Forex Market Updates & Commentary

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• Obama says his plan will reduce debt by more than 4 trl
• USDJPY moves toward key 76.25 level
• ECB buys 9.753 billion Euros in bond purchases
• EURUSD/GBPUSD extends to the downside
• EURUSD settles in a narrow range in early NY trading.
• Policy makes face exceptionally hard time: ECB Gonzalez Paramo
• Gold is stuck between the 100 and 200 hour MA today
• Portuguese Finance Minister. Accumulated economic imbalances for more than a decade
• The NY Morning Forex Commentary for September 18th 2011
• Troika expects Greek property tax to yield less than target:Greek government official
• Germany’s Merkel says EFSF will get a majority in German Parliament
• ECB’s Weidmann on the newswire
• ECB’s Liikanen
• IMF’s Traa
• Greek finance minister Venizelos on the wires…..

Obama says his plan will reduce debt by more than 4 trl Posted: 19 Sep 2011 08:04 AM PDT Changes to Medicare and Medicaid will be done slowly Changes to SS should be done slowly It is only fair to ask everyone to pay their fair share

USDJPY moves toward key 76.25 level Posted: 19 Sep 2011 07:39 AM PDT The USDJPY is moving lower as the flight into the JPY takes charge.  The 76.25 level is the next key level for the pair. The low for the day comes in at the 76.31.  It is a Japan holiday today but there were reports in the press that the Japan government were looking to enact measures that would stop the yens gains.  These measures could be announced as early as tomorrow. So although a move below the 76.25 level might trigger stops, I would expect a tough time getting through the next support against the 75.93-76.00 area.  Be careful from the short side in the pair.

ECB buys 9.753 billion Euros in bond purchases Posted: 19 Sep 2011 06:32 AM PDT 152.5 billion they have bought in total since they started the operation.  As the ECB buy bonds they mop up the excess liquidity from the purchases the following day during repo operations.  This makes it technically not a Quantitative easing policy but a policy whereby they are providing support in the bond markets of countries that need it (to keep rates low) and mop up the  in the general interbank market.

EURUSD/GBPUSD extends to the downside Posted: 19 Sep 2011 06:28 AM PDT Look for the 1.3626-33 to hold resistance with the 1.35907 being the next target below.  For the GBPUSD the 1.5650 area is the next target for the pair.

EURUSD settles in a narrow range in early NY trading. Posted: 19 Sep 2011 06:13 AM PDT The EURUSD gapped lowet today and continues to have that gap between1.3753 and 1.3711.  The gaps typically get filled but it does not have to be any time soon.   Looking at the hourly chart above, the price gapped below the 100 hour MA at the 1.3738 level. This is also a bearish development and points toward lower levels.  However, the pair is finding support against the 1.3726 level which has shown to be a level where the market turns either to the downside or back to the upside (see red areas in the chart above). A break below this level is the next downside target for the pair. Looking at the shorter term 5 minute chart, the price has a floor above the 1.3626 level at the 1.3633 level today. A move below opens the door for a test of the lows from last weeks trading at 1.3590, 1.3553 adn 1.3494. Above is resistance now at the 1.3654 level. This price has been support and most recently resistance today on the 5 minute chart.  A move above should open the door for additional profit taking with the 100 and 200 bar MA at 1.3664 and 1.3674.  Above those levels, and the price looks toward the 38.2% of the sharp move down from Friday afternoons closing area. That comes in at the 1.36955 level (see chart below).

Policy makes face exceptionally hard time: ECB Gonzalez Paramo Posted: 19 Sep 2011 06:00 AM PDT EU must design credible, effective and enforceable rules

Gold is stuck between the 100 and 200 hour MA today Posted: 19 Sep 2011 05:52 AM PDT Gold is trading between the 100 and 200 hour MA today with support at $1810.40 and resistance at $1825.62.  A break either extreme should solicit momentum in the direction of the break. Last week the price moved to the downside, reaching a low on Friday. However, the price rallied strongly on Friday – testing the 38.2% of the move down from the September 6th high to the low. Today, the price has extended above the 38.2 level but has been capped by the 200 hour MA level.

Portuguese Finance Minister. Accumulated economic imbalances for more than a decade Posted: 19 Sep 2011 05:38 AM PDT So does that mean it will take more than a decade to rebalance?

The NY Morning Forex Commentary for September 18th 2011 Posted: 19 Sep 2011 05:23 AM PDT

Troika expects Greek property tax to yield less than target:Greek government official Posted: 19 Sep 2011 04:42 AM PDT Specifically, they see 1 bln euro instead of 2 bln. Also: Troika demands hefty state spending cuts in 2012

Germany’s Merkel says EFSF will get a majority in German Parliament Posted: 19 Sep 2011 04:36 AM PDT She adds: Government will push for EFSF and ESM to be passed Oct 5th is the earliest German govt can discuss ESM treaty When talking about the Eurozone debt crisis, we must weigh our words carefully Meanwhile, JP Morgan cuts there year end EUR forecast to 1.38 from 1.45

ECB’s Weidmann on the newswire Posted: 19 Sep 2011 02:53 AM PDT It is neither planned nor necessary to change existing principles of currency union. New credit conditions of EFSF loans give little incentive to countries receiving aid to bring budgets back in order. July 21 agreement mark further steps towards joint liability without strengthening control of national finances. No sign of common European fiscal policy or politicl union on European level. Bundesbank is sceptical on secondary market bond buying. Secondary market could crowd out private investors.

ECB’s Liikanen Posted: 19 Sep 2011 01:13 AM PDT Outlook for world economy has deteriorated rapidly, and Euro zone growth risks are substantially on downside, inflation risks have changed. Sovereign debt crisis are not just individiual countries problem, but systemic Eurozone crisis. Recapitalization of banks is the most effective tool to restore confidence primarily shareholders task. Must continue to monitor all developments very closely. If Europe fails to constrain crisis, loss of confidence will undermine global growth.

IMF’s Traa Posted: 19 Sep 2011 01:09 AM PDT IMF strongly disagrees with those saying Greek EU/IMF program is not successful. Greece needs underlying structural reforms. Greece should not resort to higher and higher taxes. Additional measure will be needed to cut deficit to sustainable levels. Greece will not be able to undertake fiscal consolidation without much stronger resolve to tackle tax evasion. Must redue public sector’s claims to resources. Greece has made impressive progress but further progress is needed. Concerned that Greek EU/IMF program does not have broad political support. Must proceed with privatization, and reforms with no delays.

Greek finance minister Venizelos on the wires….. Posted: 19 Sep 2011 12:38 AM PDT Expects all countries to approve EFSF changed. Liquidity problem in Greek Economy is top priority. Greek economy to shrink 5.5% this year. Target is to have primary surplus in 2012. Primary deficit in 2011 is at 1.8 bln EUR. Government is forced to make up for fiscal shortfall with new measures. 2012 budget priority will be cutting spending.

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