Forex Technical and Fundamental Analysis for the Week of October 24, 2011

EUR/USD Technical Analysis for the Week of October 24, 2011

EUR/USDrose again this past week as traders continue to anticipate the EU coming to some kind of solution in the debt crisis. The pair looks strong at this point, but the 1.40 level should present serious resistance in this pair coming up. The meetings over the weekend could be another catalyst for a big move, but until then it is hard to tell where we go. The path of least resistance is probably down, and a breaking of the bottom of the candle for the week would have it being a “hanging man”, which is very bearish. The breaking of the 1.40 mark must be accompanied by a daily close, and then we would consider buying. Until then, we have to sit still.

EUR/USD Weekly Fundamental Analysis for the Week of October 24, 2011

The EUR/USD pair ended a volatile week and about to start a new one with the speculation and jitters evident ahead of the final plan fromEurope. The market will start the week with the EU summit in focus, hoping that the leaders present something strong and sustainable to contain the crisis. Still the leaders that meet Sunday might not present to markets any final plans especially asGermanyandFrancecalled for another meeting on Wednesday which according to them will be the latest set date for the measures to announce. The leaders are in disarray over how to expand the firepower of the EFSF without undermining the fiscal health of the guaranteeing nations or the ECB as a financing source. More volatility will be seen and we have two scenarios and two violent scenarios. One is a strong recovery if the market finds the measures strong to contain the crisis, and the other is a strong selloff is they did not find a suitable reaction to the crisis. We also have growth data from the United States which will also attract the attention, especially as the economy is expected to have expanded further in the third quarter, easing recession woes. Other news from the euro area and the U.S. economy to affect the pair this week: Monday October 24: Germany will start at 07:30 with the advanced PMI Manufacturing for October which is expected to weaken to 50.0 from 50.3 while the Services PMI to recover slightly to 50.0 from 49.7. The data start on Monday with the advanced estimate for the sectors performance in October at 08:00 GMT. The PMI Services is expected to fall to 48.5 from 48.8 and the PMI Manufacturing is expected to fall to 48.2 from 48.5 and accordingly the Composite PMI is likely to weaken as well from September’s 49.1. The Industrial New Orders for August are due at 09:00 GMT and expected to drop by 0.1% after 2.1% slump the previous month. Tuesday October 25: Germany will report the Gfk Consumer Confidence for November at 06:00 GMT which is expected to weaken to 5.1 from 5.2. The U.S. economy is set to release the Consumer Confidence for October at 14:00 GMT which is expected to improve to 46.0 from 45.4. Wednesday October 26: The United States will release the Durable Goods Orders for September at 12:30 GMT where they are expected to drop 0.7% after 0.1% drop and excluding transportation to rise 0.5% from 0.1% drop. New Home Sales Index for September is due at 14:00 GMT and expected with 1.7% rise to 300 thousand from 295 thousand. Thursday October 27: The euro zone confidence figures for October are due at 09:00 GMT. The Business Climate Indicators is expected to weaken further to -0.15 from -0.06, the Economic Confidence is expected to drop to 94.1 from 95.0 while Industrial Confidence is expected to fall to -6.5 from -5.9 and the Services Confidence will decline to -1.3 from 0.0. Consumer Confidence is expected unrevised from the advanced estimate at -19.9. Germany’s Consumer Price Index advanced reading for October is due and likely maintained the same gain from the previous month with 0.1% rise on the month and 2.6% on the year. In EU Harmonized terms expected to ease on the month with 0.1% gain following 0.2% rise and on the year to fall to 2.8% from 2.9%. Critical growth data is lined for release from theUnited Statesat 12:30 GMT. The economy is expected to expand by 2.3% in the third quarter after 1.3% and personal consumption is expected to strengthen to 1.9% after 0.7% the second quarter. The Core PCE on the quarter is expected to ease to 2.2% from 2.3% the previous quarter. The weekly jobless claims are also due as always the same time for the week ending October 22 after they dropped last week to 403 thousand. The pending home sales for September are due at 14:00 GMT and expected with 0.1% rise after 1.2% drop. Friday October 28: The U.S. economy will end the week with the income report for September at 12:30 GMT were personal spending is expected to rise by 0.6% after 0.2% and income to rise 0.3% after 0.1% drop. The Core PCE is expected with 0.2% on the month after 0.1% and on the year to rise 1.7% from 1.6%. The week will end with the University of Michigan consumer confidence final October reading at 13:55 GMT and expected to be revised higher to 58.0 from 57.5.

AUD/USD Technical Analysis for the Week of October 24, 2011

AUD/USDrose during the Friday session to form a hammer for the week. This is a very bullish sign, but the market is about to find that the 1.03-1.05 area is massive resistance. Because of this, we aren’t buying this pair until it closes above the 1.05 level and on a daily close at the very least. The path of least resistance is still probably down, as the pair is so risk sensitive. The EU meeting over the weekend could be a catalyst for a move in either direction, and headlines should continue to produce the moves in this market – almost none of which will be coming from Australia.

AUD/USD Weekly Fundamental Analysis for the Week of October 24, 2011

The AUD/USD pair ended last week with losses despite the gains recorded with the beginning of the week, where the Aussie followed other higher-yielding currencies steps and fell against the greenback. Lack of confidence and uncertainty regarding the EU debt crisis future, drove the lower-yielding currencies up as investors consider them safe havens, the greenback also recovered some of its previous losses against the European currencies and the Australian dollar. On the other hand, fears remained predominant especially after Moody’s Investors Service agency reduced Spain’s credit ratings ranking by two levels to A1 from Aa2, where Spain’s credit rating was cut for the third time since June of last year as Europe’s debt crisis threatens to engulf the nation. Meanwhile, the RBA’s minutes noted that economic growth in Australia is not going to be strong as earlier expected which is reflecting global and local factors, thereby that will cause a lower inflation than expected. This week the focus will be on inflation figures to anticipate the coming move from the RBA are they intend to keep the inflation rate at records low between 2 to 3% and the report which is due on October 26. Major highlights for this week that will affect the AUD/USD pair’s trading: Monday October 24: On Monday at 00:30 GMT, the Australian economy will release the Producer Price Index for the third quarter, where the previous reading was up by 0.8%. The annual Producer Price Index had a previous reading of 3.4%. Tuesday October 25: On Tuesday, the U.S. economy will release the Consumer Confidence for October at 14:00 GMT, where it’s expected to come at 46.3 from the previous 45.4. The House Price Index for August is due at 14:00 GMT which had a previous reading of 0.8%. Wednesday October 26: On Wednesday at 00:30 GMT, Australia will release the Consumer Price Index for the third quarter, where the previous reading was up by 0.9% and on the year had a previous reading of 3.6%. At 12:30 GMT, the U.S. economy will release the Durable Goods Orders for September, where it’s expected to come at –0.7% from the previous –0.1%, while Durables Excluding Transportation is expected to come at 0.5% from the previous –0.1%. New Home Sales for September will released at 14:00 GMT, with a previous reading of 295 thousand and it’s expected to rise to 300 thousand by 1.7%. Thursday October 27: On Thursday at 12:30 GMT the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where the advanced reading is expected to show a growth of 2.3% from the previous 1.3%. U.S. Personal Consumption is expected to show a rise of 1.9% from the prior 0.7%, while Core PCE is expected to come at 2.3% in line with the previous quarter. On Thursday at 12:30 GMT, the U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for state unemployment insurance increased 403 thousand last week. The U.S. Pending Home Sales for September is expected to come at 0.1% from -1.2%, while the annual reading had a prior reading of 13.1%. Friday October 28: On Friday, the U.S. Personal Income for September will be released at 12:30 GMT and it’s expected to come at 0.3% from the previous –0.1%, the Personal Spending Index had a prior reading of 0.2% and expected to come at 0.6%. The Core PCE for September had a previous reading of 1.6% and expected to rise to 1.8%. The University of Michigan Confidence will be released at 13:55 GMT, where it’s expected to come at 57.8 from the previous reading of 57.5.

EUR/CHF Technical Analysis for the Week of October 24, 2011

The EUR/CHF pair fell for the week as the pair continues to trade in a tight range. The market is being artificially propped up by the Swiss National Bank as the SNB is working with a “floor” at 1.2000. The market is therefore a “buy only” market, but there needs to be some kind of resolution to the debt issues in Europe for us to get wildly long in this pair. This pullback could be a buying opportunity, but it shows that the Euro is rising against many currencies, but cant against one that has a floor in it – this could be a sign of underlying weakness in the “Euro rally” we have seen lately.

EUR/CHF Weekly Fundamental Analysis for the Week of October 24, 2011

The EUR/CHF fluctuated heavily last week with focus on the debt crisis and mixed expectations for further SNB interventions. The pair still lacks major momentum and only moves strongly on SNB expectations, where the gains seen last week were backed by renewed expectations that the SNB will raise the EUR/CHF floor to 1.40 from 1.20 yet good trade figures again dampened the expectations. The market will start the week with the EU summit in focus, hoping that the leaders present something strong and sustainable to contain the crisis. Still the leaders that meet Sunday might not present to markets any final plans especially as Germany and France called for another meeting on Wednesday which according to them will be the latest set date for the measures to announce. The leaders are in disarray over how to expand the firepower of the EFSF without undermining the fiscal health of the guaranteeing nations or the ECB as a financing source. More volatility will be seen and we have two scenarios and two violent scenarios. One is a strong recovery if the market finds the measures strong to contain the crisis, and the other is a strong selloff is they did not find a suitable reaction to the crisis. Other news from the euro area and the Swiss economy to affect the pair this week: Other news from the euro area and the U.S. economy to affect the pair this week: Monday October 24: The data start on Monday with the advanced estimate for the sectors performance in October at 08:00 GMT. The PMI Services is expected to fall to 48.5 from 48.8 and the PMI Manufacturing is expected to fall to 48.2 from 48.5 and accordingly the Composite PMI is likely to weaken as well from September’s 49.1. The Industrial New Orders for August are due at 09:00 GMT and expected to drop by 0.1% after 2.1% slump the previous month. Tuesday October 25: Germany will report the Gfk Consumer Confidence for November at 06:00 GMT which is expected to weaken to 5.1 from 5.2. Wednesday October 26: A pending euro summit on Wednesday that France and Germany called for will be of focus if the leaders did not announce the measures to contain the crisis on Sunday, where the decision might be delayed till Wednesday and accordingly the focus will still be on the euro area. Thursday October 27: The euro zone confidence figures for October are due at 09:00 GMT. The Business Climate Indicators is expected to weaken further to -0.15 from -0.06, the Economic Confidence is expected to drop to 94.1 from 95.0 while Industrial Confidence is expected to fall to -6.5 from -5.9 and the Services Confidence will decline to -1.3 from 0.0. Consumer Confidence is expected unrevised from the advanced estimate at -19.9. Friday October 28: Switzerland will end the week with the KOF Leading Indicators for October at 09:30 GMT which is expected to slow to 1.00 from 1.20.

NZD/USD Technical Analysis for the Week of October 24, 2011

NZD/USDhad a bullish day on Friday and broke back above the 0.8000 level as traders felt the need to go “risk on” as the EU meeting was being held on Sunday. The Kiwi is very sensitive to the risk appetite around the world, so this wasn’t a big surprise. However, the weekly chart looks very interesting as the candle looks like a hammer, but at the top of the range. These can either be a launching point for another rally, or a “hanging man”, which is massive bearish. If the range gets broken to the upside, it should be in response to a massive “risk on” situation in the markets. If the bottom of the hammer gets broken through – that is a massively bearish signal.

NZD/USD Weekly Fundamental Analysis for the Week of October 24, 2011

The NZD/USD pair dropped last week where the Kiwi lost grounds against the dollar and most of its major counterparts, as the EU leaders didn’t announce their plan to contain the EU debt crisis, which pushed investors to abandon higher-yielding currencies amid the high uncertainty. Moreover, Kiwi extended its losses against the dollar as China’s stock market fell to the lowest in 31 months as signs of a slowing economy sent metal prices plunging while Germany and France’s disagreement over Europe’s rescue strategy threatens the global outlook. Meanwhile, the New Zealand economy gives some signs of picking up as rising consumer spending and employment add to evidence the nation’s economy is expanding modestly, buoyed by record-low interest rates and a surge in commodity prices Lack of confidence and uncertainty regarding the EU debt crisis future, drove the lower-yielding currencies up as investors consider them safe haven, the greenback also recovered some of the previous losses against the European currencies and the New Zealand dollar. Major highlights for this week that will affect the NZD/USD pair’s trading: Monday October 24: On Monday at 21:45 GMT, New Zealand economy will release the Consumer Prices Index for the third quarter, where it had a previous reading of 1.0% and expected to retreat to 0.7%. The annual Consumer Prices Index for the third quarter is expected to come at 4.9% compare to the previous reading of 5.3%. Tuesday October 25: On Tuesday, the U.S. economy will release the Consumer Confidence for October at 14:00 GMT, where it’s expected to come at 46.3 from the previous 45.4. The House Price Index for August is due at 14:00 GMT which had a previous reading of 0.8%. Wednesday October 26: On Wednesday at 00:00 GMT, New Zealand will issue the NBNZ Activity Outlook for October, where the previous reading was 35.4. The NBNZ Business Confidence for October will be released at the same time, and it had a prior reading of 30.3. At 12:30 GMT, the U.S. economy will release the Durable Goods Orders for September, where it’s expected to come at –0.7% from the previous –0.1%, while Durables Excluding Transportation is expected to come at 0.5% from the previous –0.1%. New Home Sales for September will released at 14:00 GMT, with a previous reading of 295 thousand and it’s expected to rise to 300 thousand by 1.7%. Thursday October 27: On Thursday at 20:00 GMT (Wednesday), the Reserve Bank of New Zealand will announce its rate decision for October, where it’s expected to keep the rate steady at 2.50%. At 21:45 GMT New Zealand will release the Trade Balance for September, where the previous reading showed a deficit of 641 million and expected to shrink to 440 million. The New Zealand Imports for September will be released at 21:45 GMT, where the expectations refer to 3.90 billion from the previous 4.08 billion. The Exports had a previous reading of 3.44 billion and expected to advance to 3.90 million. On Thursday at 12:30 GMT the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where the advanced reading is expected to show a growth of 2.3% from the previous 1.3%. U.S. Personal Consumption is expected to show a rise of 1.9% from the prior 0.7%, while Core PCE is expected to come at 2.3% in line with the previous quarter. On Thursday at 12:30 GMT, the U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for state unemployment insurance increased 403 thousand last week. The U.S. Pending Home Sales for September is expected to come at 0.1% from -1.2%, while the annual reading had a prior reading of 13.1%. Friday October 28: On Friday, the U.S. Personal Income for September will be released at 12:30 GMT and it’s expected to come at 0.3% from the previous –0.1%, the Personal Spending Index had a prior reading of 0.2% and expected to come at 0.6%. The Core PCE for September had a previous reading of 1.6% and expected to rise to 1.8%. The University of Michigan Confidence will be released at 13:55 GMT, where it’s expected to come at 57.8 from the previous reading of 57.5.

USD/JPY Technical Analysis for the Week of October 24, 2011

The USD/JPY pair spiked lower on Friday and even broke through the 76 level as the Dollar really got punished towards the end of the session. The move was a bit of a surprise, and should catch the attention of the Bank of Japan as well. The BoJ has shown it is working against this kind of move, and one has to wonder how much they will allow the Yen to appreciate. Because of this, we can’t sell this move, and as long as the 76 level holds up – and at the time of writing it is, we would use this as an opportunity to buy. However, this is a short-term trade, and not a long-term one.

USD/JPY Weekly Fundamental Analysis for the Week of October 24, 2011

The USD/JPY pair retreated last week but still within the same range which dominated the pair’s movements in the past three months. The Japanese yen recorded gains against the dollar and most of its major counterparts amid the delay from EU leaders to announce any clear steps to solve the EU debt crisis. Lack of confidence and uncertainty regarding the EU debt crisis future drove lower-yielding currencies up as investors consider them safe haven; the greenback also recovered some of its previous losses against European currencies. Expectations that the EU leaders are going to announce plans to contain the debt crisis helped to create some stability in the financial market, but the delay from EU leaders turned the market confidence to risk aversion. On the other hand, the Japanese yen has its own battle where BOJ is still looking for the appropriate measure to prevent it’s currency from recording more gains and hurt the economy, as all the previous measures have failed. The next BOJ’s meeting will be widely monitored from market participant, as the central bank could take extra measures to control the ongoing increase in the Japanese currency. Major highlights for this week that will affect the USD/JPY pair’s trading: Monday October 24: On Monday at 23:50 GMT (Sunday), Japan will release the Merchandise Trade Balance Total for September, where the expectations refer to a surplus of 200.4 billion yen while the previous reading was down by 775.3 billion yen. The Adjusted Merchandise Trade Balance is expected to show a deficit of 147.8 billion yen compare to the previous deficit of 294.4 billion yen. On the other hand, the annual Merchandise Trade Exports for September is expected to rise to 1.1 from the previous of 2.8, while the annual Merchandise Trade Imports is expected to come at 12.6 from 19.2. Tuesday October 25: On Tuesday at 05:00 GMT, Japan will issue the Small Business Confidence for October where it had a prior reading of 47.2. On Tuesday, the U.S. economy will release the Consumer Confidence for October at 14:00 GMT, where it’s expected to come at 46.3 from the previous 45.4. The House Price Index for August is due at 14:00 GMT which had a previous reading of 0.8%. Wednesday October 26: At 12:30 GMT, the U.S. economy will release the Durable Goods Orders for September, where it’s expected to come at –0.7% from the previous –0.1%, while Durables Excluding Transportation is expected to come at 0.5% from the previous –0.1%. New Home Sales for September will released at 14:00 GMT, with a previous reading of 295 thousand and it’s expected to rise to 300 thousand by 1.7%. Thursday October 27: On Thursday at 23:50 GMT (Wednesday), Japan will release the annual Retail Trade for September, which had a previous reading of –2.6% and it’s expected to rise to 0.1%. The seasonally adjusted Retail Trade for September is expected to drop to 0.3% from the previous –1.7%. At 04:00 GMT the Bank of Japan will announce its rate decision for October, where it’s expected to keep the rate steady at 0.10%, while market participants will focus on the bank’s statement. On Thursday at 12:30 GMT the U.S. economy will release the annualized Gross Domestic Product for the third quarter, where the advanced reading is expected to show a growth of 2.3% from the previous 1.3%. U.S. Personal Consumption is expected to show a rise of 1.9% from the prior 0.7%, while Core PCE is expected to come at 2.3% in line with the previous quarter. On Thursday at 12:30 GMT, the U.S. economy will issue its weekly initial claims numbers, where the number of people filing for first-time claims for state unemployment insurance increased 403 thousand last week. The U.S. Pending Home Sales for September is expected to come at 0.1% from -1.2%, while the annual reading had a prior reading of 13.1%. Friday October 28: On Thursday at 23:30 GMT (Wednesday), the Japanese economy will release the Jobless Rate for September, which is expected to come at 4.5% from the previous 4.3%. The Japanese annual Household Spending for September is expected to fall to 3.7% from the previous 4.1%. The National Consumer Price Index for September in Japan will be released at 23:30 GMT where is expected to remain unchanged at 0.2%, while the National Consumer Price Index Ex-Fresh Food is expected to come at 0.2% the same as the prior reading. The Japanese Industrial Production for September will be up at 23:50 GMT, with a previous reading of 0.8% and expected to fall to -2.8%, while the annual reading is expected to come at –2.8% from the prior 0.4%. The U.S. Personal Income for September will be released at 12:30 GMT and it’s expected to come at 0.3% from the previous –0.1%, the Personal Spending Index had a prior reading of 0.2% and expected to come at 0.6%. The Core PCE for September had a previous reading of 1.6% and expected to rise to 1.8%. The University of Michigan Confidence will be released at 13:55 GMT, where it’s expected to come at 57.8 from the previous reading of 57.5.

GBP/USD Technical Analysis for the Week of October 24, 2011

In a surprising show of strength, the GBP/USDpair smashed through the 1.58 level on Friday, and even ran up to the 1.5950 level, which is the beginning of a massive resistance level which is centered around the 1.60 area. The pair looks strong at this point, but with the EU meetings over the weekend, the future direction is going to be difficult to pinpoint. The 1.60 level should point the way forward, and to be honest – we are very interested in selling signs of weakness. Buying isn’t going to be possible until we close above 1.60 on the daily timeframe at the very least.

GBP/USD Weekly Fundamental Analysis for the Week of October 24, 2011

The GBP/USD showed some volatility amid worries stemming from the euro area and improvement in U.K. data. Last week, speculations increased that leaders of the largest two euro area economies are divided over the role played by the ECB and leveraging the EFSF, while German announcements referred that the coming European meeting will not be the final in solving the crisis. In the same context, Moody’s downgraded Spain’s credit rating by two notches to A1 from Aa2 while Standard and Poor’s said “sovereign ratings on France, Spain, Italy, Ireland, and Portugal likely would be lowered by one or two notches.” On the other hand, U.K. retail sales with auto fuel advanced to the highest level in five months in September and budget deficit excluding support for banks narrowed to 14.1 billion pounds in September from 15.4 billion pounds deficit a year before. While inflation skyrocketed to 5.2% in September, the BoE sees that domestic inflation is contained and expected to fall below target over the medium term, where policy makers were united over October’s monetary decision which included holding borrowing cost at 0.50% while boosting the Asset Purchase Facility by 75 billion pounds to reach 275 billion pounds. This week, the main focus will be on growth data from the United States amid the absence of important fundamentals from the British economy. The release of the data this week will be as follows: Monday October 24: Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data. Tuesday October 25: At 04:30 GMT, the U.K. will release BBA loans for house purchase for Sep. and current account for the second quarter. Consumer confidence, in theU.S., due at 14:00 GMT, will rise to 46.0 in October from 45.4 a month before, according to median estimates. Wednesday October 26: The U.K. will release CBI trends for August at 10:00 GMT, yet it is not expected to have an impact on the pair, For the U.S., MBA mortgage applications for August 19 at 11:00 GMT followed by durable goods orders, due at 12:30 GMT, which is projected to slide 0.7% in Sep. relative to the preceding 0.1% drop. At 14:00 GMT, new home sales report for Sep. is expected to show 1.7% rise from the prior 2.3% fall. Thursday October 27: The main highlight of the week which is GDP annualized for the third quarter, which is predicted to record 2.3% from 1.3% growth in the second quarter, will be available at 12:30 GMT. At the same time, initial jobless claims for the week ended Oct. 22 and continuing claims for the week ending Oct. 15. Thereafter, specifically at 14:00 GMT, pending home sales will show 0.1% rise in Sep. from the previous 1.2% fall. On the other hand, as of 23:01 GMT, U.K. GfK consumer confidence survey will remain unchanged at minus 30. Friday October 28: The week ends with the release of no fundamentals from the U.K., while in the U.S. personal income and spending will be under scrutiny at 12:30 GMT, followed by University of Michigan confidence will show a rise to 58.0 in Oct. from the prior 57.5.

USD/CAD Technical Analysis for the Week of October 24, 2011

USD/CAD fell on the week, but remains above the parity level that we have marked as massive support. The market continues to be held hostage by the oil markets, and those looks like they could be ready for a pullback. The bounce at a parity level in this pair isn’t a big surprise, and would continue to show how important the “1” level is in all pairs. The pair had a massive explosion to the upside, so this pullback isn’t unwarranted. The candle for the week does look bearish at this point, but if there are any negative headlines out there – this pair will rise as well. At this point, we think a bounce should be coming, and would look for a buy signal on the daily chart.

USD/CAD Weekly Fundamental Analysis for the Week of October 24, 2011

The USD/CAD pair extended its drop last week amid rising hopes and optimism in markets, which slightly boosted demand for higher yielding assets, leading the Canadian dollar to rise as a result, especially as crude oil prices gained as well, which provided the CAD with some bullish momentum that pushed the USD/CAD pair slightly to the downside. Meanwhile, CPI inflation in Canada showed rising inflationary pressures in September, as inflation rose above expectations, which also provided the Canadian dollar with strong momentum to push the USD/CAD pair lower on Friday. The European debt crisis dominated most of the headlines last week, as uncertainty dominated the scene, yet traders were somewhat hopeful that EU leaders will be able to craft a deal that will ease the debt crisis in Europe and ease tensions in markets as well. Nonetheless, it all remains to be seen, as EU leaders gather next week for the EU summit. Traders all around the globe will be eyeing the EU summit next week, where traders hope that EU leaders will be able to craft a plan that will ease the tensions in the euro zone area and help support debt-laden countries. Nonetheless, the level of uncertainty remains very high amid mixed reports last week that EU leaders are struggling to reach a final resolution, however, any solutions are not expected to be final and more work has to be done in order to stabilise conditions in the euro zone area. The week is full of economic fundamentals from all around the globe, especially from the United States, where data on growth, income, spending, and inflation will be released next week, as the first GDP estimate for the third quarter will be released, in addition to the income report, where both reports are expected to show improvement. If optimism persists in markets, it could push the USD/CAD pair further to the downside, but the outcome of the EU summit will be the major market mover. We should also note that the Bank of Canada will announce its decision on interest rates amid expectations the BOC will leave rates unchanged. Overall, we expect high volatility levels to continue to dominate markets next week, and accordingly, we could see the USD/CAD pair fluctuating heavily throughout next week. Highlights for this week that will probably affect the USD/CAD pair’s direction are: Monday October 24: We don’t have any major fundamentals from Canada or the United States on Monday, which means that the focus is likely to remain onEurope, and whether EU leaders will be able to reach an agreement to solve the euro zone debt crisis. Tuesday October 25: Canada will release the retail sales for August at 12:30 GMT, where retail sales are expected to rise by 0.2%, following the prior decline of 0.6%, while retail sales excluding autos are expected to rise by 0.4%, compared with the prior flat estimate. The S&P/CaseShiller house price index will be released for the month of August at 13:00 GMT, where the S&P/CS 20 city house price index is expected to rise by 0.15%, compared with the prior rise of 0.05%, while compared with a year earlier, the S&P/CS Composite-20 index is expected to decline by 3.55%, compared with the prior drop of 4.11%. The U.S. Conference Board will release the consumer confidence index for October, where consumer confidence is expected to improve slightly to 46.0 from 45.4 back in September. The Bank of Canada will announce its decision on benchmark interest rates at 13:00 GMT, where the BOC is expected to leave the benchmark interest rates unchanged at 1.00%. Wednesday October 26: The U.S. will release the durable goods orders for September at 12:30 GMT, where durable goods are expected to fall by 0.7%, compared with the prior drop of 0.1%, while durable goods excluding transportation are expected to rise by 0.5%, compared with the prior drop of 0.1%. The U.S. will release the new home sales index for September at 14:00 GMT, where new home sales are expected to rise by 1.7% to an annual rate of 300,000 units, compared with the prior estimate of 295,000 units. The Bank of Canada will release the monetary policy report at 14:30 GMT, where the monetary policy report should provide traders with a better understanding over the recent developments regarding the decision making of the BOC monetary policy stance. Thursday October 27: The United States will start with the weekly jobless claims for the week ending October 22 at 12:30 GMT after last week they rose by 403 thousand, and expectations show jobless claims will fall to 400,000. The U.S. Commerce Department will release the advanced Gross Domestic Product estimate for the third quarter of 2011, where theU.S.economy is expected to expand by 2.5%, compared with the prior expansion of 1.3% in the second quarter, as personal consumption is expected to rise by 1.9%, up from 0.7% in the second quarter. The U.S. will release the pending home sales index for September, where pending home sales are expected to rise by 0.3%, compared with -1.2% in August, while compared with a year earlier, pending home sales are expected to rise by 10.8%, compared with 13.1% in the prior estimate. Friday October 21: The U.S. will release the income report for September at 12:30 GMT, where personal income is expected to rise by 0.3%, compared with the prior drop of 0.1%, while personal spending is expected to rise by 0.6% after rising by 0.2% in August. Core PCE is expected to rise by 0.2% in September, following the prior rise of 0.1% in August, while compared with a year earlier, Core PCE is expected to rise by 1.7%, up from 1.6% in the prior estimate. The University of Michigan will release the final estimate for consumer confidence in October at 13:55 GMT, where consumer confidence is expected to rise slightly to 58.0 from 57.5.

USD/CHF Technical Analysis for the Week of October 24, 2011

USD/CHF fell this previous week as traders dumped the USD in mass on Friday. The hope that the EU is going to produce some kind of massive bailout package over the weekend is part of what is fueling the massive short-USD positions, and as a result it is pushing the USD down against most other currencies as well. The CHF was no exception. The pullback should be looked at as an opportunity to buy, but perhaps a little closer to the 0.8500 level as it looks like solid support. The weekend is going to produce fireworks more than likely, and as a result – this pair will be much clearer by the time Monday or even Wednesday rolls around, as there is a second EU meeting on Wednesday now.

USD/CHF Weekly Fundamental Analysis for the Week of October 24, 2011

The USD/CHF showed decline amid worries stemming from the euro area which triggered safety demand on the franc, where investors started to resort to it amid speculations there will be no further interventions from the SNB to curb the franc’s appreciation despite the ongoing calls of raising the euro cap against the franc to 1.40 from the current 1.20. Last week, speculations increased that leaders of the largest two euro area economies are divided over the role played by the ECB and leveraging the EFSF, while German announcements referred that the coming European meeting will not be the final in solving the crisis. In the same context, Moody’s downgraded Spain’s credit rating by two notches to A1 from Aa2 while Standard and Poor’s said “sovereign ratings on France, Spain, Italy, Ireland, and Portugal likely would be lowered by one or two notches.” This week, the main focus will be on growth data from the United States amid the absence of important fundamentals from the Swiss economy. The release of the data this week will be as follows: Monday October 24: Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data. Tuesday October 25: At 06:00 GMT, the Swiss economy will release UBS consumption indicator for Sep. Consumer confidence, in theU.S., due at 14:00 GMT, will rise to 46.0 in October from 45.4 a month before, according to median estimates. Wednesday October 26: U.S. MBA mortgage applications for August 19 will be released at 11:00 GMT, followed by durable goods orders, due at 12:30 GMT, which is projected to slide 0.7% in Sep. relative to the preceding 0.1% drop. At 14:00 GMT, new home sales report for Sep. is expected to show 1.7% rise from the prior 2.3% fall. Thursday October 27: The main highlight of the week which is GDP annualized for the third quarter, which is predicted to record 2.3% from 1.3% growth in the second quarter, will be available at 12:30 GMT. At the same time, initial jobless claims for the week ended Oct. 22 and continuing claims for the week ending Oct. 15. Thereafter, specifically at 14:00 GMT, pending home sales will show 0.1% rise in Sep. from the previous 1.2% fall. Friday October 28: The week ends with the release KOF Swiss leading indicator at 09:30 GMT which is estimated to retreat to 1.00 in Oct. from 1.21 a month earlier, while in the U.S. personal income and spending will be under scrutiny at 12:30 GMT, followed by University of Michigan confidence will show a rise to 58.0 in Oct. from the prior 57.5.

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