Tuesday, October 25, 2011

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

US Consumer Confidence Dips Below 40, House Price Index and Richmond Fed Also Decline

Posted: 25 Oct 2011 07:01 AM PDT

Richmond Fed Manf. Index:      Survey:  1   Actual: -6    Prior:  -6

House Price Index(MoM):  Survey: 0.2%   Actual: -0.1%   Prior:  0.8% 

Consumer Confidence:    Survey: 46.0   Actual: 39.8   Prior: 45.5    Revised: 46.4

EURUSD extends range, but the trendline/Fibo level holds.

Posted: 25 Oct 2011 06:47 AM PDT

No one said it would be easy.

The EURUSD fell back below the 1.3917 level and took out the targets along the way including the old low for the day at the 1.3875 level. The fall below that level extended the days range (as anticipated) and led to quick liquidation/selling pressure. The price approached trendline support (at 1.3848) off the October 20 low and 38.2% Fibo support (at 1.3843), and just as fast is it went down, the price moved back higher.

There is now a report that the EU leaders summit will take place tomorrow.  So the finance ministers meeting is canceled, but the leaders summit will take place.

The EURUSD has moved up to the 1.3910 on that report. The new 50% of the days range is at 1.3903.  The 1.3917 remains a level to eye with the 100 and 200 bar MA on the 5 minute chart (see below chart) and 61.8% the upside resistance now.

UK says there will be no Eurozone Finance ministers meeting tomorrow

Posted: 25 Oct 2011 06:40 AM PDT

ECB Mersch say not an option to use the ECB to finance EFSF

Posted: 25 Oct 2011 06:37 AM PDT

  • EFSF will only remain credible if conditions are attached to bailout payments
  • It is not an option to expand bailout capacity with ECB funds

10AM Economic Data Includes: US Consumer Confidence, House Price Index & Richmond Fed

Posted: 25 Oct 2011 06:23 AM PDT

German government and main opposition parties agree on leverage for EFSF

Posted: 25 Oct 2011 06:20 AM PDT

This sends the EURUSD higher and back above the 1.3917 level.  Shorts cover.  Watch the 1.3917 level now for support.

Not a fun market as the traders fight it out without the trend traders (Big Boys) pushing for a directional move.

DEFINE RISK–>LIMIT RISK–>ACCEPT RISK

If get good trade location, target the next level to get through.

Stay above 1.3917, look for upside targets at:

1.3917
1.3927
1.3952
1.3259

On a break of 1.3917, look for targets of:

1.3908
1.3901
1.3975

The range is still narrow for the pair for the day.  A range extension is still anticipated.  Be patient and only trade when fear is acceptable for you.

 

BOC statement sends the USDCAD above trendline resistance

Posted: 25 Oct 2011 06:18 AM PDT

Talking Technicals with James Chen – Webinar Today at 12:30 PM U.S. ET

Posted: 25 Oct 2011 06:13 AM PDT

Talking Technicals with James Chen

Please join us today (Tuesday, Oct. 25) at 12:30 PM U.S. ET for FXDD’s Talking Technicals with James Chen. This free webinar will feature a high-probability technical approach to trading in the Forex market. Please click here to register: https://www1.gotomeeting.com/register/541612225 .

S&P Case Schiller -3.8 YoY vs -3.4% expected

Posted: 25 Oct 2011 06:00 AM PDT

The lower than expected number should keep the stocks under wrap which will tend to depress the EURUSD and other “risk off” currency pairs.  So far, however, the reaction is muted with just a few pip move.

Bank of Canada Keeps Interest Rate at 1.00%

Posted: 25 Oct 2011 06:00 AM PDT

Below is the text from the BOC

Ottawa – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economy has slowed markedly as several downside risks to the projection outlined in the Bank's July Monetary Policy Report (MPR) have been realized. Financial market volatility has increased and there has been a generalized retrenchment from risk-taking across global markets. The combination of ongoing deleveraging by banks and households, increased fiscal austerity and declining business and consumer confidence is expected to restrain growth across the advanced economies.  The Bank now expects that the euro area—where these dynamics are most acute—will experience a brief recession. The Bank's base-case scenario assumes that the euro-area crisis will be contained, although this assumption is clearly subject to downside risks. In the United States, diminished household confidence, tighter financial conditions and increased fiscal drag are expected to result in weak real GDP growth through the first half of 2012, before growth strengthens gradually thereafter. In Japan, reconstruction activity is projected to boost growth over 2012-13, although Japan's economy will be constrained by reduced global activity and the sharp appreciation of the yen.  Growth in China and other emerging-market economies is projected to moderate to a more sustainable pace in response to weaker external demand and the lagged effects of past policy tightening. These developments, combined with recent declines in commodity prices, are expected to dampen global inflationary pressures.

The outlook for the Canadian economy has weakened since July, with the significantly less favourable external environment affecting Canada through financial, confidence and trade channels.  Although Canadian growth rebounded in the third quarter with the unwinding of temporary factors, underlying economic momentum has slowed and is expected to remain modest through the middle of next year.  Domestic demand is expected to remain the principal driver of growth over the projection horizon, though at a more subdued pace than previously anticipated.  Household expenditures are now projected to grow relatively modestly as lower commodity prices and heightened volatility in financial markets weigh on the incomes, wealth and confidence of Canadian households. Business fixed investment is still expected to grow solidly in response to very stimulative financial conditions and heightened competitive pressures, although it will be dampened by the weaker and more uncertain global economic environment.  Net exports are expected to remain a source of weakness, owing to sluggish foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.

Overall, the Bank expects that growth in Canada will be slow through mid-2012 before picking up as the global economic environment improves, uncertainty dissipates and confidence increases.  The Bank projects that the economy will expand by 2.1 per cent in 2011, 1.9 per cent in 2012, and 2.9 per cent in 2013.

The weaker economic outlook implies greater and more persistent economic slack than previously anticipated, with the Canadian economy now expected to return to full capacity by the end of 2013.  As a result, core inflation is expected to be slightly softer than previously expected, declining through 2012 before returning to 2 percent by the end of 2013. The projection for total CPI inflation has also been revised down, reflecting the recent reversal of earlier sharp increases in world energy prices as well as modestly weaker core inflation.  Total CPI inflation is expected to trough around 1 per cent by the middle of 2012 before rising with core inflation to the two per cent target by the end of 2013, as excess supply in the economy is slowly absorbed.

Several significant upside and downside risks are present in the inflation outlook for Canada. Overall, the Bank judges that these risks are roughly balanced over the projection horizon.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada. The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term.

Mexico Trade Balance Slides to -1831 From a Survey of -1000M and a Prior of -806M

Posted: 25 Oct 2011 06:00 AM PDT

Bank of Canada interest rate statement due at 9 AM ET

Posted: 25 Oct 2011 05:59 AM PDT

GBPUSD testing support area intraday

Posted: 25 Oct 2011 05:53 AM PDT

Like the EURUSD, the GBPUSD has a narrow range today. It also has had a up and down formation today (covering the entire range) which is also an indication the bulls and bears are unsure at this level.   The combination suggets there should be a break to the upside or the downside at some point today.

The pair is currently looking to test the 100 and 200 bar MA at the 1.5990 area.  A move below this area gives the bears an edge for a downside test of the lows. If the level holds, the bears might become impatient and cover.  Key level to eye for intraday trading today.

Canada Retail Sales Improve, USD/CAD Trades Below Parity

Posted: 25 Oct 2011 05:31 AM PDT

Canada Retail Sales:  Survey: 0.3%  Actual: 0.5%   Prior:  -0.6%   Revised: -0.5%

Canada Retail Sales Less Autos:  Survey: 0.3%  Actual: 0.4%   Prior:  0.0%   Revised: 0.1%

USD/CAD trading below parity.

Bobbys Corner-Open Market-October.25.2011

Posted: 25 Oct 2011 05:21 AM PDT

Good Morning:

Risk on-as equity markets,oil,gold all higher in overnight trading.

The euro moved higher ahead of tomorrow’s meeting of European leaders.  The leaders are looking to bolster the regions rescue fund. 
The first step would be to provide debt relief, and then to recapitalize the Greek banks.  One of the main concerns is to avoid contagion spreading to Spain and Italy.
European leaders are pushing for the banks to take huge losses on their Greek portfolios.  The banks are considering what would be acceptable in terms of how much they are willing to write off on their investment in Greece.  
The sovereign debt crisis that started about 2 years ago has pushed Greece to the brink of default, has brought many other countries financial situation to light (and the light is not very bright), and has caused turmoil in the global marketplace.
Even though Europe has done alot in the last 2 years to help keep the situation under control, they need to do more-quickly.

World equity markets are higher-as are US Futures.
Commodities are also higher across the board.

HAVE A GREAT DAY & GOOD LUCK
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