Mid-Day Report: Dollar Regains Strength, Steady after GDP Revision
May 16, 2008 on 3:25 pm | In Currency | No Comments
Action Insight | Written by ActionForex.com | Nov 29 07 14:15 GMT |
Forex Mid-Day Technical Report Dollar Regains Strength, Steady after GDP Revision
Dollar regains strength against European majors today as correction continues. Q3 GDP growth was revised up to 4.9% annualized rate, fastest growth in four years and slightly above expectation of 4.8%. The growth rate was also much stronger than Q2’s 3.9%. However, the data did little to change the view of steep slowdown in Q4 due to housing and mortgage markets problems. Jobless claims surged sharply higher to 352k, the first above 350k reading since Fed and signal a more sever deterioration in the job market. New home sales will be released later in the morning. Recent Fedspeaks will also continue with Mishkin and Bernanke featured today.
Sterling gave back yesterday’s gain after dovish comments from BoE members on the testimony before Parliamentary Treasury Select Committee. Blanchflower also made clear his intent to vote for a decrease again in December, though the overall vote will still be tight. Sterling is also weighed down by steeper than expected slow down in how price growth which saw Nationwide House price Index fell by the most since Jun 95, -0.8% mom in Nov, dragging yoy rate to 6.9% versus expectation of 8.4%. Germany’s job market continues to show surprised improvement. Unemployment rate dropped further from 8.7% to 8.6% in Nov, as the number of jobless fell by a further -53k. However, Eurozone Retail PMI fell for the third consecutive month to 45.9 in Nov, suggesting the majority of purchasing managers are feeling pessimistic. Euro heads to retest yesterday’s low. EUR/USD
Daily Pivots: (S1) 1.4749; (P) 1.4804; (R1) 1.4895; «www.actionforex.com»
EUR/USD’s recovery was limited at 1.4859 and eases back today. At this point, correction from 1.4966 is still expected to extend lower as long as 1.4859 resistance holds, probably towards 1.4519 clusters support. Above 1.4859 will indicate that fall from 1.4966 has possibly completed and bring retest of 1.5 cluster resistance.
As discussed before, while rise from 1.4014 is completed, it’s early to confirm that rise from 1.3360 has completed too. Focus is now on 1.4519 cluster support (50% retracement of 1.4014 to 1.4966 at 1.4490). Decisive break of this support zone will add much credence to the case that rally from 1.3360 has completed too after failing 1.5 key medium resistance and bring deeper correction to 1.4014/4281 support zone before resuming the long term up trend. But strong rebound above this level will suggest another rise should be seen before making a medium term top.
In the bigger picture, regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and is now close to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which will overlap with 1.5 psychological resistance. Upside could be limited by this resistance initially on overbought condition. Sustained trading above this key resistance is needed to confirm medium term rally is still underway to next projection target of 100% projection at 1.7048. On the downside, firm break of 1.3851 resistance turned support is needed to be the first signal that this up trend from 1.1639 has completed. Otherwise, long term outlook remains bullish.
GBP/USD
Daily Pivots: (S1) 2.0657; (P) 2.0744; (R1) 2.0907; «www.actionforex.com»
Cable’s rebound was limited by at 2.0380, below mentioned 2.0845 cluster resistance and eased back to 2.06 level today. Short term outlook remains neutral at this moment. With 2.0845 cluster resistance (61.8% retracement of 2.1161 to 2.0353 at 2.0852) remains intact, the original view still holds. That is, rise from 1.9652 has completed after touching medium term rising channel resistance. Fall from 2.1161 is expected to extend further to retest medium term rising channel support (now at 2.0040) after finishing the current corrective rebound from 2.0353. Below 2.0579 support will bring retest of 2.0353 low first. However, sustained break of 2.0845 cluster resistance will indicate that fall from 2.1161 has completed and will bring retest of this high.
In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. Break of 61.8% projection level at 2.0677 now encourages further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.
USD/CHF
Daily Pivots: (S1) 1.1032; (P) 1.1114; (R1) 1.1188; «www.actionforex.com».
USD/CHF’s rebound from 1.0890 resumes today and reaches as high as 1.1199 so far. At this point, further rally is still in favor as long as 1.1097 support holds. However, upside is still expected to be limited by 1.1298 resistance and bring resumption of the fall from 1.2467. on the downside, below 1.1071 will flip intraday bias back to the downside, indicating recovery is completed and bring retest of 1.0890 low.
In the bigger picture, the current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend resumed. Sustained trading below 1.1100 clusters support (95 low and 100% projection of 1.3283 to 1.1919 from 1.2467 at 1.1103) encourages decline to next medium term target of 161.8% projection at 1.0260. On the upside, however, break of 1.1298 resistance will be bring stronger rebound towards 38.2% retracemment of 1.2467 to 1.8090 at 1.1492 first.
USD/JPY
Daily Pivots: (S1) 108.71; (P) 109.59; (R1) 110.92; «www.actionforex.com».
USD/JPY is bounded in tight range after rebound from 107.21 reached as high as 110.47. At this point, intraday bias remains on the upside as long as 109.13 minor support holds and further rise could still be seen. But still, upside is expected to be limited by 111.76 resistance and bring resumption of fall from 117.94. On the downside, below 109.13 will indicate rebound has completed and bring retest of 107.21 low.
In the bigger picture, sharp decline from 124.13 remains in force and is expected to extend at least further to 100% projection of 124.13 to 111.59 from 117.94 at 105.40 and will likely bring retest key long term support zone of 101.22/65. On the upside, above 111.76 resistance will suggest that fall from 117.94 has completed and bring lengthier consolidation. But a break of 115.91 resistance is needed to signal down trend from 124.13 has completed too. Otherwise, medium term outlook remains bearish.
EUR/JPY
Daily Pivots: (S1) 161.14; (P) 162.36; (R1) 164.50; «www.actionforex.com»
EUR/JPY’s rise from 159.36 reaches as high as 163.62 earlier today. But subsequent retreat and touching of 161.83 minor support turned intraday outlook neutral for the moment. Outlook remains unchanged. With EUR/JPY still kept below 164.00/26 cluster resistance and struggling at 55 days EMA (now at 162.80), the case that rise from 149.27 has already completed at 167.72 is still in favor. That is, price actions from 168.93 is developing into larger scale consolidation and the last falling leg is in progress, with price actions from 158.67 as interim consolidation. Below 161.83 will suggest that EUR/JPY has failed the 164.00/26 cluster resistance again and will encourage a retest of 159.36 support first.
Also, note that choppy trading could still continue until a break of the established range of 158.67 and 164.30. On the downside, break of 158.67 will confirm fall from 167.62 has resumed for 61.8% retracement of 149.27 to 167.72 at 156.31 first. On the upside, sustained break of 164.00/26 cluster resistance will flip favors back to the case that price action from 167.72 is merely consolidation to rise from 149.27 and will bring retest of this high and then 168.93 key resistance.
In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed.
Forex News Digest
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Thu, 29 Nov 2007 10:28:00 GMT from The Australian
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Thu, 29 Nov 2007 10:16:00 GMT from Reuters UK
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Thu, 29 Nov 2007 10:02:00 GMT from Yahoo! Canada
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Industrial prod’n M/M Oct 1.60% 1.80% -1.40%
23:50 JPY Japan Industrial prod’n Y/Y Oct 4.70% 4.00% 0.80%
07:00 GBP U.K. Nationwide hse price M/M Nov -0.80% 0.10% 1.10%
07:00 GBP U.K. Nationwide hse price Y/Y Nov 6.90% 8.40% 9.70%
09:00 EUR Germany Unemployment rate Nov 8.60% 8.70% 8.70%
09:00 EUR Germany Unemployment change Nov -53K -30.0K -40.0K
09:45 GBP MPC Treasury Committee Hearings
11:00 GBP U.K. CBI distribution trade Nov 13 8 10
13:30 CAD Canada Current account Q3 1.0B 3.5B 8.36B
13:30 CAD Canada PPI M/M Oct -1.10% -0.50% -0.90%
13:30 CAD Canada PPI Y/Y Oct -1.00% N/A 0.10%
13:30 USD U.S. PCE core Q/Q Q3 1.80% 1.80% 1.80%
13:30 USD U.S. GDP deflator Q3 0.90% 0.80% 0.70%
13:30 USD U.S. GDP annualised Q3 4.90% 4.80% 3.90%
13:30 USD U.S. Personal consumption Q3 2.70% 2.80% 3.00%
13:30 USD U.S. Jobless claims Nov 352K 332.0K 330K
15:00 USD U.S. New home sales Oct 0.75M 0.77M
15:00 USD U.S. New homes change Oct -2.60% 4.80%
Singapore Market Steady Despite Global Turmoil
May 16, 2008 on 3:18 pm | In Currency | No Comments
Although recent credit problems in the US have led to a global market crisis, Singapore remains largely unaffected. The Singapore dollar was weakened briefly on Thursday, only to bounce back again by Friday. As for the foreign exchange markets, Singapore has been watching the unfolding drama with close observation. This is, perhaps, the reason for the city-state’s stable economy. Reports Forbes:
The MAS [Monetary Authority of Singapore] said it ‘has not needed to conduct any extraordinary operations in the markets. However, we stand ready to act if the situation warrants.’
Read more: «www.forbes.com»
Carry trade partially unravels
May 16, 2008 on 11:38 am | In Currency | No Comments
Yesterday, the collapse which roiled global financial markets spread to forex markets, causing the Yen to loosen from its moorings and sending the currency upward against most of the worlds major currencies, including a 2% rise against the USD. While the Yen has already given back some of these gains, many analysts are already speculating that this jolt some life into the Yen and put an end to the carry trade which has sent the Yen to record lows. Ultimately, it is volatility that will lift the Yen, and Yen bulls are surely hoping for another week like this one. CBS Marketwatch reports: “One of the things that carry trade relies on is relative low levels of volatility. Clearly the most recent catalyst has been the Chinese market meltdown triggering a meltdown in other emerging markets and basically a shift out of riskier assets into less risky assets.” Read More: http://www.marketwatch.com/news/story/carry-trade-unwinding-roils-currency/story.aspx?guid=%7BD649A4E9-FEB2-4BDB-93DF-BFEEE4CD4D10%7D
Daily Report: All Eyes on ECB & BoE
May 16, 2008 on 3:57 am | In Currency | No Comments
Action Insight | Written by ActionForex.com | Oct 04 07 07:02 GMT |
Forex Daily Technical Report All Eyes on ECB & BoE
Dollar extends recovery on the back of positive expectation for Friday’s NFP after yesterday’s data. Before that, market’s focus is turned to ECB and BoE rate decision today first. BoE will announce rate decision first today at 11:00 GMT. Markets widely expect BoE to keep rates unchanged at 5.75%. Expectation for a rate hike vanished in the past two months after the credit turmoil. Also, inflation continued to moderate with CPI staying below BoE’s target of 2% for the second consecutive months in Aug. The speculation of a near term rate cut faded in the past few weeks as financial markets rebounded. Also, strong nationwide house price growth of 9.0% yoy in Sep also threatens that inflation could re-emerge in case of a premature rate cut. Recent PMIs, though retreated, still suggest robust growth in the coming months. So economists expect that BoE would be on hold for the rest of the year first, wait for next round of data, and probably consider a rate cut in first half of 08. Nevertheless, the vote could be tight and there is still risk of a surprise today. BoE normally don’t release a statement if they keep rates on hold but it did issue one last month and the bank may again do so again this time to explain its actions.
ECB is also widely expected to keep rates unchanged at 4.00%, to be announced at 11:45 GMT today. Focus will again be on Trichet’s press conference at 12:30 GMT following the rate announcement. Recent data showed slowing momentum in the economy but after all, the PMIs remain in expansionary territory. Germany Ifo also remains high. Price pressure re-emerges with HICP rising back to 2.1% in Aug, above top of ECB’s comfort zone of 2%. M3 money supply growth, though moderated slightly remains at an extremely high level of 11.6% yoy. After all, Trichet is expected to maintain the hawkish tone and ECB’s tightening bias and will likely continue to describe monetary policy as “on the accommodative side” and “acting in a firm and timely manner” will be warranted. However, note that recent strength in the Euro is based on strong expectation of further rate hike from ECB and hawkish tone from Trichet is needed to maintain the strength. Should Trichet softens such tone today, further correction in the Euro could be triggered.
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BoJ Deputy Governor Iwata said that the Japanese economy could be hurt by recent financial-market turmoil and a slowdown in the U.S. or Europe. He said that “if the stock slump and the yen’s gain continue, that would have a negative effect on Japan’s economic growth”. Also, growth could also be cooled if “U.S. economic slowdown deepens and European economies suffer a deceleration.” Regarding monetary policy, Iwata emphasized that It’s important that we adjust interest rates while closely examining risks to the economy.” EUR/USD
Daily Pivots: (S1) 1.4116; (P) 1.4177; (R1) 1.4214; «www.actionforex.com»
EUR/USD’s correction from 1.4281 continues today. Break of inner rising channel support indicates rise from 1.3550 has completed after meeting 200% projection of 1.3360 to 1.3719 from 1.3550 at 1.4268 and deeper correction could be seen towards 1.3828/3926 support zone. But downside is expected to be by 1.3828 cluster support (61.8% retracement of 1.3550 to 1.4281 at 1.3829, 50% retracement of 1.3360 to 1.4281 at 1.3821) and bring another rise. On the upside, above 1.4197 will turn intraday bias back to the upside but firm break of 1.4281 high is needed to confirm recent rally has resumed. Otherwise, another fall could still be seen before completing the current consolidation.
In the bigger picture, medium term up trend from 1.1639 is still in force. Also, such rise is treated as resumption of the long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and is expected to extend to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance. However, EUR/USD will need to overcome next important cluster resistance zone at 1.4523 (261.8% projection of 1.3360 to 1.3719 from 1.3550 at 1.4490 and 200% projection of 1.3262 to 1.3851 from 1.3360 at 1.4538) first.
On the downside, sustained break of 1.3828 cluster support will indicate that rise from 1.3360 has likely completed and bring deeper decline. But still, the medium term up trend from 1.1639 remains in force as long as EUR/USD is supported by the medium term rising channel (support at 1.3500).
GBP/USD
Daily Pivots: (S1) 2.0373; (P) 2.0410; (R1) 2.0452; «www.actionforex.com»
Cable’s retreat from 1.0492 continues and is now drawing support from 4 hours 55 EMA (now at 2.0283). Further decline could still be seen as long as 2.0441 resistance holds. However, rise from 1.9879 should still be in force as long as pull back is contained above 2.0195 support. Above 2.0441 again will indicate rally from 1.9879 has resumed for next upside target of 100% projection of 1.9652 to 2.0365 from 1.9879 at 2.0592 and probably extends further to retest 2.0652 high too
In the bigger picture, a medium term top is in place at 2.0652 with bearish divergence condition and daily and weekly MACD. The three wave structure of the fall from 2.0652 suggest that such correction is either completed at 1.9652, or is developing into sideway consolidation. Hence, 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 remains a key resistance. Decisive break of this resistance is needed to confirm rally from 1.7047 has resumed for 100% projection of 1.3680 to 1.9554 from 1.7047 at 2.2901. Otherwise, another fall could still be seen before completing the consolidation.
On the downside, below 2.0195 will warn that the rise from 1.9652 has completed and break of 1.9879 low will confirm this case. In other words, the last leg of consolidation that started at 2.0652 has begun in such case and a retest of 1.9652 low could be seen.
USD/CHF
Daily Pivots: (S1) 1.1689; (P) 1.1733; (R1) 1.1791; «www.actionforex.com».
USD/CHF’s rebound from 1.1622 continues and touches mentioned 1.1800/1922 resistance zone as expected. At this point, further rebound could still be seen as long as 1.1712 support holds. However, upside is expected to be limited by 1.1922 cluster resistance (50% retracement of 1.2214 to 1.1622 at 1.1918) and bring another fall. Below 1.1712 will turn intraday bias back to the downside. But still, break of 1.1622 low is needed to confirm recent decline has resumed. Otherwise, another rise could still be seen before completing the consolidation.
In the bigger picture, sustained trading below the lower trend line support (1.1919, 1.1878, 1.1816) confirmed medium term bearishness. Current fall from 1.2214 is treated as resumption of decline from 1.2467 and is expected to head towards mentioned 1.1590 projection target first. Also, this will be tentatively treated as resumption of medium term down trend that started at 1.3283 which could extend further to retest 1.1288 (04 low).
On the upside, even though stronger rebound could be seen in case of a break of 1.1922 resistance, break of 1.2214 resistance is needed to confirm a medium term bottom is formed. Otherwise, further decline is still in favor, just after lengthier consolidation.
USD/JPY
Daily Pivots: (S1) 115.35; (P) 115.67; (R1) 116.07; «www.actionforex.com».
USD/JPY retreats mildly after reaching as high as 116.76 but after all, further rally is still in favor as long as 115.54 support holds. The whole corrective rise from 111.59 is regarded as resumed and such rise is expected to extend towards 100% projection of 111.59 to 117.11 from 112.58 at 118.10 before completion. On the downside, however, below 115.54 will turn intraday bias back to the downside and indicate USD/JPY is possibly still bounded in choppy sideway consolidation. And still, below 112.58 support is needed to be the first alert that consolidation has completed and encourage a retest of 111.59 low.
In the bigger picture, as discussed before, daily MACD’s stay above signal line suggests that the whole decline from 124.12 could have already completed at 111.59. Hence, further break of this low is needed to confirm that sharp fall from 124.13 has resumed. Otherwise, USD/JPY could still develop into lengthier consolidation.
Prior break of long term rising trend line (101.65, 108.99) indicates the the whole up trend from 101.65 could also have completed at 124.13 already, with bearish divergence condition in weekly MACD and RSI.. Break of 111.59 will indicate fall from 124.13 has resumed for support zone between 108.99 and 61.8% retracement of 101.65 to 124.13 at 110.23.
EUR/JPY
Daily Pivots: (S1) 163.34; (P) 164.11; (R1) 164.57; «www.actionforex.com»
EUR/JPY’s upside momentum continues to diminish, as seen in bearish divergence condition in 4 hours MACD, as it tested mentioned 165.39 cluster resistance (100% projection of 149.27 to 159.67 from 155.15 at 165.55) again. A short term top could be around the corner, but a break of 163.51 support is needed to confirm first. Otherwise, further rally could still be seen and sustained trading above 165.39 cluster resistance will encourage further rise to retest 168.93 high. On the downside, below 163.51 support will be another signal that a short term top is in place. Break of short term rising trend line (now at 161.95) will confirm such case and bring deeper decline to 115.15 support.
In the bigger picture, firstly the break of trend line support (137.16, 150.75) confirmed that rally from 130.60 has already completed at 168.93, with bearish divergence condition in weekly RSI. Hence, an important medium term top is in place at 168.93 already. However, secondly, since EUR/JPY is still supported within the rising channel shown in the monthly chart. the whole up trend from 88.9 could still be in force and price actions from 168.93 is probably just developing into consolidation to this long term up trend. Also, the three wave structure of the fall from 168.93 to 149.27 suggests that it’s probably developing into sideway consolidation instead of deeper correction.
So, further rise to retest 168.93 high cannot be ruled out. But firm break of 168.93 is needed to confirm long term up trend has resumed, otherwise, another fall could still be seen before completing the consolidation that started from 168.93. On the downside, a firm break of 149.27 low will have the long term channel support taken out too. This will add much favor to the case that up trend from 88.9 has indeed completed and bring much deeper decline.
Forex News Digest
«c.moreover.com»
Thu, 4 Oct 2007 01:58:00 GMT from Forbes.com
«c.moreover.com»
Thu, 4 Oct 2007 01:58:00 GMT from The Australian
«c.moreover.com»
Thu, 4 Oct 2007 01:19:00 GMT from Reuters UK
«c.moreover.com»
Thu, 4 Oct 2007 00:34:00 GMT from International Herald Tribune
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Thu, 4 Oct 2007 00:17:00 GMT from Japan Times
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Thu, 4 Oct 2007 00:05:00 GMT from Marketing News International
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Wed, 3 Oct 2007 23:24:00 GMT from Reuters Canada
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
11:00 GBP BOE rate decision Oct 5.75% 5.75%
11:45 EUR ECB rate decision Oct 4.00% 4.00%
12:30 EUR ECB Press conference
12:30 USD Jobless claims 310K 298 K
12:30 CAD Building permits Apr 1.00% -11.30%
14:00 CAD Ivey PMI Sep 61 58.5
14:00 USD Factory orders Aug -1.50% 3.70%
US govt drawing up list of candidates to replace World Bank’s Wolfowitz - report
May 16, 2008 on 3:57 am | In Currency | No Comments
LONDON (Thomson Financial) - Embattled World Bank president Paul Wolfowitz’s position is seeming more precarious after a report that the White House is compiling a list of candidates to succeed him.
The Times says the US administration is softening its support for the president, who is under mounting pressure to resign in the wake of a pay scandal involving his girlfriend, and is considering possible replacements.
According to the report Ashraf Ghani, former finance minister of Afghanistan, is the most prominent name on the list. Ghani is widely credited with overhauling the Afghan economy after Sept 11, and if appointed, would be the first ever non-American to hold the position.
Publicly the US — the bank’s largest shareholder — is standing by Wolfowitz. But the lack of comment on the matter from Treasury Secretary Henry Paulson is being interpreted as an indication of the US Government’s attempt to distance itself from the affair.
The 63-year-old bank chief is under fire from staffers and advocacy groups calling for his resignation after revelations he helped arrange a hefty pay hike for his partner, former World Bank press officer Shaha Riza, when she was transferred to the US State Department in 2005.
There are growing fears the turmoil will undermine the institution’s core anti-poverty lending and development activities.
Yesterday Wolfowitz appeared before the World Bank’s 24-member board and, according to officials present, stated again that he did not intend to stand down.
rachel.armstrong@thomson.com
rar/lam
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