Forex Market Updates & Commentary

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• $GBPUSD comes down as bulls get caught, but bounces off of value level
• $EURUSD backs off as Trichet tames comments a bit
• Nov 5 2009 Forex Market Update
• FXDD Free Online Training Nov 5 2009 4pm
• Trichet says strong dollar in the US interests
• EURUSD moves higher on Trichet comments
• Trichet starts press conference. Sees signs of economic recovery
• Initial Claims fall to 512K. Productivity rises by a record.
• ECB leaves the rate unchanged. EURUSD supported now at 1.4842/48.
• $GBPUSD goes up to the target at 1.6635 and comes off
• US Weekly Claims for Unemployment due at 8:30 AM
• In a surprise the UKs BOE boosts the Asset Purchase program by 25 billion
• BOE Rate Decision due at 7:00 AM. ECB at 7:45 AM
• Eurozone Retail Sales weaker than expected
• UK Manufacturing Production & Industrial Production

$GBPUSD comes down as bulls get caught, but bounces off of value level Posted: 05 Nov 2009 06:56 AM PST The GBPUSD has come off as the 1.6635 level target was reached and held. The price moved below the support at the 1.6596 level.  From there, the long liquidation ensued. The market simply did not do what it was supposed to do (CLICK ON PRIOR POST).  The price went down to the support at the 100 and 200 bar MA on the 5 minute chart at the 1.6533 to 1.6539 level.  The price has bounced off that level which is encouraging.  However, the drop now brings the 1.6596 level as the next hurdle again.

$EURUSD backs off as Trichet tames comments a bit Posted: 05 Nov 2009 06:39 AM PST The “strong dollar” and a “bumpy road ahead” comments caused some liquidation.  The pair has come below the support level at the 1.4881 level and indeed the waters are once again muddy (see prior post).  The muddy water warrants finding levels that make sense from a risk reward standpoint.  The close from yesterday at 1.4860 the 100 and 200 bar MA at the 1.4848 level should be good support levels.   I would look for buyers against these levels.

Nov 5 2009 Forex Market Update Posted: 05 Nov 2009 06:00 AM PST Click here to view the embedded video. Please join us for the next FXDD Free Online Training, which takes place today, November 5th 2009 at 4pm New York Time. REGISTER HERE FOR THE TRAINING FXDD VP, Greg Michalowski and Shawn Powell will be looking at risks and opportunities around the US non farm payrolls release due out tomorrow. A class you’ll want to attend today at 4pm REGISTER HERE

FXDD Free Online Training Nov 5 2009 4pm Posted: 05 Nov 2009 05:58 AM PST Please join us for the next FXDD Free Online Training, which takes place today, November 5th 2009 at 4pm New York Time. REGISTER HERE FOR THE TRAINING CLICK TO WATCH THE RE-BROADCAST HERE from Tuesday class.

Trichet says strong dollar in the US interests Posted: 05 Nov 2009 05:57 AM PST He also comments that an orderly rise in the China Yuan would be welcome. He has been more vocal in recent times about China’s currency as they tie it to the US$. So when it falls it makes European company’s goods more expensive there.  This has an adverse effect on exports to that country.

EURUSD moves higher on Trichet comments Posted: 05 Nov 2009 05:50 AM PST The EURUSD has been boosted by some of the more positive comments from ECB Trichet.  He notes that the all liquidity will not be needed in the future and that he sees the economy improving . The comments gave the EURUSD a boost and the high from yesterday has now been breached.  The next target is the high from Octber 27th at the 1.4927 level.  Look for support at the 1.4895 level and below that 1.4981.  A move back below these levels will muddy the water a bit.

Trichet starts press conference. Sees signs of economic recovery Posted: 05 Nov 2009 05:37 AM PST See improving economy. That rates are currently appropriate and that the ECB policy supports the economy.  Says inflation to move to positive YoY. This is as a result of the low numbers from July to December 2008 (when oil was plunging) falling out of the equation and being replaced by more normal values this year.  He notes that the labor mkt is worse than though.  He sees upside risks from stimulus (fiscal and monetary policy stimulus). Trichet notes that GDP may return to positive and the economy should benefit from export growth.  This is despite the EURUSD high rate. This may give the EURUSD some support. He encourages the banks to improve capital base.  He notes that perhaps as a result, that loans to businesses typical pick up after a lag (due to increasing capital base).  He notes that the central bank will remove the extra liquidity if price risks emerge. Regarding QE liquidity he says that not all the liquidity will be needed in the future. This is a positive assessment of the economy and is leading to a boost for the EURUSD

Initial Claims fall to 512K. Productivity rises by a record. Posted: 05 Nov 2009 05:34 AM PST The Initial Claims fell to 512K from a revised 532K (vs 530K). The Continuing Claims came in as expected at 5749K down from 5817K. The surprise was the Productivity. This increased by a record 9.5% for the quarter. This was boosted by a decline in Unit Labor Cost of -5.2% and the fact that bosses are making workers who have a job, work harder.  This should help stock prices.  Risk trades initially like the numbers. Yen crosses move higher in particular.

ECB leaves the rate unchanged. EURUSD supported now at 1.4842/48. Posted: 05 Nov 2009 05:16 AM PST The ECB kept the rate unchanged as expected. Trichet speaks at 8:30 AM. From a technical basis, the price held the 200 hour MA last night  reaching a low of 1.4811 with the 200 hour MA at 1.4806.  There was also trendline support of the 5 minute chart at the level.  The hold, gave buyers a reason to buy and shorts a reason to cover as well.  Off the BOE move, the EURUSD was dragged further higher and is now also above the 100 and 200 bar MA on the 5 minute chart.  The price is also above the close from yesterday at the 1.4860 level and a ceiling that was developing on the 5 minute chart at 1.4856.  If the market can hold above the 100 and 200 bar MA at the 1.4842/48 area, the upside remains the preferred bias today.  I iwill be looking for buying on dips with stops below this level A move below will look toward the trendline support at 1.4827 currently with a break looking toward 1.4810/12 and then 1.4775

$GBPUSD goes up to the target at 1.6635 and comes off Posted: 05 Nov 2009 04:50 AM PST The GBPUSD went up to the target of the 1.6635. This was a high ceiling level on October 20 and 21st and a level we spoke about in last nights FXDD FX Commentary - see report by clicking here  (to get this report to your email every day, email me at greg@fxdd.com).  The high reached 1.6635.  The lower increase in QE has the GBPUSD better bid.  The 1.6635 level will of course continue to be a key level to break on the upside.  There should be support below at 1.6602 now and the 1.6596 level which was the high yesterday.  If this level can hold corrections the upside should be explored further.  Other topside levels to watch: 1.6661/64 and 1.6693 and then 1.6741/43. The price has been moving further away from the 100 day MA after spending 11 of 13 days moving above and below the level.  The last two days have not traded below the moving average and this helped the bullish bias for the pair.  Until shorter term support levels are breached and the bias for those periods turn negative, the upside should be favored.  Watch key support levels.

US Weekly Claims for Unemployment due at 8:30 AM Posted: 05 Nov 2009 04:22 AM PST The weekly Initial Claims will be released at 8:30 along with the Continuing Claims data. The expectation is for a decline in the Initial Claims to 522K from 530K last week. The 4 week moving average has been inching down.  It is at its lowest level since January of this year.  The Continuing Claims has been declining steadily and is expected to come in at 5750K today versus 5797K last week. The 4 week moving average for this series peaked at 6774 at the end of June 2009.  It is now down to 5961, the lowest since April 2009. Some suggest the decline, may be because workers who are out of work have run out of eligibility, thus lowering the value.   This is the last employment clue before the NFP report tomorrow. Also released at 8:30 will be the quarterly Non Farm Productivity report which is expected to show another strong increase of 6.5% as less workers are producing more (on a relative basis) goods.  In the 2nd quarter the productivity rose by 6.6% for the highest gain since September 2003.  The increase in productivity is a help to corporate earnings and is a contributor to the rally in the stock market from the lows.   The back to back gain will be the largest since June/September quarters in 2003 when the productivity increased by 15% in the 2 months combined.

In a surprise the UKs BOE boosts the Asset Purchase program by 25 billion Posted: 05 Nov 2009 04:05 AM PST The market was expecting 50 Billion pounds. The BOE increased by 25 billion. This has led to an immediate gapped jump in the GBPUSD to over 1.6600.  There is resistance at 1.6635.  The price has since retraced some of the reactionary gains.  The BOE has said with the release that the world economy is showing signs of recovery and that some indicators have shown that economic activity is picking up.  They further add that the Asset Purchase Program has helped boost asset prices.   Finally levels of debt should continue to weigh on spending.

BOE Rate Decision due at 7:00 AM. ECB at 7:45 AM Posted: 05 Nov 2009 03:36 AM PST The UK Rate decision is due at 7:00 AM. Rates will remain unchanged but the thought is they will increase the QE program to 225 billion pounds in an effort to shore up the banking system.   The UK target borrowing rate is at a record low 0.5%. Despite the record low rate, lending remains weak in the UK.  Earlier this week UK PM Brown injected 40 billion pounds in to Royal Bank of Scotland and Lloyds Bank. Later at 7:45 the ECB interest rate decision will be announced. Jean Claude Trichet will hold his usual press conference at 8:30 AM.  It is expected they will keep their rate at 1%.

Eurozone Retail Sales weaker than expected Posted: 05 Nov 2009 02:06 AM PST Eurozone Retail Sales m/m came in at -0.7%, weaker than the 0.2% expected. Y/y came in at -3.6%, weaker than the -2.4% expected. Seemingly negative numbers for the Euro but not much market activity. It just may be traders are waiting for rate decisons and commentary coming out of the UK and Eurozone at 7:00 EST and 7:45 EST respectively.

UK Manufacturing Production & Industrial Production Posted: 05 Nov 2009 01:38 AM PST UK Manufacturing Production m/m came in at 1.7%, stronger than the 1.0% expected. Y/y came in at -9.3%, stronger than the -9.7% expected. Industrial Production m/m came in at 1.6%, stronger than the 1.2% expected. Y/y came in at -10.3%, inline with expectations. Revisions to prior readings made this months postive numbers lose some relevance as Manufacturing Production was revised from -1.9% to -2.0% m/m and -11.3% to -11.6% y/y.  Industrial Production was reviswed from -2.5% to -2.6% m/m and -11.2% to -11.5% y/y. Overall effect of production figures were muted because of these negative revisions of prior month. Gbp/Usd currently trades at 1.6525 and Gbp/Jpy at 149.15.

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