Forex Market Updates & Commentary

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• EURUSD moves below 1.4773 then 1.4743 support level
• Oct 8 2009 Forex Market Update
• EURUSD squeezes higher. Trichet comments increase volatility
• Bobbys Corner-Open Market-Oct.8.2009
• Trichet Press Conference Headlines on newswires
• Canada Housing Starts come in at 150.1K. Better than expected but lower than last month. Watching 1.0589 in $USDCAD
• No change in ECB rate as expected. Trichet and Initial Claims at 8:30 AM. Watch 1.4735 support
• GBPUSD moves higher today. NO rate change. Watching 1.6035 support.
• UK Asset Purchase Facility & Rate Decision
• German Industrial Production
• Sterling trades above Oct 6th high
• 10-8 Economic Calendar
• Australian Unemployment
• EUR/USD Upward Move Shows Channel Support
• JPY Current Account

EURUSD moves below 1.4773 then 1.4743 support level Posted: 08 Oct 2009 07:00 AM PDT The EURUSD used the 1.4800 high as a reason to sell.  The level also corresponded with the trendline resistance off the hourly chart. That level came in at 1.4802.  Like the USDJPY low yesterday at the 88.00 level, the stopping at the 1.4800 level in the EURUSD helped contribute to the selling pressure. In addition, there also could have been selling pressure from options selling.  Often strike prices on options are at levels such as 1.4800.  If there is settlements that get fixed today, market participants in the options will sell against the level in order to keep the options out of the money. Whatever, the reason, the market moved below our support levels at 1.4773 and then the 200 bar MA and 38.2% support at 1.4743 (see Prior post).  The decline has stopped at the midpoint of the last move higher at 1.4725 and has additional support at the 1.4719 level which is the December 2008 high price on the spike higher at that time.  With the price now below the intraday support, at 1.4743/46 the bias short term is to the downside.  A break above the 200 bar MA muddies the water a bit but a break below 1.4719 should lead to lower levels.

Oct 8 2009 Forex Market Update Posted: 08 Oct 2009 06:25 AM PDT Click here to view the embedded video. The EURUSD has had a wild ride this morning as the market digest Trichets comments. The EURUSD reached key resistance at the 1.4800/02 level. The USDJPY held trendline support. The GBPUSD broke through trendline support and is holding retracement support.

EURUSD squeezes higher. Trichet comments increase volatility Posted: 08 Oct 2009 06:08 AM PDT The EURUSD squeezed higher as Trichet comments lead to volatile market conditions. Ironically although he commented how the US strong dollar statement is extremely important, the EURUSD has moved higher.  The market wanted a lower dollar.   From a technical basis the price respected the  200 bar MA on the 5 minute chart as per the previous post (CLICK HERE TO READ POST).  This started the sharp rise higher.  The high reached 1.4800.  Like the USDJPY from yesterday when the price stopped at 88.00, the stopping at the ‘big figure’ level has led to some selling .  Watch this level for resistance.  A break, however, should lead to a spurt higher.  On the downside watch the 1.4773 level for support but as long as the 1.4743 level can hold (200 bar and new 38.2% retracement level off the 1.4800 high) the upside is favored.

Bobbys Corner-Open Market-Oct.8.2009 Posted: 08 Oct 2009 06:07 AM PDT Good Morning: Today is the last day of the Kuwait Traders Expo in Kuwait City, Kuwait. We will be returning to the US tomorrow, and be back in the office next week. As expected, both the BOE or ECB left interest rates unchanged. The USD was lower overnight, as speculation that the global recovery will push demand for higher yielding assets grows. Aussie rose to a 14 month high, as did Kiwi. Commodity producing country’s currencies are the most sought after at this time. Commodities rose, led by copper and aluminum.  Gold, nickel, tin and zinc also rose but by a lesser percentage.  Better than expected earnings from Alcoa, Inc fueled speculation that the global recovery will push raw materials to new highs. Global equity markets rose, and US futures are pointing to a higher opening this morning. Weekly jobless claims in the US dropped to a better than expected -521K Oil:$70.34                 Gold:$1053.40 Have a Great Day & Good Luck

Trichet Press Conference Headlines on newswires Posted: 08 Oct 2009 05:34 AM PDT  U.S. STRONG DOLLAR STATEMENT EXTREMELY IMPORTANT  EXCESS FOREX MOVES ADVERSE FOR ECONOMY ECB MUST REMAIN ALERT, NOT DECLARE PROBLEMS OVER EUROPE IS OUT OF ECONOMIC FREEFALL SIGNS OF ECONOMIC STABILIZATION GOVTS MUST CONSOLIDATE BUDGETS AS SOON AS THEY CAN  FISCAL CONSOLIDATION SHOULD BE STEPPED UP IN 2011  GOVTS SHOULD DESIGN PLANS IN LINE WITH EU PACT  GOVTS MUST DESIGN EXIT STRATEGIES   MON POLICY IS PROVIDING STRONG SUPPORT TO ECONOMY MEASURES WILL BE UNWOUND IN TIMELY FASHION  WHEN ECONOMY IMPROVES, MEASURES WILL BE UNWOUND BANKS SHOULD TAKE MEASURES TO STRENGTHEN CAPITAL BASES DATA SHOW BROAD MONEY GROWTH REMAINS SUBDUED TAX INCREASES MAY BE STRONGER THAN EXPECTED  INFLATION TO REMAIN SUBDUED INFLATION TO TURN POSITIVE IN COMING MONTHS  DOWNSIDE RISKS INCL. OIL PRICES, PROTECTIONISM  LABOR MKT MAY DETERIORATE LESS THAN EXPECTED  VOLATILITY IN DATA WARRANTS CAUTIOUS INTERPRETATION MUST INTERPRET DATA WITH CAUTION UNCERTAINTY REMAINS HIGH EURO ECONOMY SHOULD BENEFIT FROM STIMULUS MEASURE ECONOMY SHOULD BENEFIT FROM EXPORT RECOVERY PRICE STABILITY TO BE MAINTAINED IN MEDIUM TERM MONETARY, CREDIT EXPANSION CONTINUE TO MODERATE  MONETARY ANALYSIS CONFIRMS LOW PRICE PRESSURE INFLATION TO BE MODESTLY POSITIVE OVER POLICY HORIZON  INFLATION EXPECATIONS FIRMLY ANCHORED  ECONOMY IS STABILIZING, TO RECOVER GRADUALLY INFLATION TO TURN POSITIVE IN COMING MONTHS LATEST DATA CONFIRM PREVIOUS ASSESSMENT  ECB RATES ARE APPROPRIATE The comments on inflation turning positive is referring to the dropping out of the sharp declines seen in the months leading to Christmas last year. This was when oil prices were falling rapidly.  When those numbers drop out of the YoY equation, the inflation will move back toward the lower end of the target boundary of 2-3% inflation.  This is why he also comments how inflation remains contained, while it moves higher.  So do not interpret higher inflation, with inflation. It is purely mathematics.

Canada Housing Starts come in at 150.1K. Better than expected but lower than last month. Watching 1.0589 in $USDCAD Posted: 08 Oct 2009 05:28 AM PDT The expectation was for a decline to 148.0 from 157.3 last month. The actual level came in at 150.1 K.  The USDCAD has moved back below the old 2009 low of 1.0589 level today and remained below as dollar selling was the order of the day. The low 1.0531 which was above yesterdays low of 1.0526.  This should give shorts some concern. However, until the price extends back above the 1.0589 level, the bears remain in charge.  On a move above 1.0589, we should see additional momentum.    On the downside, the 1.0552 level will be watched as support.  Look for buyers against this level.

No change in ECB rate as expected. Trichet and Initial Claims at 8:30 AM. Watch 1.4735 support Posted: 08 Oct 2009 05:00 AM PDT The Initial Claims are expected to come in at the 543K vs 551K yesterday.  Trichet’s comments will be of interest.  He commented after the G7 meeting last week that he was pleased with the US intentions for a strong dollar.  We will see if he makes a similar comment today. From a technical view, the EURUSD also moved steadily higher overnight.  The pair moved above the 200 bar MA on the 5 minute chart initially (See comment from yesterday that discusses this key level - CLICK HERE). From there the price started the move up.  The pair has dipped below the 100 bar moving average on the 5 minute chart recently. This is the first dip since late yesterday. The level comes in at the 1.4764 level.  Watch this level.  A move below the 200 bar MA and the 38.2% retracement of the move up from yesterday at 1.4738/35 respectively will confirm intraday bearishness.  A move back above the 1.4764 level will likely move toward another test of the highs.

GBPUSD moves higher today. NO rate change. Watching 1.6035 support. Posted: 08 Oct 2009 04:54 AM PDT GBPUSD moved higher overnight. The BOE announced no rate change. This was as expected.  The Quantitative Easing was kept the same.  The BOE did say it would complete the asset purchase program but will review whether to extend it next month.  Whether they extend it next month is dependent on economic conditions.   The GBPUSD stayed above the 100 and 200 hour MA at the opening and moved toward trendline resistance at the 1.6011 level.  After consolidating/correcting, the pair moved through trendline resistance and through resistance at the 1.6035 level (38.2% retracement of the move down from Sept 23rd high).  The corrections down from the high for the day at the 1.6093 has moved to 1.6035 - raising the importance of the level today.   The bounce off this level is encouraging for the pair.  The next upside target is the 1.6118 level (midpoint of the move down from the September 23rd high). On the downside, the the 1.6035 level will remain a key support level.  The 100 bar MA on the 5 minute chart (blue line in chart below) is currently below that level at the 1.6029 level but moving higher.  Watch this level for buying support.  If the 1.6035 level gives way, a further move back down to the 1.6000 level is the next target.  The 200 bar MA and the trendline that was broken on the topside earlier today (see hourly chart) both come in at that level currently (see chart below).

UK Asset Purchase Facility & Rate Decision Posted: 08 Oct 2009 04:05 AM PDT BOE leaves key interest rate unchanged at 0.50%. BOE Asset Purchase Target unchanged at 175B. Gbp initially bought on release up to 1.6093 vs. USD. It has since retraced to 1.6060.

German Industrial Production Posted: 08 Oct 2009 03:03 AM PDT German Industrial Production m/m came in at 1.7%, weaker than the 1.8% expected. Prior was revised from -0.9% to -1.1%. Y/y came in at -16.8%, stronger than the -17.0% expected. Mixed readings on German Industrial Production. Eeur/Usd remains 1.4770 about 15 pips off high of session.

Sterling trades above Oct 6th high Posted: 08 Oct 2009 12:49 AM PDT Gbp/Usd has traded above Oct 6th high of 1.6047. This level should now be looked upon as an area of support. if the pair can remain above look for a possible run up to 1.6120-25. If sterling breaks below there should be light support around 1.6015-20 area.

10-8 Economic Calendar Posted: 07 Oct 2009 08:39 PM PDT

Australian Unemployment Posted: 07 Oct 2009 05:39 PM PDT Employment Change in Australia for the month of September came in much better than forecasted which caused the AUD to catch a rally against the majors and push new highs against the USD. The details are as follows: Employment Change - Survey: -10.0K   Actual: 40.6K   Prior: -27.1K Unemployment Rate - Survey: 6.0%   Actual: 5.7%   Prior: 5.8% Full Time Employment Change - Actual: 35.4   Prior: -30.8 Part Time Employment Change - Actual: 5.2   Prior: 3.8 Participation Rate - Survey: 65.1%   Actual: 65.2%   Prior: 65.1%

EUR/USD Upward Move Shows Channel Support Posted: 07 Oct 2009 05:29 PM PDT The EUR/USD has been making strong moves higher these past few months. Shown here on the daily EUR chart is the channel that has been developing over the last six months, which is now forming a smaller channel within itself. This signifies that the move higher should continue until the channel is broken.

JPY Current Account Posted: 07 Oct 2009 05:07 PM PDT Japan’s Current Account for August was better than expected; the details are as follows: Current Account Total - Survey: 1148.0B   Actual: 1171.2B   Prior: 1265.6B Adjusted Current Account Total - Survey: 1171.3B   Actual: 1233.6B   Prior: 1159.0B Trade Balance  BOP Basis - Survey: 285.0B   Actual: 303.7B   Prior: 437.2B The JPY caught a slight bid on the release and is currently trading off session highs.

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