Friday, August 19, 2011

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

BOC Carney says bank has wide range of policy tools it can use

Posted: 19 Aug 2011 07:05 AM PDT

  • Bank to ensure core funding markets remain liquid
  • Several downside risks to growth have been realized
  • Considerable headwinds now blowing harder
  • Canada dollar strength compounding weak US demand
  • Data points to little or negative 2Q
  • Growth to accelerate in 2H

S&P says don’t expect lower mortgage rates to spur on US housing

Posted: 19 Aug 2011 06:47 AM PDT

This is congruent which what has been seen in the current housing history. Mortgage rates are at record low levels, yet housing remains depressed.  Yesterday, Existing Home Sales fell to 4.67 million annualized units.  The months supply of homes reached 9.4 months.

USDCAD moves to test 200 hour MA/trendline at 0.9862

Posted: 19 Aug 2011 06:41 AM PDT

The USDCAD is moving back down toward the 200 hour MA and trendline. A break below will test the 50% at 0.9855 and then the low for the day at the 0.9850.  A break below next has the 100 hour MA at the 0.9842 level.

Canada Finance Minister Flaherty says world looks at Canada as a safe haven

Posted: 19 Aug 2011 06:36 AM PDT

….and good place to do business

Earlier he commented that:

  • Problem in the US and Europe is too much spending and high deficits
  • Won’t cut Canada govt spending dramatically

Feds Dudley says banks in better shape now then in 2008

Posted: 19 Aug 2011 06:34 AM PDT

  • Joblessness clearly much higher than goal. 
  • Says don’t look too much – be too alarmed – into the Fed’s monitoring of European banks
  • Inflation expectations are well anchored
  • Should not overstate impact of US Credit downgrade
  • Credit for start ups is hard
  • Lending contraction from regulation is overstated

EURUSD moves to the next target at 1.4417

Posted: 19 Aug 2011 06:16 AM PDT

A move above does not have much  in the way of resistance until the 1.4450 high from yesterday. ON the downside, the market today has not had much in the way of corrections suggesting the market shorts are being forced to cover, and the buyers remain.  Looking at the 5  minute chart below, the price has been able to stay above (apart from a few pips) the 1.4388 level which is the 100 hour MA (see blue line in the chart above).   A 38.2% correction of the last leg higher now comes in around the 1.4380 and this level -along with the 1.4388 100 hour MA - is now support for the pair. 

Any shorts have not had any satisfaction. Bulls remain in control.  Look for dips to continue to find buyers. 

USDCHF sits tight despite stock market woes.

Posted: 19 Aug 2011 06:00 AM PDT

The USDCHF remains in a tight range despite the stock market woes that normally would lead to the flight into the currency.  The fear that the SNB may enact some actions over the weekend likely has the market players cautious despite the urge for the flight to quality reaction that is so customary for the currency.

From a technical perspective the price has been moving sideways this week in narrowing ranges. Today, the price did find resistance against top trendline resistance at the 0.7959 level. Holding of that level gave traders a reason to sell and the price rotated lower.  In the last few hours the price has broken below the 100 hour MA (blue line in the chart above) and trendline support – turning the bias more to the downside.  The 100 hour MA comes in at the  0.7895 level currently while the trendline comes in at the 0.7883 level.  Staying below this level keeps the bears in control with the next target being the low from yesterday at 0.7855 and below that the 0.7820 level which was the low from Wednesdays trade.

Although the move lower in NY is more in line with a weaker stock market, higher gold scenario, the momentum is not what it used to be in this currency.  The threat of a weekend surprise will likely keep the downside limited. Look for support/profit taking at the key technical levels below.

Bobbys Corner-Open Market-Aug.19.2011

Posted: 19 Aug 2011 05:55 AM PDT

Good Morning:

Welcome to Friday-after another roller-coaster week , and today looks like it is shaping up for another crazy ride). 
As worldwide equity markets continue to sink, investors seek the safe haven of gold,CHF and JPY.

With yesterday’s higher than expected CPI data (prices on the consumer level). any moves by the Fed  to grow the anemic US economy may be delayed as inflation seems to be taking hold. 

In other news, JP Morgan lowered their forecast for US growth. The forecast was lowered as the housing market continues to loose steam, and consumer spending stalls.  Deutsch Bank announced that they were cutting their forecast for growth in China.

With no major data from the US today-the markets attention will be focused on equities.  Most notably-European Banks are in the spotlight, and market participants are hearing that the Fed is making certain that European Banks in the US (whom the Fed overseas) do not have any funding difficulties.

HAVE A GREAT DAY-WEEKEND & GOOD LUCK

Bobby’s Corner will be off for a week (or so)-as I end the summer with a family vacation.

Feds Pianalto favors additional support for recovery

Posted: 19 Aug 2011 05:37 AM PDT

  • US economy to grow around 2% this year
  • Weak growth warrants zero rates until 2013
  • Quite a few years for employment to reach typical levels

Japan Ministry of Finance to take appropriate action with regard to the Yen value

Posted: 19 Aug 2011 05:34 AM PDT

Feds Dudley sees weaker US outlook

Posted: 19 Aug 2011 05:31 AM PDT

But predicts stronger growth in the 2nd half

EURUSD surges higher in reaction to emergency Fed meeting chatter

Posted: 19 Aug 2011 05:04 AM PDT

In addition Spain is on the wires saying that they will take measures to stimulate jobs and growth.  I thought austerity was the key word in the Eurozone?  This seems at odds with the Merkel/Sarkozy plan outlined this week which called for fiscal austerity for countries with budget woes.  Nevertheless, the market seems more focused on the Fed emergency meeting and this has the EURUSD moving through key technical levels.

In any case the EURUSD has shot higher breaking above the key 100 day MA at the 1.4359 level (blue line in the chart below). At the level is also the trendline off the highs on the hourly chart (see below).  The move above this key level sent the price straight to the 100 hour MA at the 1.4388 level and above the 1.4400 level.  A move back below the 1.4388 level will be needed to slow the markets bullishness.

Looking at the 5 minute chart the price if the price were to decline back below the 1.4388 level, look for support at the 1.4367 level. This is the 38.2% of the last surge higher. If the bullish move is supported by the market, holding the 38.2% is often watched closely for clues. 

Canadian CPI 120.0 vs. 119.8 prior reading.

Posted: 19 Aug 2011 04:01 AM PDT

Core CPI 0.2%; as expected.

Comments from the EU Commission

Posted: 19 Aug 2011 03:30 AM PDT

  • Wants rapid implementation of July summit conclusions.
  • Collateral agreement between Finland and Greece is being examined by the Eurozone.
  • Euro area member states must decide if Finnish-Greek agreement is in line with summit conclusions.
  • Urges avoiding excessive collateralizing in Greek aid.
  • Like to see all the pactivalities of July 21 summit deal finalized by the end of August.

JPM cut its fourth quarter US GDP estimate to 1.0% from 2.5%, and Q1 2012 GDP estimate to 0.5% from 1.5%

Posted: 19 Aug 2011 03:26 AM PDT
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