By GCI Forex Research
Fundamental Outlook at 0800 GMT (EDT + 0400)
USD
Markets have been rangebound in Asian hours. EURUSD traded 1.3207-1.3236 and USDJPY traded 84.14-84.34. Yesterday, equities closed lower, with the S&P 500 down by 0.51%. Ahead today, investors’ focus will shift to the release of US jobless claims and the Philly Fed business index. In addition the EU summit will start today. However we expect no major surprises related to the summit. Last but not least the SNB will decide on rates today, which should also be a non-event. Altogether our team expect sthe US dollar to remain supported until the end of the year and prefer to sell rallies in EURUSD.
EUR
According to the Portuguese Banking Association the domestic banking sector is solid and well capitalized and liquidity the only weakness. It was also said that there will not be any financing problems in 2011 and that the likelihood of a bailout is now lower than two months ago.
Eurogroup Chairman Juncker said that there is no reason for Italy to be penalized by the market. He also said the idea of a Euro Bond would be a systemic response to Eurozone problems and that a proposal will go ahead. However Germany has not changed its stance with respect to the creation of a common bond.
German Chancellor Merkel once again reminded investors that the private sector and the IMF will be involved in any Eurozone bailout in the future. Such comments are not new, but investors remain under a cloud of uncertainty as to whether restructuring will be needed or not before 2013.
Eurozone PMIs are due and should give an indication on how Eurozone GDP is shaping up, but sovereign concerns will remain the focus.
CHF
The SNB rate announcement is due today. We expect no change from the SNB and no major surprise from the accompanying statement. The franc will remain driven by external developments such as Eurozone woes and broader risk sentiment.
TECHNICAL OUTLOOK
EURUSD 1.3305/1.3292 support.
EURUSD NEUTRAL Pullback from 1.3499 has support at 1.3305/1.3292.
USDJPY BULLISH Focus is on 84.35/41 with little resistance above this till 85.40. Support at 82.84.
GBPUSD NEUTRAL Initial resistance at 1.5965, while support lies at 1.5720.
USDCHF BEARISH Violation of 0.9548 would expose 0.9463 key low. Resistance at 0.9726 previous low.
AUDUSD BULLISH Next resistance above 1.0031 lies at 1.0091. Support at 0.9833.
USDCAD BEARISH Focus on 0.9978/31 support zone; initial resistance defined at 1.0141.
EURCHF BEARISH Momentum is negative; the cross eyes 1.2766. Resistance at 1.3004.
EURGBP NEUTRAL Recovery eyes 0.8528, with initial support defined at 0.8433.
EURJPY NEUTRAL 113.67 and 110.49 mark the near-term directional triggers.
Forex Daily Market Commentary provided by GCI Financial Ltd.
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