Forex Technical and Fundamental Analysis for September 28, 2011

EUR/USD Technical Analysis for September 28, 2011

 

 

EUR/USD rose for the session on Tuesday, but pulled back late in trading as reports came out of the EU that there was some kind of disagreement on the amount of “haircuts” or losses on Greek bonds. If this part of the agreement dissolves, it is a game changer and not in a good way. The pair is massively bearish, and any sense of trouble out of the EU sends this pair down. Because of that fact alone – we are net sellers on rallies. If we can break below the 1.34 level – this pair falls much, much farther.

 

EUR/USD Daily Fundamental Analysis for September 28, 2011

The EUR/USD was generally trading with positive momentum on Tuesday amid a relief rally across markets on hope that European leaders will be able to contain the debt crisis.

Speculation that the euro area leaders are ready and willing to take more action to contain the crisis started to spread some relief in the market and ease edgy investors. This eased sentiment saw investors take the vote from parliament inevitable and likely to pass the amendments to the EFSF role.

Papandreou from his turn tried to ease the woes by assuring markets to their commitment to rise and recover and contain their fiscal problems.

Speculation that the leaders are discussing more tools to build a firewall around Greece and also prevent other nations from suffering is the fuel for the positive sentiment which helped the market start to recover some of the losses. The speculation is around the possibility of expanding the EFSF whether the money support, or by leveraging the fund or even talk of a new special purpose vehicle that will be separate from the ECB and will purchase peripheral bonds from banks to the exchange if issued debt guaranteed by the EFSF, which is a similar form to the TARP as first submitted in the United States.

Also the speculation turned to the ECB and expected action next week whether by expanding the emergency loans or even cutting rates which is one of the reasons that is likely to limit the euro’s gains for the coming period as more talk is seen about rate cuts as soon as next week.

More volatility is expected on Wednesday as investors return to see the updates of Merkel and Papandreou’s meeting as well as the final vote from the Slovenian parliament. The lack of major data from the euro area will keep the focus on the debt crisis although the inflation data from Germany might be a reason for renewed speculation for the ECB’s move and accordingly pressure the euro if the expectations continued to be for a rate cut.

The German Import Price Index for August is due at 06:00 GMT and expected to have dropped 0.3% after 0.8% rise and on the year to fall to 6.8% following 7.0%.

Also from Germany we await the preliminary Consumer Price Index for September which is projected with a drop of 0.1% following a flat reading in July and on the year to hold at 2.4%. In EU Harmonized terms to drop 0.2% after it also remained unchanged in July and on the year to hold at 2.5%.

At 12:30 GMT the U.S. durable goods orders for August are due, where orders are expected with a drop of 1.0% following 4.0% rise and excluding transportation expected with 0.2% rise easing from 0.7% gain the previous month.

AUD/USD Technical Analysis for September 28, 2011

 

 

The AUD/USD pair surged in the early part of the Tuesday session to retest the parity level. However, during the session we saw a failure to breakthrough, and the pair looked weak in the end. The AUD is a “risk on” currency, and will get sold off in times of trouble. With the action late in the US session, one has to think that the parity level will continue to serve as huge resistance in this market. Because of that, we are selling rallies and will get much more aggressive to the sell side if we can close below 0.97 on the daily chart. We cannot buy until the parity level is completely cleared on a daily close.

 

AUD/USD Daily Fundamental Analysis for September 28, 2011

The Australian dollar inclined versus greenback after the European leaders said that they will do more to contain the debt crisis, prompting the investors to unwinding some of the fears and recover the losses endured in the past week.

Further, the Australian dollar (Aussie) continued its upside movement to reach the highest in two days against its U.S. counterpart as Asian shares extended a global rally in equities, supporting demand for higher-yielding currencies.

The market has turned its attention into the Australian economy as it is seen capable of sustaining the recovery during the next period with the strong outlook for Australia’s growth and the continued expansion in China, the largest market for Australian production.

The Europe Zone is continuing to struggle to contain its sovereign debt woes and said over the weekend it will actively implement the changes to the EFSF role and consider leveraging its capacity to protect nations and create a firewall around Greece.

On Wednesday the Australian economy will start the week with the new home sales index for August at 01:00 GMT after it dropped by 8.0% in July.

At 12:30 GMT, the U.S. economy will release the durable goods orders for August, where the expectations refer to a drop by 1.0% from the previous rise of 4.0%.

The durable goods exclude transportations are expected to come at 0.4% from the previous 0.7%.

EUR/CHF Technical Analysis for September 28, 2011

 

 

EUR/CHF still remains very stagnant as the Swiss National Bank continues to stand guard against the rising of the Franc. With the EU situation still very cloudy, it is going to be hard to buy this pair, but the shorting of it is going to be impossible as the SNB will certainly intervene if the pair falls again. Because of this, we are buyers – but only once Europe gets things together, and at that point – it is a long-term trade.

 

EUR/CHF Daily Fundamental Analysis for September 28, 2011

The eased jitters in the market over the future of the euro area helped the euro to hold its gains against the franc yet the EUR/CHF maintained the tight trading range .

The market started to unwind some of the euro negativity on hopes that European leaders are capable of containing the crisis and moving in the right direction.

The speculation is around the possibility of expanding the EFSF whether the money support, or by leveraging the fund or even talk of a new special purpose vehicle that will be separate from the ECB and will purchase peripheral bonds from banks to the exchange if issued debt guaranteed by the EFSF, which is a similar form to the TARP as first submitted in the United States.

More volatility is expected on Wednesday as investors return to see the updates of Merkel and Papandreou’s meeting as well as the final vote from the Slovenian parliament. The lack of major data from the euro area will keep the focus on the debt crisis although the inflation data from Germany might be a reason for renewed speculation for the ECB’s move and accordingly pressure the euro if the expectations continued to be for a rate cut.

Eyes will be on the data from Germany with the absence of data from the euro area and Switzerland. The German Import Price Index for August is due at 06:00 GMT and expected to have dropped 0.3% after 0.8% rise and on the year to fall to 6.8% following 7.0%.

Also from Germany we await the preliminary Consumer Price Index for September which is projected with a drop of 0.1% following a flat reading in July and on the year to hold at 2.4%. In EU Harmonized terms to drop 0.2% after it also remained unchanged in July and on the year to hold at 2.5%.

NZD/USD Technical Analysis for September 28, 2011

 

 

NZD/USD rose during the Tuesday session as the world reacted to a belief that the EU was getting closer to reaching a solution to the debt crisis. However, the pair failed at the 0.8000 resistance level that we warned about, and it looks like the downtrend is still going to be intact. We are selling rallies at this point as there is far too much bearishness in the market to think that the NZD will continue to rise.

 

NZD/USD Daily Fundamental Analysis for September 28, 2011

The New Zealand dollar advanced as stock gains boosted demand for so-called commodity currencies, along with the cheerful data from the Chinese economy, where China’ industrial production continued to accelerate, supporting the outlook for New Zealand products as the Chinese market is the largest market for New Zealand goods.

The New Zealand’s currency (Kiwi) gained against the dollar after an official said the European Central Bank may return to purchase the bonds along with further measures to ease monetary conditions.

On Wednesday, NZD building permits for August are due will at 21:45 GMT (Tuesday), where in the prior month it inclined 13.0% and now expected to drop by 1.5%.

Moreover, New Zealand will continue the fundamentals with the NBNZ activity outlook indicator for September at 01:00 GMT after it reached to 43.3 in August, also the NBNZ business confidence that recorded 34.4 in August.

Further, the New Zealand economy is to end the week’s data by releasing its annualized money supply M3 at 02:00 GMT, whereas the previous inclined 6.3% on the year.

On Wednesday at 12:30 GMT, the U.S. economy will release the durable goods orders for August, where the expectations refer to a drop by 1.0% from the previous rise of 4.0%. The durable goods exclude transportation is expected to come at 0.4% from the previous reading 0.7%.

USD/JPY Technical Analysis for September 28, 2011

 

 

USD/JPY continues to trade in a 100-pip range on Tuesday as traders are willing to consolidate instead of take on the Bank of Japan by selling this pair. The pair has been extremely reliable from a scalping standpoint recently, and as such should have made a lot of short-term traders very happy. Until something fundamentally changes in the outlook for the global economy, this pair could very well sit still as the BoJ is just under this level, and there is no real reason to sell the yen for the long-term at this point.

 

USD/JPY Daily Fundamental Analysis for September 28, 2011

The USD/JPY pair traded in a narrow range early Tuesday , as the refuge currencies lost momentum, where the greenback retreated against the euro and the sterling pound on expectations that EU policy makers are going to reach a final plane to contain the crisis.

The fears eased as the stock markets advanced widely, pushing investors to abandon lower yielding currencies such as the yen and dollar, which opened the way for the higher-yielding assets to cover their previous losses.

On the other hand, the USD/JPY pair lost its downside momentum to trade in a narrow rang due to lower demand for both currencies.

Furthermore, the Japanese currency reached its post-war levels against the dollar, increasing bets that the Bank of Japan could intervene for the third time this year in the FX market to prevent further gains for the yen.

On Wednesday at 12:30 GMT, the U.S. economy will release the durable goods orders for August, where the expectations refer to a drop by 1.0% from the previous rise of 4.0%. Durable goods excluding transportations are expected to come at 0.4% from the previous reading 0.7%.

GBP/USD Technical Analysis for September 28, 2011

 

 

GBP/USD spiked on Tuesday, continuing the three day rally in this pair. However, there was a bit of a selloff late in the session and this created a long wick at the top of the candle. The pair is most certainly in a downtrend, and as a result we are selling rallies. It looks that the short-term charts might offer selling opportunities as the pair looks limp in late session trading. We do not buy this pair as it is related to the “risk on” trade and there are far too many issues out there to think that headline risks won’t come back into the picture from time to time.

 

GBP/USD Daily Fundamental Analysis for September 28, 2011

On Tuesday trading,

the pair rose for a third consecutive session as a correction to the collapse of the pound near one-year low against the greenback on some hopes euro- area officials will do necessary measures, responding to pressure from the United States and IMF, to ease the tensions stemming from the European debt crisis. The dollar has been benefiting from being a safe haven amid, yet with some optimism in the market, investors left the dollar and bought pound and other high-yielding currencies. Regarding fundamentals, U.S. consumer confidence showed a decline 45.4 in September from 45.2 in August. On Wednesday, at 10:00 GMT, the U.K. will release CBI trends orders report, which is expected to have slight effect on the pair. Thereafter, eyes will be directed towards U.S. data, specifically to MBA mortgage applications for July 22, due at 11:00 GMT, which will be followed by durable goods orders report for June which is expected to show a 0.3% rise in June from the prior 1.9% advance. Finally, at 18:00 GMT, Fed’s Beige book will be out.

USD/CAD Technical Analysis for September 28, 2011

 

 

The USD/CAD pair fell hard on Tuesday as the 1.03 level proved to be too much. We suggested that a break of the Monday low would be a sell signal, and this proved to be true. However, mixed signals coming out of the EU and the proposed “haircut” on Greek bonds shook the Forex markets late in the day, driving people into buying the USD. The Dollar gained against all currencies, and the Loonie was no different. It should be noted that the end of the day had the 1.02 level looking somewhat firm as well. We aren’t willing to sell after the afternoon reaction, but buying is going to be hard to do until we get a new high.

 

USD/CAD Daily Fundamental Analysis for September 28, 2011

The USD/CAD pair fell on Tuesday to the downside , as risk appetite improved in markets after reports suggested EU officials are preparing measures to ease tensions in the euro zone area, which provided the Canadian dollar with strong bullish momentum that pushed the USD/CAD pair to drop.

The USD/CAD pair could still extend its downside wave on Wednesday given that optimism continues to dominate markets however, if pessimism spreads again, the pair will rise back. Overall, we still expect the USD/CAD pair to rise, since conditions in markets haven’t stabilised yet.

Wednesday September 28:

At 12:30 GMT the U.S. durable goods orders for August are due, where orders are expected with a drop of 1.0% following 4.0% rise and excluding transportation expected with 0.2% rise easing from 0.7% gain the previous month.

USD/CHF Technical Analysis for September 28, 2011

 

 

USD/CHF fell on Tuesday as traders sold the Dollar to buy riskier assets in general. However, the USD/CHF pair did see a bit of a rebound late in the day as the rallies worldwide fell off. The pair is being supported by the Swiss National Bank, and as a result – we do not sell, only buy on dips. The pair looks bullish, but the nature of this pair suggests that it might be choppy with a positive tone going forward. We cannot sell with the SNB lurking below.

 

USD/CHF Daily Fundamental Analysis for September 28, 2011

On Tuesday, the pair continued its drop for the third session as the wave of optimism spreading in markets, on hopes European leaders will introduce measures to prevent the debt crisis from worsening, damped demand on the dollar as a favourite safe haven, where the several interventions by the SNB reduced the appeal of the franc.

Earlier on Tuesday, the franc slipped after the drop in Swiss consumer demand to the lowest in almost two years in August as the index fell to 0.79 from a revised 1.28 in July. The data added to worries that the Swiss economy will face sluggishness, where the KOF lowered growth projections to 2.3% this year and 1.5% in 2012 from 2.8% and 1.9% respectively.

In the U.S., consumer confidence showed a decline 45.4 in September from 45.2 in August.

On Wednesday, Eyes will be directed towardsU.S.data, amid the absence of news from Switzerland, specifically to MBA mortgage applications for Sep. 23, due at 11:00 GMT, which will be followed by durable goods orders report for Aug. which is expected to show a 1.0 drop from the prior 1.9% advance.

 

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