Forex Market Updates & Commentary

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• Richmond Fed comes in at +1 versus expectation of +8. Consumer Confidence better than expectations.
• November 24th 2009 FXDD Morning Forex Video is available for viewing
• Case Schiller Home Price Index comes in a little worse than expectations. GBPUSD comes down after testing the 1.6600 level.
• USDJPY falls as risk aversion leads to a flight into the JPY
• GDP comes in as expected at +2.8%. Consumption revised lower. Government up. Net Trade a negative and Investment also subtracts in the revision.
• GBPUSD suffers on the back of King comments but bounces as NY enters
• Bobbys Corner-Open Market-Nov.24,2009
• EURUSD moves up on NY buying as the market awaits the GDP data
• S & P Case Schiller due at 9:00. Consumer Confidence and Richmond Fed Man. Index comes out at 10 AM
• US GDP due out at 8:30 AM. A decline to +2.8% Annualized is expected.
• Eurozone Industrial Orders above estimates
• BOE Inflation Report; King inflation due to rise
• UK Economic Data
• German IFO
• Swiss Employment Level

Richmond Fed comes in at +1 versus expectation of +8. Consumer Confidence better than expectations. Posted: 24 Nov 2009 07:00 AM PST This is worse than expected while Conference Board Consumer Confidence comes in better at 49.5 vs 47.3.

November 24th 2009 FXDD Morning Forex Video is available for viewing Posted: 24 Nov 2009 06:53 AM PST Click here to view the embedded video.

Case Schiller Home Price Index comes in a little worse than expectations. GBPUSD comes down after testing the 1.6600 level. Posted: 24 Nov 2009 06:13 AM PST The expectations was for a -9.10 decline.  It came in at -9.36% for the top 20 cities. The dollar has improved a little off the release. with the EURUSD and GBPUSD back down a bit.  The GBPUSD reached a high of 1.6595 off the GDP data, finding sellers against the 1.6600 level.  The market simply finds that level to sell against or buy above.  There should be support against the 200 bar moving average on the 5 minute chart at 1. 6563 level.  Watch this level this morning for momentum clues.  A break below should lead to further pressure with downside confirmation on a break of the 100 bar MA at the 1.6544 level.   A move above the 1.6600 level targets the high for the day at 1.6617. Be patient today.

USDJPY falls as risk aversion leads to a flight into the JPY Posted: 24 Nov 2009 06:07 AM PST The USDJPY has moved to new lows on the back of the weaker GDP data. The price broke through the 88.56 low from yesterday and has moved to a low of 88.34. The 2009 low comes in at 88.00. This is the next target for the pair.  Risk aversion is helping to contribute to the losses.  The USDJPY has been in a narrow trading range over the last week.   The price yesterday broke briefly above the 100 hour MA for the first time since  November 13th. However, the momentum quickly reversed as resistance against 89.17 held.  This helped pave the way for the move lower overnight.  The pair will likely be influenced by what equities do this morning.  The S & P futures are showing a small gain of 2.3 while the Nasdaq is down  1 point. Dow futures are up 11 points currently before the opening at 9:30  Look for the target at 88.00 to find buyers against the level.  ON the topside, the 88.65 level where the 100bar MA on the 5 minute chart is found, should provide upside resistance.  The price has been tracking below the 100 bar MA for most of the trading day today.   As long as the price remains below this level, the bias is down for the pair.  The caveat is when the price moves toward the 88.00 level. I would expect profit takers to enter the market on dips toward that level.

GDP comes in as expected at +2.8%. Consumption revised lower. Government up. Net Trade a negative and Investment also subtracts in the revision. Posted: 24 Nov 2009 05:41 AM PST The revision to the GDP came in at +2.8% from +3.5% originally reported.  Personal Consumption on an annualized basis fell to 2.9% from 3.4%. The expectation was for a decline to 3.2%.  This contributed 2.07% to the 2.8% total gains.  Private investment contributed 0.91% (vs prior estimate of 1.22%).  The Net Exports subtracted -0.83%  which originally showed a decline of -0.53 and Government contributed 0.63% of the 2.8% gain.  In the initial report, this sector added 0.48%.  The Change in Inventories (which is a part of investment) contributed 0.87% to the overall +0.91% from total private investment.  It is expected that inventory replenishment will help growth going forward in the 4th quarter. Motor Vehicle purchases was responsible for 0.81% growth in the 3rd quarter. The cash for clunker program was a help to this in the 3rd quarter.   Governement is doing their part. One would think that with a lower dollar the Net Export contribution would be a positive for growth (or at least less of a negative as the US does continue to run a deficit from trade). However, the decline is indicative of the reliance on foreign goods and in particular the reliance on oil imports.  Imports alone contributed -2.53% to GDP while exports added 1.71%. Until that time when reliance on oil is decreased (or demand falls), the US will continue to have net trade issues and this will continue to be a negative for growth.

GBPUSD suffers on the back of King comments but bounces as NY enters Posted: 24 Nov 2009 05:30 AM PST The GBPUSD was down for most of the day on the back of a more negative assessment of the economy by Bank of England Governor Mervyn King.  The comments helped fuel expectations that additional quantitative easing measures might be needed down the road. This always tend to weaken the currency in question.  The market has rebounded from the low of 1.6496 as NY buying pushed the price up to 1.6590. The 1.6600 level once again has put on lid on the gain.  Going forward, look for resistance against the 1.6600 level.  A move above targets the 38.% retracement level and the 100 hour moving average  at the 1.6618 and 1.6630 level respectively. On the downside look for support at the 1.6543 level where the 100 bar MA on the 5 minute chart is found.

Bobbys Corner-Open Market-Nov.24,2009 Posted: 24 Nov 2009 05:16 AM PST Good Morning: The Euro gained overnight as the IFO survey of business sentiment data from Germany printed better than expected. The marketplace feels that the ECB will keep interest rates at the 1% level thru most of 2010.  Asian equity markets were lower, and European stocks are higher at this time.  US Futures are pointing to a higher opening this morning.   Banks stocks are weaker as speculation mounts that they are still in need of more capital. US Treasury markets is little changed. Oil:$77.44                            Gold:$1169.00 Today’s data: GDP-Q3                          exp: 2.9&              prior: 3.5% Case/Shiller:               exp: -9.2%            prior: -11.32% Cons Conf:                   exp:  47.5              prior; 47.7 Rich Fed:                     exp: 9.0                  prior: 7.0 2:30 PM- Minutes of FOMC Nov 4 meeting HAVE A GREAT DAY & GOOD LUCK

EURUSD moves up on NY buying as the market awaits the GDP data Posted: 24 Nov 2009 05:03 AM PST NY came in and took the EURUSD up 30 pips as the market awaits the US GDP data at 8:30 AM.  The move has culminated a down and up day so far that started with the pair  falling steadily to a low of 1.4888 before bouncing back higher - taking out the old high for the day at the 1.4970 on it’s way to the new day high of 1.4984.  German IFO data was better than expectations and EUROZONE Industrial Production also was better than expectations earlier today and helped contribute to the gain.  The overriding trend continues to have the pair flucuating with a 1.4800 to 1.5000 levels as the rough low to high range. From a technical basis, the hourly chart shows the up and down activity over the last week or so.  The movement has the 100 and 200 hour moving averages converged at the 1.4919 area and the 50% midpoint of the recent 1.5047 to 1.4801 range coming in at the 1.4924 level.   When the price broke below these moving averages earlier, momentum pushed the price to the low at 1.4888.  The climb back higher found initial resistance at the level, but was able to push through.  From that point, the market climbed above the 100 and 200 bar on the 5 minute chart - giving bulls the go ahead for further gains. The last spurt higher takes the price back up toward the 1.5000 level where yesterdays high was reached.  Above that level is resistance at 1.5015 and 1.5047. Through the number look for support at the 1.4945 to 1.4937 area where the 200 bar moving average (green line) and the 100 bar moving average on the 5 minute chart are found (blue line in the 5 minute chart above).  Below that the 1.4919 level once again should provide support. On the topside until the price breaks 1.5000, 1.5015 and 1.5047 nearly any price level between those values has the potential to stall the upside.

S & P Case Schiller due at 9:00. Consumer Confidence and Richmond Fed Man. Index comes out at 10 AM Posted: 24 Nov 2009 04:40 AM PST The monthly S & P Case Schiller Home Price index is due at 9:00 AM. The expectation is for a YoY decline of -9.10% from -11.32%.  This release shows the YoY decline in prices for the top 20 housing markets in the US.  The Conference Board Consumer Confidence for November will be released at 10 AM. The expectation for this release is for the index to decline to 47.5 from 47.7.  The index reached a low of 25.30 in February 2008. Since that time the release has moved higher in a up and down pattern   Also at 10 AM, the Richmond Fed Manufacturing index will be released. The Philly Fed Index was releassed last week better than expectations. The Empire Manufacturing index was released earlier and that came in worse than expected.  The Richmond Fed index is expected to show a small gain to 8 from 7.  The index reached a low of -55 in December 2008.  The recent peak was 14 in July, August and September.  Last month the index declined to 7.

US GDP due out at 8:30 AM. A decline to +2.8% Annualized is expected. Posted: 24 Nov 2009 04:12 AM PST   At 8:30 AM the US GDP for the 3rd quarter will be released. This is the second cut of the number, with the first estimate coming in at +3.5%.    That estimate was based on uncomplete data. This release will include such things as the Trade Balance data for September which was released on November 13th and showed a larger deficit. A larger deficit is a negative for GDP.  As a result, Net Exports will help contribute to a decline in the first estimate.  The expectation is for a decline to a gain of +2.8% from the original estimate of 3.5%. In addition to a negative effect from trade, Personal Consumption data - the largest component of GDP -  is also expected to be revised lower to + 3.2% from +3.4% on an annualized basis.  The GDP Price Index is expected to show a gain of 0.8% which is unchanged from the initial report.  Finally the Core PCE QoQ is expected to show a rise of 1.4% also unchanged from the prior release.  The release can be quite volatile as it will also include pieces for government and investment (i.e.  business investment, residential purchases, inventories go in this component piece).  It also includes inventories which in the first release contributed 0.94% to the GDP. Of the pieces which make up the 3.5% GDP, Personal Consumption contributed the most on an annualized basis. Below is breakdown on how much each component contributed to the 3.5% annualized GDP figure: Personal Consumption: +2.36% (67%) Gross Private Domestic Investment +1.22% (34%) Net Exports -0.53% (-15%) Governmant Consumption +0.48% (14%) The US GDP is presented on a Annualized Basis.  That is it takes the quarter on quarter change and annualizes that change.  So it tends to have more of an impact in the newspaper headlines.  That is, the 1st and 2nd quarters can show a decline but the 3rd quarter rebounds and the release shows a growth rate of 3.5% on the nightly news.  The true GDP growth for the year of 2009 is of course less once you factor in the declines in the 1st and 2nd quarter and annualize that value.     Most other country GDP releases are presented on a quarter on quarter change basis.   The Eurozone GDP estimate for example showed a gain of +0.4% for the quarter.

Eurozone Industrial Orders above estimates Posted: 24 Nov 2009 02:05 AM PST Eurozone Industrial Orders m/m came in at 1.5%, stronger than the 0.7% expected but weaker the prior reading of 2.0%. Eur/Usd received a small boost upon release as the pair trades above 1.4940. Eur/Gbp buyers also help strengthen Euro across the board, the pair is currently at its session high of .9050.

BOE Inflation Report; King inflation due to rise Posted: 24 Nov 2009 02:00 AM PST BOE Governer Mervyn King states that inflation is due to rise above 2.0% in short run and says spare capacity will continue to drag on inflation. The MPC has taken unprecedented actions to curb the the situation, according to King. King is encouraged by signs of recovery, but feels UK economy faces profound challenges. King says UK faces significant slack margin which should pull down inflation. King says a ‘credible plan’ needed to curb budget deficit.

UK Economic Data Posted: 24 Nov 2009 01:36 AM PST UK BBA Mortgage Approvals came in at 42,238, less than the estimated 44,000. Preliminary Business Investment q/q came in at -3.0%,  stronger  than the -3.5% expected. Not much change in GBP as the market awaits the Inflation Report Hearings out in about 15 minutes.

German IFO Posted: 24 Nov 2009 01:07 AM PST German IFO Business Climate came in at 93.9, stronger than the 92.5 estimate and 91.9 prior reading. German IFO Current Assessment came in at 89.1, stronger than the88.0 estimate and 87.3 prior reading. German IFO Expectations came in at 98.9, stronger than the 97.3 estimate and 96.8 prior reading. Strong numbers for the euro as we have seen gains against the Usd and Jpy on heels of release. Eur/Usd traded up to 1.4935 and Eur/Jpy 132.43. eur/Usd has given back some gains, currently trading at 1.4925 and eur/Jpy at 132.35.

Swiss Employment Level Posted: 24 Nov 2009 12:21 AM PST The Swiss Employment Level came in as expected at 3.96M which is an increase of 10,000 from last quarters reading. Usd/Chf currently trades at 1.0143 and Eur/Chf at 1.5115, unchanged from pre-release.

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