Daily Forex Report: BoJ Cuts 20bps, Has Euro Topped?
By ActionForex

The forex markets are rather steady today so far as little response is paid to BoJ’s rate cut. the Bank of Japan cut the overnight lending rate from 0.3% to 0.1% on 7-1 vote and announced plan to buy corporate debts to help corporate raise funds during deepening recession. Tado Noda was the sole member to dissent. Basic loan rate was also lowered by 20bps to 0.3% by unanimous vote. Yen remains mixed after the decision. Note that firstly, more upside cannot be ruled out in EUR/JPY and CHF/JPY as supported by the theme of intervention. Secondly, USD/JPY’s recovery is not convincing yet as the downtrend is still intact. Thirdly, GBP/JPY, AUD/JPY and CAD/JPY are staying in range despite all the volatility elsewhere. There is not broad based direction in the Japanese currency for the moment. Read the rest of this entry »

Daily Forex Report: Swiss Franc to Take Over Euro’s Leading Strength?

By ActionForex

Dollar index extended the sharp decline to as low as 78.22 before recovering mildly. The broad based weakness in the greenback is still overwhelming in the markets but after all as the greenback is now sitting in side an important support zone of 75.89 to 80.38, some support should be seen in near term as the greenback approaches 61.8% retracement of 71.31 to 88.46 at 77.86. It’s unclear on whether dollar’s up trend has totally finished but some noticeable rebound should be seen on oversold condition in near term. The critical factor to determine dollar’s outlook will indeed be on whether another fall will be seen after the anticipated rebound to make the whole fall from 88.46 a five wave impulsive sequence, or will such fall complete in three wave corrective manner. This should be decided in the next few weeks and will set the tone for 2009. Read the rest of this entry »

Daily Pivots: (S1) 1.3274; (P) 1.3345; (R1) 1.3438

EUR/USD’s rise continues in early US session and reaches as high as 1.3585 so far, taking out mentioned 100% projection of 1.2329 to 1.3290 from 1.2549 at 1.3510. At this point, intraday bias remains on the upside as long as 1.3430 minor support holds. Focus now turns to 1.3768 cluster resistance. On the downside, below 1.3430 minor support will turn intraday outlook neutral first. But another rise is still in favor as long as 1.3250 support holds. Read the rest of this entry »

Forex News and Events:
By Ac-Markets

The Dollar fell broadly on Thursday, hitting 7-week lows against the Euro and Yen, as safe-haven demand faded and investors began booking year-end profits following months of steady Dollar buying.

Data showing another weekly rise in the number of Americans filing for jobless benefits, this time to a 26-year high, also weighed on the Dollar, boosting the case for the Federal Reserve to cut interest rates next week from an already low 1%.

With trading conditions thinning ahead of year end, that pushed investors toward the Euro, which carries interest rates of 2.5%, higher not only than US rates but also those in Britain, Japan and Switzerland, where the central bank cut rates by 50bp to 0.5% on Thursday. Implied rate spreads also moved in the Euro’s favor after European Central Bank Executive Board member Juergen Stark said late Wednesday the bank did not have a lot of room to maneuver on rates after lowering them to 2.5% last week. Axel Weber, head of Germany’s Bundesbank, also tried to cool further ECB rate cut expectations, telling a German newspaper “we should be careful when our interest rates enter territory never explored before.” ECB rates have never been lower than 2 percent.

EurUsd hit 1.3406, its highest level in 7 weeks, before easing to 1.3328, up 2.41%. EurGbp rose 0.85% to 0.8870 after posting 0.8909 high. EurJpy rose 0.97% to 121.99. GbpUsd rose 1.56% to 1.5027. GbpJpy UsdJpy fell 1.41% to 91.53.

Part of the reason for the Dollar’s drop was also tied to a fall in the rates banks charge each other to borrow Dollars, reflecting decreased demand for the currency, and a general rise in risk appetite. The Dollar’s rally in recent months was mainly the result of investors unloading stocks, commodities and emerging market assets and putting the money into safer US Treasury debt.

Also on Thursday, data showed the US trade deficit widened unexpectedly in October, with imports from China rising to a new high. Some analysts say rising deficits could pose a problem for the Dollar in the long run. Analysts, however, said the Dollar’s current struggles were temporary and warned that the New Year will likely bring a renewed wave of risk-aversion and deleveraging that renews safe-haven flows into the currency.

Weekly Review and Outlook: Euro Strengthened in Volatile Markets, Dollar Sharply Lower ahead of FOMC
by ActionForex

While the headlines might be dominated by the automaker bailout drama, risk aversion or dollar’s loss of its safe haven status last week, it’s Euro’s strength and momentum that should be paid most attention to and most closely watched. Dollar’s index’s sharp decline to as low as 83.22 last week was inline with the head and shoulder top scenario that indicates a medium term top is at least in place at 88.46. However, Dollar’s weakness was indeed not too severe except version the yen which saw USD/JPY dived to 13 year low of 88.54 before rebounding. GBP/USD, AUD/USD and USD/CAD are still kept by near term levels only, without significant technical breakthrough. On the other hand, while much volatility was seen in yen crosses, most of the are still held by near term low and thus there is no confirmation of a another round of massive yen buying yet. Read the rest of this entry »

Daily Pivots: (S1) 1.5283; (P) 1.5355; (R1) 1.5428

GBP/USD’s break of 1.5178 minor support indicates that corrective rise from 1.4557 should have completed with three waves up to 1.5534. Intraday bias flipped back to the downside for retesting 1.4557 low first and break will confirm that recent decline has resumed for next medium term target at 1.3680. On the upside, while another another rise cannot be ruled out, upside is still expected to be limited by 1.5600 cluster resistance (50% retracement of 1.6671 to 1.4557 at 1.5614). However, decisive break of 1.5600/14 will be the first alert that whole fall from 1.8668 has completed and strong rebound might follow targeting 1.6671 resistance.

In the bigger picture, there are some different interpretations of the structure of the whole down trend from 2.1161, with different projection targets. Main question is whether fall from 1.8668 is the fifth wave in the five wave sequence from 2.1161 (1.9337, 2.0158, 1.7445, 1.8668, ?) or it’s the third wave inside the fall from 2.0158. In either case, fall from 1.8668 is possibly completing a five wave sequence of its own. Strong rebound above 1.4278/4310 cluster projection target (100% projection of 1.7630 to 1.5269 from 1.6671 at 1.4310, 161.8% projection of 2.0158 to 1.7445 from 1.8668 at 1.4278), followed by break of 1.5600 resistance will suggests that a medium term bottom is formed and bring larger scale correction. Though, sustained trading below 1.4278/4310 will target 1.3680 key long term support (01 low).

GBP/USD 4 Hours Chart - Forex Chart, Forex Rates, Forex Directory, Forex Portal

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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Mid-Day Report: Dollar Weakens as Consolidation Continues, FOMC Minutes Next
Dollar is sharply lower against European majors in early US session as consolidation continues. Technically speaking, as discussed in our technical outlook reports, more upside is still expected in EUR/USD and GBP/USD. Meanwhile, USD/CHF retreats sharply after edging higher to 1.2082 earlier today. Dollar index’s dip below 4 hours 55 EMA argues that some more pull back should be seen before resuming recent rally. Elsewhere, Crude oil, rides on dollar’s retreat and rebounds strongly from intraday low of 53.66 to above 55.6. Focus will now turn to FOMC minutes for inspirations on further volatility. Though, ,markets are pricing in 90% chance of another 50bps cut from Fed on Dec 16 and the minutes will likely have little impact to this view based on current economic and inflation outlook. Read the rest of this entry »

Daily Pivots: (S1) 1.1861; (P) 1.1926; (R1) 1.2013

USD/CHF edges higher to 1.2006 today and continues to press last week’s high of 1.2000. At this point, intraday bias remains on the upside as long as 1.1825 minor support holds and further rise is still expected to next target of 100% projection of 1.0693 to 1.1746 from 1.1208 at 1.2261. On the downside,below 1.1825 will flip intraday bias to the downside and argue that a short term top is possibly in place with bearish divergence condition in 4 hours MACD.

In the bigger picture, medium term rise from 0.9634 is still in progress and has taken out 1.1878 (61.8% retracement of 1.3283 to 0.9634 at 1.1889). Sustained trading above there will encourage further medium term rally to test 1.3283 high. On the downside, break of 1.1208 support is needed to indicate that such medium term rally has completed. Otherwise, medium term outlook will remain bullish even in case of deep pull back.

Daily Report: Dollar Higher after G20 Delivered Little Impact

Dollar edges higher as the markets open this week and remains firm after G20 delivered little impact to the markets. The Japanese yen, on the other hand, fails to sustain earlier gains after economic data showed Japanese economy shrank in Q3. The G20 statement called for a “broader policy response” including monetary and fiscal policies but nothing concrete was achieved to revive global growth. The message that individual countries should act “as deemed appropriate to domestic conditions” sounded as if there isn’t any consensus among the participating countries on specific actions. After all, not much was expected from the meeting though.
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