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Friday, 9 Sep 2011

EUR Declines on ECB Rate Statements

The euro was indeed seen dropping against the USD following the European Central Bank's (ECB) latest announcement regarding interest rates, known as the Minimum Bid Rate. 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.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trendnonodownnonono
Weekly Trendnoupdownupupup
Resistance1.45501.645081.250.93401.10800.9410
1.42801.620080.250.89501.07600.9080
1.39901.598077.700.87651.06600.8880
Support1.38351.591075.940.85501.04800.8660
1.36601.57800.82401.03150.8600
1.34301.56500.77100.99250.8560

Economic News

CAD - Canadian Dollar Falls as Investors Seek Safety

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 interest rates. A weaker-than-forecast uptick in US private sector employment Wednesday 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 this week, 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 employment change data and unemployment rate. Should today's news foreshadow a modest growth in the Canadian economy's employment sector, 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.

EUR - EUR Sinks after Interest Rate Announcement

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 bearish in late trading as shifts away from the greenback, due to uncertainty about global employment levels, caused several market participants to opt for other stores of value. The pair was last seen holding near 1.3970 in late trading Thursday.

The euro was indeed seen dropping against the USD following the European Central Bank's (ECB) latest announcement regarding interest rates, known as the Minimum Bid Rate. 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.

With nearly every analyst anticipating yesterday's move, and the accompanied dovish statement by Trichet, the market followed suit with expectations and witnessed a quick plummet in EUR values. Several reports have begun to assume a possible rate reduction as early as mid-2012 by the ECB, though future economic growth will factor heavily in such a decision. For now, traders appear to be looking to a weakening of the EUR through the remainder of the week.

JPY - Japanese Yen Bearish as Data Reveals Contraction

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 - Oil Sees Uptick after Inventory Report Shows Supply Decrease

Crude Oil prices found support Thursday, moving towards $89 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.

Technical News

EUR/USD

Last week's candlestick highlights two key points; the inability of the EUR to maintain a bid above the 1.4500 level and the formation of an outside day down candlestick pattern on the close. As such the key support levels for the pair are found the 1.4100 level where the August 11th low coincides with the 61% Fib retracement from the July to August move. The other key level is the rising trend line from the May 2010 low which comes into play at 1.3975. To the upside resistance is found at this week's opening gap of 1.4180 followed by 1.4325 and last week's high of 1.4550.

GBP/USD

The GBP/USD has the monthly, weekly, and daily stochastics falling while the price is encroaching upon significant support where the 200-day moving average and the August 11th low coincide at 1.6110. A break here could open the door to 1.6000 with additional support way down at 1.5780. To the upside the high from last Thursday/Friday at 1.6250 stands as initial resistance followed by 1.6450 and 1.6615.

USD/JPY

The JPY has formed a base at 76.40 while failing to move below the all-time low of 75.94 set earlier in August. Weekly and daily stochastics have turned up but monthly stochastics remain firmly to the downside. Initial resistance is found at 77.70 followed by the post intervention high of 80.20 and finally at 81.30 off of the 2007 falling trend line.

USD/CHF

The appreciation of the pair failed at the 0.8275 resistance and the long term downtrend continued with a vengeance, falling as low as 0.7710 before recovering slightly. There are two levels that stand out from the August move higher; 0.7650 at the 50% Fibonacci retracement and the 0.7510 at the 61% retracement.

The Wild Card

EUR/GBP

With yesterday's bearish engulfing candlestick it appears the pair has failed to complete its head and shoulders bottom reversal chart pattern. Forex traders may eye the 0.8660 level from the rising support line off of the August lows. A break here would take the pair out of its 1.5 month consolidation pattern. Additional support to the downside is found at the May low of 0.8610 as well as the pair's rising trend line from the June 2010 low which comes in at 0.8550. Resistance is located at the July/August high of 0.8880.

Current Time: 10/31 03:14 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
10/31
06:00JPY+ Housing Startsy/y-12.5%-17.1%-1
07:00JPY+ BoJ Outlook Report---3
08:00EUR+ German Retail Salesm/m2.5%-0.8%-3
08:45EUR+ French Consumer Spending m/m0.7%-0.3%-3
10:00EUR+ Italian Monthly Unemployment Rate12.3%12.4%-1
11:00EUR+ CPI Flash Estimate y/y0.3%0.4%-5
11:00EUR+ Unemployment Rate11.5%11.5%-3
11:00EUR+ Italian Prelim CPI m/m-0.3%-0.1%-1
13:30CAD+ GDPm/m0.0%0.0%-5
13:30USD+ Core PCE Price Index m/m0.1%0.1%-3
13:30USD+ Employment Cost Index m/m0.7%0.6%-3
13:30USD+ Personal Spending m/m0.5%0.2%-3
13:30USD+ Personal Income m/m0.3%0.3%-1
14:45USD+ Chicago PMI60.560.2-3
14:55USD+ Revised UoM Consumer Sentiment86.486.4-3
14:55USD+ Revised UoM Inflation Expectations2.8%--1
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