Tuesday, December 8, 2009

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

Dec 8th 2009 Forex Market Update

Posted: 08 Dec 2009 06:30 AM PST

Bank of Canada leaves rate unchanged

Posted: 08 Dec 2009 06:04 AM PST

In the statement they cite :

 "The main risks are a more protracted global recovery and persistent strength in the Canadian dollar that could act as a significant further drag on growth and put additional downward pressure on inflation," . This contrasts with the prior statement that said the currency's strength would "more than fully offset" signs of recovery.

They also note that growth could be faster because of stronger than projected global and domestic demand. They repeated that rate is expected to remain at 0.25% through June 2010. 

The USDCAD has moved higher after the announcement.

$GBPUSD moves below 100 day MA last night. Moody’s comment and weak data hurt.

Posted: 08 Dec 2009 05:29 AM PST

gregmike-05873

The GBPUSD fell last night with a combination of technical bearishness, comment from Moody’s and weak economic data combined forces to pressure the pair.  The price fell below the 100 day MA at the 1.6418 level after moving below but closing above yesterday.  The Moody’s report described the UK as weaker than top rated peers like Germany and France.  Finally Industrial Production data came in at 0.0% for the month versue expectation of +0.5% and the prior month was revised lower to +1.3% from +1.6%.  All helped contribute to the currency weakness. 

From a technical basis in addition to moving below the key 100 day MA (blue line in the chart above), the pair has moved down to test the lows from November at the 1.6260 and 1.6270 levels.    These level will be eyed as key support today.  A break will next look to target 1.6200 and 1.6150 levels.  The GBPUSD has been consolidating since June after rising from January.

On the topside, the market has been trending down for most of the London sesssion, moving away from the 100 bar MA on the 5 minute chart in the process.  Yesterday’s low at 1.6312 and the 1.6326 level - the initial major low for the pair today - are levels to watch.

Housing Starts in Canada rise to 158.5K. BOC Rate decision at 9:00 AM

Posted: 08 Dec 2009 05:22 AM PST

This is up from last months 157.4K but below expectations at 1.60K. Yesterday, the Building Permits for October surprised to the upside when it rose by 18% vs expectations of a 1% gain. 

Later today at 9:00 AM, the Bank of Canada will announce their interest rate decision. The expectation is for the rate to stay at 0.25%.  The data out of Canada has shown signs of strengthening with the Employment Report on Friday showing strength.  However,the BOC has in the past commented on the value of the currency and its effects on slowing export growth (”the strong Canadian dollar will more than fully offset the favorable developments”) .  They also have explicitly cited that rates are on hold until June 2010.  Expect more of the same in their announcement today.

Fitch downgrades Greece to BBB+. EURUSD heads lower

Posted: 08 Dec 2009 04:47 AM PST

Fitch downgraded Greece to BBB+ and lowered the outlook to negative. THere is some rumblings that Portugal may not be far behind. The downgrade is from A-. The significance is if another rating agency - S & P or Moody’s - downgrades Greece to below A, it could influece the liquidity Greek banks can receive from the ECB.  The ECB accepts only A-rated collateral for repo operations from Greek banks. Without a change in ECB policy, this could lessen the ability for Greek financial institutions to secure funding in the event of an liquidity emergency.

This has pressured the EURUSD and helped push the price down to new lows for the day at the 1.4774 level. The low from yesterday at the 1.4768 level will be the next target for the currency pair.  Earlier today the German Industrial Production was released and was weaker than expectations.  On a MoM basis the reading showed a -1.8% decline versus expectation of +1.0%.  The prior month was revised higher to +3.1% from 2.7% but was not enough to offset the sharp decline. Yesterday Factory Orders fell for the 1st time in 8 months.  They fell -2.1% vs expectations of +0.8%. 

gregmike-05871

The EURUSD fell and closed below trendline support on Friday (daily chart) and is now back below the 1.4800-1.4830 support area from the lows of November.  We will be watching to see if the price can maintain the selling pressure against the 1.4800 level this morning.  If the price is not able to claw its way above the 1.4800 level, the a move to new lows is likely. From a longer term perspctive the target on the downside could look to test the 1.4675 level and below that the 100 day MA at the 1.4623 level (blue line in the chart above). Before that level is the low from yesterday at the 1.4756.

On the topside, the 1.4800 and 100 bar MA on the 5 minute chart are levels to watch (see blue line in the chart below).That level currently comes in at 1.4823.   The 1.4828 level will also be of interest for sellers.   The bias remains to the downside. 

gregmike-05872

German Industrial Production

Posted: 08 Dec 2009 03:07 AM PST

German Industrial Production m/m came in at -1.8%, much weaker than the +1.0% expected. The prior reading of -12.9% was revised up to -12.6%.2.7%.

Y/Y came in at -12.4%, weaker than the -10.2% expected. The prior reading of 2.7% was revised up to 3.1%.

Weak numbers for the Euro as Eur/Usd is trading about 25 points lower than pre-number levels at 1.4820.

UK Manufacturing and Industrial Production

Posted: 08 Dec 2009 01:46 AM PST

UK Manufacturing Production m/m came in at 0.0%, weaker than the 0.5% expected. The prior reading of 1.7% was revised down to 1.5%.

Y/Y came in at -7.8%, weaker than the -7.2% expected. The prior reading of -9.3% was revised down to -9.8%.

Industrial Production m/m came in at 0.0%, weaker than the 0.5% expected. The prior reading of 1.6% was revised down to 1.3%.

Y/Y came in at -8.4%, weaker than the -7.6% expected. The prior reading of -10.3% was revised down to -10.8%.

Poor numbers for GBP and the initial market reaction was about a 15-20 point sell off across the board.  The pound has since rebounded and is trading at pre - number levels against the majors. We can probably attribute this muted reaction to the depressed level of GBP. It is trading at the low end of wide range against USD and JPY at 1.6360 and 145.30 respectively. Also at new high in Eur/Gbp at .9075.

Halifax House Price Index (UK)

Posted: 08 Dec 2009 01:06 AM PST

Halifax HPI m/m came in at 1.4%, stronger than the 0.8% expected and prior reading of 1.2%.

The strong HPI had no major market effect as traders await UK production figures at 4:30 EST.

Gbp/Usd trades at 1.6362, Gbp/Jpy at 145.65, and Eur/Gbp at .9055.

Eur/Usd trading just above trendline

Posted: 07 Dec 2009 11:36 PM PST

Eur/Usd is trading just above 1.4821, which is a trendline of hourly lows from Dec. 4. this level acted as resistance in yesterday’s trading until a break brought Eur/Usd up to 1.4892.

A break below 1.4821 should bring Eur/Usd down to 1.4755, the low from Dec. 7.

If the pair holds look for a run back up to 1.4879, the 38.2% Fibo.

vincent_fx000171

Japanese Economic Data

Posted: 07 Dec 2009 09:42 PM PST

Japan Leading Indicators came in at 89.7%, stronger than the 88.7% expected and 87.5% prior reading.

The Economy Watchers Sentiment Index came in at 33.9, weaker than the 40.3 expected and 40.9 prior reading.

Neither number induced any market movement as Usd/Jpy remains within a very tight band in the last hour trading between 88.78 - 88.88. The pair currently trades at 88.85.

12-8 Economic Calendar

Posted: 07 Dec 2009 08:22 PM PST

region_forex_00006

Japan’s Current Account & Trade Balance

Posted: 07 Dec 2009 04:09 PM PST

Japan’s October Current Account total for October came in marginally lower than expected at 1,397B vs. 1,484B. The Adjusted Total was also lower. The Trade Balance figure however improved from the prior month and exceeded expectations at 949B (864.6B expected, 599.2B prior.) But once again the market had a limited reaction as the Nikkei opens up slightly lower.

UK BRC Retail Sales Monitor

Posted: 07 Dec 2009 04:04 PM PST

The UK’s November BRC Retail Sales reading  came in at 1.8% worse than the prior release of 3.8% in same store sales, the total sales number was also lower at 4.1% vs. 5.9%. The market has had little reaction to this release with the Sterling unchanged as year-end market forces could be coming into play.

Dec 7th 2009 Forex Market Report

Posted: 07 Dec 2009 01:30 PM PST
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