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Monday, November 30, 2009

GBP/USD rises back above 1.6400

Cable decline has found support at 1.6380. GBP/USD rose back above 1.6400 and at the moment trades at 1.6418/24, 0.50% below today’s opening price. Despite recent recovery from the lows of the day, Cable is 170 pips far from 1.6593 (intra-day high). To the upside immediate resistance lies at 1.6440 and above at 1.6465 and 1.6505.

Michael J. Malpede, affirms: “GBP traded lower with gains limited by report of an unexpected decline in UK consumer confidence and comments from BOE's Posen that it's too early for the BOE to exit monetary stimulus.” Regarding the technical outlook he comments that is negative “as GBP trades below 1.6400. Expect near-term support at 1.6272 the November 27th low with resistance at 1.6595 for November 30th high.”

EUR/USD hovers around 1.5000

The Euro has been moving sideways against the Dollar in the last hours hovering around 1.5000. EUR/USD found support at 1.4970 and from there rose to test levels above 1.5000 but failed to hold on top. Currently trades at 1.4992/95, 0.15% below today’s opening price. The pair is still moving with a downside bias for the day.

To the upside, resistance lies at 1.5020 and above at 1.5060 and 1.5080/85 (intra-day high). Support could be located at 1.4970 and below at 1.4950 and 1.4920/30.

James Hyerczyk, comments: “The inability of U.S. equity markets to follow-through to the upside after the Dollar weakened has helped the currency reverse its early morning course. The Dollar broke overnight as debt problems in Dubai eased over the week-end.”

Canada Afternoon: C$ Ends Modestly Higher Amid Less Risk Aversion

The Canadian dollar ended higher Monday, as a rebound in commodity prices and relatively less global alarm over the debt crisis in Dubai served to lessen the risk aversion that had weakened the Canadian currency in recent sessions.

The U.S. dollar was trading at C$1.0558 at 3:34 p.m. EST (2034 GMT), from C$1.0585 at 8:00 a.m. EST (1300 GMT), and from C$1.0612 late Friday.

Movements for the Canadian dollar were fairly narrow in contrast to last week, as the currency consolidated some of the recent big moves amid some subsidence in the concern about the potential for another global financial crisis from the problems in Dubai.

The Canadian dollar also got some muted supported from Canada's third quarter gross domestic product report, which underperformed expectations but nonetheless contained some encouraging underlying details that had analysts predicting a much stronger final quarter of 2009.

Canada's GDP posted positive growth in July-September--signaling an end to recession--after three consecutive quarters of decline, but the third quarter's 0.4% annualized pace of expansion was less than the 1.0% rate seen in the consensus forecast.

Notwithstanding the tepid headline figure however, components of the report such as merchandise trade, consumer and business capital spending suggested a more robust performance may be in the offing for the economy in late 2009 and heading into 2010.

So long as commodities and the global risk environment remain supportive, most currency watchers still expect to see a stronger tone from the Canadian dollar over the relatively near-term, even if caution heading into year-end results in a continued range trade for a while longer.

"By and large, the market is probably biased to take the Canadian dollar a bit stronger," said Jack Spitz, director of foreign exchange at National Bank in Toronto. "As long as the market is biased to favor risk and commodities remain supported around these levels, I think the Canadian dollar is likely to outperform, but still within the range."

Senior currency strategist Shaun Osborne of TD Securities in Toronto said that with many accounts focused on capital preservation heading into the year-end, conservative positioning and continued trading within a fairly well-defined range of about C$1.0400 and C$1.0750 are likely in coming weeks.

These are the exchange rates at 3:34 p.m. EST (2034 GMT), 8:00 a.m. EST (1300 GMT), and late Friday.

USD/CHF finds resistance at 1.0065

he Dollar’s recovery from 0.9993 has found resistance at 1.0065. USD/CHF lost momentum in the last hour and fell from 1.0065 to test a support at 1.0040. If the pair falls below the Swiss Fran could gain momentum and approach to the parity level. Greenback has lost previous gains and currently trades at 1.0039/44, the same price it had at the begging of the day.

Michael J. Malpede, affirms: “CHF traded mixed Monday supported by broad USD weakness sparked by improving risk sentiment. The improvement in risk sentiment is attributed to report that the UAE central bank is standing behind local and foreign banks in Dubai. (…) The SNB was rumored to have sold CHF on November 26th as the CHF rose to parity versus the USD and a five month high versus the EUR. In addition, SNB's Roth indicated that central banks may need to end stimulus measure soon. His comments would likely undermine SNB intervention efforts.”

ForexLive New York wrap-up; Choppy end to the month

Canadian GDP rises 0.4% in Q3; weaker than expected Chicago PMI rises to 56.1 in November from 54.2 in October Goldman: US banks have raised enough capital to cover two-thirds of losses Trichet: If non-standard measures pose threat to price stability will removed immediately Dubai World seeks to renegotiate $26 bln of its $59 bln in debt Yacht with 5 British crew seized by Iran Stocks turn up at close on Dubai World restructuring news; ends up 0.4%; S&P rises 5.7% in November Gold, oil rally late. Gold ends at $1178; Oil at $77.20 As ever, month-end proved choppy and unpredictable. Flows overshadowed fundamentals for most of the US session with sales of EUR/USD a major feature at the London fixing and for the several hours following the fixing. About 30 prior to the 16:00 Fix, the selling began in earnest and EUR/USD began its slide from the 1.5045 area to a low at 1.4975. Demand was found in that region on three pushes lower and we recovered in afternoon trade as news that Dubai World is seeking to renegotiate about half its debts was taken as a positive by the market. We rebounded toward 1.5020 before stalling. GBP/USD was sold heavily in late London trade, extending GBP weakness that had been in place for much of the session. Chinese buying in the 1.6400/10 slowed the decline but we ultimately dipped to 1.6385 before rebounding to 1.6445 late. AUD/USD perked up late in the session, rising ahead of the RBA meeting and a slightly better risk appetite among early Asian traders who are trading on a December P&L. New Yorkers are trading in November, and keeping a low profile ahead of month-end.AUD ends close to US session highs, now at 0.9155. USD/CAD slipped late as well, with oil and gold showing late strength. We trade at 1.0553 late. USD/JPY rallied to 86.75 before heavy EUR/JPY selling for the 16:00 GMT foxing pushed prices as low as 86.00. We spent the afternoon recovering and end near 86.45. Traders await another barrage of Japanese verbal intervention on Tuesday. Perhaps the government will have its story straight this time...

Wall Street finish in positive; Dollar pulls back

Stocks finished with gains at Wall Street on a last hour rally. The Dow Jones rose 0.34% and the Nasdaq 0.29%. Fears over the Dubai debt eased and the Chicago Purchasing Manager’s index came better-than-expected. Gold rebounded at 1,163 and rose back above 1,175. Greenback pulled back from the highs of the day.

EUR/USD is back above 1.5000 after finding support at 1.4970. The pair trades near the same level it had at the beginning of the day. Greenback was able to recover after falling during the Asian session.

Cable is consolidating losses across the board. Despite rising in the last hours the Pound is heading toward a daily decline. GBP/USD recently rose to 1.6460 as the pair continues to recover from 1.6380 (intra-day low).

The Yen rose during the American session across the board. USD/JPY holds above 86.00. Greenback managed to rise after falling to 85.85 but is still under pressure.

Thursday, November 19, 2009

EUR/USD moves away from the low and consolidates above 1.4900

The Euro is extending its recovery against the Dollar but still trades 0.30% below today’s opening price. EUR/USD is testing level above 1.4920, the next resistance lies at 1.4940 and above at 1.4970 (intra-day high). The pair fell earlier to 1.4840 (intra-day low) but Greenback failed to hold below 1.4900.

Michael J. Malpede, analyst at Easy Forex affirms: “EUR traded lower pressured by a drop in risk appetite as global equity markets decline and in reaction to a warning from a German think tank that Germany may face a double dip recession in late 2010. (…) The technical outlook for the EUR is mixed as the EUR falls below is 1.4900. Expect EUR support at 1.4808 the November 17th low and 1.4740 with resistance at 1.4999 the November 17th high.”

C$ Down But Off Lows As U.S. Dollar Advances

The Canadian dollar ended substantially lower Thursday as the U.S. dollar advanced and stocks, commodities and other risk-sensitive assets sold off.

It managed to recover somewhat from its earlier lows in more settled afternoon trading.

The U.S. dollar was trading at C$1.0633 at 3:43 p.m. EST (2043 GMT), from C$1.0623 at 8:00 a.m. EST (1300 GMT), and from C$1.0563 late Wednesday.

The greenback reached a high at C$1.0690, its highest level since Nov. 9, according to EBS via CQG, before surrendering some of its gains.

Analysts said the Canadian dollar's retreat Thursday was reflective of the broader move away from risky assets and towards the U.S. dollar rather than any specifically Canadian developments.

"Oil is still down $2. Gold's come back, but it's still a little bit softer [and] equities are all in the red," said Jon Gencher, director of foreign exchange sales at BMO Capital Markets in Toronto.

The Canadian dollar's retreat in recent sessions came at the same time as significant declines in its Canadian counterpart, he said.

Although trading has been somewhat volatile of late, the U.S./Canadian dollar pair remains essentially rangebound, Gencher said. "Volumes have been very, very light. [There's a] lack of conviction, a lot of players are on the sidelines," he said.

"Most of the other currencies were weaker today, and it was sort of a down day in some of the commodities, especially earlier in the day," said Aaron Fennell, senior market strategist at Lind-Waldock Canada in Toronto. Some commodities recovered partially in afternoon trading, he added.

"Overall, the market's just seemed to be a little edgy today, and there was some of that flight to the U.S. dollar, flight to quality trade that we've become so familiar with the last few months," Fennell said.

"The U.S. dollar's been really strong against all the major currencies except the yen," said David Pierce, director of GPS Capital Markets in Sault Lake City.

That dollar strength is accompanied by downward pressure on commodities prices, which in turn have a big impact on the Canadian dollar, he said.

Pierce said the U.S./Canadian dollar pair is sitting near a technically significant 12-month resistance line at $1.0662. "If we can push through and close above C$1.0662, I'd expect to see the Canadian dollar to continue to weaken tomorrow towards the C$1.0737 level," he said.

The downside space for the pair is "really wide open" until C$1.0236, Pierce said. "Really, most of the pressure and the trend has been for a stronger Canadian [dollar] against the U.S.," he said.

On a longer-term basis, Pierce expects the Canadian dollar to strengthen unless it breaks through some of the nearby technical levels. His forecast for the year end level for the U.S./Canadian dollar pair is C$1.0400.

"I think, for the balance of the year, we're going to see it in a range trade," said Lind-Waldock's Fennell.

Market players appear inclined to sell the U.S. dollar around the C$1.0640 area and buy it in a broad zone between C$1.0300 and C$1.0200, he said

"Because the speculators are thinking that way, I think it will start to carve out a range. Eventually, it will press the topside of that," although that's unlikely to happen until the New Year, Fennell said.

There are no significant data scheduled for Canada or the U.S. on Friday.

At 6:05 p.m. EST (2305 GMT), Bank of Canada Governor Mark Carney will speak to the Foreign Policy Association in New York on the topic "The Evolution of the International Monetary System."

A copy of his remarks will be released on the bank's website at 5:50 p.m. EST (2250 GMT). Carney will hold a news conference at approximately 7:00 p.m. EST (0000 GMT), the Governor will hold a press conference.

There are no significant Canadian data releases planned for Friday.

Forex: USD/CHF fails to break above 1.0200 and falls below 1.0130

The Dollar lost most of the gains against the Swiss Franc during the American session. USD/CHF peaked at 1.0195 and failed to break above 1.0200. From there the pair pulled down to 1.0125. Currently trades at 1.0128/31, 0.31% above today’s opening price. Despite rising after falling in the last two days, Greenback trades closer to the lows of the day and far from the highs.

The Swiss Franc also recovered against the Euro. EUR/CHF jumped to 1.5145, reaching the highest price in two week but then pulled back to 1.5110, which is located a few pips above the opening price.

Wall Street ends with losses; Dollar consolidates gains

Wall Street finished in the negative side following a slide in European stocks. Crude oil also retreat and fell more than 2.50%. Dollar is consolidating gains but moved away from the highs. The best performer so far is the Yen that is rising across the board.

The Dow Jones lost 0.89% and The Nasdaq lost 1.66% on worries about the economic recovery. The S&P500 ended below 1,100 after falling 1.34%. Crude oil trades below $78 a barrel. Gold did not reach new historic highs but managed to recover from below $1,130 and is back above $1,140.

Dollar is rising across the board expect to the Yen. During the American session Greenback’s rally eased and moved away from the highs. EUR/USD trades above 1.4900 but the pair failed to break above 1.4920. Cable managed to hold above 1.6605. GBP/USD trades at 1.6658/63, 0.50% below today’s opening price. The Yen is consolidating gains across the board. USD/JPY is testing level above 89.00 after falling to 88.60.

AUD/JPY weekly technicals

The market rally stopped at the major 61.8% retracement level which is a good sign for the bears. Nevertheless there is a very strong daily uptrend to be broken before the reversal is confirmed. The daily uptrend comes in around 80.00, and there is more solid support in the form of a daily low and the 100-day MA around 79.50 which will also lend support. A daily close below the latter will confirm my analysis that a reversal is underway.

Dollar and Yen finish with gains on falling stocks

The Dollar finished with gains across the board, falling only to the Yen. Majors are still moving in ranges. Stocks fell worldwide on worries about the economic recovery favoring Greenback and the Yen. Cable continues to weaken and currencies tied to commodities are moving away from multi-month highs.

The analysis team affirms: “The U.S stocks declined by the end of today’s trading session as the worse than expected fundamentals released from the U.S. economy, whereas US Leading Indicators for October plunged to 0.3%; worse than the forecasted reading of 0.4% and the prior reading of 1.0%.”

EUR/USD fell losing part of yesterday’s gains but managed to recover from 1.4840 and finished above 1.4900. GBP/USD fell for the third day in a row and accumulates a decline of more than 150 pips. Cable rebounded at 1.6605 but found resistance at 1.6670. The Pound also weakened against European currencies and continues to pull back after rising sharply on Monday and Tuesday.

The Yen appreciated across the board. Against the Dollar rose to a fresh one-month high. USD/JPY currently is hovering around 89.00, if the Yen manages to stay below it could gain momentum. GBP/JPY tumbled to 147.30 posting a fresh two-week low.

Currencies tied to commodities also fell against the Dollar, particularly during the European session. AUD, CAD and NZD are currently trading at the lowest level in more than a week against Greenback.

The Research Desk comments on the coming session: “Looking ahead to the Asia session, we have New Zealand credit card spending and the Bank of Japan rate decision due up. Both events should elicit little in the way of price action but if global equity marts follow US shares into the depths, look for the US dollar to come back better bid on the follow.”