Month: October 2009

Source: ForexYard

The U.S. Unemployment Claims and U.S. Core CPI data are set to drive forex trading today when they are released at 12:30 GMT. If strong economic data continues to be published from the U.S, U.K and Europe today, combined with strong equity performances this may continue to lead to a sell-off of safe haven currencies today, and push investors to higher yielding, riskier currencies as many see the global recession coming to an end. This could also push Crude Oil to the $77 price level.

Economic News

USD – Dollar Falls to a 14-Month Low

The Dollar fell to a fresh 14-month low against most of it major currency pairs yesterday, as solid earnings by JP Morgan Chase, and rising stock and commodity prices stoked optimism for an improving global economy. By yesterday’s close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.4959. The Dollar experienced similar behavior against the GBP and closed at 1.6054.

The Dollar, which has been a safe-haven investment previously, was hit by the sharp rise in profit reported by JP Morgan Chase, as well as forecast-beating earnings from Intel Corp late on Tuesday. These factors all helped brighten the economic outlook, and encouraged investors to move into perceived riskier and higher-yielding currencies.

The greenback also remained under broad selling pressure on expectations that U.S. Interest Rates will stay at very low levels for some time, following comments by Federal Reserve Vice Chairman Donald Kohn on Tuesday. Low rates reduce the attractiveness of U.S. assets and ease demand for the Dollars to buy them.

Looking ahead to today, the two main news events that may have a very large impact on the Dollar and its main currency pairs in today’s trading are the Core CPI and Unemployment Claims at 12:30 GMT. These reports are very important, as they are likely to greatly impact the value of the USD. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow today’s key data publications.

EUR – EUR Rises on Increased Optimism

The EUR rallied against the Dollar yesterday after minutes from the last meeting of the Federal Reserve’s policy-setting panel showed officials expect inflation to remain subdued for some time. The EUR touched a fresh 14-month high versus the Dollar above 1.4950, a fresh session high and it’s highest since August 2008. The European currency finished around 100 pips higher against the JPY to finish yesterday’s trading session at the 133.75 level.

Another leading indicator released yesterday was EUR Industrial Production. European industrial output rose for a fourth month in August, adding to signs the Euro-Zone economy is emerging from the recession. Production in Europe increased 0.9% from July, when it gained 0.2%.

Confidence in the European economic outlook improved to a one-year high last month, and a gauge of Euro-Zone manufacturing and services industries showed a stronger expansion than initially estimated. The survey showed a significant improvement, thereby boosting hopes that the rate of decline in the Euro-Zone economy is now moderating.

Sentiment in the Euro Zone economy has brightened in the past week following better-than-expected news. The EUR is showing signs of resilience even though there was volatility throughout non-EUR crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., European and Japanese economies will affect their positions.

JPY – Yen Loses Ground on All Fronts

The Japanese Yen fell sharply against most of its major currency crosses on Wednesday after the Bank of Japan deferred a decision on when to end support for corporate finance after the government pressed the central bank to consider the economic cost of its retreat from credit markets. By yesterday’s close, the JPY fell against the EUR, pushing the oft-traded currency pair to 133.75. The Japanese Yen experience similar behavior against the GBP and closed at 143.65.

The central bank had been tipped to decide whether to stop corporate bond purchases and other measures used to cushion the shock of the financial crisis. BOJ Governor Masaaki Shirakawa suggested that an exit from the corporate finance market was a foregone conclusion and that the debate was primarily about timing. The decision on support for corporate finance could be taken at the next meeting at the end of October.

Crude Oil – Crude Oil Rises Above $75 a Barrel

Oil prices rose yesterday above $75 a barrel for the first time in a year because of a weak Dollar and the belief that the upcoming holiday shopping season will bring more traffic to the roads. Also helping to lift oil prices was the Dow Jones Industrials Average, which hit a new annual high, and pushed past the 10,000 mark for the first time in more than a year.

A plunge in the Dollar lately has convinced many investors to pump money into Crude as a hedge against inflation. Today, traders are advised to the major economic indicators which will be published from the U.S., such as the Crude Oil Inventories at 15:00 GMT. If the USD continues to weaken today, $80 a barrel seems like a very realistic target for the end of the week.

Technical News

EUR/USD

The EUR/USD cross has been experiencing much volatility lately, and currently stands at the 1.4960 level. The chart’s RSI shows that the pair is currently floating in the overbought territory, and a downward correction is imminent. This view is also supported by the MACD of the 4-hour and weekly charts. Entering the pair now before the downward breach occurs may turn out to pay off today.

GBP/USD

The cross is currently recording very bullish behavior in the past 2 days, and there may be room for even further bullishness in this pair today. The Slow Stochastic of the daily chart shows a fresh bearish cross, and that a further upward move for today is imminent. Going long with tight stops may turn out to be a wise choice today, as end-of-week trading nears.

USD/JPY

The USD/JPY cross has become very volatile lately, and currently stands at the 89.37 level. On the one hand, the RSI of the weekly chart shows the pair floating in the overbought territory. On the other hand, the MACD of the daily chart supports a further bullish move for today. Entering the pair when the signals are clearer seems to be the right choice for today’s trading.

USD/CHF

The cross has recently recorded a 3-day losing streak, and there are signs for further volatility for the pair today. The RSI of the daily chart shows the pair sitting in the oversold territory. On the other hand, the RSI of the weekly chart shows that the pair is overbought. It may be a good to enter the pair when the signals are clearer.

The Wild Card – Crude Oil

Crude Oil has been an extremely bullish and attractive commodity for forex traders in the past 2 weeks. The daily chart’s Slow Stochastic shows a fresh bearish cross, signaling that a downward move for today is imminent. The bearish move for today’s trading is also supported by the MACD of the 4-hour chart. Going short with tight stops may turn out to bring big returns for today.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Movers of the Day

Asia-Pacific

Australian Westpac consumer confidence at 1.7%

Japanese Key interest rate left unchanged at 0.1%

New Zealand CPI at 1.3% QoQ versus 0.8% expected

RBA governor speech

Europe

UK Claimant count rate at 5%

UK average earnings excluding bonuses in line with expectations at 1.9%

UK unemployment at 7.9% better than expected

EU industrial production fall –15.4% YoY

Americas

US MBA mortgage applications fall -1.8%

US Import price index at 0.1% MoM

US Retail Sales fall -1.5% less than expected

FOMC Minuets

US Monthly Budget Statement

US API Crude oil inventories fall -172K

The Overall Sentiment

Sentiment was strongly negative mainly driven by optimism fueled by the better than expected US Retail sales but mainly due to better than expected corporate earnings reports which continue to stream in and surprise largely for the better. The Dow was at the centre edging above the 10,000 milestone thus marking a 10 Years flat trend for the index gaining virtually zero for the decade. The Dow ended the day with a 1.47% gain trading at 10,015, The S&P was up 1.75% and in Europe the FTSE advanced 1.98% in response to the positive sentiment  and the UK unemployment figure which is steady at 7.9%.In Frankfurt the DAX  was higher by 2.45% and the Paris the CAC40 rose 2.14%.In the FX arena the broad Dollar selloff continued amid strong risk appetite with the Euro rising to 1.495$ just shy of the 1.5 mark and the CAD at the  1.2 zone with rising bets it is heading for parity  versus the Greenback. The FOMC minuets released later in the day revealed some Fed members were in favor of additional or an expansion of the Mortgage related Quantitative Easing pointing more Dollar printing from the Fed is not yet out of the horizon and a rate hike is even more unlikely. Markets in reaction to the news pushed the Dollar lower as inventors start to asses Dollar depreciation as deeper than anticipated. In the commodities arena Gold continued to hover slightly under the record high trading at the 1060$ zone, Silver continued to confidently move to settle above the 18$ and oil pushed close to 76$ with the 80$ at its aim.

The Day Ahead

The statement before the opening of the trade in Asia-pacific coming from RBA governor Glenn Stevens outlining the Reserve Bank of Australia “should not be timid in raising rates”, is leaving almost no space to doubt rates in Australia will continue to rise, and is expected to affect sentiment for the Aussie Dollar with bets the currency is heading for parity against the Greenback. In addition markets will be fuelled by the positive sentiment a day before and with eyes on the expected earnings releases in the US with market movers such as Citi, Goldman Sachs and Google expected to report.CPI figures from the US and EU are also due with reading expected to be close to zero flat. At Mid day US initial Jobless claims will gather attention as always, with investors expecting a 525K figure trying to price when US unemployment will bottom. The concluding data for the day will be US manufacturing data with NY Empire state manufacturing index and Philadelphia Fed manufacturing survey with investors expecting a slight retreat in manufacturing sentiment. All in all earning releases are expected to lead market trend with markets fluctuating in tandem to surprises for the better or the worst.

Technical Analysis

EUR/JPY

Although the pair has gathered some bullish momentum from around the 129 area and is currently trading around the 134 zone. By examining carefully the fast moving average versus the slow moving average it is evident the pair is in a flat trend with potential downside. The 136-137 resistance should be closely watched as only a break of that area would question the flat trend. However a continuous failure to break the 136-137 resistance will potentially put the 127-129 support to the test.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By Adam Hewison – I’ve had a number of requests from MarketClub members to produce another video on crude oil. Part of that may have come from the crude oil alert that we put on our blog on October 12.

What is interesting about crude oil is the fact that seasonally, it should be going down. However, the market appears to be doing just the opposite. We have written about this before and when something is supposed to happen and the opposite occurs, it’s time to pay attention.

What was also interesting in crude oil is the fact that all of our “Trade Triangles” are all green giving a perfect 100% Chart Analysis score. This indicates that there are some strong trends in place and the odds are that the market should go higher. However, this is not a guarantee and all trades should be managed with stops.

In my new short video, I show some levels that crude oil could potentially go to. I also indicate a key level that many professional traders are watching and if this level is broken, it will certainly be a game changer.

Watch the Crude Oil Video Here…

This video is free to view and there are no registration requirements. The one request we have is that you comment on our blog about your thoughts on crude oil.

All the best,

Adam Hewison

President of INO.com, Inc.
Co-creator of MarketClub.com

By CountingPips.com

The US Dollar has been mixed today in forex trading against the other major currencies as risk appetite has flowed with positive earnings reports out and with gold and oil touching higher levels today.  Intel and JP Morgan Chase & Co. have helped push stock markets higher as both companies beat earnings expectations.  JP Morgan recorded a $3.59 billion profit in the third quarter while Intel’s profits fell by 5 percent in the quarter but was better than the forecasts expected.  The Dow Jones today briefly touched the 10,000 mark for the first time this year before falling lower as the Dow has jumped over 100 points today while the Nasdaq has gained over 20 points and the S&P500 has climbed almost 15 points at time of writing. Crude oil traded over $75 a barrel while gold touched a new all-time high above $1,070.00 per ounce earlier today before retreating lower.

Economic releases today showed that US retail sales, released by the Department of Commerce, declined after a strong showing in August.  Retail sales fell by 1.5 percent last month after a revised increase of 2.2 percent in August.  Despite the decrease, retail sales surpassed market expectations of a 2.1 percent decline for the month. On an annual basis, retail sales dropped by 5.7 percent from the September 2008 level after a 5.8 percent annual decline in August.

Core retail sales, excluding auto sales, rose by 0.5 percent and beat forecasts expecting a 0.2 percent gain following August’s 1.0 percent revised core sales gain. An 11.8 percent drop in sales of automobiles contributed to the lower sales figures.

Out of Japan overnight, the Bank of Japan kept its interest rate unchanged at the 0.10 percent level as widely expected.  The statement with the rate decision expressed optimism about the domestic economy and business sentiment stating that, “Japan’s economy has started to pick up.”

The US dollar has been mixed in forex trading, losing ground to the euro, British pound and Swiss franc while gaining versus the Japanese yen and New Zealand dollar.  The USD is currently trading virtually unchanged versus the Australian and Canadian dollars from the day’s opening exchange rates at 2:01 pm EDT in the U.S. trading session according currency data by Oanda.

EUR/USD Daily Chart – The euro, gaining for the third straight day versus the dollar, is on a path towards the 1.5000 psychological threshold. The euro has gained seven out of the last nine days to reach its highest levels of the year.

The Yen has fallen drastically thus far in today’s trading, due to the decision by the Bank of Japan (BoJ) to not conclude its program of purchasing corporate debt in this morning’s Monetary Policy Meeting. This led to speculation that the decision will likely take place during the next meeting instead.

Analysts stated that today’s unexpected decision was due to the inability of small businesses to get large loans. Also this morning, the 8 policy members voted to keep the Japanese Interest Rate at 0.1%. They said out that the economy is pointing up. However, it seems that rates will be kept at this level throughout 2010.

The Bank of Japan did actually raise the evaluation of Japan’s economy for a second month in a row, due to improvements in corporate sentiment. However, Finance Minister Hiroshisa Fujii was more pessimistic, and noted that the economic situation in Japan is far more drastic than Governor of the Bank of Japan Masaaki Shirakawa suggests.

It should be noted, however, that today’s decision was unexpected as the governors remarks earlier in October sparked expectations that the bank’s decision of purchasing corporate debt would expire at the end of the year.

Shirakawa stated that he made this decision largely due to it being more helpful for the policy board to decide the fortune of credit easing policy altogether. In the meantime, he stated that the BoJ intends to find away to make it easier to help fund smaller businesses.

So far today, the JPY is trading nearly 150 pips lower vs. the British currency at 143.27. It should be noted this behavior is also due to lower than forecast Claimant Count Change figures from Britain. The Yen also made large declines vs. both the USD and EUR today.

To read more interest articles, please visit my blog page on the ForexYard blog. Additionally, if you want to profit from the forex market now, I recommend that you open a trading account as soon as possible.

Source: ForexYard

The U.S. Dollar fell against a basket of currencies to within sight of recent lows on Tuesday as Gold hit a new high and Oil prices strengthened. The USD and commodities are often inversely correlated, with Gold and Oil priced in dollars and seen as an alternative currency and hard asset themselves. Ahead of U.S. corporate earnings figures and speeches from Federal Reserve officials later in the day, currency investors continued to speculate about when the U.S. central bank will tighten its monetary policy, thus putting more pressure on the U.S currency.

Economic News

USD – Dollar Trades near 14-Month Low as Investors Favor Gold

The U.S dollar traded near a 14-month low against the EUR as signs that the global economy is recovering spurred demand for higher-yielding assets. The greenback declined to the highest since August 2008 to $1.4828, down from $1.4786 in late trading.

The USD slumped versus major counterparts on Tuesday as investors favored gold, often viewed as the most stable commodity. With the greenback’s losses softened by a drop in U.S. stocks amid concerns about the strength of the economy’s recovery, analysts have said that traders look to gold as a hedge against inflation and market volatility. Following the enormous bailout packages of 2008-09, inflation has become a real concern. As a result, gold has become largely important as a hedge in today’s market.

Analysts also noted reports about what central banks are doing with their reserves that indicate a shift away from the U.S. currency, confirming a long-standing fear in the market. The U.S dollar may decline further today before a government report forecast to show U.S. consumer prices gained last month, curbing demand for safe-haven assets.

EUR – EUR Hits Record Highs

The EUR rose to nearly $1.49 against the USD, its highest level since August 2008, just before the demise of investment bank Lehman Brothers’ pushed the global banking system to the edge of collapse and sparked a frenzy of Dollar buying by investors eager to dump riskier currencies.

The European currency strengthened on investors’ fear that a weak U.S. labor market and a protracted recovery will keep Interest Rates near zero well into 2010.That makes holding low-yielding U.S. dollars unattractive, and any appeal the greenback has would be dulled further if other major central banks start lifting interest rates as growth picks up.

The British pound was within 1 penny of its lowest level in more than 6 months against the EUR after a business group said the Bank of England should expand asset purchases, and as inflation slowed more than forecast. The currency slid to 94 pence per EUR today, for the first time since March 27, before recouping its losses.

Meanwhile, against the U.S. Dollar, the GBP rebounded from the weakest level since May gaining 0.6% to $1.59. The U.K currency declines may be limited, however, as some indicators show signs that the economy is recovering after the central bank cut its benchmark interest rate to a record low of 0.5% and started buying assets to further depress borrowing costs.

JPY – Yen Gains as Equity Markets Move Lower

The Japanese yen climbed against the EUR and U.S. Dollar as falling producer prices and stocks in Japan boosted demand for the nation’s currency as a refuge. The Yen climbed to 132.85 per EUR from 133.26 yesterday. Japan’s currency strengthened to 89.36 to the Dollar from 89.71.

Japan’s producer prices fell for a 9th consecutive month as oil traded lower than last year’s levels and demand for materials waned. The costs companies pay for energy and unfinished goods declined 7.9% in September from a year earlier after sliding a record 8.5%, the Bank of Japan said today. The Yen’s 11% gain against the U.S. Dollar in the past 6 months has also contributed to price declines by making imports cheaper.

The government will cut prices of the grain sold to domestic flour millers by the most in at least 39 years as import costs dropped on a stronger currency and a slump in international prices, the Japanese Ministry of Agriculture, Forestry and Fisheries said this month.

Crude Oil – Oil Reaches towards $75 on OPEC Demand Forecast

Crude Oil prices rose for a 5th consecutive day, trading near $75 a barrel, after the Organization of Petroleum Exporting Countries (OPEC) increased its world energy demand forecast, and the weaker Dollar boosted the appeal of commodities. Oil gained 1.2% yesterday as OPEC raised its 2010 global oil-consumption estimate on expansion in emerging economies.

Also helping Crude move higher, the U.S. Dollar fell to the lowest level in 14 months, lifting dollar-denominated commodity prices. Analysts said that in case the equity markets continue to rise and the U.S. Dollar softens further, it cannot be ruled out that Oil prices will attempt to break the annual high of $75 a barrel in the next few days.

Technical News

EUR/USD

The price of this pair appears to have just entered the over-bought territory on the daily and 4-hour charts’ RSI, suggesting downward pressure. The fresh bearish cross on the hourly chart may indicate that the move is more immediate. If this downward correction can breach the bullish channel of this pair, then going short will be a very wise strategy.

GBP/USD

It looks as if there are fresh bearish crosses on the hourly and 4-hour Slow Stochastic indicators, suggesting an imminent downward correction for this pair. As the price is currently cascading downward out of the over-bought territory on the hourly RSI, the downward notion appears to be justified. Going short with tight stops could be a smart move today.

USD/JPY

The price has turned upward and begun to exit the over-sold territory on both the hourly and 4-hour RSI, suggesting an upward trend reversal is taking place. The fresh bullish cross on the hourly Slow Stochastic supports this notion. Going long appears to be today’s preferable strategy.

USD/CHF

It seems like there are brand new bullish crosses on the hourly Slow Stochastic and MACD, suggesting that an upward correction is overdue. With the price just entering the over-sold territory on the 4-hour RSI, the upward pressure appears to be mounting. Going long on this pair could be today’s best choice.

The Wild Card – Crude Oil

With upward corrections due for the USD, a correlating downward correction is also building up for the price of Crude Oil. There are bearish crosses on the hourly and daily Slow Stochastic, the price is floating in the over-bought territory on the hourly, 4-hour, and daily RSI, and the hourly MACD has started tilting downwards. Once the downward correction begins, which should happen any minute now, forex traders will have an excellent opportunity to enter the price swing at this year’s peak price level.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

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By Fast Brokers – Gold is trading off fresh 2009 highs as the Dollar logs gains against the Euro and Aussie.  However, this is after the EUR/USD popped past our key 3rd tier downtrend line and September highs.  While a retracement beneath our 3rd tier downtrend line is possible, today’s movement in the EUR/USD could spell accelerated gains in the near future.  The final obstacle the EUR/USD must overcome is its highly psychological 1.50 level.  The reason we speak of the EUR/USD in relation to gold is because the precious metal has achieved its historic breakout without full cooperation from the Euro.  The EUR/USD has been tightly correlated with gold throughout the year, implying gold’s accomplishment overcame quite a few obstacles of its own.  Therefore, as we mentioned previously, a topside breakout in the EUR/USD could fuel further gains in gold.  As a result, we feel a pressing need to highlight any noteworthy developments regarding the EUR/USD’s topside potential.   Gold hasn’t given evidence of creating a lasting top since we have no historical reference to work with.  Hence, gold’s uptrend is alive and boundless until we are able to initiate some credible downtrend lines.

Meanwhile, investors should eye near-term performances of both the AUD/USD and EUR/USD since gold should be positively correlated with these two major Dollar crosses.  Furthermore, upcoming Q3 earnings and U.S. econ data should impact the FX markets, meaning gold will be influenced as well.  Outperformance of earnings and data implies gains in U.S. equities and consequently serve as positive catalysts for gold’s uptrend, and vice versa.  Technically speaking, it’s difficult to place topside technicals on gold other than the psychological $1075/oz and $1100/oz levels.  As for the downside, the precious metal has developed a few technical cushions, including our multiple uptrend lines along with 10/13, 10/10, and 10/7 lows.  Additionally, the psychological $1050/oz level should serve as a technical support.

Present Price: $1057.40/oz

Resistances: $1058.54/oz, $1061.40/oz, $1068.30/oz

Supports: $1054.82/oz, $1052.80/oz, $1050.67/oz, $1048.60/oz, $1045.23/oz, $1042.96/oz

Psychological: $1050/oz, $1075/oz, $1100/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD has broken through our 3rd tier downtrend line and consequently September highs.  Though the currency pair is trading off of intraday highs, today’s move will likely prove to be an important step for the beginning of a new leg up.  Our 3rd tier is the final foreseeable downtrend line for the near future.  Therefore, barring a large immediate reversal, the EUR/USD may have finally broken loose of its top-end constraints.  Today’s positive movement comes despite weaker than expected ZEW Consumer Sentiment data.  The ZEW numbers are a noticeable setback concerning the future of the economic recovery.  Today’s data reflects the spotted cool down appearing in econ releases around the globe.  The EUR/USD’s strength in light of today’s news contradicts rationality and reinforces the inherently negative investor sentiment surrounding the U.S. Dollar.

Despite today’s topside progress the EUR/USD still has a bit of a rough patch to deal with between present price and the highly psychological 1.50 level before immediate-term gains can truly accelerate.  Meanwhile, the EUR/USD’s near-term fate likely rests upon the shoulders of 3rd quarter earnings results and important U.S. econ data over the next two days, including Retail Sales and Core CPI.  If U.S. earnings and econ data both top expectations then the EUR/USD may receive the boost it needs to top 1.50.  On the other hand, any significant setbacks could undermine today’s progress and cap near-term gains.

As we mentioned previously, the EUR/USD’s pop past our 3rd tier downtrend line and September highs sends a bullish signal.  Although 1.50 wouldn’t be a cakewalk, recent breakouts in gold and the Aussie leave the Euro with quite a bit of room to make up.  As for the downside, the EUR/USD has plenty of cushions, beginning with our fresh 1st tier uptrend line and ending with our 4th tier uptrend line and weekly lows (10/13, 10/12, 10/7, 10/5).  As for the topside, the EUR/USD faces technical barriers in the form of 8/21/08 and 8/13/08 highs along with the psychological 1.50 level.  The EU will release Industrial Production tomorrow, yet the EUR/USD’s upcoming movements will likely depend on the performance of the U.S.

Present Price: 1.4858

Resistances: 1.4881, 1.4905, 1.4946, 1.4981, 1.5013, 1.5052

Supports: 1.4842, 1.4823, 1.4794, 1.4769, 1.4743, 1.4719

Psychological: September Highs, 1.50

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is recovering from intraday losses after experiencing a key pullback since late Friday.  The GBP/USD sank below our important 1st tier uptrend line and September lows, setting itself up for another leg down over the near-term.  Ironically, the EUR/USD eclipsed its September highs today, signifying the contrasting paths of the Euro and Pound.  In fact, the EUR/GBP has been climbing much closer to the key parity level.  However, the Pound’s present strength is not surprising, and marks the over-extension of the Aussie and gold.  We notice that the S&P futures are trading soft while investors snap up oversold 30 Year T-Bond futures.  The behavior of these various investment vehicles supports today’s pop in the Pound.  What doesn’t support today’s pop is the weaker than expected CPI growth.  Today’s disappointing CPI release couples with Friday’s discouraging PPI number, as opposed to the previous release of the two pricing data points when CPI outperformed expectations.  Therefore, corporate revenue should be under added strain, leaving the door open for the BoE to add funds to its QE program.  At the very least, current pricing data supports the BoE’s dovish stance and encourages the central bank to maintain its loose monetary policy for the time being.  This spells bad news the Pound and gives us little reason to alter our negative outlook on the Cable trend-wise.

Britain will keep the data train rolling tomorrow by releasing important CCC numbers.  The CCC has been relatively flat over the last few months.  Therefore, any dramatic shift to either side would most likely have a large impact on the Pound.  While the medium-term trend of the CCC has been headed south, stagnation over the past quarter could represent a trough in the pattern.  Therefore, we expect the CCC may register a larger than anticipated increase tomorrow.  Such an occurrence would reinforce the significance of the Cable’s decline below our key 1st tier uptrend line.  Despite the weight of tomorrow’s CCC release, the GBP/USD’s present fate likely relies upon the performance of upcoming U.S. earnings and econ data flows.  Outperformance of each reinforces the Cable’s negative correlation with the EUR/USD, and encourages investors to favor the Dollar over the Pound due to the BoE’s clear dovish policy stance.

Technically speaking, our multiple downtrend lines and the highly psychological 1.60 area serve as topside barriers.  As for the downside, there’s quite a bit of distance between present price and our next uptrend line.  Furthermore, a dip beneath 06/2008 lows sets the stage for a more protracted pullback towards 05/2008 levels and the psychological 1.55/1.50 trading zones.  We maintain our negative outlook on the Pound due to the aforementioned analysis unless either Q3 earnings disappoint and/or the BoE alters its monetary stance.

Present Price: 1.5808

Resistances: 1.5825, 1.5847, 1.5869, 1.5907, 1.5935, 1.5981

Supports: 1.5778. 1.5760, 1.5728, 1.5708, 1.5671, 1.5635

Psychological: 1.55, 1.50

Market Commentary provided by Fast Brokers.

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