Forex Technical and Fundamental Analysis for the Week of October 3, 2011

EUR/USD Technical Analysis for the Week of October 3, 2011

EUR/USDcontinued its fall over the past week, after trying to rally. The highs keep getting lower, and it appears that the world is getting impatient about the debt crisis. Until the EU gets its act together, this pair will continue to be a “sell only” pair. We sell rallies, and if the 1.3350 area gives way to the downside – we become even more aggressive sellers. If that area falls by the wayside, the 1.30 level should be seen soon.

EUR/USD Weekly Fundamental Analysis for the Week of October 3, 2011

The EUR/USD is about to start another hectic week with a heavy load of fundamentals and with heightened focus on the ECB and the infamous jobs report from the United States. The jitters continue to dominate the markets with the high uncertainty over the outlook, where investors see rising risk of recession and the inability of Europe from containing the debt crisis. Still, the sentiment remains much better than it was before as European parliaments approve the amendments to the EFSF and Greece is working its way to attain the next tranche to avert default, yet still the uncertainty remains over the next move from the euro area leaders to contain the crisis once and for all. Investors this week will eye the developments in the finance chiefs meeting hoping for clues on Greece or the next move from the euro leaders though not strongly expected as the meeting is to discuss the permanent rescue mechanism. This leaves the ECB at the front line as talk of a rate cut loses steam in the market after Trichet signaled the unlikelihood of the move alongside inflation that rallied to 3.0%, yet still the market expects the ECB to announce new easing measures whether restart some liquidity lines or even restarting the covered-bond purchases program. As for the United States the heavy data will add to the volatility this week yet eyes will be on the infamous jobs report and continued weak jobs growth or net job losses in the past month will be very negative on growth sensitive markets as they hope for any good sign to ease recessionary fears into slowing growth fears. Other news from the euro area and the U.S. economy to affect the pair this week: Monday October 03: Germany starts the day at 07:55 GMT with the final PMI Manufacturing estimate which is expected unrevised contraction at 50.0. The euro area is set to release the final PMI Manufacturing estimate at 08:00 GMT which is expected with an unrevised contraction at 48.4. The United States will start the week with the ISM Manufacturing for September at 14:00 GMT and expected to slow slightly to 50.5 from 50.6. Construction Spending for August is also due at 14:00 GMT and expected with 0.2% drop following a drop of 1.3%. Tuesday October 04: The euro area August Producer Price Index is due at 09:00 GMT and expected with 0.3% drop after rising 0.5% a month earlier and on the year to fall back to 5.7% after 6.1%. EU finance chiefs meet in Luxembourg to discuss the progress made so far after the parliaments pass the EFSF expanded powers and also discuss the permanent rescue facility. From the United States Factory Orders for August are due at 14:00 GMT and expected with a slight 0.2% rise after 2.4% rise. Wednesday October 05: Germany starts the day at 07:55 GMT with the final PMI Services estimate which is expected unrevised contraction at 50.3. The euro area is set to release the final PMI Services estimate at 08:00 GMT which is expected with an unrevised contraction at 49.1 while the Composite PMI is expected steady as well at 49.2. The Retail Sales Index for August follow at 09:00 GMT and expected with 0.3% drop following a rise of 0.2% the previous month and on the year to fall 0.7% after a drop of 0.2%. The United States will start at 12:15 GMT with the ADP Employment Change for September which is expected with 75 thousand new jobs following 91 thousand the previous month. At 14:00 GMT the ISM Services for September is due and expected to slow to 53.0 from 53.3. Thursday October 06: German factory orders for August are due at 10:00 GMT and expected flat following a drop of 2.8% and on the year to rise 2.8% following 8.7%. Eyes will be definitely on the ECB rate decision at 11:45 GMT although rates are expected steady at 1.50%. More focus will be directed towards Trichet’s last press conference as President of the ECB at 12:30 GMT where investors expect to see the bank announce new measures to ease the market strain and also look for hints for futures policy moves by the bank. From the United States the weekly jobless claims are due at 12:30 GMT for the week ending September 30 after the previous week they unexpectedly eased to 391 thousand. Friday October 07: German Industrial Production for August is due at 10:00 GMT and expected with 1.5% drop following 4.0% gain and on the year to rise 5.6% following 10.1%. From the United States the eyes will be on the infamous jobs report for September at 12:30 GMT. The nonfarm payrolls are expected to show 50 thousand created jobs after remaining unchanged in August, while the unemployment rate is expected to hold steady at 9.1%. The whole sales inventories are due at 14:00 GMT for August and expected to rise by 0.6% after 0.8%. The week will end with the August Consumer Credit at 19:00 GMT and expected to slow to $8.0 billion from $11.965 billion the previous month.

AUD/USD Technical Analysis for the Week of October 3, 2011

AUD/USD fell hard over the last several days as the trading world is now convinced of a recession. With the possible slowdown in China, this particular currency will get hit as Australia supplies that country with so much of its materials. The pair is decidedly bearish, and as such we only sell. The breaking of the weekly candle’s lows is our next sell signal in this pair, and it is a big one.

AUD/USD Weekly Fundamental Analysis for the Week of October 3, 2011

The AUD/USD pair continued its downside wave last week affected by the pessimistic outlook for financial markets which drove investors to abandon higher-yielding currencies and focus on the safe haven investments such as the US dollar and yen. We can see that the worsening European debt crisis has more impact on the market movements, which led Aussie to retreat against its major counterparts, while Australia’s economy is benefiting from demand from developing nations including China and India for iron ore, coal and natural gas. The FOMC new stimulus program called “Operation Twist” did not provide the needed effect on the dollar as investors remained negative over its ability to support the recovery and accordingly continued to demand the dollar as haven. The expectations remain bearish for the AUD/USD pair, as the current EU debt crisis and the slowdown in the U.S. economy fuel fears among investors and driving them to abandon higher-yielding currencies. Major highlights for this week that will affect the AUD/USD pair’s trading: Monday October 3: On Monday at 22:30 GMT (Sunday), the Australian economy will release the AiG Performance of Manufacturing Index for September, where the previous reading was 43.3. The U.S. economy will release the Construction Spending for August at 14:00 GMT, where it is expected with a drop of 0.2% after -1.3%. The ISM Manufacturing Survey for September will be released at 14:00 GMT with a previous reading of 50.6 and expected to slow to 50.3. Tuesday October 4: On Tuesday at 00:30 GMT, Australia will release the Trade Balance for August, where the previous reading showed a surplus of A$ 1826 million. The Building Approvals for August will be up at 00:30 GMT, which had a prior reading of 1.0%. On the other hand, the annual Building Approvals had a previous reading of –15.0%. At 03:30 GMT, the Reserve Bank of Australia will release its interest rate decision, where it’s expected to keep the rate unchanged at 4.75%, trying to support the Australian economy among the current crisis in EU and U.S. On Tuesday at 14:00 GMT, Fed Chairman Bernanke will testify before the JEC, while Factory Orders Index for August will be released at 14:00 GMT with a prior reading of 2.4% and expected to come at 0.2%. Wednesday October 5: On Wednesday at 22:30 GMT (Tuesday), the Australian economy will release the AiG Performance of Service Index for September, which had a previous reading of 52.1. At 00:30 GMT, Australia will release the seasonally adjusted Retail Sales for August, where the previous reading was 0.5%. The U.S. economy will release the ADP employment change for August at 12:15 GMT, where it’s expected to come at 75 thousands from the previous reading of 91 thousands. The U.S. ISM Non-Manufacturing Composite for September will be released at 14:00 GMT, where it’s expected to come at 52.7 from the prior reading of 53.3. Thursday October 6: On Thursday at 12:30 GMT, U.S. economy will release the weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance eased to 391 thousand last week. Friday October 7: The United States of America will issue a number of economic data on Friday, starting with the jobs report at 12:30 GMT, the non-farm payrolls are expected to show that the U.S. economy added 73 thousand jobs during the month of September after it stagnated in August. The unemployment rate during the month of September is expected to remain at 9.1%.

EUR/CHF Technical Analysis for the Week of October 3, 2011

EUR/CHF continues to sit fairly quietly. The pair did pull back over the last week, but only mildly so. The pair is being lifted by the Swiss National Bank, and the pair looks like it doesn’t know what to do. To be honest – if Europe finally gets the debt crisis under control, this could be a great long-term buy. Until then though, we can’t sell – the SNB will intervene if this pair falls too far. The pair could be a great trade someday, with the key word being someday.

EUR/CHF Weekly Fundamental Analysis for the Week of October 3, 2011

The EUR/CHF capped the previous week a little changed as the tight range trading remains predominant for the pair. The pair ended September on a strong note of confirmation from the SNB that reiterated its commitment to halting the excessive franc gains while the euro was a little better poised than previously on seen action from the leaders to contain the crisis. This busy week of fundamentals will continue to focus on the debt crisis and the response from officials as finance chiefs meet to discuss the ongoing developments and negotiate the permanent rescue facility, though little news on Greece might emerge from the meeting. The other critical aspect will be the ECB and the final meeting for Trichet on Thursday. The bank is highly expected to hold rates steady yet also expected to announce further measures to contain the crisis and assure ample liquidity in markets which the market continues to speculate. Also the inflation data from Switzerland are expected to show the prevailing risk of deflation which might give the pair some power to move higher on expectations the SNB might take more steps to stem the rising risk and further take measures to weaken the currency. It will be a very volatile week and unless the market finds a strong reason for the euro to regain the upside momentum or the franc to lose more strength on expected SNB intervention the pair will likely continue the tight range movement. Other news from the euro area and the Swiss economy to affect the pair this week: Monday October 03: Switzerlandwill start the week at 07:15 GMT with the Retail Sales for August after it was reported with an annual rise of 1.9% the previous month. At 07:30 GMT the Swiss PMI Manufacturing for September is due and expected to fall back to 50.0 from 51.7 the previous month. The euro area is set to release the final PMI Manufacturing estimate at 08:00 GMT which is expected with an unrevised contraction at 48.4. Tuesday October 04: The euro area August Producer Price Index is due at 09:00 GMT and expected with 0.3% drop after rising 0.5% a month earlier and on the year to fall back to 5.7% after 6.1%. Wednesday October 05: The euro area is set to release the final PMI Services estimate at 08:00 GMT which is expected with an unrevised contraction at 49.1 while the Composite PMI is expected steady as well at 49.2. The Retail Sales Index for August follow at 09:00 GMT and expected with 0.3% drop following a rise of 0.2% the previous month and on the year to fall 0.7% after a drop of 0.2%. Thursday October 06: Switzerlandwill release the inflation data for September at 07:15 GMT where the CPI index on the month is expected to rebound by 0.1% following a drop of 0.3% and on the year to rise marginally to 0.3% after 0.2% rise. Eyes will be definitely on the ECB rate decision at 11:45 GMT although rates are expected steady at 1.50%. More focus will be directed towards Trichet’s last press conference as President of the ECB at 12:30 GMT where investors expect to see the bank announce new measures to ease the market strain and also look for hints for futures policy moves by the bank. Friday October 07: The Swiss economy will end the week with labour figures for September due at 05:45 GMT where the unemployment rate is expected to hold steady in seasonally adjusted terms at 3.0%.

NZD/USD Technical Analysis for the Week of October 3, 2011

NZD/USDfell hard after initially rising this past week. The Kiwi is a highly sensitive currency when it comes to the commodity markets, and we think that this pair is a sell only pair now. The 0.75 area should be supportive, but if it gives way – look out! This pair is to be sold on rallies, and if we get below that 0.75 level – we would sell there as well.

NZD/USD Weekly Fundamental Analysis for the Week of October 3, 2011

The NZD/USD pair dropped last week to reach its lowest level in five months, where investors increased demand for the US dollar as a safe haven, due to worries over the global economy outlook. Risk aversion controlled the FX market and drove investors to shift their trading to lower-yielding currencies such as the US dollar. Kiwi lost more momentum on expectations that the EU debt crisis and the slowdown in the U.S. economy will affect global growth negatively. The Fed’s policy makers signaled that there is a “significant” downside risks to the growth outlook, which triggered a huge sell-off for the higher-yielding assets and caused the Kiwi to lose grounds against the greenback Expectations signal further losses for the NZD/USD pair during the coming period, as jitters spread all over the financial market, increasing demand for the US dollar as a safe haven which pushed the pair to the downside. Major highlights for this week that will affect the NZD/USD pair’s trading Monday October 3: On Monday at 00:00 GMT, the New Zealand economy will release the ANZ Commodity Price Index for September, where it had a previous reading of –1.2%. The U.S. economy will release the Construction Spending for August at 14:00 GMT, where it is expected with a drop of 0.2% after -1.3%. The ISM Manufacturing Survey for September will be released at 14:00 GMT with a previous reading of 50.6 and expected to slow to 50.3. Tuesday October 4: On Tuesday at 14:00 GMT, Fed Chairman Bernanke will testify before the JEC, while Factory Orders Index for August will be released at 14:00 GMT with a prior reading of 2.4% and expected to come at 0.2%. Wednesday October 5: The U.S. economy will release the ADP employment change for August at 12:15 GMT, where it’s expected to come at 75 thousands from the previous reading of 91 thousands. The U.S. ISM Non-Manufacturing Composite for September will be released at 14:00 GMT, where it’s expected to come at 52.7 from the prior reading of 53.3. Thursday October 6: On Thursday at 12:30 GMT, U.S. economy will release the weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance eased to 391 thousand last week. Friday October 7: The United States of America will issue a number of economic data on Friday, starting with the jobs report at 12:30 GMT, the non-farm payrolls are expected to show that the U.S. economy added 73 thousand jobs during the month of September after it stagnated in August. The unemployment rate during the month of September is expected to remain at 9.1%.

USD/JPY Technical Analysis for the Week of October 3, 2011

USD/JPYcontinues to drag across the bottom this past week as traders are simply not willing to test the mettle of the Bank of Japan. Because of this, we have formed a couple of supportive candles these past two weeks. Is this a buying opportunity? We don’t know yet, but we are keeping an eye out for it. A larger green daily candle could entice us into buying this pair, at least until we get to the 80 handle. We can’t sell – the BoJ will fight that.

USD/JPY Weekly Fundamental Analysis for the Week of October 3, 2011

The USD/JPY pair traded in a limited range last week but it tended to the upside, as the market sentiment is still uncertain regarding the current EU debt crisis and slowdown in the U.S. economy. The Japanese yen traded near its post-war levels for the last two months against the dollar, where risk aversion controlled the FX market and drove investors to shift their trading to safe haven currencies such as the yen. The latest comments from the EU leaders tried to provide confidence in the financial market, but since there is no clear plan till now, the pessimistic sentiment prevails which increased demand for lower-yielding currencies, giving the yen more momentum against its major counterparts. Expectations signal for further losses for the USD/JPY pair during the coming period, as jitters spread all over the financial market, increasing demand for the Japanese yen as a safe haven which push the pair to the downside. Risk aversion hit the market sharply after the Fed’s decision as the policy makers indicated that there is a “significant” downside risk to growth which increased uncertainty for investors. Major highlights for this week that will affect the USD/JPY pair’s trading: Monday October 3: On Monday at 23:50 GMT (Sunday), Japan will issue Tankan Large Manufacturers Index for the third quarter, where the previous reading was down by 9 while it’s expected to improve to 2. The Tankan Non-Manufacturing Index is expected to show a rise of 2 from the previous fall of 5, on the other hand the Tankan Large All Industry Capex for the third quarter is expected to come at 4.3% compare to the prior reading of 4.2%. The U.S. economy will release the Construction Spending for August at 14:00 GMT, where it is expected with a drop of 0.2% after -1.3%. The ISM Manufacturing Survey for September will be released at 14:00 GMT with a previous reading of 50.6 and expected to slow to 50.3. Tuesday October 4: On Tuesday at 14:00 GMT, Fed Chairman Bernanke will testify before the JEC, while Factory Orders Index for August will be released at 14:00 GMT with a prior reading of 2.4% and expected to come at 0.2%. Wednesday October 5: The U.S. economy will release the ADP employment change for August at 12:15 GMT, where it’s expected to come at 75 thousands from the previous reading of 91 thousands. The U.S. ISM Non-Manufacturing Composite for September will be released at 14:00 GMT, where it’s expected to come at 52.7 from the prior reading of 53.3. Thursday October 6: On Thursday at 12:30 GMT, U.S. economy will release the weekly initial claims, where the number of people filing for first-time claims for the state unemployment insurance eased to 391 thousand last week. Friday October 7: On Friday the Bank of Japan will announce its rate decision for the October, where it’s expected that the central bank will keep the rate unchanged at its lowest level between 0.0% and 0.10%. At 05:00 GMT, Japan will issue the preliminary reading for Coincident Index for August, where the previous reading was 107.1. The preliminary reading for Leading Index for August will be up at the same time, with a prior reading of 104.6. The United States of America will issue a number of economic data on Friday, starting with the jobs report at 12:30 GMT, the non-farm payrolls are expected to show that the U.S. economy added 73 thousand jobs during the month of September after it stagnated in August. The unemployment rate during the month of September is expected to remain at 9.1%.

GBP/USD Technical Analysis for the Week of October 3, 2011

GBP/USDhad a positive week, but faded quite a bit in the end. The pair is still in a downdraft, and as such – we are sellers on rallies. The bottom of support can be found at 1.53, and if we can close on the daily chart below that – we would become very aggressive in our selling. We don’t buy this pair – it is too dependent on the global “animal spirits” at this point. We like the USD, and will continue to sell cable when we get chances.

GBP/USD Weekly Fundamental Analysis for the Week of October 3, 2011

The GBP/USD pair did a rebound in the week that ended Sep. 30, halting five consecutive weeks of decline, where the sentiment showed some improvement on hopes European officials will introduce new measures to contain the debt crisis, which enhancing demand on high-yielding currencies, yet the positive impact was affected by worries regarding the slowdown in global growth trajectory. The main focus was on the euro area as a German vote to expand the EFSF and the pass a property tax in the Greek Parliament in addition to the propose of other measures such as imposing a financial-transactions tax and buying of covered bonds by the ECB regained confidence in the market that European officials will prevent the crisis from worsening. Though, the continuation of the release of downbeat data from major economies added to worries that the sluggish growth pace would continue. This week, the main highlight will be on the awaited non-farm payrolls report for the month of September as it will provide an update to the status of the labour market after the disappointing report that showed the U.S. economy failed to create any jobs in August. In the U.K., the main focus will be on the rate decision for the month of October. The release of the data this week will be as follows: Monday October 3: The week starts with the release of important manufacturing data from both economies. As of 08:30 GMT, PMI manufacturing is predicted to show further contraction to 48.8 in September from a prior of 49.0 in August. For the U.S., ISM manufacturing, due at 14:00 GMT, will be out with expectations referring to a decline to 50.5 in September from a prior of 50.6 in August. Tuesday October 4: U.K. PMI construction will be available at 08:30 GMT, with projections referring to an ease in expansion to 51.2 in Sep. compared with the prior reading of 52.6. As of 14:00 GMT, the U.S. economy will release factory orders report for the month of August, where analysts’ forecasts are in favour of a 0.2% rise compared with the 2.4% advance recorded in July. Wednesday October 5: Eyes will be PMI manufacturing, which will show that the services’ sector expansion cooled down in September to 50.5 from 51.1 a month before. At the same time, 2q GDP final reading is expected to remain unrevised at 0.2% on the quarter and 0.7% on the year. In the U.S., ADP employment change, release at 12:15 GMT, is expected to show a drop in private sector jobs to 75,000 in September from the 91,000 jobs added in August. Thereafter, specifically at 14:00 GMT, ISM non-manufacturing will probably show an ease in expansion to 53.0 in Sep. from 53.3 a month earlier. Thursday October 6: The British economy will be focusing on BoE rate decision for October 6, yet expectations refer to no change in the bank’s monetary stance as policy makers will keep both interest rate and APF quantity steady at 0.50% and 200 billion pounds. In the U.S., initial jobless claims for the week ended September 30 and continuing claims for the week ended September 24 will be under scrutiny before the release of the jobs report on Friday. Friday October 7: The week ends with the release of producer prices index for the U.K., due at 08:30 GMT. The output gauge for the year ending September is predicted to show a slight rise to 6.2% from the previous reading of 6.1%, while the input measure will record 17.2% increase in the year ended Sep. compared with the prior 16.2% advance. For the U.S., the main highlight of the week will be out at 12:30 GMT; the jobs report is predicted to show that the U.S. economy added 50,000 jobs in September compared with the zero jobs added in August, according to median forecasts.

USD/CAD Technical Analysis for the Week of October 3, 2011

USD/CAD shot straight up over the past week. We have seen a few levels give way as resistance, and it appears that this market wants to go much higher. With oil prices falling, there will be pressure on this pair to continue to rise, and as such – we only buy at this point. We would buy dips as we believe this pair is a buy only pair now. It is a little overextended at this point, so we are waiting to see falls in order to buy at cheaper levels.

USD/CAD Weekly Fundamental Analysis for the Week of October 3, 2011

The USD/CAD pair extended its gains last week above parity to reach the highest level in a year, as the strength of the U.S. dollar in addition to rising volatility in markets over the past period pushed investors away from higher yielding and risky assets, where the U.S. dollar gained huge momentum amid rising concerns over the outlook for global growth on signs of slowing economic activities in major economies around the world. Moreover, the mounting fears from the European debt crisis and the looming default that is facing Greece boosted demand for lower yielding assets including the U.S. dollar, which put huge negative pressure on the Canadian dollar and allowed the USD/CAD pair to extend its gains over the course of last week, and despite that all EU Parliaments that voted on expanding the European Financial Stability Facility passed the plan, yet traders were still concerned that EU leaders will struggle to agree over the details of the plan. Greece and the European debt crisis will continue to be one of the major highlights of the week, as speculations and fears continue to mount over the outlook of the European debt crisis, as European countries continue to vote for expanding the European Financial Stability Facility (EFSF). Still, the fear of recession is evident and we hope that the data from this week can ease the pressure with the dollar still enjoying the upper hand. The important data are from the United States, where most of markets’ focus will turn to Friday’s infamous jobs report, but before that and specifically on Thursday, traders will be focused on the European Central Bank’s decision on interest rates amid the controversy that surrounds the decision, where some analysts believe the ECB should cut rates, while last week’s increase in inflation to 3% could stop the ECB from easing monetary policy. Overall, we preserve our bullish outlook for the USD/CAD pair, since financial markets conditions continue to suggest that demand for lower yielding assets will remain strong, and that should continue to provide the USD/CAD pair with more bullish momentum. Highlights for this week that will probably affect the USD/CAD pair’s direction are: Monday October 03: The United States will start the week with the ISM Manufacturing for September at 14:00 GMT and expected to slow slightly to 50.5 from 50.6. Construction Spending for August is also due at 14:00 GMT and expected with 0.2% drop following a drop of 1.3%. Tuesday October 04: EU finance chiefs meet in Luxembourg to discuss the progress made so far after the parliaments pass the EFSF expanded powers and also discuss the permanent rescue facility. From the United States Factory Orders for August are due at 14:00 GMT and expected with a slight 0.2% rise after 2.4% rise. Wednesday October 05: The United States will start at 12:15 GMT with the ADP Employment Change for September which is expected with 75 thousand new jobs following 91 thousand the previous month. At 14:00 GMT the ISM Services for September is due and expected to slow to 53.0 from 53.3. Thursday October 06: Eyes will be definitely on the ECB rate decision at 11:45 GMT although rates are expected steady at 1.50%. More focus will be directed towards Trichet’s last press conference as President of the ECB at 12:30 GMT where investors expect to see the bank announce new measures to ease the market strain and also look for hints for futures policy moves by the bank. From the United States the weekly jobless claims are due at 12:30 GMT for the week ending September 30 after the previous week they unexpectedly eased to 391 thousand. Canada will release the building permits index for August at 12:30 GMT, which declined by 0.6% back in July. Canada will release the Ivey PMI for the month of September at 14:00 GMT, where the index is expected to expand to 58.0 from 56.4 in the prior estimate. Friday October 07: Canada will release the jobs report for September at 11:00 GMT, where the net change in employment is expected to rise by 12.5K, compared with the prior drop of 5.5 thousand, while unemployment is expected to remain unchanged at 7.3%. From the United States the eyes will be on the infamous jobs report for September at 12:30 GMT. The nonfarm payrolls are expected to show 50 thousand created jobs after remaining unchanged in August, while the unemployment rate is expected to hold steady at 9.1%. The whole sales inventories are due at 14:00 GMT for August and expected to rise by 0.6% after 0.8%. The week will end with the August Consumer Credit at 19:00 GMT and expected to slow to $8.0 billion from $11.965 billion the previous month.

USD/CHF Technical Analysis for the Week of October 3, 2011

The USD/CHFpair had a neutral week this past 5 days, but as it fell – the 0.90 level acted as support. Because of this, we feel that the way going forward is going to be up, and this makes sense as the USD is the ultimate “safe haven”, and the CHF cannot be bought as long as the Swiss National Bank is trying to sell off the Franc. As there is threat of intervention, we avoid selling this pair. We buy dips, and believe parity is in the cards before it is all said and done.

USD/CHF Weekly Fundamental Analysis for the Week of October 3, 2011

The USD/CHF pair was little changed in the week that ended Sep. 30, as it remained close to the week’s starting level, where the hopes in markets that European officials will introduce measures to contain the debt crisis damped demand on refuges, yet the positive impact was offset by worries regarding the slowdown in global growth trajectory. The main focus was on the euro area as a German vote to expand the EFSF and the pass a property tax in the Greek Parliament in addition to the propose of other measures such as imposing a financial-transactions tax and buying of covered bonds by the ECB regained confidence in the market that European officials will prevent the crisis from worsening. However, the continuation of the release of downbeat data from major economies added to worries that the sluggish growth pace would continue. This week, the main highlight will be on the awaited non-farm payrolls report for the month of September as it will provide an update to the status of the labour market after the disappointing report that showed the U.S. economy failed to create any jobs in August. The release of the data this week will be as follows: Monday October 3: The week starts with the release of important data from the Swiss economy; as of 07:15 GMT, retail sales for the year ending August will be available, followed by PMI manufacturing, due 15 minutes later, which is estimated to show a drop to 50.0 in September from 51.7 recorded in August. For the U.S., the main highlight will be also on manufacturing data as ISM manufacturing, due at 14:00 GMT, will be out, with expectations referring to a decline to 50.5 in September from a prior of 50.6 in August. Tuesday October 4: As of 14:00 GMT, the U.S. economy will release factory orders report for the month of August, where analysts’ forecasts are in favour of a 0.2% rise compared with the 2.4% advance recorded in July. Wednesday October 5: Eyes will be directed towards U.S. data, amid the absence of news from Switzerland, specifically to ADP employment change, release at 12:15 GMT, which is expected to show a drop in private sector jobs to 75,000 in September from the 91,000 added in August. Thereafter, specifically at 14:00GMT, ISM non-manufacturing will probably show an ease in expansion to 53.0 in Sep. from 53.3 a month earlier. Thursday October 6: The Swiss economy starts the day with the release of CPI data for September at 07:15 GMT, as forecasts refer to 0.3% rise in the annual gauge from the preceding 0.2% increase. In the U.S., ADP employment change, release at 12:15 GMT, is expected to show a drop in private sector jobs to 75,000 in September from the 91,000 jobs added in August. Thereafter, specifically at 14:00 GMT, ISM non-manufacturing will probably show an ease in expansion to 53.0 in Sep. from 53.3 a month earlier. Friday October 7: The week ends with the release of unemployment data for the Swiss economy, at 05:45 GMT, where the reading is predicted to linger at 2.8% in September while the seasonally adjusted reading will also remain at 3.0%. For the U.S., the main highlight of the week will be out at 12:30 GMT; the jobs report is predicted to show that the U.S. economy added 50,000 jobs in September compared with the zero jobs added in August, according to median forecasts.

 

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