Forex Technical and Fundamental Analysis for the Week of September 12, 2011

EUR/USD Technical Analysis for the Week of September 12, 2011

EUR/USD fell apart this past week, and more specifically on Friday as there are many rumours as to whether or not the Greeks were preparing to default on their debts or not. Adding to the confusion, one of the members of the European Central Bank committee resigned as differences are boiling over in the central bank. We are ready to sell any and all rallies as the 1.40 level, the 1.3850 recent low, and several pieces of bad news such as a failed Greek bond auction on Friday have all culminated into very, very bad news for the common currency.

EUR/USD Weekly Fundamental Analysis for the Week of September 12, 2011

The EUR/USD ended with heavy losses for the second consecutive week with the bearishness haunting the euro after Trichet expressed the change of stance to a dovish bias. We can see the euro hammered with too many problems in Europe and this week the sluggish outlook for growth and the downside revision to ECB projections to 1.6% from 1.9% growth this year and to 1.3% from 1.7% next year weighed down on the euro. This week, the euro area will not release major fundamentals which will keep the focus on the sentiment, the debt crisis, and worsening global growth. The United States will take the lead with heavy data yet investors will still be focused on predominant debt woes that will affect the pair. The major highlight will be the meetings to discuss the debt crisis, whether at the EU parliament or the finance ministers and central bankers meeting in Poland at the end of the week. The comments on the Greek status of aid will be critical and whether the finance chiefs can break a deadlock on the measures that were announce in the last summit. We expect the EUR/USD to remain under bearish pressure and only a relief upside recovery will be seen if the euro area assures they are ready to counter the crisis and help Greece avoid default and shelter other European nations like Italy and Spain from mounting market pressures. Other news from the euro area and the U.S. economy to affect the pair this week: Monday August 12: The euro area starts the week quietly with investors looking for clues for the next move and the means to contain the debt crisis, where eyes will track the EU’s annual report on public finances which might have its effect on the market. Tuesday August 13: The United States will start a busy week on a soft note with the August import price index at 12:30 GMT where the index is expected with 0.7% drop following 0.3% rise and on the year to ease to 13.0% from 14.0%. Meanwhile, at 18:00 GMT the monthly budget statement for August is expected to show a widening deficit of $126.5 billion from $90.5 billion. Wednesday August 14:                                                         The euro area industrial production for July is due at 09:00 GMT and expected with 1.6% rebound from 0.7% drop and on the year to expand 4.8% following 2.9%. The focus will also turn to the debt crisis with the EU Parliament debating economic conditions and the debt crisis which might hint for the coming move from the region to support debt-laden nations and break the deadlock in the bailout for Greece. As for the United States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also due at 12:30 GMT will be the Retail Sales for August which are expected with a slowing 0.2% rise after 0.5% advance in July. Business Inventories for July will be released at 14:00 GMT and expected with 0.5% rise from 0.3% the previous month. Thursday August 15: The European Central Bank will publish the monthly report at 08:00 GMT repeating Trichet’s dovish stance as investors focus on the downside revision to growth and inflation expectations. At 09:00 GMT the August inflation figures are due where the CPI is expected to rise 0.2% on the month following 0.6% drop and on the year to come in line with the flash estimate at 2.5% and the core annual CPI to hold at 1.2%. The United States will continue with more inflation figures at 12:30 with the August CPI where inflation is expected to have eased with 0.2% gain on the month following 0.5% and on the year to hold at 3.6%. Core inflation is expected steady on the month with 0.2% rise and on the year to tick slightly higher to 1.9% from 1.8%. At the same time, the current account for the second quarter is due, where the deficit might have expanded to $121.5 billion from $119.3 billion in the first quarter.  As for Empire Manufacturing for September the index might have recovered to -3.95 from -7.72. Also due at 12:30 GMT, the weekly jobless claims are awaited after unexpected rising last week by 414 thousand. At 13:15 GMT the industrial production for August is expected to have eased to 0.1% following 0.9% and the capacity utilization to hold at 77.5%. At 14:00 GMT we have the Philadelphia fed index for September which is expected to have recovered to -15.0 from -30.7. Friday August 16: The euro area will end the week with the trade figures for July at 09:00 GMT. The Trade surplus might have expanded to 2.0 billion from 0.9 billion in non-seasonally adjusted terms and the current account is also due after recording a shortfall of 7.4 billion the previous month in seasonally adjusted terms. Eyes in Europe will be on the EU Finance Ministers and Central Bankers that will start their two-day meeting in Poland to discuss the deepening debt crisis with hope they will finalise the support mechanism and decisions agreed upon in the last summit. The United States will end the wee with the TIC Flows for July at 13:00 GMT; the net long-term TIC flows the previous month were reported at $3.7 billion and total net TIC flows at -$29.5 billion. At 13:55 GMT the preliminary Michigan Consumer Confidence index is due and expected to rise slightly to 56.3 from 55.7 the previous month.

AUD/USD Technical Analysis for the Week of September 12, 2011

The AUD/USD pairfell during the previous week, as we suggested could happen based upon the shooting star formed the week before. However, there is massive support below this level as represented by the massive hammer from 5 weeks ago. The area should be massively supportive, even if we are starting to show a bearish bias in the global markets. Because of this, the pair will be hard to sell until we clear the parity level. At that point, we are short for the long-term.

AUD/USD Weekly Fundamental Analysis for the Week of September 12, 2011

The Australian dollar was pressured to decline against the American dollar after the RBA’s decision to keep rates unchanged at 4.75% as policy makers signaled concerns about the European debt risks that may affect the global recovery. Moreover, the Australian government saw that global financial market conditions are unsettled at this period, also it noted that the rates decision is prudent at this time amid the fears that dominate the market. On the other hand, Australia said the economy needs time to recover, adding that the Bank won’t increase borrowing costs till the end of the year, in an effort to support the economic recovery. This week, the market will focus on the data from the US economy and the Euro-Zone for any sign that will ease the uncertainty over the outlook and provide signals for coming moves from policy makers. Major highlights for this week that will burden the AUD/USD pair’s trading Monday September 12: The Australian economy is to start the week’s fundamentals with the trade balance index for July at 01:30 GMT, where the surplus is expected to narrow to A$1900 million from A$2052 million in June. As for the U.S. economy it will not release any fundamentals on Monday, but Fed’s Fisher will speak on monetary policy in Dallas at 20:00 GMT. Tuesday September 13: The NAB business confidence and conditions indicator for August will released at 01:30 GMT; the confidence was reported at 2 in July and conditions at -1. The U.S. economy will report the import price index for August, where the index is expected to drop by 0.7% following the previous 0.3% rise, on the year to ease to 13.0% from 14.0%. At 18:00 GMT the monthly budget statement for August will be released where it is expected to show a deficit of $126.0 billion from $90.5 billion. Wednesday September 14: At 00:30 GMT Australia will report the Westpac consumer confidence for September after it dropped by 3.5% in August. The U.S. economy will release the PPI index for August at 12:30 GMT, where the previous reading was up by 0.2% and expected at – 0.1%, while the annual reading is expected to come at 6.4% from the prior reading of 7.2%. At 12:30 GMT, the U.S. economy will release the advanced retail sales for August, where the previous reading was 0.5% and expected to come at 0.2%. The U.S. business inventories for June will be released at 14:00 GMT, where it had a previous reading of 0.3% and expected to come at 0.5%. Thursday September 15: The United States will continue with more inflation figures at 12:30 with the August CPI where inflation is expected to have eased with 0.2% gain on the month following 0.5% and on the year to hold at 3.6%. Core inflation is expected steady on the month with 0.2% rise and on the year to tick slightly higher to 1.9% from 1.8%. At the same time, the current account for the second quarter is due, where the deficit might have expanded to $121.5 billion from $119.3 billion in the first quarter.  As for Empire Manufacturing for September the index might have recovered to -3.95 from -7.72. Also due at 12:30 GMT, the weekly jobless claims are awaited after unexpected rising last week by 414 thousand. At 13:15 GMT the industrial production for August is expected to have eased to 0.1% following 0.9% and the capacity utilization to hold at 77.5%. At 14:00 GMT we have the Philadelphia fed index for September which is expected to have recovered to -15.0 from -30.7. Friday September 16: At 13:00 GMT, the U.S. economy will release the net long-term TIC flows for July, where the previous reading was $3.7 billion while the total net TIC flows had a previous reading of -$29.5 billion. At 13:55 GMT, the U.S. economy will release the University of Michigan survey of consumer confidence for September, where the preliminary reading is expected to come at 56.6 from the prior reading of 55.7.

EUR/CHF Technical Analysis for the Week of September 12, 2011

EUR/CHF shot straight up during the week as the Swiss National Bank decided that it “can no longer tolerate the EUR/CHF being below 1.20”. This is unheard of for a central bank to come straight out and say this, and it even went so far as to say it would be willing to buy “unlimited” amounts of foreign currency to defend this level. Because of this, we aren’t willing to fight them. We are looking to buy this pair, perhaps near the 1.20 level, but must give the stop loss some range, perhaps below the 1.15 area.

EUR/CHF Weekly Fundamental Analysis for the Week of September 12, 2011

The EUR/CHF ended the week with strong gains after the unexpected move from the Swiss National Bank which kept the pair steady above the new 1.20 floor. The Swiss National Bank intervened unexpectedly in the market last week and opted to take the move ahead of this week’s scheduled decision. The SNB used a strong tone against the franc’s rally and said is prepared to buy unlimited amounts of foreign currencies to keep the franc from excessive gains that is hurting the economy. The SNB’s strongest move was setting the floor for the EUR/CHF at 1.20 which held the pair to the upside and likely to continue this week. After the move from the bank the pair’s movement is now confined and affected by the intervention rather than fundamentals, where the euro is still weak and hammered by debt woes. This week the lack of major data from the euro area and Switzerland will keep the focus on the sentiment and the decision taken last week. The SNB’s rate decision is expected with little surprises and investors will await any comments to see possible future steps from the bank which will add little to what is already seen. As for the euro, the focus is on the progress in the debt-laden nations and negotiations on the bailout for Greece as the EU parliament and finance ministers meet. The pair will fluctuate within a thin range yet likely retain the upside bias. Other news from the euro area and the Swiss economy to affect the pair this week: Monday August 12: The euro area starts the week quietly with investors looking for clues for the next move and the means to contain the debt crisis, where eyes will track the EU’s annual report on public finances which might have its effect on the market. Tuesday August 13: Wednesday August 14: Switzerland will start the day at 07:15 GMT with the Producer & Import prices for August where the index is expected to drop 0.4% following 0.7% drop and on the year to decline 1.1% following 0.6% drop. The euro area industrial production for July is due at 09:00 GMT and expected with 1.6% rebound from 0.7% drop and on the year to expand 4.8% following 2.9%. The focus will also turn to the debt crisis with the EU Parliament debating economic conditions and the debt crisis which might hint for the coming move from the region to support debt-laden nations and break the deadlock in the bailout for Greece. Thursday August 15: The Swiss Industrial Production for the second quarter is due at 07:15 GMT and expected with 2.3% rebound on the quarter following 9.2% slump and on the year expected with 3.2% rise following 5.0%. The main focus will be the SNB decision at 07:30 GMT where the surprises have already been delivered from the bank and the 3-month Libor rate will be left at the zero range with eyes on the statement and any new injection of liquidity after the bank set the target for the euro-franc at 1.20 and expressed readiness to buy foreign currencies with unlimited amounts. The European Central Bank will publish the monthly report at 08:00 GMT repeating Trichet’s dovish stance as investors focus on the downside revision to growth and inflation expectations. At 09:00 GMT the August inflation figures are due where the CPI is expected to rise 0.2% on the month following 0.6% drop and on the year to come in line with the flash estimate at 2.5% and the core annual CPI to hold at 1.2%. Friday August 16: The euro area will end the week with the trade figures for July at 09:00 GMT. The Trade surplus might have expanded to 2.0 billion from 0.9 billion in non-seasonally adjusted terms and the current account is also due after recording a shortfall of 7.4 billion the previous month in seasonally adjusted terms. Eyes in Europe will be on the EU Finance Ministers and Central Bankers that will start their two-day meeting in Poland to discuss the deepening debt crisis with hope they will finalise the support mechanism and decisions agreed upon in the last summit.

NZD/USD Technical Analysis for the Week of September 12, 2011

The NZD/USD pairfell after forming a shooting star the previous week. We stated that we expected this pair to fall, but only as a sign of consolidation. The markets have fallen, and we still feel that this pair could consolidate as opposed to melting down. If you are in the trade, there is probably a little more in the short position. However, if you haven’t shorted this pair yet, you are better off waiting to see if the 0.8000 level gives way. If it does, we are massively short.

NZD/USD Weekly Fundamental Analysis for the Week of September 12, 2011

The New Zealand’s currency ended last week with losses as Asian equities declined, though it pared the losses after the report that showed New Zealand business confidence rose this month after retreating to a four-month low during August amid the worsening global conditions. New Zealand currency (the Kiwi) dropped to the lowest in more than a week amid concern Europe’s sovereign debt crisis and a slowing U.S. economy will dent global growth, damping demand for higher-yielding assets. The market is moving into the hurdle as the fears dominate investors’ sentiment, pushing them to increase demand on safe haven assets such as the greenback, gold and the Yen. In the week ahead, the NZD/USD pair will move according to the market sentiment that will be the main reason behind the majors’ movements. The Focus will be on the RBNZ rate decision and statement to define the coming policy action from the nation amid the high uncertainty for the global recovery and as central banks start to take action to shelter their economies from growing downside pressures. Major highlights for this week that will burden the AUD/USD pair’s trading Monday September 12: No data is queued for release on Monday but Fed’s Fisher will speak on monetary policy in Dallas at 20:00 GMT. Tuesday September 13: The U.S. economy will report the import price index for August, where the index is expected to drop by 0.7% following the previous 0.3% rise, on the year to ease to 13.0% from 14.0%. At 18:00 GMT the monthly budget statement for August will be released where it is expected to show a deficit of $126.0 billion from $90.5 billion. Wednesday September 14: The U.S. economy will release the PPI index for August at 12:30 GMT, where the previous reading was up by 0.2% and expected at – 0.1%, while the annual reading is expected to come at 6.4% from the prior reading of 7.2%. At 12:30 GMT, the U.S. economy will release the advanced retail sales for August, where the previous reading was 0.5% and expected to come at 0.2%. The U.S. business inventories for June will be released at 14:00 GMT, where it had a previous reading of 0.3% and expected to come at 0.5%. Thursday September 15: The market is waiting the Reserve Bank of New Zealand interest rate decision at 21:00 GMT (Wednesday), where the expectations indicate that the policy makers will leave the rates unchanged at 2.50%. Moreover, the NZ performance of manufacturing index for August that will released at 22:30 GMT (Wednesday), where the July’s reading came at 53.2. The United States will continue with more inflation figures at 12:30 with the August CPI where inflation is expected to have eased with 0.2% gain on the month following 0.5% and on the year to hold at 3.6%. Core inflation is expected steady on the month with 0.2% rise and on the year to tick slightly higher to 1.9% from 1.8%. At the same time, the current account for the second quarter is due, where the deficit might have expanded to $121.5 billion from $119.3 billion in the first quarter.  As for Empire Manufacturing for September the index might have recovered to -3.95 from -7.72. Also due at 12:30 GMT, the weekly jobless claims are awaited after unexpected rising last week by 414 thousand. At 13:15 GMT the industrial production for August is expected to have eased to 0.1% following 0.9% and the capacity utilization to hold at 77.5%. At 14:00 GMT we have the Philadelphia fed index for September which is expected to have recovered to -15.0 from -30.7. Friday September 16: At 01:00 GMT, New Zealand economy will report the September consumer confidence index after it rose 3.6% to 113.3 in August. At 13:00 GMT, the U.S. economy will release the net long-term TIC flows for July, where the previous reading was $3.7 billion while the total net TIC flows had a previous reading of -$29.5 billion. At 13:55 GMT, the U.S. economy will release the University of Michigan survey of consumer confidence for September, where the preliminary reading is expected to come at 56.6 from the prior reading of 55.7.

USD/JPY Technical Analysis for the Week of September 12, 2011

USD/JPY rose during the previous week as the 77 level seems to be a “line in the sand” for the Bank of Japan. The area has held up extraordinarily well in the face of serious risk off type of trading environment globally. The 80 mark above looks to be very strong resistance, and as such, we find this trade a little difficult to hang onto. If we can clear the 80 level – this pair goes up and much higher than most people will expect. We don’t’ short this pair, as it invites the Bank of Japan to intervene.

USD/JPY Weekly Fundamental Analysis for the Week of September 12, 2011

The USD/JPY pair was able to penetrate the consolidated area which the pair has been trading within for three weeks, as the strong dollar and the disappointing BOJ meeting opened the way for the greenback to cover some of its losses against the Japanese currency. The continuation of the EU debt crisis and the current slowdown in the U.S. economy increased fears among investors and drove them to abandon any risky investments and focus on the greenback and the yen. The latest BOJ meeting did not give investors what they really want, as the central bank kept the interest rate, asset-purchase program and credit-loan program unchanged, without mentioning any further measures or expansion in the current stimulus package. Japan’s economy contracted during the second quarter, opening the way for more concerns regarding the negative effect of the strong yen on the nation’s recovery. Despite the weakening yen during last week, the Japanese currency is still near its post-war levels against the dollar, increasing bets that the BOJ could intervene in the FX market for the third time this year. The latest policy makers’ comments around the glob failed to support confidence, as fears and uncertainty dominate the global economic outlook and is forcing investors to focus on safe haven investments. Major highlights for this week that will affect the USD/JPY pair’s trading: Monday September 12: On Monday at 23:50 GMT (Sunday), the Bank of Japan will release the August 4-5 Board Meeting minutes, when the Bank released extra measures to support the Japanese economy. At 23:50 GMT,Japan will issue the Tertiary Industry Index for July, where it is expected to show a rise of 0.2% compare to the previous reading of 1.9%. As for the U.S. economy it will not release any fundamentals on Monday, but Fed’s Fisher will speak on monetary policy in Dallas at 20:00 GMT. Tuesday September 13: On Tuesday at 01:00 GMT,Japanwill release the Japanese manpower survey for the forth quarter, where the previous reading was 8.0. The U.S. economy will report the import price index for August, where the index is expected to drop by 0.7% following the previous 0.3% rise, on the year to ease to 13.0% from 14.0%. At 18:00 GMT the monthly budget statement for August will be released where it is expected to show a deficit of $126.0 billion from $90.5 billion. Wednesday September 14: The Japanese economy will release the final reading for the industrial production index for July at 04:30 GMT, where the previous reading was up by 0.6%. As for the annual reading it had a previous reading of –2.8%. The U.S. economy will release the PPI index for August at 12:30 GMT, where the previous reading was up by 0.2% and expected at – 0.1%, while the annual reading is expected to come at 6.4% from the prior reading of 7.2%. At 12:30 GMT, the U.S. economy will release the advanced retail sales for August, where the previous reading was 0.5% and expected to come at 0.2%. The U.S. business inventories for June will be released at 14:00 GMT, where it had a previous reading of 0.3% and expected to come at 0.5%. Thursday September 15: The United States will continue with more inflation figures at 12:30 with the August CPI where inflation is expected to have eased with 0.2% gain on the month following 0.5% and on the year to hold at 3.6%. Core inflation is expected steady on the month with 0.2% rise and on the year to tick slightly higher to 1.9% from 1.8%. At the same time, the current account for the second quarter is due, where the deficit might have expanded to $121.5 billion from $119.3 billion in the first quarter.  As for Empire Manufacturing for September the index might have recovered to -3.95 from -7.72. Also due at 12:30 GMT, the weekly jobless claims are awaited after unexpected rising last week by 414 thousand. At 13:15 GMT the industrial production for August is expected to have eased to 0.1% following 0.9% and the capacity utilization to hold at 77.5%. At 14:00 GMT we have the Philadelphia fed index for September which is expected to have recovered to -15.0 from -30.7. Friday September 16: At 13:00 GMT, the U.S. economy will release the net long-term TIC flows for July, where the previous reading was $3.7 billion while the total net TIC flows had a previous reading of -$29.5 billion. At 13:55 GMT, the U.S. economy will release the University of Michigan survey of consumer confidence for September, where the preliminary reading is expected to come at 56.6 from the prior reading of 55.7.

GBP/USD Technical Analysis for the Week of September 12, 2011

The GBP/USD pairfell hard this past week, and is approaching the recent low in the 1.5750 area. The bottom of the hammer for that week will serve as a trigger for selling this pair for the longer-term. The cable pair is very sensitive to the risk environment in the global markets, and as such we feel there is much more risk to the downside as opposed to the upside. The area could be supportive, but this chart almost looks doomed to fail. We are selling a break below that level.

GBP/USD Weekly Fundamental Analysis for the Week of September 12, 2011

The GBP/USD ended with a third weekly decline as the downbeat data from the UK pushed the pound down while the dollar was boosted by the $447 billion jobs stimulus plan proposed by president Obama. Yet, the sterling recovered some of the losses when the BoE rejected to respond to calls for boosting APF by 50 billon pounds. This week, attention will be on inflation data from both economies as it will give an update about inflation amid expectations that there might be monetary intervention by the Fed on Sep. 20-21 meeting and by the BoE later in the year. Other news from the euro area and the U.S. economy to affect the pair this week: Monday August 12: Both economies will lack fundamentals and therefore the pair is expected to follow the general direction in the market. Tuesday August 13: At 08:30 GMT, theU.K.will release important inflation and trade data; annual CPI for August is predicted to rise to 4.6% from the prior 4.4%, where the monthly reading will probably show a rise by 0.6% from the previous flat reading. Yearly RPI is predicted to advance 5.2% from the previous 5.0%. Regarding trade data, visible trade balance report is estimated to show a narrowing deficit to 8400 million pounds in July from 8873 million pounds deficit a month earlier. The United State swill start a busy week with inflation data for the month of August as import price index due at 12:30 GMT is expected to record 0.7% drop, following the 0.3% rise, and on the year to ease to 13.0% from the prior 14.0%. Thereafter, specifically at 18:00 GMT, the monthly budget statement for August is expected to show a widening deficit of $126.5 billion from $90.5 billion shortfall. Wednesday August 14:                                                         At 08:30 GMT, theU.K.will release jobs report where ILO unemployment for the three months ended July will linger at 7.9% while jobless claims will show a decline to 35.0 thousands in August compared with 37.1 thousands in July. As for the United States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also at the same time Retail Sales report for August is expected to slow to 0.2% compared with the 0.5% advance posted in July. Business Inventories for July will be released at 14:00 GMT and expected to show 0.5% rise from 0.3% the previous month. Thursday August 15: As of 08:30 GMT, retail sales excluding with auto fuel will show 0.3% drop in August from the prior 0.2% advance, while the reading excluding auto fuel is also predicted to record -0.3% from the previous 0.2% advance. In theUnited States, the release of more inflation data continues as at 12:30 August CPI, which is expected to have eased with 0.2% gain on the month following 0.5% and on the year to hold at 3.6%, will be available. Core inflation is expected steady on the month with 0.2% rise and on the year to tick slightly higher to 1.9% from 1.8%. Also, at 12:30 GMT, the current account for the second quarter is due, where the deficit might have expanded to $121.5 billion from $119.3 billion in the first quarter.  As for Empire Manufacturing for September, the index might have recovered to -3.95 from -7.72. Moreover, the weekly jobless claims are awaited at 12:30 GMT after unexpected rising last week by 414 thousand. At 13:15 GMT the industrial production for August is expected to have eased to 0.1% following 0.9% and the capacity utilization to hold at 77.5%. Finally, at 14:00 GMT thePhiladelphiafed index for September is expected to have recovered to -15.0 from -30.7. Friday August 16: The Swiss economy ends the week with no releases, yet theUnited Stateswill release TIC Flows for July at 13:00 GMT, followed by the preliminary Michigan Consumer Confidence index, which is forecasted to show a rise to 56.3 in Sep. from the previous 55.7, at 13:55 GMT.

USD/CAD Technical Analysis for the Week of September 12, 2011

USD/CAD had a bullish week as the oil markets sold off. The parity level just above is massively resistive, and kept prices down. However, we saw that there was a hammer printed the week before, so this bullish move isn’t overly surprising. The pair has been stuck in a 300 pip range over the last couple of weeks, and a move is certainly about to happen. We like buying on a break above the parity level, perhaps a daily close above it, and we like selling on a break below the 0.98 level under the same circumstances.

USD/CAD Weekly Fundamental Analysis for the Week of September 12, 2011

The USD/CAD pair rose last week amid rising concerns around global financial markets, where signs global growth is slowing down, in addition to ongoing fears from the European debt crisis, and doubts the U.S. Congress would approve Obama’s jobs stimulus package, boosted demand for lower yielding assets, which put downside pressures on the CAD, and accordingly, the USD/CAD pair was able to post strong gains. Moreover, data from the Canadian labour market last week signaled weakening activities in the labour market, where unemployment rose unexpectedly in August to 7.3% from 7.2%, while the net change in employment showed Canadian employers shed jobs for the first time since March, which also put negative pressure on the CAD, and allowed the USD/CAD pair to extend its gains further. Rising pessimism in global financial markets should put the CAD under more pressure over the coming period, where investors fear the U.S. economy is heading into a double dip recession, and since the United States is Canada’s largest trading partner, we should expect the Canadian economy to suffer deeply, and that should provide the USD/CAD pair with bullish momentum. Moreover, traders will be eyeing the G7 meeting over the weekend, and whether they can reach a solution to ease the deepening EU debt crisis, and also help support global growth. Moreover, traders will be looking for clues regarding Obama’s jobs stimulus package, and whether U.S. lawmakers can reach an agreement to pass the jobs bill. Highlights for this week that will probably affect the USD/CAD pair’s direction are: Monday September 12: We don’t have any economic news from either country on Monday, however, attention will be towards the weekend’s G7 meeting. Tuesday September 13: The United States will start a busy week on a soft note with the August import price index at 12:30 GMT where the index is expected with 0.7% drop following 0.3% rise and on the year to ease to 13.0% from 14.0%. Meanwhile, at 18:00 GMT the monthly budget statement for August is expected to show a widening deficit of $126.5 billion from $90.5 billion. Wednesday September 14:                                                The focus will turn to the debt crisis with the EU Parliament debating economic conditions and the debt crisis which might hint for the coming move from the region to support debt-laden nations and break the deadlock in the bailout for Greece. At 12:30 GMT, Canada will release the capacity utilization rate for the second quarter, where capacity utilization increased to 79.0% in the prior estimate. As for the United States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also due at 12:30 GMT will be the Retail Sales for August which are expected with a slowing 0.2% rise after 0.5% advance in July. Business Inventories for July will be released at 14:00 GMT and expected with 0.5% rise from 0.3% the previous month. Thursday September 15: The United States will continue with more inflation figures at 12:30 with the August CPI where inflation is expected to have eased with 0.2% gain on the month following 0.5% and on the year to hold at 3.6%. Core inflation is expected steady on the month with 0.2% rise and on the year to tick slightly higher to 1.9% from 1.8%. At 12:30 GMT, Canada will release the manufacturing sales index for July, which is expected to rise by 1.2%, following the prior drop of 1.5% back in June. At the same time, the current account for the second quarter is due, where the deficit might have expanded to $121.5 billion from $119.3 billion in the first quarter.  As for Empire Manufacturing for September the index might have recovered to -3.95 from -7.72. Also due at 12:30 GMT, the weekly jobless claims are awaited after unexpected rising last week by 414 thousand. At 13:15 GMT the industrial production for August is expected to have eased to 0.1% following 0.9% and the capacity utilization to hold at 77.5%. At 14:00 GMT we have the Philadelphia fed index for September which is expected to have recovered to -15.0 from -30.7. Friday September 16: Eyes in Europe will be on the EU Finance Ministers and Central Bankers that will start their two-day meeting in Poland to discuss the deepening debt crisis with hope they will finalise the support mechanism and decisions agreed upon in the last summit. The United States will end the week with the TIC Flows for July at 13:00 GMT; the net long-term TIC flows the previous month were reported at $3.7 billion and total net TIC flows at -$29.5 billion. At 13:55 GMT the preliminary Michigan Consumer Confidence index is due and expected to rise slightly to 56.3 from 55.7 the previous month.

USD/CHF Technical Analysis for the Week of September 12, 2011

USD/CHF shot straight up this previous week after the Swiss National Bank announced it “could no longer tolerate a EUR/CHF cross rate below 1.20”. Because of this, the CHF lost massive amounts of value as the SNB pushed the markets into selling them. The USD is being bought hand over fist, and as such – this move supercharged this pair, causing it to gain 1,000+ pips for the week. Because of this, we cannot sell this pair – we can only buy it. We are waiting to see a bit of a pullback in order to join this move up.

USD/CHF Weekly Fundamental Analysis for the Week of September 12, 2011

The USD/CHF ended with heavy gains last week as the intervention by the Swiss National Bank to curb the franc’s runway reduced the appeal of the franc. The SNB surprisingly decided to set a target for the franc versus the euro at 1.20 in the most recent step to curb the franc’s runaway which affected Swiss exporters and raised deflation threats. The SNB vowed to “enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.” On the other hand, the dollar was boosted by the $447 billion jobs stimulus plan proposed by president Obama. This week, attention will be on inflation data from both economies as it will give an update about inflation amid expected interventions by the SNB, which will announce interest rate for September this week, to support the ceiling target and possible introduction of new stimulus by theU.S.to boost recovery that started to fade. Other news from the euro area and the U.S. economy to affect the pair this week: Monday August 12: Both economies will lack fundamentals and therefore the pair is expected to follow the general direction in the market. Tuesday August 13: While the Swiss economy has no data releases, theUnited Stateswill start a busy week with inflation data for the month of August as import price index due at 12:30 GMT is expected to record 0.7% drop, following the 0.3% rise, and on the year to ease to 13.0% from the prior14.0%. Thereafter, specifically at 18:00 GMT, the monthly budget statement for August is expected to show a widening deficit of $126.5 billion from $90.5 billion shortfall. Wednesday August 14:                                                         At 07:15 GMT, the Swiss economy will release producer and import prices for August, where analysts expect 1.1% drop on the year and 0.4% fall on the month from both prior readings of -0.6% and -0.7% respectively. As for theUnited States, the Producer Price Index is due at 12:30 GMT where prices might have dropped 0.1% on the month following 0.2% rise and to have eased to 6.4% on the year from 7.2%. Excluding food and energy the pressure is also expected to have eased with 0.2% rise on the month following 0.4% yet to rise to 2.6% on the year from 2.5%. Also at the same time Retail Sales report for August is expected to slow to 0.2% compared with the 0.5% advance posted in July. Business Inventories for July will be released at 14:00 GMT and expected to show 0.5% rise from 0.3% the previous month. Thursday August 15: As of 07:15 GMT, Swiss industrial production for the second quarter will record 2.3% advance from the prior 9.2% drop while the annual reading will record 3.2% rise from the previous 5.0% advance, according to median forecasts. Yet, the SNB will grab attention after the surprising cut last month and putting ceiling for the franc against euro last week. Expectations refer to no change in the 3-month Libor target at 0.00%. In theUnited States, the release of more inflation data continues as at 12:30 August CPI, which is expected to have eased with 0.2% gain on the month following 0.5% and on the year to hold at 3.6%, will be available. Core inflation is expected steady on the month with 0.2% rise and on the year to tick slightly higher to 1.9% from 1.8%. Also, at 12:30 GMT, the current account for the second quarter is due, where the deficit might have expanded to $121.5 billion from $119.3 billion in the first quarter.  As for Empire Manufacturing for September, the index might have recovered to -3.95 from -7.72. Moreover, the weekly jobless claims are awaited at 12:30 GMT after unexpected rising last week by 414 thousand. At 13:15 GMT the industrial production for August is expected to have eased to 0.1% following 0.9% and the capacity utilization to hold at 77.5%. Finally, at 14:00 GMT thePhiladelphiafed index for September is expected to have recovered to -15.0 from -30.7. Friday August 16: The Swiss economy ends the week with no releases, yet theUnited Stateswill release TIC Flows for July at 13:00 GMT, followed by the preliminary Michigan Consumer Confidence index, which is forecasted to show a rise to 56.3 in Sep. from the previous 55.7, at 13:55 GMT.

 

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