Forex Market Updates & Commentary

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• EURUSD back higher on the day
• G20 official: Eurozone countries talking about idea of pooling IMF SDR allocation
• EURUSD retraced all the way back to the 100 bar MA on the 5 minute chart
• Traders Course 4:00 PM TODAY: Non-Farm Payroll
• EURUSD falls toward the low for the day and finds profit takers. 1.3709-19 eyed above
• Papendreou will not resign but will await results of talks with opposition party
• Greek referendum will not go ahead if major parties reach political agreement
• Factory Orders Show Positive Data Improve to 0.3%, Manufacturing Lower
• Greek government ready to discuss opposition proposal on temporary government
• Greek President Not to Meet With Papandreou Today
• ECB Draghi’s comments as they come out
• EURUSD stays above close from yesterday at 1.3746
• Greek PM has not resigned: Report from Socialist official
• Greek confidence vote is now unlikely: Socialist Party member
• Surprise ECB cut to 1.25%. Draghi press conference eyed

EURUSD back higher on the day Posted: 03 Nov 2011 07:48 AM PDT The price moved above the 1.3708-18 area  and the price surged higher. The price is now above the 1.3747 close of yesterday. It is above the midpoint of the days range. It is up on the talk of no Greek referendum and talk of new credit line from IMF.  The details are sketchy but the market is acting now and asking questions later it seems.

G20 official: Eurozone countries talking about idea of pooling IMF SDR allocation Posted: 03 Nov 2011 07:33 AM PDT Also proposing new 6 month IMF credit line of about 500% of the members quota.  The proposed new IMF credit line would be for countries facing exogenous shocks.  This would NOT include countries like Italy and Spain. HMMM..Who does it help then? Markets are tied to headline risk. Liquidity risk is increased as well which increases the effects of the headlines.

EURUSD retraced all the way back to the 100 bar MA on the 5 minute chart Posted: 03 Nov 2011 07:30 AM PDT Fast break the other way. The EURUSD moved above the the 1.3709 level and the 200 bar MA at the 1.3719 level and did not stop until reaching the 100 bar MA at the 1.3741 level.  Now look for support at the prior resistance.

Traders Course 4:00 PM TODAY: Non-Farm Payroll Posted: 03 Nov 2011 07:25 AM PDT Traders Course 4:00 PM TODAY: Non-Farm Payroll Special Update Show with FXDD Chief currency analyst Greg Michalowski and Forex Trainer Shawn Powell. Register now

EURUSD falls toward the low for the day and finds profit takers. 1.3709-19 eyed above Posted: 03 Nov 2011 07:17 AM PDT The low for the day came in at the 1.36558 level. The low on the move down in the NY morning 1.36588.  Profit takers came in against the level and slowed the decline. On the topside, the last leg to the downside took the price from 1.3792 to 1.36588. The 38.2% of that move down comes in at the 1.37097. The 200 bar MA on the 5 minute chart comes in at the 1.3719 level.  This level held support on the initial move lower.  A move above this area will disappoint the shorts who are expecting more today.

Papendreou will not resign but will await results of talks with opposition party Posted: 03 Nov 2011 07:13 AM PDT That should be fun…

Greek referendum will not go ahead if major parties reach political agreement Posted: 03 Nov 2011 07:08 AM PDT According to the PM’s Office

Factory Orders Show Positive Data Improve to 0.3%, Manufacturing Lower Posted: 03 Nov 2011 07:04 AM PDT Manufacturing Composite:  Survey: 53.5   Actual: 52.9   Prior: 53.0   Composite Index: 52.9 vs 53.0 last month Business Activity: 53.8 vs 57.1 last month New Orders: 52.4 vs 56.5 last month Backlog of Orders: 47.0  vs 52.5 last month Supplier Deliveries* 52.0 vs 49.5 last month Inventory Change * 57.5 vs 59.0 last month Employment: 53.3 vs 48.7 last month Factory Orders:    Survey: -0.2%   Actual: 0.3%   Prior: -0.2%   Revised: 0.1%

Greek government ready to discuss opposition proposal on temporary government Posted: 03 Nov 2011 06:50 AM PDT Papendreuo majority is hanging on a thread with defections pushing the ruling party to 150 for and 150 against.  As a result, there is a question on whether his government can govern.

Greek President Not to Meet With Papandreou Today Posted: 03 Nov 2011 06:40 AM PDT

ECB Draghi’s comments as they come out Posted: 03 Nov 2011 06:35 AM PDT Intensified risk to the economy Significant downside revisions to 2012 Price costs should remain moderate Underlying expansion still moderate Economic outlook is subject to high degree of uncertainty Growth to be dampened by moderating global demand Low short term interest rates will help the economy Inflation rates likely to stay above 2% for some time, then ease Inflaton risks are broadly balanced Sluggish growth has potential to reduce inflation risk Soundness of bank balance important.  Welcomes 9% capital ratio. See mild recession at the year end Financial stability lies first with government Never precommit to rate cuts May have overshot sovereign bond spreads The solution to the overshoot is not to rely on external forces (in other words…have ECB/EFSF artificially buy bonds) ECB Balance sheet is not at risk.

EURUSD stays above close from yesterday at 1.3746 Posted: 03 Nov 2011 06:12 AM PDT The last 3 five minute bars has found buyers against the close from yesterday at the 1.3746.  Moving below this level opens the door for the bears to take a run at the 100 and 200 bar MAs (so far the 200 bar MA (blue and green lines) held support) but until then the shorts may be forced to cover. The situation in Greece is fluid and the market action suggests that the buyer and sellers are balanced – currently at least.  Although the cut is welcomed (and perhaps overdue), does it change the tide.   A lot of effort is being made to stop the bleeding, put rings around the problems, etc, yet the source of the bleeding is not healing.  It also is becoming an increasing albatross around the Eurozones neck.  Merkel’s comment that if the Greeks vote ”no” they “won’t get a cent” sounded like a parent lecturing a misbehaving child who just does not listen.  In reality Merkels threat if carried out, will likely mean full default of Greek debt and more capitalization will be needed for EU banks (and potential for more contagion in Italy and Spain).  Is that what she really wants?  Is that what the EU economy needs?  In a normal situation, let Greece (i.e. the bad child) go their own way and let the cards fall where they fall. However, with the tentacles extending far and wide (they just outlined a plan to put the firewall around the problem areas, now that will be destroyed), does the EU have a choice?  Too big. Too fast.  Too much leverage leads to too much risk.  I lecture to retail traders to define risk, limit risk, accept risk. Risk cannot be defined. Risk may not be limited and therefore accepting risk is very difficult for Merkel and company.  FEAR is increased.

Greek PM has not resigned: Report from Socialist official Posted: 03 Nov 2011 06:03 AM PDT

Greek confidence vote is now unlikely: Socialist Party member Posted: 03 Nov 2011 06:01 AM PDT Is that because Papendreuo will resign?   The EURUSD has moved back higher on the news. Gold is up $34 Oil is up $1.30 Dow Futures are up 147 S&P is up 17 German Dax is up  222 or 3.8% French CAC is up 105 or 3.29%

Surprise ECB cut to 1.25%. Draghi press conference eyed Posted: 03 Nov 2011 05:53 AM PDT The EURUSD fell sharply on the cut with the low finding support against the 100 bar MA on the first look. The price rallied back higher but has continued the softening to the 200 bar MA on the same chart below. The change in the ECB policy should weaken the EURUSD. The Greek uncertainty should weaken the EURUSD.

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