Europe will dominate the headlines

Home » Forex 14 November 2011

Europe is likely to dominate the headlines once again this week as traders watch political developments in Italy and Greece. The expectation is that national governments will be fully operational in both countries over the coming days so markets will be looking for progress on fiscal initiatives and economic reforms. There are new PMs in place in both countries now, with the Italian lower house of parliament giving its final approval to a package of economic measures over the weekend. Sentiment was also boosted overnight by the news that the Japanese economy grew at an annualised rate of 6.0% in Q3.

The latest developments are helping the euro hold above the $1.37 level versus the USD but markets are likely to be cautious about pushing it higher, given that there is still much uncertainty about the sovereign debt situation. Markets will also be watching to see if the ECB continues to support the Italian bond market. The ECB also holds its monthly non-policy meeting on Thursday. This normally confines itself to the discussion of technical issues but in light of the current uncertain environment and downside risks to growth it is probably worth watching, particularly after last Friday’s comments from the ECB’s Nowotny about

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Sterling upside limited following Inflation report

Home » Forex 17 November 2011

After falling to fresh one month lows of $1.3423, the euro has recouped some of the losses seen versus the dollar and yen yesterday with players reported to be taking profits on recent moves. However, as the threat of contagion in the euro zone continues to build many are concerned at how long the single currency can remain resilient to the region’s sovereign debt problems. Though the problems may not be confined to the euro zone with Fitch yesterday warning of the exposure of US banks to European debt, which it described as

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Euro gains following last weeks sell off

Home » Forex 21 November 2011

The euro held steady around the $1.35 level in early morning trade, helped by a round of short covering going into the weekend. Reports of an EU paper on the issuance of common bonds also seemed to help the mood, as did news of an outright victory for the conservative party in Spanish elections. The dollar also came under some mild pressure with a US congressional super committee expected to make some formal announcement today on its plans for $1.2 trillion in budgetary savings over the next ten years. At the same time though, the focus remains very much on Europe as markets look for further clarity on the sovereign debt issue. As well as sovereign risk issues, the euro faces some key data releases this week. On Wednesday, November’s flash PMIs are due for release and expected to fall from already weak levels. Other data in the eurozone include a number of key business and consumer confidence and activity reports, including the closely watched German Ifo business climate index for November.

Meanwhile, in the US the main focus of attention will most likely be tomorrow’s release of the minutes of the last FOMC meeting, which took place at the beginning of the month. Recent US data have been reasonably positive but the outlook remains one of a prolonged period of subtrend growth. This is likely to be reflected in the tone of the minutes, amid ongoing speculation that the Fed may yet provide further quantitative easing if recent underlying weakness in the economy proves persistent. In terms of sterling, which has started the week at $1.575 versus the dollar, markets will be looking to Wednesday’s release of the minutes of the November Bank of England’s policy meeting for some direction, watching the tone of discussions to see if any MPC members are leaning towards voting for further quantitative easing.

Sending money abroad? Converting currency?

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Euro under pressure as bond yields spread

Home » Forex 24 November 2011

The euro fell sharply yesterday and overnight on the back of poor debt auction results from Germany, as well as talk that the French-Belgian bailout deal for Dexia bank is not viable under its original terms. France may have to carry a bigger share of the costs, putting even further pressure on its credit rating. Meanwhile, Germany was auctioning

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Euro holds modest gains as finance ministers meet

Home » Forex 29 November 2011

The euro is holding on modest gains seen versus the dollar and yen overnight, with optimism that Europe could be finally moving towards comprehensive solutions to its debt crisis leading to a round of short covering. Traders are now focusing on a two day meeting of European finance ministers, which starts later today, to see if the group will provide any further details on plans to beef up the fire power of the regions bailout fund, the EFSF. At summit meetings in late October it was decided to leverage the

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FOCUS ON EU SUMMIT AND ECB MEETING

Home » Forex 5 December 2011

As the focus remains on trying to find a comprehensive solution to Europe’s sovereign debt crisis tensions are likely to be running high again this week in the run up to Thursday’s ECB meeting and Friday’s EU Summit. The Summit is expected to put forward proposals for EU treaty changes allowing for greater fiscal union in the euro zone, perceived by many as a crucial part of the solution to the current crisis. The euro was modestly higher overnight, with market sentiment described as guarded following the news of fresh austerity measures in Italy.

With markets so short the euro, there is likely to be some short covering on any good news that comes out of Europe over the coming days. Data released over the weekend showed that by the end of last week, speculators had their largest net short position in 18 months last week. As well as the EU Summit, markets will also be watching Thursday’s ECB policy meeting, with the central bank widely expected to cut interest rates for the second consecutive month. The post meeting press conference will be watched carefully as markets look for signs of a softening in tone from the central bank with regards to taking an increased role in the sovereign debt crisis. The ECB is also due to publish its latest staff quarterly economic forecasts.

The first part of the Irish budget package for 2012 will be released today, with spending measures being presented by the Minister for Expenditure and Public Sector Reform Brendan Howlin at 2.30pm this afternoon. Meanwhile, data released this morning showed that the Irish services PMI rose again in November, moving to 52.7 from 51.4 in October. This marks the eleventh month in a row that activity in the sector has increased with last months jump in the new business sub index to 52.6 from 49.7 suggesting further strength ahead.

Sending money abroad? Converting currency?

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Forex Technical Update

EUR/USD: EUR is currently trading at 1.3186 levels. Euro collapsed drastically as Fitch joined Moody’s Investors Service in issuing warning that Euro zone may face lower credit ratings, citing the reason that policymakers as having failed to produce decisive measures to end the ongoing crisis. Support is seen at around 1.3000 levels and resistance is seen at around 1.3323 levels. EUR/INR is at 70.28 levels. EUR/INR is likely to trade in the range of 70.00 and 70.60 levels for today. Short Term: Bearish Medium Term Bearish Target 1.30. Exporters can look at covers at 71 levels.

GBP/USD: GBP is currently trading at 1.5605 levels. Risk aversion in the market made the cable weak vs. the US dollar and the cable rallied very strongly vs. the EURO on the back of continuous negative news emerging from the Euro zone. Looking ahead CPI y/y data is expected weak. Support is seen at around 1.5500 levels and resistance is seen at 1.5746 levels (55 days daily EMA). GBP/INR is at 83.16. GBP/INR is likely to trade in the range of 83.00 and 83.50 levels today. GBP/INR may not fall much due to weakening rupee. Maintain short term Bearish and Medium Term Bearish. Target 1.5500 again.

USD/JPY: Yen is currently trading at 77.87 levels. Tertiary Industry Activity m/m data came out better then expected this morning. Support is seen at 77.57 levels (21 and 100 days daily EMA) while resistance is seen at around 78.03 levels. Outlook: Short Term slight Bullish and Medium Term: Maintain bearish for the pair. Next target 80

AUD/USD: The commodity currency is currently trading at 1.0070 levels. The commodity currency is trading weak vs. the greenback on the back of risk aversion in the market and weaker Housing Starts q/q data this morning. Support is seen at around 1.0000 levels and resistance is seen at 1.0213 levels (100 days daily EMA). Exporters can cover at round 1.0300 levels and Importers can cover below parity levels. Short Term: Bearish Medium Term: Bearish. Target: 0.9700

Oil: Oil is currently trading at 97.97 levels. Oil is trading in red on concerns that Euro zone will not be able to tame it massive debt crisis. Support is seen at 95.47 levels (55 days daily EMA) while resistance is seen at around 101.41 levels. Outlook: Short term bearish and medium term bearish. Target 90-95 levels again. Look at shorts at stiff resistances for medium term.

Gold: Gold is currently trading at 1655 levels. Gold collapsed drastically over night as continuing global weakness made the Investors to buy more US Dollars and to sell the precious metal. Support is seen at around 1650 levels (200 days daily EMA) and resistance is seen at 1693.28 levels (21 days weekly EMA). As suggested earlier stay away from longs until we see significant corrections. Look at Initiating shorts at good resistances. Outlook stays bearish may target 1600-1650 soon. Look at shorts.

Dollar Index: DI is currently trading at 79.57 levels. US Dollar rallied strongly and the investors’ dump the riskier assets after Fitch and Moody’s Investors Service issued warning that Euro zone may face lower credit ratings as the recent EU summit didn’t produced any concrete solution to end the Euro zone crisis. Support is seen at around 79.33 levels and resistance is seen at around 80.00 levels. Short term and Medium Term: Bullish. Target 81.

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India Forex

DISCLAIMER

These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

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