Forex Market Updates & Commentary

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• EUs Van Rompuy says fast track amendments to EU rules could be reinforced by deeper adjustment to treaty
• GBPUSD moves back toward the days midpoint after finding support against the 200 hour MA
• EURCHF pounds against the days highs but finds profit takers on the first test
• AUDUSD at the midpoint of days range and struggles with direction
• USDJPY stays steady.
• SNB and BIS decline to comment on market talk that BIS is buying EURCHF
• GBPUSD tests the 200 hour MA. Stays between the “Goal Posts”
• S&P Kraemer says a downgrade of negative watch is no means certain
• Market talk of BIS bid in EURCHF/USDCHF
• Bank of Canada leaves rates unchanged
• S&P notes that crisis in EU has become a bigger near term threat
• Canada Building Permits Much Stronger at 11.9% vs 1.6% Expectations and Prior of -4.9%. Revision Also Stronger
• Canada Building Permits rise 11.9%.
• Bobbys Corner-Open Market-December.6.2011
• EFSF credit rating may be cut by S&P: S&P reports

EUs Van Rompuy says fast track amendments to EU rules could be reinforced by deeper adjustment to treaty Posted: 06 Dec 2011 07:50 AM PST There is need to ensure bigger resources for IMF via bilateral loans Proposes possible review of EUR 500bln ceiling of Euro zone permanent ESM bailout fund ESM bailout fund should follow IMF practices and involve less unanimous decision making

GBPUSD moves back toward the days midpoint after finding support against the 200 hour MA Posted: 06 Dec 2011 07:29 AM PST The GBPUSD did bounce off of the 200 hour MA (green line in the chart above) for the second time and the bounce has also moved above the broken trendline (see chart above) at the 1.5631 level (see prior post). The price remains contained by the 100 and 200 hour MAs (blue and green lines respectively) suggesting the market traders still struggle with the directional bias for the pair. Buyers are coming in on dips, and sellers are coming in on rallies.  Traders can continue to use the extremes as levels to lean against and define risk.  On breaks, I will be looking for momentum in the direction of the break. The 1.5558 level is the next downside target (61.8% in chart above). On the topside a move above the 100 hour MA (blue line) will target the successive highs (each lower) over the last 4 trading days.

EURCHF pounds against the days highs but finds profit takers on the first test Posted: 06 Dec 2011 07:22 AM PST The EURCHF worked its way to the high for the day but found willing profit takers on the first test. The price has tested the 100 bar MA on the 5 minute chart on 3 separate occasions. The last time was a failed break and this helped lead to the move back higher.  The bulls in the pair will need to have the price break above this level to increase the bullish bias.  The pair is up today on the back of weaker CPI and the potential for another intervention by the SNB.

AUDUSD at the midpoint of days range and struggles with direction Posted: 06 Dec 2011 07:01 AM PST The RBA cut rates by 25 basis points today and the price of the AUDUSD moved lower. Later it was boosted by better data out of Germany and an overall better tone in the EURUSD.  Now the price has moved to the midpoint of the days trading range at the 1.02119 level and looks for the direction.  The pair is down on the day. The price has also stayed below the 100 day MA over the last week of trading (blue line in the chart below). That level currently comes in at the 1.0300 level.   That keeps the bearish bias over the long term, but the market traders are still searching for momentum  to the downside. So far, that momentum has been limited. Looking at the hourly chart below, the lack of momentum is evident.  Over the last 4 or 5 days, the price has traded sideways with a low of 1.0149 and and high of 1.0328. The 100 HOUR MA comes in at the 1.0228 level (blue line in the chart below) currently and the price has moved above and below this level in the NY session. The traders are simply not sure. I will be looking for the market to make a break above the 1.0300 level or a break below the recent low at the 1.0149 level to cast the vote for the trader’s bias. With lower rates in Australia, one would expect a lower AUDUSD.  That is not happening which suggests that risk appetite remains in play and a possibility.  Nevertheless for me, the proof remains in the pudding and that includes a move back above the 1.0300 level (100 day MA).

USDJPY stays steady. Posted: 06 Dec 2011 06:48 AM PST The USDJPY has remained steady today with the 38.2% of the move up from the November 18th low to the November 29th high at the 77.62 level holding support. The 100 and 200 hour MA are converging 77.78 and 77.72  respectively.  A move above the 77.78 level or move below the 77.66 level should lead to further momentum in the direction of the break. There is rumblings that the JPY remains a “safe haven” currency. I am not so sure and I think the sideways action is saying the market does not know what to do with the pair.

SNB and BIS decline to comment on market talk that BIS is buying EURCHF Posted: 06 Dec 2011 06:39 AM PST The EURCHF remains below the earlier high for the day (off the weaker than expected CPI). That high came in at the 1.2416 level. The high in NY came in at the 1.24125 level so far.  A break of the 1.2416 level opens the upside for further upside momentum.

GBPUSD tests the 200 hour MA. Stays between the “Goal Posts” Posted: 06 Dec 2011 06:23 AM PST The GBPUSD has remained between the “Goal Posts” as defined by the 100 hour (blue line) and 200 hour (green line) MAs. The price is down testing the bottom goal post at the 1.5591 level. A move below should lead to further momentum to the downside. A holding of the line should lead to short covering as traders continue to trade the range and wait for the break.

S&P Kraemer says a downgrade of negative watch is no means certain Posted: 06 Dec 2011 06:08 AM PST He does also note however, that the challenges for the Eurozone are larger than the situation in the US Kraemer says the timing of the announcement was in reaction to the risk

Market talk of BIS bid in EURCHF/USDCHF Posted: 06 Dec 2011 06:07 AM PST The Bank of International Settlement is being touted as a bid in the EURCHF and USDCHF. Both pairs have moved higher in the last few minutes. The Swiss CPI data was disappointing today and this should get the attention of the SNB who is trying to stimulate demand and with it inflation.

Bank of Canada leaves rates unchanged Posted: 06 Dec 2011 06:00 AM PST 2nd half growth is stronger than expectations No suggestion of potential rate change CPI is slightly higher but expect that as food and energy prices fall and ongoing excess supply will soften inflation pressures. Below is the full statement from the BOC. http://www.bankofcanada.ca/2011/12/press-releases/fad-press-release-2011-12-06/ The USDCAD has fallen but remains above the 100 hour MA at the 1.0170 level.  This is the key level.

S&P notes that crisis in EU has become a bigger near term threat Posted: 06 Dec 2011 05:38 AM PST Crisis is one of governance and crisis manangement. They note that crisis has moved beyond periphery Crisis has spread from the EMU periphery to the core Policy response to stimulate demand now more limited. EU summit is an opportunity to break perception that policy response so far has been largely defensive. An unsuccessful summit could lead to another downward leg in the crisis The EFSF rating will likely be in line with the AAA ratings of the stongest members. The comments from S&P are putting pressure the EU to react and react strongly at their summit later this week. Any failure risks not only the rating decreases but also the obvious potential for higher interest rates – especially in the countries at risk.

Canada Building Permits Much Stronger at 11.9% vs 1.6% Expectations and Prior of -4.9%. Revision Also Stronger Posted: 06 Dec 2011 05:31 AM PST

Canada Building Permits rise 11.9%. Posted: 06 Dec 2011 05:30 AM PST This is much stronger than expectations of 1.6%. Last month showed a decline of -4.1%.  Residential permits fell by -0.1% while non residential surged by 32.8% Bank of Canada decision is next on tap at 9 AM. The USDCAD has had a modest reaction to the better than expected number with the USDCAD actually moving a touch higher (Cad weaker).   With the interest rate decision due at 9 AM the market seems to be waiting for the decision to determine the directional bias today.  The 100 hour MA on the USDCAD chart below comes in at the 1.01716 level. Staying above the  MA level after the decision keeps a  bullish bias for the pair. Moving below the level would give the pair a bearish bias.

Bobbys Corner-Open Market-December.6.2011 Posted: 06 Dec 2011 05:28 AM PST Good Morning: Risk 0ff after yesterday’s late afternoon announcement by S&P that they are putting 17 European countries on a negative credit watch. This negative watch may lead to possible downgrades. In other S&P news-they have reaffirmed China’s Aa/A-1+ rating. S&P seems to be interested in politics again, after downgrading the US this summer.  S&P commented that the “continued disagreements among European policy makers” was a main reason for the downgrade warning.  Many feel that S&P should back off-as the downgrade watch just complicates solving the EU debt crisis. With the EU meeting for yet another summit in Brussels on Dec 8 and 9-analysts questioned the timing of the S&P move. Ahead of the summit-German Chancellor Merkel and French President Sarkozy will present a plan to rewrite the EU’s governing treaty to enforce tighter economic controls over member countries. The crisis has already led to bailouts for Greece,Ireland and Portugal-and it looks like Italy is next in line. World equity markets were mostly lower-but US futures are slightly higher. HAVE A GREAT DAY & GOOD LUCK

EFSF credit rating may be cut by S&P: S&P reports Posted: 06 Dec 2011 05:26 AM PST This again will be contigent on the action by the EU members during their summit later this week.

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