US markets will be on Thanksgiving holiday next Thursday but in general, we don’t expect market volatility to drop a lot as a number of important economic data are scheduled to release throughout the week. But in any case, main focus will still be on developments in the stock markets. As mentioned before, most major currency pairs and crosses are still bounded in established range and sustained selling in the stock markets is needed to trigger a decisive breakout from the current ranges.

From US, existing home sales, new home sales, house price index Q3 GDP revision, consumer confidence, Oct Personal income and spending, durable goods will be released. From Eurozone, main focus will be on Germany Ifo on Monday and HICP flash and unemployment on Friday. Other data include Germany Gfk and unemployment, Eurozone business climes, industrial orders, and current account. UK Q3 GDP, Gfk consumer sentiment will be featured. From Japan, main focus will be on Friday’s string of economic data including Oct CPI, household spending, industrial production, retail sales and housing starts. Canadian retail sales and PPI will be released. Swiss KOF will also be featured.

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AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6589; (P) 0.6688; (R1) 0.6834

AUD/USD gaps higher today but after all it’s still staying in range of 0.6543 and 0.7014. With 0.6543 support intact, there is no confirmation of completion of rebound from 0.6008 yet. Further rally cannot be ruled out and break of 0.7014 will target 38.2% retracement of 0.9849 to 0.6008 at 0.7475. On the downside, though, break of 0.6543 will confirm that rebound 0.6008 has completed and will bring retest of this low. Read the rest of this entry »

Daily Pivots: (S1) 0.6648; (P) 0.6755; (R1) 0.6869

AUD/USD weakens again after failing to take out 0.6891 resistance but after all it’s still staying in established range. Further rise is still mildly in favor as long as 0.6549 minor support holds and break of 0.6891 will indicate that rebound from 0.6008 has resumed for 38.2% retracement of 0.9849 to 0.6008 at 0.7475. On the downside, below 0.6549 support will argue that rebound from 0.6008 has possibly completed and flip intraday bias back to the downside to retest this low. Read the rest of this entry »

Despite edging lower to 0.6008 early last week, AUD/USD was supported above 0.6 psychological support and 76.4% retracement of 0.4773 to 0.9849 at 0.5971 and rebounded strongly. Subsequent rebound was limited at 0.6891 and retreated mildly, turning intraday outlook neutral for the moment. On the downside, break of 0.6529 will suggest that the rebound from 0.6008 has finished and will flip intraday bias back to the downside for retesting this low. On the upside, above 0.6891 will indicate that rise from 0.6008 has resumed for 38.2% retracement of 0.9849 to 0.6008 at 0.7475.

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AUD/USD was bounded in consolidation between 0.6330 and 0.7237 last week and such choppy consolidation might continue further. Above 0.7076 will argue that rebound from 0.6330 is extending further to 0.7237 and above. However, upside is expected to be limited below 0.7674/83 cluster resistance (61.8% retracement of 0.8519 to 0.6330 at 0.7683, 38.2% retracement of 0.9849 to 0.6330 at 0.7674) and bring down trend resumption. On the downside, below 0.6495 will bring retest of 0.6330 low and break will confirm that recent down trend has resumed for next long term fibonacci support at 76.4% retracement of 0.4773 to 0.9849 at 0.5971.

In the bigger picture, the strength of the fall from 0.9849 strongly suggests that it’s developing into an impulsive fall in at least the same degree as the up trend from 0.4773 to 0.9849. The current interpretation is that first wave of such fall has completed at 0.7802. Second wave correction has completed at 0.8519 and fall from there should represents the third wave decline. In other words, AUD/USD is probably in the middle of such decline only. Any interim correction should be limited below 0.7802 support turned resistance and bring down trend resumption.

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AUD/USD’s decline from 0.9849 accelerated even further last week and dived to as low as 0.6330, taking out 0.6773 key medium term support without hesitation. From a short term angle, initial bias remains on the downside this week as long as 0.6759 minor resistance holds. Further decline is still expected to next downside target of 76.4% retracement of 0.4773 to 0.9849 at 0.6712 at 0.5971. On the upside, note that mild bullish convergence condition is being displayed in 4 hours MACD. Above 0.6759 will argue that a short term bottom is in place and bring rebound to 0.7135 and above before resuming the down trend.

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Action Insight Daily Report
Dollar and yen are generally higher today as global stock markets tumble following DOW’s 678pts fall to 8579. Niikkei dropped nearly another 10% to 8276, having the worse weekly drop in history after a 98 year old Japanese insure Yamato Life files for bankruptcy. European stock markets also open sharply lower with FTSE 100, DAX and CAC 40 dropping nearly 10%. Dollar index resumes recent rally and climbs to as high as 81.91 so far. Crude oil tumbles another 5% to 82 level while gold climbs over 3% to above 930.

AUD/USD and AUD/JPY are the biggest loser today so far but are still holding above this week’s low. The more important developments these few days are the persistent weaknesses in Sterling and Canadian Dollar. Sterling is pressured by concern that UK-Iceland assets row may escalate further. The two nations are tussling over on who should compensate British savers with money locked in Icelandic banks after the system collapsed. Prime Minister Gordon Brown said UK may freeze the assets of Icelandic companies using anti-terrorism laws. GBP/USD took out 1.7047 key medium term support and falls to as low as 1.6786 so far. GBP/JPY drops to as low as 165.91. EUR/GBP is back above 0.8 level. USD/CAD on the other hand, surges sharply to as high as 1.1647 on falling oil prices. Euro is sold off sharply in EUR/CHF with the cross breaking Mar’s low of 1.5331 and diving to as low as 1.5167 so far. Though, the common currency remains relatively steady against dollar and yen.

On the economic data front, Swiss unemployment rate was unchanged at 2.4% in Sep. Main focus is on Canadian job report which is expected to show unemployment rate up to 6.2% in Sep, with 11k jobs added. Canadian and US trade balance will also be featured. Nevertheless, economic data will likely continue to take a back seat and focus remains on development in the global financial crisis. Also, attention will be on the G7 meeting which begins on Friday, followed by annual IMF/World Bank meeting from Oct 11-13.
By ActionForex

The Australian dollar is up against majors today after the Australia bureau of statistics released lower-than-expected housing finance data and Westpac released a plunging consumer confidence index. Still, economists say the currency is reacting very little to economic data.
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EURUSD
Buy @ 1.3930
Sell @ 1.3475
TP 140 pips
SL 100 pips
Move SL to Entry after 70 pips

GBPUSD
Buy @ 1.7890
Sell @ 1.7450
TP 200 pips
SL 120 pips
Move SL to Entry after 85 pips

USDCHF
Buy @ 1.1490
Sell @ 1.1110
TP 100 pips
SL 70 pips
Move SL to Entry after 60 pips

USDJPY
Buy @ 107.10
Sell @ — No Signal
TP 80 pips
SL 70 pips
Move SL to Entry after 50 pips

USDCAD
Buy @ 1.0940
Sell @ 1.0710
TP 120 pips
SL 80 pips
Move SL to Entry after 60 pips

AUDUSD
Buy @ — No Signal
Sell Limit @ 0.7670
TP 250 pips
SL 120 pips
Move SL to Entry after 80 pips

After a strong rally, dollar remains firm in Asia on news that a sweetened $700b bailout plan will pass Senate votes today and also pass House vote successfully on Thursday. US Senate is set to vote on the modified $700 rescue plan on Wednesday. Changes include raising FDIC insurance from $100k to $250k, which will get more democrat votes, and a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, which will get more republican votes. It’s believed that the arrangement itself and the changes will be enough to take 12 more votes from the House on Thursday to pass the bill. House surprised the markets by voting against rescue plan by 228 to 205 on Monday.

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