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Friday, 16 Sep 2011

USD May Fall after TIC Data Friday

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.

EUR/USDGBP/USDUSD/JPYUSD/CHFAUD/USDEUR/GBP
Daily Trenddowndowndownupnono
Weekly Trendnonodowndownupup
Resistance1.45501.620081.000.92001.10800.9080
1.42801.068080.200.8945 1.07600.8880
1.40201.587077.850.88901.03900.8840
Support1.38351.570075.94 0.8545 1.02500.8640
1.36701.53500.82500.99250.8525
1.35001.49600.80000.97000.8460

Economic News

USD - US Dollar Falls as Investment Data in View

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.

EUR - EUR Gains after Global Inflationary Figures

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.

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.

Oil - Oil Sees Uptick after Inventory Report Shows Supply Decrease

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.

Technical News

EUR/USD

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.

GBP/USD

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.

USD/JPY

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.

USD/CHF

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.

The Wild Card

Gold

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.

Current Time: 11/24 11:16 GMT
# Time $€£¥ Event Per. Prev. Fore. Act. Imp.
11/24
14:00EUR+ Belgian NBB Business Climate-6.8-5.3-1
14:45USD+ Flash Services PMI57.157.31
11/25
00:50JPY+ Monetary Policy Meeting Minutes---3
02:00JPY+ BOJ Gov Kuroda Speaks---5
03:00NZD+ Inflation Expectationsq/q2.2%--1
08:00EUR+ German Final GDP q/q0.1%0.1%-1
10:00EUR+ Italian Retail Salesm/m-0.1%0.2%-1
10:05AUD+ RBA Deputy Gov Lowe Speaks---2
10:30GBP+ BBA Mortgage Approvals 39.3K38.5K-3
11:00GBP+ Inflation Report Hearings---5
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