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Source: ForexYard
Yesterday, Standard & Poor’s announced that their downgrading Japan’s credit ranking from AA- to AA, due to the sluggish economy that doesn’t seem to know how to address its sovereign debt of $11 trillion. This was the first time in nine years that S&P has cut Japan’s credit ranking.
The market, of course, had an immediate impact to this turn of events, and the Japanese yen instantly depreciated against all the major currencies, including a 100 pips fall against the U.S. dollar and the euro and the British pound. In the meantime since then, the yen has corrected come of its losses, but the Japanese currency is still trading at relatively low levels. It now seems that any further comment regarding the Japanese debts are likely to create similar responses in the market.
As for today, several significant economic releases are expected from around the globe. Here are the leading two:
• 10:30 GMT, Swiss KOF Economic Barometer
This is an index, which is designed to predict the direction of the economy over the next six months. The expectations are that the index result will be 2.09. However, if the end result will beat expectations, the CHF might strengthen as a result.
• 13:30 GMT, U.S. Advance Gross Domestic Product (GDP)
The GSP measures that change in the total value of all goods and services produced by the economy, and thus considered to be the primary gauge of the economy’s health. If the end result will reach projection to a 3.5% rise, the dollar might see a rising trend against its major currency rivals.
Forex Market Analysis provided by ForexYard.
© 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.
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
Most significant on today’s calendar will be the US publication of its TIC Long-Term Purchases data and consumer confidence data. Should today’s news foreshadow a modest growth in the US investments, an assessment that does, however, seem less likely from data released these past few weeks, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios, which could also drop the USD in short-term trading.
The US dollar (USD) was seen moving lightly bearish late Thursday as investors sought the higher yielding assets from speculation on a minor market uptick following recent releases on inflation. A stronger-than-forecast uptick in US CPI data added to risk appetite for many investors, leading some to await today’s news before entering more strongly.
The downtick seen in the greenback was significantly milder than in other currencies, especially as its safe-haven appeal remains and the economy isn’t out of troubled water just yet. This may be partially due to the USD’s disconnection from some of the market turmoil, but it could also be from some optimistic data emerging from the economy lately.
Most significant on today’s calendar will be the US publication of its TIC Long-Term Purchases data and consumer confidence data. Should today’s news foreshadow a modest growth in the US investments, an assessment that does, however, seem less likely from data released these past few weeks, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios, which could also drop the USD in short-term trading.
The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading bullish in late trading as shifts away from the greenback, due to optimism about global inflation levels, caused several market participants to opt for other stores of value. The pair was last seen holding near 1.3500 in late trading Thursday.
The euro was recently seen dropping sharply against the USD following last week’s announcement regarding interest rates. Stuttering mildly ahead of the decision, there was an atmosphere of EUR avoidance in the market even prior to the statement by ECB President Jean-Claude Trichet. This week, however, the news appears to be favoring the EUR and today may not be much different, especially if the US TIC investment data beats forecasts.
With nearly every analyst failing to anticipate yesterday’s move, the market appeared set for some upheavals in value, with the EUR suddenly resurging and the greenback taking losses. For now, traders appear to be looking to a strengthening of the EUR through the remainder of the week.
The Japanese yen (JPY) was seen consolidating in an ascendant flat formation these past few days, as market reports showed modest declines across the boards. Despite recent reports on Japan’s shrinking housing sector, yesterday’s publication of Japanese bank lending and machinery orders showed a broadening contraction striking several sectors of the island economy.
Expectations for these reports were for modest growth from last month’s reading. The actual figures shrank below forecasts, however, leading to some odd downticks in JPY values amid an environment of risk aversion. National data on housing and manufacturing has somewhat halted the JPY’s ascent as many investors hesitate to move into the once-burgeoning JPY. This data, combined with the recent interventions by the BOJ, has so far caused the yen to weakly move bearish.
Crude Oil prices found support Thursday, moving towards $90 a barrel in late trading as sentiment appeared to shift in favor of a price increase following news that supply in the United States declined by 4 million barrels this week. With supply falling and manufacturing and industry in decline, the balance between supply and demand appear to be reaching agreement as the value of oil seems to be leveling out in recent trading, despite the recent swings in currency values.
As investors seek shelter from recent market uncertainty, the value of crude oil, which was seen holding steady all week, may see additional gains before today’s close. A sudden jump in dollar values due to a sudden return to risk aversion, as was expected following the recent interest rate announcements, could drive many investors into lower investments on physical assets; driving oil prices back downward by the middle of next week.
A sharp decline in the value of pair and EUR/USD has put in serious technical damage when it closed below its long term uptrend from May 2010. Both weekly and monthly stochacstics are falling as the pair undergoes a sharp correction. Support comes in at a range of 1.3400-25 from the February low and the 50% Fibonacci retracement from the bullish move that took the pair from the May 2010 low to the May 2011 high. The 61% retracement at 1.3040 is a significant mile marker while long term players may be focused on the January pivot of 1.2875. To the upside the July low of 1.3835 is the initial resistance, followed by the previously trend line which could prove to be resistive as often occurs with broken trend lines and this level is found at 1.3990.
Three weeks of declines and cable has broken below its long term rising trend line from the May 2010 low. The pivot at 1.5780 is a significant support level which coincides with a 38% Fibonacci retracement from the May 2010 to April 2011 move. Below here the GBP/USD has support at the October lows/early January highs of 1.5650 followed by December pivot at 1.5350. Initial resistance may be found at 1.6080 followed by 1.6375 and the late August high of 1.6450.
The yen has been range bound between its all-time low of 75.94 and 78.85 to the upside. Price action in the crosses has been much more volatile. Daily, weekly, and monthly stochastics are mixed and the next major resistance level is found at the post intervention high of 80.20 followed by the long term trend line from the June 2007 high which comes in at 81.00. A lack of support on the daily chart makes it difficult to predict a downside target but the big round number of 75 stands out.
Last week the pair surged higher by almost 13% on the back of the SNB protective floor at 1.20 for the EUR/CHF. The USD/CHF continues to move higher and is now testing its falling trend line from November 2010 which comes in at 0.8890. This level has additional importance as it coincides with the 68% Fibonacci retracement from the November 2010 high to the August low. Both weekly and monthly stochastics are rising and with a break here the pair could extend its gains to the resistance at 0.8945 from the April 1st high. Support comes in at 0.8545 and 0.8250.
Spot gold prices have broken below the $1,790 support level which has opened the door to the $1,700 support level from the August 25th low. Forex traders should note that the $1,790 level will now likely serve as initial resistance followed by $1,845 and the all-time high of $1,920.
Forex Market Analysis provided by ForexYard.
© 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.
| Tender date | Settlement date | Maturity date |
| 12 October 2011 | 13 October 2011 | 5 January 2012 |
| 9 November 2011 | 10 November 2011 | 2 February 2012 |
| 7 December 2011 | 8 December 2011 | 1 March 2012 |
“These will all take the form of repurchase operations against eligible collateral and will be carried out as fixed rate tender procedures with full allotment. Further information on tender procedures can be found on the ECB’s website.” The move has largely been read as intended to shore up liquidity for European banks and a show of solidarity and cooperation between global central bankers. The European Central Bank is (somewhat reluctantly) becoming an increasingly instrumental institution in ensuring the financial stability of the Eurozone; buying time with its SMP program while the EU leaders implement more permanent solutions to fiscal sustainability and addressing risks in the banking system.
The Reserve Bank of India [RBI] increased its repo rate by 25 basis points to 8.25% from 8.00% and raised the reverse repo rate to 7.25% from 7.00%. The RBI said: “The monetary tightening effected so far by the Reserve Bank has helped in containing inflation and anchoring inflationary expectations, though both remain at levels beyond the Reserve Bank’s comfort zone. As monetary policy operates with a lag, the cumulative impact of policy actions should now be increasingly felt in further moderation in demand and reversal of the inflation trajectory towards the later part of 2011-12. As such, a premature change in the policy stance could harden inflationary expectations, thereby diluting the impact of past policy actions. It is, therefore, imperative to persist with the current anti-inflationary stance. Going forward, the stance will be influenced by signs of downward movement in the inflation trajectory, to which the moderation in demand is expected to contribute, and the implications of global developments.”
The Reserve Bank of India increased the repo rate by a surprise 50 basis points at its previous meeting to 8.00%, having increased 25 basis points in June, and 50 basis points during the May meeting. India’s key inflation measure, the wholesale price index, increased 9.78% in August, compared to 9.22% in July, 9.44% in June, 9.06% in May, 8.66% in April, and 8.98% year on year in March, exceeding the Bank’s previous estimate of 8%. India reported annual GDP growth of 7.7% in the June quarter, compared to 7.8% in the March quarter this year, and 8.3% in the previous quarter.
GBPUSD is facing the resistance of the downtrend line on 4-hour chart, as long as the trend line resistance holds, the rise from 1.5707 is treated as minor consolidation of downtrend, and another fall to 1.5600 is still possible. However, a clear break above the trend line will indicate that a cycle bottom has been formed at 1.5707, then lengthier consolidation of downtrend could be seen.
Sept 15 (Bloomberg) — Steven Saywell, head of foreign-exchange strategy for Europe at BNP Paribas SA, discusses the euro and Swiss franc. He speaks with Owen Thomas on Bloomberg Television’s “Countdown.”
There is a slew of economic data out today for the market to digest. The Labor Department said the consumer price index rose by a seasonally adjusted 0.4% in August, or 0.2% excluding food and energy.
HSBC (HBC) has hiked its gold forecast for 2011, 2012 and 2013. The firm said it now expects gold to hit $1,630 per ounce this year, compared to a prior forecast of $1,590.
