Forex Market Updates & Commentary

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• Traders Course: Special class today with Shawn Powell 4:00 PM – Support and Resistance
• Philadelphia Fed index comes out lower but Employment better
• Talk of ECB funding bailout via IMF is being shot down by Germany; Sources
• The good news is US data continues to surprise on the upside
• James Chen Speaking Today 10:15 am at the Las Vegas Traders Expo
• Fitch: Italy’s rating could be cut to low investment grade if access to capital markets are hindered
• Fitch says window of opportunity for new Italian government
• EU official: There are some discussion on ECB lending money to IMF for lending to Eurozone states
• EURUSD in a 100 pip range today
• Greece aims to start debt swap in early next year
• Bullard would be open to something more radical to stimulate housing
• Housing Starts (620K vs 610e) Initial Claims (388K vs. 395k)
• US Initial Jobless Claims 388K vs 395K survey and 390K prior.
• Bobbys Corner-Open Market-November.17.2011
• Swiss ZEW Economic Expectations

Traders Course: Special class today with Shawn Powell 4:00 PM – Support and Resistance Posted: 17 Nov 2011 07:21 AM PST Traders Course: Special class today with Shawn Powell 4:00 PM as Greg Michalowski is speaking in Las Vegas at the Traders Expo.  Shawn Powell will teach a class on support and resistance. Register now

Philadelphia Fed index comes out lower but Employment better Posted: 17 Nov 2011 07:02 AM PST 3.6 is lower than the 9 expected for the headline Employment is better though at 12 vs 1.4 last month New Orders 1.3 vs 7.8 last month (worse) Finally, Prices Paid 22.8 vs 20.8 Outlook for 6 months went from 27.2 vs 41.9. So this is better Despite the worse than expected headline, not as bad as first thought (I guess mixed is the best term).

Talk of ECB funding bailout via IMF is being shot down by Germany; Sources Posted: 17 Nov 2011 06:48 AM PST So the push higher in the EURUSD on the idea, is now losing that momentum

The good news is US data continues to surprise on the upside Posted: 17 Nov 2011 06:34 AM PST The housing data and Initial Claims were better today. Retail Sales were better earlier this week. Industrial Production, Capacity Utilization, CPI, Empire Manufacturing were all better than expected. The Philadelphia Fed Index is due at 10:00 AM next. The expectation is for around 9 (unchanged from last months 8.7) I wonder if there will be a point where better US data is NOT a support to the EURUSD, but then again when dealing with fundamentals the market is unpredictable.  There could be bad auctions, higher bond yields, rioting in the streets yet the market fear is that a headline will come out to support the market. Case in point, a bond swap headline was released when the bailout plan was released in the EU a few weeks ago. Greece is still hopeful of private participation in the bond swap program at the proposed 50% haircut.  New goverments are introduced, but the same reforms need to be made. Nothings changed. The stories just get circulated around and around.

James Chen Speaking Today 10:15 am at the Las Vegas Traders Expo Posted: 17 Nov 2011 06:32 AM PST I will be speaking today (November 17) at 10:15 AM about Forex trend trading at the Las Vegas Traders Expo, free workshop. Details: http://bit.ly/qyJZZ2 James Chen, CTA, CMT Director of Technical Research and Education FXDD

Fitch: Italy’s rating could be cut to low investment grade if access to capital markets are hindered Posted: 17 Nov 2011 06:21 AM PST The EURUSD is back down on the headline. The do note that it is contingent on losing access to the capital markets.  That is “The $25,000 Question”.  Do investors have confidence in the ability to make austerity measures and to weather the potential for slower growth?  Can they lower the deficits?  Can the new government get the political and public support?   Right now the bond markets are being supported not by the capital markets but by the ECB sterilized purchases of both Italian and Spanish bonds.

Fitch says window of opportunity for new Italian government Posted: 17 Nov 2011 06:20 AM PST Challenge facing new Italian government New techno government to prove itself credible Must obtain broad public support for fiscal policy Rise in bond yields are a systematic reluctance to hold debt due to government transition The yields can come down if confidence is restored When the tide starts to turn in an environment when the capital preservation is desired, it is hard to stop.  They are right, the negativity needs to be stopped.  However,there is a saying in liquidity crisis’ that “cash is king”.  Having an asset that is declining in price is a loss, whether it be unrealized or realized.   This is a function of two much debt and a deleveraging of debt holdings.

EU official: There are some discussion on ECB lending money to IMF for lending to Eurozone states Posted: 17 Nov 2011 06:14 AM PST The ECB is not supposed to lend money directly to member states. They are not supposed to do QE (it should be sterilized). This is an end around way for the ECB to lend money to the troubled nations. It is getting really thick out there.

EURUSD in a 100 pip range today Posted: 17 Nov 2011 06:06 AM PST The EURUSD is in a 100 pip range today. The high has come in at the 1.3521. The low has come in at 1.3520.  The range is smaller than normal.  A range extension can be expected.  This is despite a Spanish auction which did not reach it’s intended goal of 4 billion Euros sold. The yield approached 7% for the 10 year bonds.  As mentioned yesterday, the Italian and Spanish bonds have been purchased by the ECB in a sterilized format. On the topside the 1.3535 level and then the 1.3569-77 area are targets on a break. On the downside the 1.3481 is the 100 bar MA on the 5 minute chart.  Staying above this level keeps the bulls in charge.

Greece aims to start debt swap in early next year Posted: 17 Nov 2011 05:55 AM PST This would imply a 50% haircut on the bonds. Proposal to private debt holders would be put forth by the end of November

Bullard would be open to something more radical to stimulate housing Posted: 17 Nov 2011 05:37 AM PST Other comments from Bullard this morning: Housing will be flatter for longer He does not see inflation as a concern Thinks it will come back to the Feds implicit target

Housing Starts (620K vs 610e) Initial Claims (388K vs. 395k) Posted: 17 Nov 2011 05:31 AM PST This is better than expected data. Oil is down -$1.48 S&P -3 Dow Futures  down -19 Gold down -28.40

US Initial Jobless Claims 388K vs 395K survey and 390K prior. Posted: 17 Nov 2011 05:30 AM PST Housing starts (Oct) – Survey: 610K  Actual: 628K   Prior: 658K Building permits (Oct) – Survey: 603K   Actual 653K:   Prior: 594K Continuing claims- Survey: 3635K   Actual: 3608K   Prior: 3625K

Bobbys Corner-Open Market-November.17.2011 Posted: 17 Nov 2011 05:29 AM PST Good Morning: Forexland was relatively quiet as markets were watching comments from Italian PM Monti.  Mr. Monti commented that Italy faces serious emergency-as does the EU in general. See his comments here: http://www.forexlive.com/blog/2011/11/17/italy-pm-monti-italy-faces-serious-emergency/ Today’s auction of Spanish 10 year debt, with a yield of almost 7%- is the highest since the 19999-when the euro was first introduced. French and Italian bonds also followed suit.  Overall the European bond markets are sliding-and pushing borrowing costs from the region to new highs.  The spreads between German and French bonds jumped to over 200 basis points.  Belgian-German bond spreads rose to 321-the highest level since the single currency’s inception. World equity markets are and were lower-and US Futures are also pointing to a lower opening this morning. Gold and silver are lower-as is oil-but WTI is still trading over $101/bar. HAVE A GREAT DAY & GOOD LUCK

Swiss ZEW Economic Expectations Posted: 17 Nov 2011 02:04 AM PST Swiss ZEW Economic Expectations came in at -64.3, weaker than teh prior reading of -54.4. The decline of Swiss investor confidence adds to signs of a worsening economic slowdown.

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