InvestMacro FX

Oil prices received a boost yesterday after Saudi Oil Minister Ali Naimi suggested consuming countries are happy with oil between $70 and $90 a barrel, raising the price ceiling by 10$ from the previous range of $70 – $80.

Oil received an additional boost following the release of better than expected manufacturing data from the U.S and China. Oil has advanced this year despite rising inventories as investors bet demand will increase as global economic substantiates. It appears that prices are heading back to around $85, with further room to appreciate.

One major block in crude’s resurging rally is the outcome of the U.S. Federal Reserve’s policy meeting on Tuesday and Wednesday. It is widely expected that further quantitative easing measures will be announce in order to recharge the lackluster U.S economic recovery. The only question is the size of the second “stimulus”. Oil prices tend to have an inverse relation as oil is denominated in U.S. Dollar and a weak currency makes the commodity cheaper and therefore more attractive to investors. If the scope of the intervention is smaller than expected it is likely the greenback will regain some strength, putting pressure on oil prices.

Tomorrow’s release of U.S inventories is expected to show an increase of 1.7 million barrels last week, after a 5 million barrel jump the previous week. It seems, however, that despite the markets oversupplied, prices remain moderately steady. A bigger than expected increase, none the less, will likely suppress oil prices in the short term, pushing them back to below $82.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar weakened slightly during the Asia session, thanks largely to a surprise policy rate hike from the RBA. EURUSD traded 1.3874-1.3937, USDJPY 80.47-80.76. AUDUSD reached 0.9995, and looks poised for a second run to parity. However, Asian equities failed to make significant headway after US equities closed flat, suggesting investors are largely unwilling to put on fresh risk-seeking positions ahead of this week’s events. Even though investors are mostly focused on the FOMC and labour data later in the week, US manufacturing data lent some support to our economists’ forecast that real growth should pick up to +2.5% in Q4 vs. +2% in Q3, and that the FOMC announces only “QE2-lite” on Wednesday. The manufacturing ISM index jumped above expectations to 56.9 in October from 54.4 in September. Meanwhile, personal income, spending and price data for September were largely as expected. Of note, private wages and salaries managed to increase again in September which is a contributing factor to stronger growth. The US mid-term elections are due today and press reports suggest the Republicans will make strong gains in both the House of Representatives and the Senate, which could be dollar-supportive in the near term should investors expect less fiscal spending as a result.

EUR

For the third week in a row, no bond purchases settled last week under the ECB’s sovereign bond buying program. However, sovereign yields for peripheral issuers are still widening, and Irish 10y yields breached 7% again yesterday, suggesting the ECB may need to reactivate the program in the near future.

Recent sovereign risk concerns have been prompted largely by worries over budget negotiations in Portugal and Ireland. Friday’s decision by the EU Council to force bondholders to share the costs of future sovereign bailouts may have also been a contributing factor.

Final Eurozone and German PMI Manufacturing for October are expected to remain largely unchanged.

JPY

Economics Minister Kaieda said the government should intervene if FX market movements are abrupt, and he warned that the government may not be able to implement part of its stimulus plan until next year as it may be hard to pass the supplementary budget by December.

Kaeida went on to say that he is closely watching the outcome of the FOMC meeting, but that BoJ will make its own decision on monetary policy.

Finance Minister Noda said that FX moves in recent days were one-sided and that he stands ready to take decisive action if needed.

GBP

The PMI for the manufacturing sector rose to 54.9 in October, while a small decrease to 53.0 had been expected. The PMI for the service sector will be published on Wednesday. Contrary to the majority we expect to see a slight rise to 53.0. This would be further confirmation that the British economy is recovering. That means that at the central bank meeting on Thursday the Bank of England will not decide on any further measure of monetary policy easing. But it is still too early to sound the all clear. Even if the most recent publications suggest that an extension of the expansionary monetary policy is unlikely short term we will have to wait and see what effects the government’s budget consolidation measures will have. Should the UK publications disappoint over the coming weeks concerns about additional measures of quantitative easing on the part of the BoE will easily re-emerge. Moreover the BoE’s rhetoric is unlikely to change. Recently its members had increasingly referred to uncertainties regarding the economic outlook. As a result Sterling remains vulnerable to set-backs.

TECHNICAL OUTLOOK

EURUSD BULLISH Look for a break above 1.4159, which would trigger another bullish run towards 1.4373. Support holds at 1.3698

USDJPY BEARISH Outlook is bearish; next big support below 79.75 lies at 77.91. Resistance at 81.41, Monday’s high.

GBPUSD BULLISH Clearance of 1.6107 would expose 1.6276 and 1.6458 next. Support comes in at 1.5878 ahead of 1.5606

USDCHF BEARISH Bounce-off from 0.9463 pushed through resistance at 0.9929 thus exposing 1.0183. Near-term support at 0.9703.

AUDUSD BULLISH Positive momentum pressures 1.0004; a break here would expose 1.0222 measured target. Support at 0.9866 intraday low ahead of 0.9542 reaction low.

USDCAD BEARISH Clearance of 1.0154 puts odds in favor of extension of losses towards 0.9981. Upside capped at 1.0380

EURCHF BULLISH Targets 1.3924 with scope for 1.4041 next. Near-term support at 1.3540

EURGBP BULLISH While support at 0.8636 holds, view pullback as correction. Resistance at 0.8772

EURJPY BULLISH Only a break below 110.66 would hurt the positive tone. Resistance at 113.78 ahead of 115.68

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

The U.S dollar rose on Monday, spurred by strong U.S. and Chinese manufacturing data, as investors awaited mid-term U.S. congressional elections and more monetary easing from the Federal Reserve in the days ahead.

Economic News

USD – Dollar Rises on Positive Manufacturing Data

The U.S dollar rose against most of its major currency pairs on Monday after stronger-than-expected U.S. manufacturing data, though gains were fleeting as markets braced for more monetary easing from the Federal Reserve this week. By yesterday’s close, the USD rose against the EUR, pushing the oft-traded currency pair to 1.3895. The dollar experienced similar behavior against the CHF and closed at 0.9910.

The Fed is likely to announce on Wednesday a fresh round of quantitative easing under which the U.S. central bank would buy bonds and essentially flood the economy with dollars in an attempt to revitalize it. That should push Treasury yields lower and diminish the allure of some U.S. assets, forcing investors to seek higher returns elsewhere.

The dollar has lost 7.5% against major currencies since September in anticipation of Fed easing. Most economists expect the Fed to buy $80 billion to $100 billion in assets per month, with total purchases seen at anywhere from $250 billion to $2 trillion.
Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.

EUR – EUR Falls To Session Low vs. Dollar

The EUR fell to a session low against the dollar on Monday after the dollar strengthened on earlier data showing business activity in the U.S. manufacturing sector came in stronger than expected in October. After yesterday, the 16 nation currency fell sharply against the USD, pushing the oft-traded currency pair to 1.3895.The EUR also saw bearishness against the JPY and closed at 111.90.

The EUR surrendered gains against the U.S. dollar on Monday, falling to session lows, as riskier assets such as U.S. stocks pared gains. Analysts also said investors felt uncomfortable pushing the EUR higher given the huge amount of bearish trades on the dollar, which suggests a near-term recovery in the U.S. currency is on the horizon.

There will be only one data release from Euro-zone today as the Manufacturing PMI will be announced during early trading. This indicator tends to have a relatively small impact on the market. A rising trend will have a positive effect on the nation’s currency. In addition, traders should pay close attention to the response of equity market to determine how to continue with EUR positions. Investors should pay close attention to the news and place their transaction accordingly with the developments throughout the day.

JPY – Yen Gains against Most Major Currency Counterparts

The Japanese Yen experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The Yen extended gains versus the EUR on Monday, to trade at about 111.90 amid a broad sell-off in the EUR. The JPY also saw bullishness against the GBP and closed at 129.20.

The JPY’s trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

Crude Oil – Crude Oil Rises above $83 a Barrel

Crude oil prices ended nearly 2% higher on Monday, boosted by comments from the Saudi Arabian oil minister that an oil price between $70 and $90 a barrel was comfortable for consumers.

Countries in the OPEC oil-producing cartel, including Saudi Arabia, Nigeria, Venezuela and Iran, have the power to restrict output and push up prices or rein in prices by producing more.

In addition, Oil has risen in recent months on the weak US dollar, as investors turn to the commodity as an alternative asset.

As for today, traders are advised to watch carefully after the leading stock markets and the major economic indicators which will be published from the U.S, Britain and Euro-Zone in order to predict the next movements in oil prices.

Technical News

EUR/USD

The EUR/USD has gone increasingly bearish yesterday, and currently stands at the 1.3895 level. The weekly chart’s Slow Stochastic supports this currency cross to fall further today. However, the 4-hour chart’s Stochastic Slow signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. Going short with tight stops may turn out to be the right choice today.

USD/JPY

The price of this pair appears to be floating in the over-sold territory on the weekly chart’s RSI indicating an upward correction may be imminent. The upward direction on the daily chart’s Slow Stochastic also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The pair has recorded much bullish behavior yesterday. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s RSI signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice.

The Wild Card

NZD/USD

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the 8-hour chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

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.

USD/JPY

Daily graph: http://www.real-forex.com/charts-daily/November2010/JPY_DAILY_021110.JPG

During the navigation of the 20 previous trading sessions, the pair tried to cross several times the support of 80.42 but failed. The vain breach occurred in the session of 01-11-2010 could indicate a soon reversal, creating an opportunity to go “Long”.

The identification of an increasing configuration should confirm this opportunity.

Potential trade

One-Hour graph: http://www.real-forex.com/charts-daily/November2010/JPY_1H_021110.JPG

Once the resistance of 80.8 will be crossed and broken, the required configuration should appear. Every trade has to be done carefully, therefore our analysts chose this way:

• “Limit” order on “Long” position 10 pips above the one-hour resistance mentioned earlier, meaning: 80.9.
• “Stop Loss” on the last low occurred: 80.33
• “Take profit” on the following resistance: 81.1.

AUD/CAD

Daily graph: http://www.real-forex.com/charts-daily/November2010/AUD_DAILY_021110.JPG

The navigation of the last three weeks didn’t stop and is still moving between 0.9661 and 1. Due to the anemic candle appeared on 01-11-2010, the pair may not reach the resistance of the parity at all.

The movement of the pair is very likely to change into a downtrend and even break the support. Once reached, the pair can either test the support, or cross the support and break it.

In case of simple vain breach of the support, the pair is expected to start a new uptrend until the resistance of 1, creating the opportunity to go “Long”.

If the support is crossed and broken, the navigation will stop and the current downtrend will continue, creating the opportunity to go “Short”.

We’ll keep following…

Have a profitable day!

Real-Forex team.

By CountingPips.com

Important News Releases – November 2, 2010

• Australia RBA interest rate decision
• Switzerland retail sales for September
• United Kingdom purchasing managers index construction for October
• United States ABC consumer confidence
• Australia AiG Service Index

See full Calendar here

EURUSD pulled back from the upper border of the triangle pattern on 4-hour chart, suggesting that a cycle top has been formed at 1.4011 level. Deeper decline towards the lower border of the pattern to reach next cycle bottom is possible later today. As long as 1.3698 key support holds, the price action from 1.4152 is treated as consolidation of uptrend from 1.2587 (Aug 24 low) and another rise towards 1.4500 would more likely be seen after consolidation.

Daily Forex Forecast

By FxNewsIndia – Manufacturing data for India today showed that manufacturing activity increased in October following a decline in September. The HSBC manufacturing purchasing managers index, a measure of overall manufacturing sector activity, rose to a score of 57.2 in October following a September score of 55.1. The PMI had dipped in September from the August score of 57.2 but has remained above a score of 50 for 19 consecutive months. A score above 50 is considered an expanding sector while a score below 50 signals contraction in that area.

Helping to boost the PMI this month were increases in new orders and exports but the data also showed pressures on production capacity and price inflation remained.

Frederic Neumann, Co-Head of Asian Economics Research at HSBC said in the report that, “After some bouncy data in the last few months, India’s economy has picked up steam again. The manufacturing sector remains supported by strong local consumption growth, and growing employment suggests that domestic demand will remain robust. Price pressures, however, are still too strong for comfort, possibly prompting the central bank to hike again before the end of the year.”

By Russell Glaser – Volatility in the EUR/USD has fallen off and the pair has created a triangle pattern on the daily chart. The following analysis shows traders how to trade a breakout of the consolidation pattern including predefined levels for limits and stop orders.

Looking at the daily chart for the EUR/USD, an ascending triangle pattern has formed. The upper boundary begins at the height of the uptrend at 1.4157 and the lower boundary begins at the mid-October low of 1.3697. Multiple points of contact have been made with the boundary lines with the most recent coming today during the morning hours of the European trading session.

As the previous trend is up, we should expect the pair to break to the upside. A breakout higher from an ascending triangle pattern typically performs better than a breakout to the downside.

However, this rule is not set in stone and the trade can also be played in the opposite direction should the pair break below the lower boundary.

Finding a price target for the triangle pattern is relatively easy. Traders should measure the distance of the base of the triangle, approximately 450 pips. Therefore, a limit order can be placed roughly 450 pips from the price where the pair moves above or below the boundary lines.

Traders will want to be patient and wait for confirmation that the price has broken outside of the boundary lines before opening a position in any one direction. Trading inside the triangle has its risks and is not recommended.

To protect against a false breakout traders should include a protective stop. A stop to the downside can be placed below the support level at 1.3800. A stop to the upside can be placed above the resistance level of 1.4000.

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.

We are technical traders. We are trying to use historical patterns to predict future, repeatable moves. We do pay attention to news, but technical analysis is the main stay of what we do.

This week is likely to be a VERY tricky. We have major news announcements every day & the rumour mill is working over time so many of these moves have the potential to be VERY volatile.

For example we have interest rate decisions from the USA, Canada, Britain, Australia, Europe. Last month the Reserve Bank of Australia was widely expected to raise rates. they didn’t and the Aud promptly fell.

In the UK, the British Government has just introduced savage budget cuts & MPC members showed splits last month in both the desire to raise rates and pump more money into the economy. All of this causes great uncertainty so the announcements will be closely scrutinised & could cause wild swings in price. Swings that could simply ignore previous major support & resistance, at least temporarily.

Then for the USA there is a swathe of big news this week, interest rates, unemployment amongst them. There is the slight matter of the FOMC announcement, there is a LOT of speculation that the Fed will pump more money into the economy. If they do this could have huge effect on the $US & equally if they do not!

Many commentators expect them to do something, so this could be already factored into the price so no action could cause volatile swings too!!

The week then ends with the mentrorpro members day off, otherwise known as NFP friday. This is the most dangerous, scheduled news event of the month & I always avoid it.

So how do we play all this? This will be tricky if you are trying to trade from weekly charts as you will have to close/cancel or at least moves stops on trades or orders, depending on the news that is due on a particular day.

Monday is relatively light for news, so I will do my usual thing & try to make my weekly 100 pip minimum target as early in the week as possible. Tuesday is not so bad, but either cancel, close or move stops on anything Aud or Jpy until their interest rate decisions have been released & the dust has settled.

Wednesday is a Japanese bank holiday so I will ignore any Yen trades that day. A recent Bank holiday saw less than 30 pips movement on the $/Yen all day, so probability says that is likely to happen again, so why go looking for boredom/trouble?

Wednesday from the New York open I will avoid anything $USA related. There is a lot of red flag news, culminating in the FOMC statement. What usually happens there is that a few hours before the FOMC release, price stagnates and then, depending on the announcement we could have wild swings that could carry on all the way through to the London open on Thursday.

Thursday sees British & European interest rate decisions, reports & press conferences and USA employment statistics.

Friday is NFP – No Forex Please

Last week we concentrated mainly on trades placed from my weekly analysis. This week we will return to normal where I will show you areas I am looking at on a daily basis, but I will do brief updates on the weekly trades as & when there is anything I need to report.

As always we have lots of major news including FOMC on Wednesday ( I made a mistake in the video and said Tuesday), interest rate decisions, and culminating in “do anything but forex Friday” NFP news.

Daily & 4 Hour Intra day Analysis

As detailed above the news is likely to control most pairs this week. Many pairs are range bound and big, surprise news could give us break outs, spikes, the works!

Make sure you do not have orders placed or open with big stops around these announcements. Also many pairs are bouncing between relatively small areas so do not be greedy, move stops to entry after 25/30 pips and consider taking some profit there as well.

Good trading this week.

http://www.forex-fxtrader.com