Forex Technical and Fundamental Analysis for September 16, 2011

EUR/USD Technical Analysis for September 16, 2011

 

 

The EUR/USD pair spiked on the session during Thursday as the announcement of USD liquidity measures out of no less than 5 central banks will help the EU banks borrow in USD. The move effectively takes a lot of pressure off of the banks in Europe as far as a freezing of credit and lending. However, it does not protect against sovereign debt risk as they are priced in Euros. The pair rocketed up to the 1.3950 area, but slowed and fell back a bit in the later hours of trading. The 1.40 area is just above, and it appears there will be serious resistance at the mark. The pair is susceptible to headline risk, and any news coming out of the EU that is negative will push this pair much lower. We feel there is a massive trade coming, but we will more than likely have to test the 1.40 area first, and make our decision from that price action.

 

EUR/USD – Sept 16, 2011

EUR/USD Daily Fundamental Analysis for September 16, 2011

The EUR/USD moved higher on Thursday with the improved sentiment in the mark and eased Greek woes yet later in the session rallied after the unexpected move from the ECB with other central banks to increase dollar funding to ease market tension.

Investors reacted positively to the ECB’s announced coordinated action with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to conduct three more US dollar liquidity-providing operations with a maturity of around three months till the end of the year.

The central bank acted preemptively to tightening credit markets and sign of troubled interbank lending to contain the crisis before it worsens as bank lending started to suffer with rising pessimism and risk of Greek default and debt contagion in the region.

Already, the market was moving higher on support from Merkel and Sarkozy that stated their confidence in Papandreou’s steps to ensure Greece meets is fiscal conditions for the bailout and that the nation will not drop out of the euro.

We can see the sentiment improving and surely all the focus remains on the debt crisis and the means to counter the threat of expansion, offsetting the effect of the negative data from the U.S. and deviating the focus from the weakening global growth.

On Friday we expect the market to continue to react to the ECB’s surprise move while choppy trading will be evident with the end of the week trading. Eyes will be on more remarks from the finance chiefs and central banks as they gather for the summit in Poland which for the first time will be attended by U.S. Treasury Secretary Geithner.

The euro area will end the week with the trade figures for July at 09:00 GMT. The Trade surplus might have expanded to 2.0 billion from 0.9 billion in non-seasonally adjusted terms and the current account is also due after recording a shortfall of 7.4 billion the previous month in seasonally adjusted terms.

Eyes in will be as we said on the EU Finance Ministers and Central Bankers that will start their two-day meeting in Poland to discuss the deepening debt crisis with hope they will finalise the support mechanism and decisions agreed upon in the last summit.

The United States will end the wee with the TIC Flows for July at 13:00 GMT; the net long-term TIC flows the previous month were reported at $3.7 billion and total net TIC flows at -$29.5 billion.

At 13:55 GMT the preliminary Michigan Consumer Confidence index is due and expected to rise slightly to 56.3 from 55.7 the previous month.

AUD/USD Technical Analysis for September 16, 2011

 

 

The AUD/USD pair fell and then rose during the Thursday session. The resulting candle was a daily hammer, and this is the second one in a row. It is hard to ignore these types of signals, and it looks like the AUD/USD will rise much easier than it will fall. However, we see the 1.05 area as a massive resistance barrier, and we think that it will provide plenty of problems for the bulls. The pair could be bought on a break of the Wednesday highs, but you should keep stops tight in this kind of situation. Continued consolidation may be in order, between the 1.01 and 1.06 marks.

 

AUD/USD Daily Fundamental Analysis for September 16, 2011

The Australian dollar suffered a sharply decline in the Asian session on Thursday against its major counterparts, where Aussie was pressured with the revised inflation calculations that made it less likely for the RBA to increase rates.

The revised method of calculating inflation means that the Reserve Bank of Australia is to reduce its CPI forecasts for the Jun-December, adding to speculation that the Bank will cut its benchmark interest rates by 155 basis points during the next 12 months.

On the other hand, the President of RBA, Mr. Stevens, said “households watching global and local events may continue their precautionary behaviour for longer than otherwise and help weaken demand compared with the central bank’s August forecasts.”

On Friday, the Australian economy is to end this week without releasing any data, but at 13:00 GMT, the U.S. economy will release the net long-term TIC flows for July, where the previous reading was $3.7 billion while the total net TIC flows had a previous reading of -$29.5 billion.

At 13:55 GMT, the U.S. economy will release the University of Michigan survey of consumer confidence for September, where the preliminary reading is expected to come at 56.6 from the prior reading of 55.7.

EUR/CHF Technical Analysis for September 16, 2011

 

 

The EUR/CHF continues to barely move as the pair has been effectively killed by the Swiss National Bank. The Thursday action did see a slight rise in the value of the Euro versus the Franc, but it was minor in the end. The pair will need Europe to get it together in order for it to rise. The Swiss have effectively “pegged” the EUR/CHF to 1.20, so shorting is almost impossible at this point. We are currently waiting to see if the EU can find some footing, otherwise this pair will be tough to trade.

 

EUR/CHF Daily Fundamental Analysis for September 16, 2011

The EUR/CHF pair is still wedged within the same trading area even after the SNB confirmation on Thursday that it will defend the new floor set and stands ready to act against the franc’s rally.

The pair continues to lack the momentum needed to move strongly as the SNB move depressed the appeal for the euro-franc traders. The SNB on Thursday failed to weaken the franc much after reiterating their commitment to a weaker franc and providing strong downside revision to growth and inflation projections for the coming two years.

Also the euro gains and eased jitters failed to provide any appeal to the pair or drive it higher as it remain to hover around the same levels since the opening of the week. In a surprise move the ECB’s announced coordinated action with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to conduct three more US dollar liquidity-providing operations with a maturity of around three months till the end of the year.

The central bank acted preemptively to tightening credit markets and sign of troubled interbank lending to contain the crisis before it worsens as bank lending started to suffer with rising pessimism and risk of Greek default and debt contagion in the region.

We can see the sentiment improving and surely all the focus remains on the debt crisis and the means to counter the threat of expansion, yet still haven demand is limited on the franc with the SNB intervention threat and the outlook for the euro remains weak for now.

On Friday we expect the market to continue to react to the ECB’s surprise move while choppy trading will be evident with the end of the week trading though the same tight range is expected to be seen for the EUR/CHF pair. Eyes will be on more remarks from the finance chiefs and central banks as they gather for the summit in Poland which for the first time will be attended by U.S. Treasury Secretary Geithner.

The euro area will end the week with the trade figures for July at 09:00 GMT. The Trade surplus might have expanded to 2.0 billion from 0.9 billion in non-seasonally adjusted terms and the current account is also due after recording a shortfall of 7.4 billion the previous month in seasonally adjusted terms.

NZD/USD Technical Analysis for September 16, 2011

 

 

NZD/USD found itself chopping around during the Thursday session, and has shown the 0.81 area to be supportive. The pair will be hard to short until we break the 0.80 level – an area we see as vital to the uptrend. The pair looks like it wants to bounce, but it should be said that the 0.85 – 0.86 levels gave it fits the last time it rallied. Because of this, we feel consolidation between 0.81 and 0.86 will be the play for the next several days and weeks. A breaking of either sends the pair in a new direction, and until that happens, we are buying towards the bottom of the range, and selling towards the top.

 

NZD/USD Daily Fundamental Analysis for September 16, 2011

The New Zealand dollar (Kiwi) also plunged against the US dollar after the US economy reported that retail sales stagnated. Moreover, the Reserve Bank of New Zealand (RBNZ) kept benchmark interest unchanged at 2.50% during this month, damping demand for Kiwi.

Moreover, Germany and France leaders announced that they are going to support the Greek debt crisis; also they noted that Greece will remain in the Euro-Zone, while the China also expressed the willingness to support Europe, easing some pressures, but the fears still dominate the market’s movements.

On the other hand, New Zealand policy makers indicated that the economic performance is on the tack amid the sluggish global growth, where the risk is for the global economy to slow sharply.

On Friday, at 01:00 GMT, New Zealand economy will report the September consumer confidence index after it rose 3.6% to 113.3 in August.

At 13:00 GMT, the U.S. economy will release the net long-term TIC flows for July, where the previous reading was $3.7 billion while the total net TIC flows had a previous reading of -$29.5 billion.

At 13:55 GMT, the U.S. economy will release the University of Michigan survey of consumer confidence for September, where the preliminary reading is expected to come at 56.6 from the prior reading of 55.7.

USD/JPY Technical Analysis for September 16, 2011

 

 

The USD/JPY pair originally shot up during the Thursday session, but quickly retreated as the word got out that 5 central banks are increasing the available Dollars for banks to lend each other in Europe. Because of this, the USD got sold off in various other markets, and in turn it sank in this market. We still see 76 as a massive support barrier, and don’t sell because of it. The market isn’t sellable, and as such – we are looking for supportive candles. The Bank of Japan will certainly be aware of any breaking down in this pair, and will intervene if the pair falls too far.

 

USD/JPY Daily Fundamental Analysis for September 16, 2011

The USD/JPY fluctuated on Thursday with eased jitters across the board over Greece which helped Japanese shares move higher in the session after leaders pledged support for the debt-laden nation.

Some of the woes eased and that helped unwind some of the haven pressure on the Japanese yen. Germany and France pledged support to Greece and dismissed expectations for the nation to drop out of the euro as Papandreou remains committed to fiscal consolidation and meeting the budget target for the year to enable his nation to acquire the new bailout.

Still, the focus remains on the progress in Greece and the growth status for the global economy which is the main source of volatility for markets. We can see slight unwinding of pessimism which will weaken the yen against its majors, yet choppy trading will remain evident with persisting overall uncertainty and high risk.

On Friday, at 13:00 GMT, the U.S. economy will release the net long-term TIC flows for July, where the previous reading was $3.7 billion while the total net TIC flows had a previous reading of -$29.5 billion.

At 13:55 GMT, the U.S. economy will release the University of Michigan survey of consumer confidence for September, where the preliminary reading is expected to come at 56.6 from the prior reading of 55.7.

GBP/USD Technical Analysis for September 16, 2011

 

 

The GBP/USD pair rose on Thursday as the hammer from the Wednesday session was triggered for a buy signal. However, towards the end of the session, the buying abated and even formed a 4 hour shooting star at the 1.58 level. We mentioned that we didn’t like buying this market because the 1.60 looked far too strong to fight, and it appears that we may be proven correct. A breaking of the lows on Wednesday sends this pair much lower, perhaps to 1.53 before serious support comes into play. We won’t buy until the daily close above 1.61 or so.

 

GBP/USD Daily Fundamental Analysis for September 16, 2011

On Thursday trading, the pound rebounded against the dollar after the release of retail sales data which showed better-than-expected drop in retail sales in August.

 

Also, the pound benefited from the improvement in the sentiment which came after the ECB decision along with other major central banks which involve providing European banks with dollar loans to help in easing funding pressure on them till the end of the year.

 

On the other hand, the dollar was pushed down after the grim jobless data which showed that jobless claims rose to the highest level since June.

 

On Friday, the British economy ends the week with no releases, yet the United State swill release TIC Flows for July at 13:00 GMT, followed by the preliminary Michigan Consumer Confidence index, which is forecasted to show a rise to 56.3 in Sep. from the previous 55.7, at 13:55 GMT.

USD/CAD Technical Analysis for September 16, 2011

 

 

USD/CAD fell on the Thursday session, falling far enough to find the recent lows in the 0.9850 area. The support area we have marked is between 0.98 and 0.97 as far as larger support, and as such – we feel that any continuation of this fall is going to be difficult to sell at this level. We would be sellers on a daily close under the 0.97 mark, and would aim for several handles at that point, with 0.9450 as our first target. We will be watching the oil markets, as demand for oil creates demand for Canadian dollars. If the oil markets can rally significantly, we will more than likely see this pair fall. If not, we stay in consolidation.

 

USD/CAD Daily Fundamental Analysis for September 16, 2011

The USD/CAD pair dropped on Thursday amid rising risk appetite in markets, where Germany and France announced they will continue to support Greece, as they assured markets that Greece will remain in the euro bloc, while central banks around the world led by the European Central Banks will provide European banks with the three medium-term loan operations in October, November, and December, to help ease some of the pressures, as European banks are struggling to receive funding recently, which supported confidence in markets, providing the Canadian dollar with strong momentum to push the USD/CAD pair to the downside.

If the current wave of optimism continues to dominate markets, we should expect the USD/CAD pair to extend its downside wave, nonetheless, we expect the bearish wave to continue over the short term only, since the medium term outlook still suggests that the pair will continue to rise, unless the Fed announce a huge amount of monetary easing next week.

Friday September 16:

Eyes in Europe will be on the EU Finance Ministers and Central Bankers that will start their two-day meeting in Poland to discuss the deepening debt crisis with hope they will finalise the support mechanism and decisions agreed upon in the last summit.

The United States will end the week with the TIC Flows for July at 13:00 GMT; the net long-term TIC flows the previous month were reported at $3.7 billion and total net TIC flows at -$29.5 billion.

At 13:55 GMT the preliminary Michigan Consumer Confidence index is due and expected to rise slightly to 56.3 from 55.7 the previous month.

USD/CHF Technical Analysis for September 16, 2011

 

 

USD/CHF fell on Thursday, but has bounced off of the 200-day moving average. The pair is a “buy only” pair as the USD is the last remaining global safe haven, and the CHF is being actively worked against by the Swiss National Bank. We see the 0.85 – 0.83 zone to be vital for support, and are waiting to see if the moving average holds, or if the zone does. If we get supportive action in either area, we are happy to buy this pair. We don’t sell at all, as the SNB has the ability to print and sell an unlimited amount of Francs.

 

USD/CHF Daily Fundamental Analysis for September 16, 2011

On Thursday, the dollar retreated against the franc as the dollar was affected by grim jobless data which showed that jobless claims rose to the highest level since June.

The sentiment showed some improvement after the ECB along with other major central banks said it will provide European banks with dollar loans to help in easing funding pressure till the end of the year.

The announcement boosted demand on high-yielding currencies, where the franc did not take advantage of the SNB announcement that it will take all necessary measures to defend the ceiling target of the franc against the euro.

On Friday, the Swiss economy ends the week with no releases, yet theUnited Stateswill release TIC Flows for July at 13:00 GMT, followed by the preliminary Michigan Consumer Confidence index, which is forecasted to show a rise to 56.3 in Sep. from the previous 55.7, at 13:55 GMT.

 

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