daily Fundamental Analysis for October 14, 2011

The USD/CAD pair rebounded to the upside on Thursday amid rising risk aversion in markets, where worse than expected data from China raised concerns over the outlook for global growth, which put commodities under negative pressure. Moreover, traders were anxious ahead of a bond auction by Italy, where traders worry that demand will be weak amid jitters from the European debt crisis, which weighed down on confidence levels and put higher yielding assets including the Canadian dollar under pressure, which sent the USD/CAD pair to the upside.

Traders will continue to monitor the latest developments from Europe, and if pessimism continues to dominate markets, we should expect the USD/CAD pair to extend its gains on Friday. Nonetheless, if some progress is made in Europe, demand for higher yielding assets will improve and that will put the USD/CAD pair under pressure.

Friday October 14:

Canada will release the manufacturing sales index at 12:30 GMT, which is expected to have risen in August by 0.4% compared with 2.7% in July.

The U.S. economy will end the week with heavy data starting at 12:30 GMT with the September Retail Sales as the index is expected to rise moderately by 0.2% less autos after 0.1% gain in August and excluding gas and auto sales are also expected with 0.2% rise after 0.1%.

At 13:55 GMT the University of Michigan confidence for October is expected with a rise to 60.0 from 59.4; and finally at 14:00 GMT, Business Inventories for August are expected to hold at 0.4%.

USD/CHF Technical Analysis for October 14, 2011

 The USD/CHF pair rose during most of the session on Thursday, only to fall back down. The result is a shooting star at the bottom of a recent fall. The candle could be a launching point for further weakness in this pair, as the USD finds itself on the back foot. The resulting set up is if the bottom of the candle gets broken – it should see lower prices. But with the Swiss National Bank working against the appreciation of the Franc, it is going to be very difficult to short this pair with any real conviction. Alternately, if the market breaks this candle to the upside – it is a very bullish signal, which we would be happy to get long on.

 

USD/CHF Daily Fundamental Analysis for October 14, 2011

On Thursday, the USD/CHF advanced as investors resorted to the dollar as a refuge after a Chinese report which showed that exports grew by the weakest pace in seven months, which raised concerns the sluggish global growth pace would continue.

Chinese trade surplus narrowed to $14.51 billion in September from $17.76 billion in August as exports slowed to 17.1%, the weakest pace in seven months, from 24.5% and imports slipped to 20.9% from 30.2%.

Meanwhile, investors are still cautious that European leaders would be not able to contain the debt crisis ahead of the important European Council meeting on October 23.

The ECB said the participation of private-sector banks in bailing out debt-trapped nations would yield in financial instability, noting that the turn is now on the European governments after the ECB had supported banks from collapsing since the start of the financial crisis.

On Friday, the week ends with the release of some fundamentals from theU.S.which are retail sales for July,UniversityofMichiganconfidence for August and business inventories for June at 12:30 GMT, 13:55 GMT and 14:00 GMT respectively.

 

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