Forex Technical and Fundamental Analysis for October 31, 2011

EUR/USD Technical Analysis for October 31, 2011

The EUR/USD pair had a negative day on Friday, after clocking in an outstandingly bullish day on Thursday. The rest isn’t surprising after that massive move, but the market has stopped at a former gap, which has to have some technicians wondering. Personally, we think the rally is somewhat overdone as there are some major details to be worked out in the EU and its bailout. However, the 1.40 level should be a bit of a floor as this market looks to pullback and pick up some more buyers that perhaps missed the move. If we can break back below the 1.39 level – we would be massively bearish at this point.

EUR/USD Fundamental Analysis for October 31, 2011

The EUR/USD ended last week with strong gains as the euro rallied following the announced plan to contain the debt crisis and the dollar slumped with the improved risk appetite. The sentiment is starting to improve with the incoming fundamentals easing recession woes and the plan announced, yet the uncertainty remains high and investors fear still the chapter after the relief rally, especially as they still do not know how and when will those new measures be activated, and especially the leveraged EFSF. This week is full of major releases with the rate decision from both the FOMC and the ECB alongside the G20 summit from Cannes and the infamous jobs report and according a volatile start for the week might be seen. The euro zone will starts the week at 10:00 GMT with the consumer price index annual estimate for October, which is expected to decline to 2.8% from 3.0%. The euro zone will also release the unemployment rate at 10:00 GMT, with expectations that unemployment lingered at 10% in September. The United States will join the session with the Chicago purchasing manager at 13:45 GMT, with expectations that the indicator could have retreated to 59.0 from 60.4 in October.

USD/JPY Technical Analysis for October 31, 2011

The USD/JPYfell again on Friday as traders started to lose fear on a Bank of Japan intervention, according to the options markets. The idea that they wouldn’t be as interested in the value of the Yen is probably a dangerous one to trade off of. The market is pressing the patience of the Bank of Japan, and we should see soon if they lose patience. The upside is probably more difficult for traders to stay in, but the 75.50 area has been very strong as support and intervention form that level would certainly knock a lot of the speculative traders out of the markets. Because of this, we buy only – but need to see supportive candle – which we don’t at the moment.

USD/JPY Fundamental Analysis for October 31, 2011

The USD/JPY pair dropped last week reaching its post-war level, as the weak dollar and the uncertainty regarding the financial market kept the yen high against the greenback, despite its decline against other major currencies. The Japanese yen retreated against European currencies but it held the gains against the dollar, since greenback dropped against other major currencies with the return of confidence to the financial market after the EU announcement. On Monday at 05:00 GMT, Japan will release the Construction Orders for September where the previous reading was 9.3%. The annual Housing Starts for September will be also released at 05:00 GMT, which is expected to drop to 0.906 million from the prior reading of 0.934 million. At 13:45 GMT, the U.S. economy will release the Chicago Purchasing Manager for October which is expected to ease to 59.0 from 60.4.

GBP/USD Technical Analysis for October 31, 2011

The GBP/USD marketrose again on Friday as traders continue to try and sell off the Dollar. The market has found what was once the August lows in the form of the 1.61 area. The market did finish with a green candle, but the rally faded towards the end of the session, signaling a small correction may be in the cards at this point. The 1.60 below should be supportive and somewhat of a floor at this point, and as long as we stay above that area, we will be bullish and buying the cable pair on dips. The 1.6150 level has to give way on a daily close for us to think this move has real legs, but the short-term trade should be fruitful if using the pullback and buy strategy.

GBP/USD Fundamental Analysis for October 31, 2011

As of 08:30 GMT, UK mortgage approvals will retreat to 50.5 thousands in Sep. from 52.4 thousands in Aug., according to median estimates, where the U.S. will release Chicago Purchasing Manager at 13:45 GMT which is predicted to retreat to 59.0 in October form 60.4 a month earlier. Once again, attention will probably come back to fundamentals as after the European debt deal struck last week the main focus will be on shoring up economies amid the sluggish global growth. This week, the main highlight will be on the infamous jobs report from the US as it will give an update regarding the status of the labour sector, after September’s report had shown better-than-expected reading. Yet, before the release of the jobs report eyes will be growth figures from the United Kingdom. If the data released this week showed improvement, the pair is predicted to continue its upside direction. However, the outlook for the British economy remains clouded with uncertainty as last week BoE policymaker Martin Weale said there is a possibility that the economy could witness contraction in the fourth quarter, while Paul Fisher said there is a high probability the U.K. could experience another recession and the BoE may add further to stimulus after the current round is completed.

USD/CHF Technical Analysis for October 31, 2011

The USD/CHF pairhad a slightly bullish day on Friday, showing that the 0.86 level is the start of possible support in this market. The 0.85 is a more significant level in our eyes, but this area that we found ourselves in on Friday is the top of the Swiss National Bank’s thrust upward from a few months ago. This should become an area where serious support steps up, and as such we are looking for buying opportunities. So far, we haven’t seen the candles for that – but we are watching.

USD/CHF Fundamental Analysis for October 31, 2011

The week starts with the release of no data from the Swiss economy, where the U.S. will release Chicago Purchasing Manager at 13:45 GMT which is predicted to retreat to 59.0 in October form 60.4 a month earlier. Once again, attention will probably come back to fundamentals as after the European debt deal struck last week the main focus will be on shoring up economies amid the sluggish global growth. This week, the main highlight will be on the infamous jobs report from the US as it will give an update regarding the status of the labour sector, after September’s report had shown better-than-expected reading. Yet, before the release of the jobs report eyes will be on manufacturing data from both economies. If data showed improvement, the pair is predicted to continue its downside fall as investors will leave the dollar as a favourite safe haven after the Swiss franc had lost its appeal as a refuge after the several interventions that took place since September and amidst speculations the bank will raise the euro cap against the franc to 1.40 from the current 1.20, especially as some earnings reports showed that many Swiss companies were affected by the franc’s appreciation, the pair is continuing its downside direction.

EUR/CHF Technical Analysis for October 31, 2011

EUR/CHFcontinues to sit still. The Swiss National Bank has put a “floor” in on this pair at the 1.20 level, and the whole world knows it. Because of this, we think that the sell side is without a doubt limited at this point. However, what we do find interesting about this market is that even though the EU has “fixed” itself, nobody is buying the Euro against the Franc. One would think that the Franc would get sold off massively as the SNB is trying to make this market rise. While this chart isn’t tradable at this point in time, it does show that not all is what it seems with the Euro perhaps. This chart is an interesting study in market sentiment currently, rather than a trading area.

EUR/CHF Fundamental Analysis for October 31, 2011

The EUR/CHF starts a new week on Monday with little market focus on the pair as it still lacks major momentum and even with the heavy volatility and the euro rally seen last week the pair ended the week nearly flat. Investors have little faith in favouring the euro over the franc amid this time of uncertainty, and even as the SNB set the floor for the pair, the risk is not worth taking for investors that still see the franc the needed haven even if the euro recovers on the announced EU plans to contain the debt crisis. We still see the pair to continue to trade within a limited tight range and only capable of trending to the upside with speculation for a new SNB move. The week from the euro area starts with the CPI estimate for October at 10:00 GMT which is expected to ease back to 2.8% from 3.0%. Also the euro area unemployment is due at the same time which is expected to hold at 1.0% in September.

AUD/USD Technical Analysis for October 31, 2011

The AUD/USD pairfell, and then rose again during the Friday session to form a hammer. The candle is at the top of the move up, so it is either supportive – and the rally has been strong, or it will be a “hanging man” if the bottom gives way. Either way, we think the tide has decidedly shifted in the favour of the Aussie for the time being. If we fall from the levels we see now, we think the 1.60 level will be the “floor” in this pair for a while. The breaking of the highs from Thursday will also be a signal to buy as well. We won’t sell until we break the low from Friday, and then only until 1.60 or so – we think the trend is too strong to risk a long-term sell at this point.

AUD/USD Fundamental Analysis for October 31, 2011

The AUD/USD pair ended last week with gains to reach its highest level in seven weeks, as greenback traded lower against most of major counterparts last week to give Aussie the chance to record more gains against the US dollar. The EU summit announcement regarding the aid plan to help the European countries and Greece from the current debt crisis, fuelled confidence in financial markets which drove investors to higher-yielding currencies such as the Australian dollar. On the other hand, talks about the possibility of activating the third round of quantitative easing caused more weakness to the greenback, which helped boost the risk appetite in the FX market and demand for Aussie. On Monday at 13:45 GMT, the U.S. economy will release the Chicago Purchasing Manager for October which is expected to ease to 59.0 from 60.4.

USD/CAD Technical Analysis for October 31, 2011

USD/CADrose and retested the parity level on Friday, only to fall back down. This shows us that the breakdown in this pair was a serious one, and we think a breaking of the lows on Friday could send us into selling positions. However, with all of the “noise” in the area at these levels, we think the action could be a grind, and less of a meltdown. The overall trend is still down, so we prefer selling at this point. We wouldn’t buy unless we find a way to rise and close above parity again.

USD/CAD Fundamental Analysis for October 31, 2011

The USD/CAD pair rebounded to the upside on Friday, where some analysts were sceptic whether the EU debt deal would be able to contain the euro zone debt crisis, in addition to the mixed income report from the United States, which showed personal income rose below expectations to drive the savings rate lower in September, as traders shunned risky assets and targeted lower yielding ones, which put negative pressure on the Canadian dollar, sending the USD/CAD pair higher as a result. Traders will be eyeing the FOMC rate decision next week, where the majority of analysts expect the FOMC to leave the current monetary policy unchanged, while on Monday, traders will be following the GDP figures from Canada, and the Chicago PMI from the United States. Monday October 31: Canada will release the industrial product price index for September at 12:30 GMT, where the index is expected to rise by 0.1% following the prior rise of 0.5% in August, while the raw materials price index is expected to drop in September by 2.4% following the prior drop of 3.2% in August. Canada will also release the Gross Domestic Product estimate for August, where GDP is expected to expand by 0.2%, compared with 0.3% in July, while compared with a year earlier GDP is expected to expand by 2.2%, compared with 2.3% in the prior estimate. The United States will join the session with the Chicago purchasing manager at 13.45 GMT, with expectations that the indicator could have retreated to 59.0 in October from 60.4 in September.

NZD/USD Technical Analysis for October 31, 2011

The NZD/USD pair fell during the early part of the Friday session, only to bounce again during the US session. The commodity tradehas been bullish, and the Kiwi has flourished as a result. The candle from Friday looks like a hammer, but can also be a “hanging man” if we break the bottom. So the trade set up is quite simple: we buy if it gets above the highs from Thursday, and sell if we get below the lows from Friday. We expect the 0.8000 level to be supportive in the case of a selling situation.

NZD/USD Fundamental Analysis for October 31, 2011

The NZD/USD pair advanced last week to trade near its highest level in six weeks, as the risk appetite droved investors to increase demand for higher-yielding currencies such as the Kiwi. The New Zealand dollar was able to record gains against the greenback, amid the current market sentiment which encourage more investment in the risky assets. The EU summit announcement helped fuel confidence and the risk appetite, while the stable outlook for the New Zealand economy increased chances for the Kiwi to record gains against the US dollar. On Monday, the New Zealand economy is to start the week’s fundamental data with the building permits index for September at 21:45 GMT (Sunday), after in August it surged 12.5%. At 02:00 GMT, New Zealand will issue the money supply M3 for the year ending September where the preceding reading inclined 5.5%. At 13:45 GMT, the U.S. economy will release the Chicago Purchasing Manager for October which is expected to ease to 59.0 from 60.4.

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