Forex Technical And Fundamental Analysis For The Week Of November 21, 2011

EUR/USD Technical Analysis for the Week of November 21, 2011

EUR/USDhad a very bearish week these past 5 sessions, but managed to close just above the all-important 1.35 level. The pair is finding a lot of support just below, so it more than likely will be a fight to get this pair to stay down for long periods of time. However, the previous week’s hammer was violated to the downside, and this is a very bearish sign. This pair is a sell only pair, but better serves you if you sell rallies instead of trying to force it down.

EUR/USD Fundamental Analysis for the Week of November 21, 2011

The EUR/USD pair ended a strongly bearish week, where during last week the pair kept on extending the losses as pessimism and rising debt concerns controlled markets and investors and pushed them away from demanding risky investments, especially after yields surged on indebted nation’s bonds, which raised fears that the debt crisis is spreading now in terms of higher yields on European bonds. However, a slight wave of optimism spread in the market after the European Central Bank intervened and bought Italian and Spanish bonds, which sent yields lower and supported bonds to gain value, which in result supported the euro to recover some of the losses incurred during the week on Friday. GreeceandItalywere able to end the political instability this week, as both nations assigned new Prime Ministers to save the nations from a deeper crisis, whereGreeceassigned the former European Central Bank vice president, Lucas Papademos as the new Premier, whileItalyhanded the former European Commissioner, Mario Monti the premiership. Greece and Italy accelerated the implementation of the austerity measures and will pass them through the parliament and now all eyes will be focused during this week on the European Union leaders’ meeting in Brussels, where both new premiers are to join them in a discussion about the economic and financial situation in the euro-area region, while during the meeting both premiers will present their plans to cut spending and meet targets. On Sunday, general elections will take place in Spain, as the Spanish Prime Minister’s period came to an end and now eyes will be focused on the new elected government, with expectations that the People’s Party will take the lead and the party leader will become the next Premier, which could add positivity to the market as he pledged to lower Spain’s deficit to 4.4% of the total GDP next year. During the week, investors will have their eyes concentrated on bonds auctions in Italy, France and Spain, where all markets are tracking yields’ behaviour and movements in Europe, as last week yields climbed to all-time record since founding the one currency union, which sent the euro south, where rising yields could prevent European nations from accessing the capital market as they rise to unsustainable levels. Eyes will also be concentrated on the United States, where by November 23 (Wednesday) lawmakers should find common grounds and provide markets with a final plan to cut the U.S. huge budget deficit over the coming 10 years, where in case lawmakers didn’t agree, a previously set plan, which is expected to cut the deficit by 1.2 trillion dollar over the period, will be activated as they reached the deadline without providing any comprehensive measures. Turning to critical fundamentals expected this week,GermanyandU.S.will release the gross domestic product figures, which are expected to have major impact on the pair, while the euro zone andGermanywill provide data regarding the manufacturing and services sectors’ performance in November, and finally the United State swill release the income report. Volatility and heavy fluctuations are highly possible this week, especially with heavy fundamentals load in addition to the political and financial decisions from Europe and the U.S, noting that the United Stateswill be in the Thanks Giving Holiday on Thursday, while on Friday there will be an early closing in the New York session Other news from the euro area and the U.S. economy to affect the pair this week: Monday November 21: The euro zone will start this week at 09:00 GMT with the current account figures for September, where the previous non-seasonally adjusted deficit was 6.3 billion euros, while the previous seasonally adjusted deficit was 5.0 billion euros. The United Stateswill join the session at 15:00 GMT with the existing home sales figures for October, with expectations that the existing homes sales could have retreated to 4.80 million houses from 4.91 millions. In addition, the monthly existing home sales index could show that sales dropped by 2.2% from the previous drop of 3.0%. Tuesday November 22: The euro zone will start the session at 15:00 GMT with the consumer confidence indicator for November in the advanced reading, where the indicator stood at -19.9 in the previous month. At 13:30 GMT the United States will join the session with the GDP figures for the third quarter in a second reading, where the quarterly annualized GDP index could have lingered at 2.5%, while the personal consumption index could have stood at 2.4%, in the time GDP price index is expected unchanged at 2.5%. Finally, the quarterly core PCE is projected steady at 2.1%. At 19:00 GMT the Federal Reserve will release the Minutes of FOMC last meeting. Wednesday November 23: Germany will start the session at 08:30 GMT with the PMI manufacturing and service for November in an advanced reading, where the PMI manufacturing is expected to decline further to 48.4 from 49.1, while the PMI services could have slipped to 50.0 from 50.6. At 09:00 GMT the euro zone will join the session with the PMI Composite for November in an advanced reading, as the PMI composite is expected to contract further reaching 46.2 from 46.5, while the PMI manufacturing could have contracted further to 46.5 from 47.1, in the time the PMI service is expected lower at 46.0 from 46.4. At 10:00 GMT the euro zone will provide the industrial new orders figures for September, where the non-seasonally adjusted annual index could have expanded by 8.0% from 6.2%, while the seasonally adjusted monthly index could have dropped by 2.6% from 1.9%. At 13:30 GMT the United States will join the session with the durable goods figures for October, where durable goods orders could have fallen 1.0% from the previous drop of 0.8%, while durable goods excluding transportation index is expected unchanged, noting that the previous expansion was 1.7%. The United Stateswill also release the income report at 13:30 GMT, with expectations that the personal income index could have improved 0.3% from 0.1%, while the personal spending index could have expanded by 0.3% from 0.6%. Furthermore, the annual PCE Deflator could have expanded by 2.7% from 2.9%, while the monthly PCE core could have improved 0.1% from the previous zero expansion, in the time the annual PCE core is expected higher at 1.7% from 1.6%. In addition, the United Stateswill provide markets with the initial jobless claims figure for the 19th of November, where the number of claims could have eased to 385 thousands from 388 thousand. At 14:55 GMT the Untied States will end the session withUniversityofMichiganconfidence for November in a final reading, where the confidence could have improved slightly to 64.5 from 64.2. Thursday November 24: Germany will start the session at 06:00 GMT with the GDP figures for the third quarter in a final reading, where the seasonally adjusted quarterly GDP is expected unchanged at 0.5%, while the working-day adjusted GDP index is expected at 2.6%. In addition, the domestic demand index for the third quarter is expected unchanged at 0.4%, while exports are expected to expand by 1.7% from 2.3%. At 09:00 GMT Germany will release the IFO survey for November, where the business climate indicator could have retreated to 105.2 from 106.4, while the current assessment indicator could have declined to 115.2 from 116.7, in the time expectations indicator could ease to 96.0 from 97.0. The United States (Thanks Giving Holiday) Friday November 25: There are no fundamentals affecting the EUR/USD pair. The United States (Early closing)

USD/JPY Technical Analysis for the Week of November 21, 2011

USD/JPYcontinued to grind lower after the intervention by the Bank of Japan this last week. The pair is going to be tough for long-term traders as the range simply is too tight for a long-term trade. The selling of this pair has been the only way to go, but occasional interventions make that a dangerous proposition from time to time. Because of this, we advise long-term traders to avoid this pair currently.

USD/JPY Fundamental Analysis for the Week of November 21, 2011

The USD/JPY dropped for the second consecutive week since the BOJ intervened in the FX market, where risk aversion returned in the financial market to increase demand for safe have currencies such as the yen and greenback. Bank of Japan did not introduce any new support to the Japanese economy during the last meeting, while the Japanese authorities lowered the economic assessment, increasing fears among investors which returned to prefer investment in the Japanese currency. The greenback also witnessed a strong performance against most of its major counterparts excluding the yen, where the federal currency reached its highest level in five weeks against the euro and the highest in four weeks against the British pound. The EU debt crisis still dominates investors’ sentiment and reflected negatively on other economies performance, fueling the pessimistic outlook for the global economy, pushing readers to abandon riskier assets. Adding to the gloomy picture, the credit agency Fitch warned the United States banking sector of a possible infection from the EU crisis, which could lead to downgrade some banks in U.S. On the other hand, the expected movement for the USD/JPY pair is to continue moving to downside adding more pressure on the BOJ to intervene once again in the FX market. Major highlights for this week that will affect the USD/JPY pair’s trading: Monday November 21: On Monday at 23:50 GMT (Sunday), Japan will issue Merchandise Trade Balance for October, where it’s expected to show surplus of 28.8 billion yen compare to the previous surplus of 300.4 billion yen. The Adjusted Merchandise Trade Balance for October is expected to show a deficit of 82.0 billion yen widening from 21.8 billion yen deficit. At 04:30 GMT, the Japanese economy will release the All Industry Activity Index for September, where it’s expected to fall by 1.0% from the previous reading of –0.5%. Coincident Index for September will be released at 05:00 GMT, where it had a prior reading of 88.9, while the Leading Index for the same month had a previous reading of 91.6. At 15:00 GMT, the U.S. economy will release the Existing Home Sales for October, where it’s expected to come at 4.80 million down by 2.2% from the previous reading of 4.91 million which is down by 3.0%. Tuesday November 22: On Tuesday at 13:30 GMT, the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where it’s expected unrevised at 2.5%. The Personal Consumption for the third quarter is also expected unrevised at 2.4% as well as the Core Personal Consumption Expenditure to hold at 2.1%. At 19:00 GMT, the Federal Reserve Bank will release its minutes for the Nov. 1-2 FOMC meeting. Wednesday November 23: On Wednesday at 13:30 GMT, the U.S. economy will release the Durable Goods Orders for October, which is expected to come at –1.0% from the previous –0.8%. Also the Personal Income for October will be released at the same time and expected to improve to 0.3% from 0.1% while the U.S. Personal Spending is expected to slow to 0.3% from 0.6%. The annual Personal Consumption Expenditure Core for October is expected to come at 1.7% compare to the previous reading of 1.6%. At 13:30 GMT, the U.S. economy will issue its weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance fell to 388 thousand last week. Finally, the U.S. economy will release the University of Michigan Confidence for November at 14:55 GMT, where the final reading is expected to come at 64.5 from the prior reading of 64.2. Thursday November 24: Both economies will not release any data on Thursday, while U.S. markets will be closed for Thanksgiving Holiday. Friday November 25: On Friday at 23:30 GMT (Thursday), Japan will release the annual National Consumer Price Index for October, where it’s expected to come at –0.2% from the previous reading of 0.0%. The National Consumer Price Index Ex-Fresh Food is expected to show a drop of 0.1%.

GBP/USD Technical Analysis for the Week of November 21, 2011

GBP/USDfell during the week as the Bank of England looks set to take on more quantitative easing. The safety status of the Dollar also helps, and should continue to propel this pair lower over the coming weeks. The 1.55 level look set to be tested, and the 1.53 level looks very supportive. It is at these levels that real questions will be asked of the Pound. The pair looks weak, and as a result we like selling rallies. Buying isn’t an option at these levels.

GBP/USD Fundamental Analysis for the Week of November 21, 2011

In the week ended Nov 18, the GBP/USD showed decline for the third week as the tensions stemming from the euro area enhanced demand on the dollar as a refuge. The rise in Spanish and French bond yields on the back of the soar of Italian 10-year notes above 7%, the highest since the inception of the euro, triggered concerns the debt contagion is spreading among the euro region’s largest economies. The political changes taking place in the region’s highly indebted nations, namely Greece and Italy, could not allay fears, especially amid disputes between European leaders regarding the role of the ECB to counter crisis and the veil of details of expanding the EFSF rescue fund so far. In the U.K., the Bank of England (BoE) said in its quarterly inflation report raised concerns as it mentioned that growth outlook is now weaker and inflation will fall sharply over 2012, referring that the outlook for both growth and inflation is likely to depend on the latest developments in the euro zone. However, the improvement in the U.S. data managed to ease some of the tensions in the market, yet it did not shift the sentiment as the main concern meanwhile is on the euro zone as investors believe the debt crisis may drag global economies into another recession as well as financial turbulences. This week, the main focus will be on 3q GDP preliminary reading, BoE minutes and public finance data. In theU.S., the main highlight will be GDP 3q annualized second reading, minutes of FOMC meeting and other important data. The release of the data this week will be as follows: Monday Nov 21: While the U.K. economy lacks fundamentals, as of 15:00 GMT, the U.S. will release existing home sales which are estimated to record 2.2% drop in Oct. compared with a prior of -3.0%. Tuesday Nov 22: At 09:30 GMT, public finance excluding interventions will be due with expectations referring to a narrowing in deficit to 6.6 billion pounds in Oct. from the prior 14.1 billion pounds. In theU.S., the main focus will be on the main highlight of the week which is GDP annualized for the third quarter (second reading), which is predicted to remain unrevised at 2.5%, where it will be available at 13:30 GMT. Thereafter, the concentration will shift to minutes of the FOMC meeting due at 19:00 GMT. Wednesday Nov 23: Attention will be toward BoE minutes, due at 09:30 GMT, release which may show a split among policy makers as some may have supported more stimulus to boost the economy amid the sluggish recovery pace.  At the same time, U.K. BBA loans for house purchase for the month of Oct. will be released. For theU.S., eyes will be on MBA mortgage applications for Nov. 18 at 12:00 GMT while will be followed by durable goods and personal spending at 13:30 GMT. Durable goods report is predicted to show a drop of 1.0% in Oct. from the prior 0.8% drop, while personal spending will signal a drop to 0.3% in Oct. from 0.6% in Sep. Due to thanks giving holiday on Thursday, initial jobless claims for the week ending Nov. 19 and continuing claims for the week ending Nov. 11 will be available at 13:30 GMT. Thereafter, at 14:55 GMT,University of Michigan confidence will show a rise to 64.5 in Nov. from the prior 64.2. Thursday Nov 24: TheU.K.will release 3q GDP preliminary reading which is estimated to remain unrevised at 0.5%.  At 11:00 GMT, CBI trends total orders for Oct. will be out, yet the news is not expected to have a significant impact on the pair’s movements. However, trading on the pair may be calm due to thanks giving holiday. Friday Nov 25: The week ends with the release of no data from both economies which suggest that the pair will follow the general sentiment in market.

USD/CHF Technical Analysis for the Week of November 21, 2011

USD/CHF continued to rise this past week as the world buys Dollars. The safe haven trade is helping push this pair higher as the Swiss National Bank is currently working against the value of the Franc. The pair should continue to rise over time, and a breaking of the 0.93 level would actually constitute a trend change as it shows a higher high. We like buying dips, and if we get above the 0.93 area, might even hold onto longs in this pair for quite some time going forward.

USD/CHF Fundamental Analysis for the Week of November 21, 2011

In the week ended Nov 18, the USD/CHF showed incline for the third week as the tensions stemming from the euro area enhanced demand on the dollar as a refuge. The rise in Spanish and French bond yields on the back of the soar of Italian 10-year notes above 7%, the highest since the inception of the euro, triggered concerns the debt contagion is spreading among the euro region’s largest economies. The political changes taking place in the region’s highly indebted nations, namelyGreeceandItaly, could not allay fears, especially amid disputes between European leaders regarding the role of the ECB to counter crisis and the veil of details of expanding the EFSF rescue fund so far. However, the improvement in theU.S.data managed to ease some of the tensions in the market, yet it did not shift the sentiment as the main concern meanwhile is on the euro zone as investors believe the debt crisis may drag global economies into another recession as well as financial turbulences. This week, the main focus will be on Swiss trade data, amid speculations the SNB may intervene again to raise the franc’s cap against the euro, especially as the recent Swiss companies’ earnings reports showed the profits were negatively affected by the franc’s appreciation. In theU.S., the main highlight will be GDP 3q annualized second reading, minutes of FOMC meeting and other important data. The release of the data this week will be as follows: Monday Nov 21: The Swiss economy will start the day with the release money supply M3 for the year ending Oct. at 08:00 GMT. As of 15:00 GMT, theU.S.will release existing home sales which are estimated to record 2.2% drop in Oct. compared with a prior of -3.0%. Tuesday Nov 22: At 06:00 GMT, the Swiss economy will release its most important data for the week which is trade data for Oct. with exports and imports during the month. In theU.S., the main focus will be on the main highlight of the week which is GDP annualized for the third quarter (second reading), which is predicted to remain unrevised at 2.5%, where it will be available at 13:30 GMT. Thereafter, the concentration will shift to minutes of the FOMC meeting due at 19:00 GMT. Wednesday Nov 23: Eyes will be on MBA mortgage applications for Nov. 18 at 12:00 GMT while will be followed by durable goods and personal spending at 13:30 GMT. Durable goods report is predicted to show a drop of 1.0% in Oct. from the prior 0.8% drop, while personal spending will signal a drop to 0.3% in Oct. from 0.6% in Sep. Due to thanks giving holiday on Thursday, initial jobless claims for the week ending Nov. 19 and continuing claims for the week ending Nov. 11 will be available at 13:30 GMT. Thereafter, at 14:55 GMT,UniversityofMichiganconfidence will show a rise to 64.5 in Nov. from the prior 64.2. Thursday Nov 24: Both economies lack economic fundamentals which propose that there would be calm trading on the pair, especially due to thanks giving holiday, which is predicted to follow the general trend in market as it will not able to get direction from data. Friday Nov 25: The week ends with the release of no data from both economies which suggest that the pair will follow the general sentiment in market.

EUR/CHF Technical Analysis for the Week of November 21, 2011

EUR/CHFcontinues to sit still as the week was unchanged. The pair is being supported by the Swiss National Bank but still cannot clear the 1.25 level. Once it does – this pair becomes as long-term buy and hold trade. But at the moment, there are no signs that this will happen any time soon. The pair looks ready to run to the upside, but the Europeans are going to have to get the debt crisis under control before it does, and this is something that seems a long way off. We buy for the long-term on a weekly close above 1.25 at this point, and can only wait for it to happen.

EUR/CHF Fundamental Analysis for the Week of November 21, 2011

The EUR/CHF ended another week nearly flat with choppy and tight ranged trading all week. The outlook for the pair remains uncertain and investors are waiting for clear signs from the SNB that they will move. The euro is still trading with heavy volatility and uncertainty as the outlook for the next move from Europe is not clear and the future of the euro is still at risk with the deepening debt crisis. This week our eyes will continue to be focused on the developments in Europe especially as the two new governments in Greece and Italy already won parliamentary support and now drafting the new spending and austerity measures. Both leaders are expected to head for Brussels to talks with the EU leadership and that will be watched alongside expected meeting with the German and French leadership. We have more auctions this week and the market will continue to eye the debt market and borrowing costs after they surged this year and holding around the critical levels with Italy and Spain both seeing yields fluctuate around 7.0%. The German GDP and the euro area PMI figures will be important. The November advanced PMI will indicate how worse the state of the economy is getting into the fourth quarter especially with the euro area seen contracting again. More volatility is expected yet with the lack of any sign on SNB movement we can see the pair still likely to test 1.23-22 areas again with the intervention expectations losing momentum, yet eased worries over Europe’s future and SNB expectations will keep negate the downside bias. Other news from the euro area and the Swiss economy to affect the pair this week: Monday November 21: The Swiss economy will start the day with the release money supply M3 for the year ending Oct. at 08:00 GMT. The euro zone will start this week at 09:00 GMT with the current account figures for September, where the previous non-seasonally adjusted deficit was 6.3 billion euros, while the previous seasonally adjusted deficit was 5.0 billion euros. Tuesday November 22: At 06:00 GMT, the Swiss economy will release its most important data for the week which is trade data for Oct. with exports and imports during the month. The euro zone will start the session at 15:00 GMT with the consumer confidence indicator for November in the advanced reading, where the indicator stood at -19.9 in the previous month. Wednesday November 23: Germany will start the session at 08:30 GMT with the PMI manufacturing and service for November in an advanced reading, where the PMI manufacturing is expected to decline further to 48.4 from 49.1, while the PMI services could have slipped to 50.0 from 50.6. At 09:00 GMT the euro zone will join the session with the PMI Composite for November in an advanced reading, as the PMI composite is expected to contract further reaching 46.2 from 46.5, while the PMI manufacturing could have contracted further to 46.5 from 47.1, in the time the PMI service is expected lower at 46.0 from 46.4. At 10:00 GMT the euro zone will provide the industrial new orders figures for September, where the non-seasonally adjusted annual index could have expanded by 8.0% from 6.2%, while the seasonally adjusted monthly index could have dropped by 2.6% from 1.9%. Thursday November 24: Germany will start the session at 06:00 GMT with the GDP figures for the third quarter in a final reading, where the seasonally adjusted quarterly GDP is expected unchanged at 0.5%, while the working-day adjusted GDP index is expected at 2.6%. In addition, the domestic demand index for the third quarter is expected unchanged at 0.4%, while exports are expected to expand by 1.7% from 2.3%. At 09:00 GMT Germany will release the IFO survey for November, where the business climate indicator could have retreated to 105.2 from 106.4, while the current assessment indicator could have declined to 115.2 from 116.7, in the time expectations indicator could ease to 96.0 from 97.0. Friday November 25: We do not have major data due for release on Friday and trading might be calm after the US holiday and early closing this week.

AUD/USD Technical Analysis for the Week of November 21, 2011

AUD/USDfell very hard during the week as traders continue to shun the riskier assets around the world. The Aussie is very risk-sensitive, so the fall was to be expected. The parity level is currently holding up the pair as support, and looks like the start of tough support coming up. With this in mind, this pair is a sell – but should be more of a grind than a sprint south form here. We like selling rallies as well, but don’t buy. If the parity level gives way with any meaning, the 0.9350 level will be targeted, but could take some time to reach.

AUD/USD Fundamental Analysis for the Week of November 21, 2011

The AUD/USD pair fell to its lowest level in five weeks affected by the current market sentiment which reflects the investors’ fears of further slowdown in the global growth due to EU debt crisis and the sluggish recovery in developed economies. The Aussie continued its downside movement against the green back for the third consecutive week, where the greenback found enough support from investors to soar against other majors as a safe haven currency. On the other hand, Aussie lost momentum after the Reserve Bank of Australia lowered the interest rate and indicated that they will keep the rate at those levels till the end of the year, which reduced demand for the Australian currency. The Chinese economy also reduced demand on raw materials from Australia, as a result of their policy to cool down the economy in order to fight the current inflation pressure, which affected negatively on the Australian economy that is considered China’s biggest trade partner. The volatility is likely to remain dominant for the AUD/USD this week with the focus still on Europe. Nevertheless, we still see the possibility for a relief correctional move if investors see any hope for movement from Europe. Major highlights for this week that will affect the AUD/USD pair’s trading: Monday November 21: At 15:00 GMT, the U.S. economy will release the Existing Home Sales for October, where it’s expected to come at 4.80 million down by 2.2% from the previous reading of 4.91 million which is down by 3.0%. Tuesday November 22: On Tuesday at 13:30 GMT, the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where it’s expected unrevised at 2.5%. The Personal Consumption for the third quarter is also expected unrevised at 2.4% as well as the Core Personal Consumption Expenditure to hold at 2.1%. At 19:00 GMT, the Federal Reserve Bank will release its minutes for the Nov. 1-2 FOMC meeting. Wednesday November 23: On Wednesday at 23:00 GMT (Tuesday), the Australian economy will release the Conference Board Leading Index for September, where it had a previous reading of –0.1%. At 00:30 GMT, Australia will issue the Construction Work Done for the third quarter, which had a prior reading of 0.7%. On Wednesday at 13:30 GMT, the U.S. economy will release the Durable Goods Orders for October, which is expected to come at –1.0% from the previous –0.8%. Also the Personal Income for October will be released at the same time and expected to improve to 0.3% from 0.1% while the U.S. Personal Spending is expected to slow to 0.3% from 0.6%. The annual Personal Consumption Expenditure Core for October is expected to come at 1.7% compare to the previous reading of 1.6%. At 13:30 GMT, the U.S. economy will issue its weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance fell to 388 thousand last week. Finally, the U.S. economy will release the University of Michigan Confidence for November at 14:55 GMT, where the final reading is expected to come at 64.5 from the prior reading of 64.2. Thursday November 24: Both economies will not release any data on Thursday, while U.S. markets will be closed for Thanksgiving Holiday. Friday November 25: Both economies will not release any data on Thursday, while U.S. markets are still scheduled for an early closing for Thanksgiving Holiday.

USD/CAD Technical Analysis for the Week of November 21, 2011

USD/CADcontinued to hang about in its recent consolidation area for the week, but is pressing the top of the range in the form of the 1.03 level. The pair had recently broke out of consolidation and popped, fell back and retested the parity level, and now looks set to continue the upward momentum. On a daily close above 1.03, we would be long of this pair as the oil markets looks particularly vulnerable at the moment too. The “risk off” trade is what will push this pair higher. We don’t sell at the moment, and wouldn’t until a close below the 0.99 level.

USD/CAD Fundamental Analysis for the Week of November 21, 2011

The USD/CAD pair rallied to the upside last week, as the U.S. dollar strengthened on mounting fears the European debt crisis is worsening, where yields on Italian bonds rose last week above 7%, a level that forced Greece, Ireland, and Portugal to seek bailouts, while yields on Spanish bonds also rose last week, which raised fears that the debt crisis is spreading into major economies within the euro zone area. Meanwhile, economic data from theUnited Statesgenerally showed better than expected performance, where manufacturing activities continued to expand in November, while retail sales rose above forecasts in October, which eased some of the concerns in markets over the outlook for growth in the world’s largest economy. Nonetheless, the huge pessimism fromEuroperemained the dominant theme around global financial markets. Data fromCanadalast week showed that price pressures eased in October, but CPI inflation rose above median estimates, while the leading indicators rose in October above median estimates. Europe will be very much the focus next week, where traders will be eyeing new developments on the European debt crisis, where Italy and Spain, the third and fourth largest economies in the euro zone area, are starting to feel the pressure from the debt crisis, and the uncertainty that is surrounding the outlook continues to weigh down on confidence. Important data will be released from Europe and theUnited States next week, where manufacturing and growth figures are expected from Germany, while theU.S.economic calendar is full of economic data on housing, growth, income, and confidence. Accordingly, we should expect heavy fluctuations to dominate gold prices next week. We should also note thatU.S.markets will be closed on Thursday, as Americans celebrate Thanks Giving, whileU.S.markets will close early on Friday. Data fromCanadawill be limited next week to wholesale sales and retail sales. Also, on Wednesday November 23, the deadline set by U.S. President Barack Obama for the super committee to announce budget cuts of at least $1.2 trillion in order to contain the widening budget deficit, will be due, and if the Congress fails to pass the cuts, an automatic measure to cut spending and raise taxes will be activated. The high level of uncertainty in markets could provide the USD/CAD pair with more bullish momentum, where traders will be eyeing developments inItalyandSpain, and accordingly, we should expectEuropeto dominate the pair’s movement next week. Nonetheless, if optimism spreads through markets, the USD/CAD pair will decline, as demand for higher yielding assets is likely to rise in that case, and that should provide the Canadian dollar with momentum. Highlights for this week that will probably affect the USD/CAD pair’s direction are: Monday November 21: Canada will release the wholesale sales index for September at 13:30 GMT, which is expected to rise by 0.5% following the prior rise of 0.2% in August. TheUnited Stateswill join the session at 15:00 GMT with the existing home sales figures for October, with expectations that the existing homes sales could have retreated to 4.80 million houses from 4.91 millions. In addition, the monthly existing home sales index could show that sales dropped by 2.2% from the previous drop of 3.0%. Tuesday November 22: At 13:30 GMT, Canada will release the retail sales for September, where retail sales are expected rise by 0.5% in line with the prior rise in August, while retail sales excluding autos are expected to rise by 0.3%, compared with 0.4% in August. At 13:30 GMT, the United States will join the session with the GDP figures for the third quarter in a second reading, where the quarterly annualized GDP index could have lingered at 2.5%, while the personal consumption index could have stood at 2.4%, in the time GDP price index is expected unchanged at 2.5%. Finally, the quarterly core PCE is projected steady at 2.1%. At 19:00 GMT the Federal Reserve will release the Minutes of FOMC last meeting. Wednesday November 23: At 13:30 GMT the United States will join the session with the durable goods figures for October, where durable goods orders could have fallen 1.0% from the previous drop of 0.8%, while durable goods excluding transportation index is expected unchanged, noting that the previous expansion was 1.7%. TheUnited Stateswill also release the income report at 13:30 GMT, with expectations that the personal income index could have improved 0.3% from 0.1%, while the personal spending index could have expanded by 0.3% from 0.6%. Furthermore, the annual PCE Deflator could have expanded by 2.7% from 2.9%, while the monthly PCE core could have improved 0.1% from the previous zero expansion, in the time the annual PCE core is expected higher at 1.7% from 1.6%. In addition, the United Stateswill provide markets with the initial jobless claims figure for the 19th of November, where the number of claims could have eased to 385 thousands from 388 thousand. At 14:55 GMT theUnited Stateswill end the session withUniversityofMichiganconfidence for November in a final reading, where the confidence could have improved slightly to 64.5 from 64.2. Thursday November 24: TheUnited States markets will be off to celebrate the Thanks Giving Holiday. Friday November 25: TheUnited States markets will close early.

NZD/USD Technical Analysis for the Week of November 21, 2011

NZD/USDfell very hard during the week as traders continue to shun the riskier assets around the world. With the Kiwi being so sensitive to risk appetite, this pair was always going to fall. As long as there is economic uncertainty, there will be pressure on this pair. As a result, we like selling rallies as the weekly candle is so ominous, but the 0.75 level will more than likely produce some kind of bounce. Once that area gives way though – this pair falls quickly. We cannot buy this pair at all.

NZD/USD Fundamental Analysis for the Week of November 21, 2011

The NZD/USD pair dropped for the third consecutive week to reach its lowest level in six weeks, where Kiwi is loosing more ground against the greenback as risk aversion shifted traders away from higher-yielding currencies such as the Kiwi. The greenback continued its strong performance against other major currencies, as the current market sentiment support the safe haven currencies such as the US dollar and the yen. On the other hand, the EU debt crisis still has its negative effect on the financial market and on other economies, which fuelled fears of the global economy outlook and drove investors to abandon higher-yielding currencies. The Chinese economy also reduced demand for raw materials from New Zealand, as a result of their policy to cool down the economy in order to fight the current inflation pressure, which affected negatively the New Zealand economy. The NZD/USD pair is to record more losses during the upcoming period, as the current market sentiment in addition to the slowdown in top economies are increasing fears between traders and drive them to safe assets. Major highlights for this week that will affect the NZD/USD pair’s trading Monday November 21: At 15:00 GMT, the U.S. economy will release the Existing Home Sales for October, where it’s expected to come at 4.80 million down by 2.2% from the previous reading of 4.91 million which is down by 3.0%. Tuesday November 22: On Tuesday at 02:00 GMT the Reserve Bank of New Zealand will release the 2-year Inflation Expectations for the fourth quarter, where the previous reading was 2.9%. At 13:30 GMT, the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where it’s expected unrevised at 2.5%. The Personal Consumption for the third quarter is also expected unrevised at 2.4% as well as the Core Personal Consumption Expenditure to hold at 2.1%. At 19:00 GMT, the Federal Reserve Bank will release its minutes for the Nov. 1-2 FOMC meeting. Wednesday November 23: On Wednesday at 13:30 GMT, the U.S. economy will release the Durable Goods Orders for October, which is expected to come at –1.0% from the previous –0.8%. Also the Personal Income for October will be released at the same time and expected to improve to 0.3% from 0.1% while the U.S. Personal Spending is expected to slow to 0.3% from 0.6%. The annual Personal Consumption Expenditure Core for October is expected to come at 1.7% compare to the previous reading of 1.6%. At 13:30 GMT, the U.S. economy will issue its weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance fell to 388 thousand last week. Finally, the U.S. economy will release the University of Michigan Confidence for November at 14:55 GMT, where the final reading is expected to come at 64.5 from the prior reading of 64.2. Thursday November 24: On Thursday at 21:45 GMT (Wednesday), New Zealand economy will release the Trade Balance for October, where the previous month it recorded a deficit of NZ$ 751 million. The New Zealand exports for October had a previous reading of NZ$ 3.44 Billion, while the prior reading for the Imports was NZ$ 4.19 Billion. Friday November 25: Both economies will not release any data on Thursday, while U.S. markets are still scheduled for an early closing for Thanksgiving Holiday.

 

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