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Friday, 21 Oct 2011

British Economy Posting Strong Gains this Week

The Great Britain pound (GBP) is expected to be seen trading with mildly bullish results this week after reports on the country's retail sales and inflation revealed a solid uptick this past month. Against the US dollar (USD) the pound has been trending strongly upwards as the greenback's bearish moves help other currencies rise, particularly in Europe.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendnodownnoupnono
Weekly Trenddowndowndownupnoup
Resistance1.41751.645080.250.97751.10800.9080
1.39701.610077.850.93101.07200.8880
1.39151.585077.500.89701.03200.8795
Support1.36501.563076.300.86301.01100.8685
1.34401.532575.940.85500.99200.8530
1.31451.52700.82400.93900.8285

Economic News

CAD - Canadian Dollar Falls ahead of CPI Data

The Canadian dollar (CAD) was seen moving lightly bearish late Thursday as investors fled the higher yielding assets from speculation on a market downturn following recent releases on manufacturing. A worse-than-forecast uptick in US unemployment claims this week added to risk sensitivity for many investors, leading some to await today's news before entering more strongly.

The Bank of Canada (BOC) also held rates steady in its latest decision, along with every other major economy announcing a rate decision, but talk was slightly more optimistic in the northern giant's economy than elsewhere. The downtick seen in the Loonie was significantly milder than in other currencies. This may be partially due to the CAD's disconnect 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 Canadian publication of its CPI and Core CPI data. Should today's news foreshadow a modest growth in the Canadian economy's consumer inflation, 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 support the CAD in short-term trading.

GBP - GBP Rising on Retail Sales and Inflationary Growth

The Great Britain pound (GBP) is expected to be seen trading with mildly bullish results this week after reports on the country's retail sales and inflation revealed a solid uptick this past month. Against the US dollar (USD) the pound has been trending strongly upwards as the greenback's bearish moves help other currencies rise, particularly in Europe.

A mildly pessimistic sentiment towards investing in the euro at the moment has many investors on edge when considering regional investments. An embattled euro zone is sending financial ripples through its neighbors and some are concerned it could pull growth down across the entire continent. With yesterday's retail sales data out of Britain, this doesn't seem to be the case, at least for the island economy north of Western Europe. Inflationary data also seemed to support this solid growth with consumer prices growing at a healthy rate in the UK.

Sentiment across the region may have turned negative, with many analysts and economists expecting moves towards safety by traders this week, but the GBP could see a solid weathering of this financial storm so long as data remains bullish. Great Britain appears positioned for a relatively better quarter than its southerly neighbors. The pound could see some bullish movement at the end of this week as a result of this overall sentiment.

AUD - Australian Economy Dipping Mildly Below Expectations

The Australian dollar (AUD) is expected to be pushed down a bit at the close of this week as market reports showed mild hesitation across the boards. Piling atop recent reports on Australia's slowly expanding housing sector, recent publications of Australian consumer and business confidence is starting to show a somewhat disturbing contraction striking several sectors of Australia's economy, as well as its psyche.

Expectations for these recent reports have been for modest growth, and in some instance, at best, zero movement. The week's reporting has so far led many investors to pull away from the Australian dollar (AUD) in recent trading, but many are expecting a rebound. National data on housing and employment has also driven many investors away from the once-burgeoning AUD. This data, combined with dismal housing starts figures and building approvals reports, has so far dragged the Aussie lower and looks to continue doing so this week.

Oil - Crude Oil Sees Downtick in Inventory Growth

Crude Oil prices gained mild support Thursday as sentiment appeared to favor an upward turn brought about by a strong downtick in US stockpiles. The weekly report revealed yesterday that the US has lost roughly 4.7 million barrels from its reserves. This news has so far countered the notion of a sinking price of oil brought about by higher USD values and pushed oil into a bullish posture from supply shortfall speculations.

An expected dip in oil values due to this week's risk sensitive environment, which saw the greenback climbing sharply, has so far not affected the price of physical assets in any clearly visible way. The stockpile report out Wednesday surprised many investors who had priced in a far milder decline in reserves. With this sentiment grabbing hold among many traders, oil prices could see resurgence above $90 a barrel in the near future.

Technical News

EUR/USD

The pair has traded within a wide 8 cent range since the beginning of the month and could continue its rebound. Initial resistance for the EUR/USD is found at the weekly high which coincides with the 50-day moving average at 1.3910 and a retracement target at 1.4015. A move above here would signal more than just a correction in the downtrend. The previously broken trend line from May 2010 beckons as resistance at 1.4175. Should any downside price action be seen in the EUR/USD pair then the 20-day moving average could come into play at 1.3550.

GBP/USD

Cable has received a significant bounce after the downtrend failed to follow through below the 1.5300-1.5270 range. Initial resistance can be found from last week's high of 1.5850 with scope to the 1.6000-1.6100 range. Support is located at Tuesday's low of 1.5630 followed by the September low of 1.5325.

USD/JPY

The range trading for the USD/JPY continues with the pair held in check between the levels of 77.50 and 76.30. A move higher would likely find willing sellers at the September high of 77.85 while a break here could test the post intervention high of 80.25.

USD/CHF

The USD/CHF is encroaching on its rising trend line from the August and September lows which comes in at 0.8900. A bounce here could retest the October high of 0.9310 while a break of the trend may have scope to the 0.8550 support.

The Wild Card

EUR/JPY

The EUR/JPY is finding support, albeit weak support at 104.75. Forex traders should note that a break here and the charts lack support levels until the October low of 101.06. To the upside the EUR/JPY has resistance at 107.65 and 109.00.

Current Time: 12/22 11:01 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
12/22
15:00EUR+ Consumer Confidence-12-11-1
15:00USD+ Existing Home Sales5.26M5.21M-3
21:45NZD+ Trade Balance-908M-550M-5
12/23
JPY+ Bank Holiday---1
07:45EUR+ French Consumer Spending m/m-0.9%0.2%-3
09:00EUR+ Italian Retail Salesm/m-0.1%0.2%-1
09:30GBP+ Current Account-23.1B-21.1B-5
09:30GBP+ BBA Mortgage Approvals 37.1K37.3K-3
09:30GBP+ Final GDP q/q0.7%0.7%-3
09:30GBP+ Index of Services 3m/3m0.8%0.7%-1
09:30GBP+ Revised Business Investment q/q-0.7%-0.7%-1
13:30CAD+ GDPm/m0.4%0.1%-5
13:30USD+ Core Durable Goods Orders m/m-1.1%1.1%-5
13:30USD+ Final GDP q/q3.9%4.3%-5
13:30USD+ Durable Goods Orders m/m0.3%3.0%-3
13:30USD+ Final GDP Price Indexq/q1.4%1.4%-1
14:00EUR+ Belgian NBB Business Climate-6.1-5.8-1
14:00USD+ HPI m/m0.0%0.3%-1
14:55USD+ Revised UoM Consumer Sentiment93.893.5-3
14:55USD+ Revised UoM Inflation Expectations2.9%--1
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