{"id":13679,"date":"2010-10-05T08:25:31","date_gmt":"2010-10-05T12:25:31","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=13679"},"modified":"2010-10-05T08:25:31","modified_gmt":"2010-10-05T12:25:31","slug":"forex-daily-market-commentary-125","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/10\/05\/forex-daily-market-commentary-125\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

By GCI Forex Research<\/strong><\/p>\n

Fundamental Outlook at \t\t\t0800 GMT (EDT + 0400)<\/span><\/strong><\/p>\n

<\/strong><\/p>\n

<\/strong><\/p>\n

USD<\/span><\/em><\/strong><\/p>\n

Price action during the Asia session was governed by two major \t\t\tpolicy surprises: the RBA kept the cash rate on hold despite market \t\t\texpectations of a +25bp hike; AUDUSD lost over 70pips on the \t\t\tannouncement. The BoJ eased policy by much more than expected, \t\t\teffectively cutting the policy rate by replacing the existing policy \t\t\ttarget of 0.1% with a range of 0-0.1%. EURUSD traded 1.3637-1.3695, \t\t\tUSDJPY 83.33-83.99. Earlier, during the US session data included a \t\t\tslight disappointment in factory orders mixed in with a pick-up in \t\t\tpending home sales. Factory orders were slightly below expectations \t\t\tin August at -0.5% but July orders were revised up. Our analysts \t\t\tnote their 1.5% real GDP growth forecast for Q3 has assumed a 10% \t\t\tpace for real equipment and software spending, which is close to the \t\t\tdata reported so far. Meanwhile, the pending home sales index rose \t\t\tmore than expected in August Leading up until July, the weakness \t\t\treflected payback for the expiration of the home buyer tax credits \t\t\tat the end of April. Looking beyond this period of volatility, we \t\t\tstill expect support for home sales over the medium-term as the \t\t\temployment situation improves, mortgage rates remain near \t\t\thistorically low levels, and affordability remains favorable. Though \t\t\tFed comments were relatively limited, QE2 is still on investor minds \t\t\tahead of the larger data releases this week, with non-manufacturing \t\t\tISM up next.
\nEUR<\/span><\/em><\/strong><\/p>\n

The euro did not manage to regain lost ground during the overnight \t\t\tsession as there was little to counteract the reports that the Irish \t\t\tcentral bank reportedly views risks to the ECB staff growth \t\t\tforecasts as slightly tilted to the downside and global economic \t\t\tuncertainty is regarded to have increased. Another report also \t\t\tweighed on the euro, where a major Austrian bank is looking to \t\t\tchange existing CHF loans into EUR loans, which, if it triggers a \t\t\ttrend, would provide the franc with structural support versus the \t\t\teuro.
\nThe ECB announced that \u20ac1.344bn worth of sovereign bond purchases \t\t\tsettled last week under the ECB’s Securities Market Program. This \t\t\trepresents a very significant increase on the tally for the week \t\t\tbefore and clearly suggests that sovereign bonds yields amongst \t\t\tissuers on the Eurozone periphery would have been significantly \t\t\thigher last week were it not for the ECB’s intervention.
\nWe expect EURUSD upside to become increasingly limited again by \t\t\tstructural weakness in the periphery. We also remain cautious on \t\t\trisk sentiment, as a sudden return of risk aversion cannot be \t\t\texcluded in an environment of heightened global economic \t\t\tuncertainty. Going forward we expect EURUSD to approach 1.28 in the \t\t\tmedium-term.
\n JPY<\/span><\/em><\/strong><\/p>\n

In a surprise move the BoJ was much more dovish than expected, and \t\t\teffectively cut the policy rate target by replacing the existing \t\t\ttarget of 0.1% with a range 0-0.1%. No changes were made to the \t\t\tBoJ’s monthly intake of JGBs which will continue to accumulate on \t\t\tthe BoJ’s balance sheet at a rate of \u00a51.8 trn per month. However, \t\t\tthe BoJ has set up a new “temporary” facility specifically to \t\t\tpurchase short-term assets with a maturity of 1-2 years. The aim \t\t\twill be to use this facility to buy \u00a53.5trn in short-dated JGBs and \t\t\tT-bills and about \u00a51trn in CP, ABCP and corporate bonds.
\n AUD<\/span><\/em><\/strong><\/p>\n

Against consensus expectations, the RBA held the cash rate unchanged \t\t\tat 4.5% for the fifth consecutive meeting. However, our Australian \t\t\teconomics team note that the RBA maintains is tightening bias, \t\t\tnoting that rates are “appropriate for the time being” and that “it \t\t\tis likely that higher interest rates will be required, at some \t\t\tpoint, to ensure that inflation remains consistent with the \t\t\tmedium-term target.” Our analysts now expect the next hike will come \t\t\tin November.<\/p>\n

<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong><\/p>\n


\n<\/span><\/strong> USDCAD focus on 1.0108.
\nEURUSD BULLISH Bull pressure held below 1.3818\/96 ahead of 1.4194. \t\t\tNear-term support comes in at 1.3560 ahead of 1.3381.
\nUSDJPY BEARISH Look for a break below 82.88 for extension of bearish \t\t\ttrend towards 79.75. Resistance remains at 84.50 ahead of 85.40.
\nGBPUSD BULLISH Move above 1.5999 and 1.6069 would expose 1.6276. \t\t\tSupport at 1.5670 ahead of 1.5503.
\nUSDCHF BEARISH Clearance of 0.9709 exposes 0.9590 and 0.9500 next. \t\t\tResistance at 0.9918 breakout low.
\nAUDUSD BULLISH Sharp decline pressures 0.9559 ahead of 0.9463, but \t\t\toverall model is bullish with initial resistance defined at 0.9751 \t\t\tahead of 0.9850.
\nUSDCAD BEARISH Focus is on downside; initial support lies at 1.0108 \t\t\tahead of 0.9931. Resistance comes in at 1.0380.
\nEURCHF NEUTRAL Following the pullback from 1.3467, model has turned \t\t\tneutral. Support at 1.3165 ahead of 1.2991.
\nEURGBP BULLISH Next resistance above 0.8738 lies at 0.8808. Support \t\t\tholds at 0.8563 ahead of 0.8510.
\nEURJPY NEUTRAL Expect gains to extend towards 116.68 and 119.33 \t\t\tnext. \t\t\t \t\t\tNear-term support comes in at 112.98 ahead of 115.53.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/span><\/p>\n

GCI Financial Ltd (\u201dGCI\u201d) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (\u201dForex\u201d) 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 (\u201dCFDs\u201d) 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.<\/p>\n

DISCLAIMER: GCI\u2019s 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.<\/p>\n","protected":false},"excerpt":{"rendered":"

Price action during the Asia session was governed by two major policy surprises: the RBA kept the cash rate on hold despite market expectations of a +25bp hike; AUDUSD lost over 70pips on the announcement…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13679","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/13679","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=13679"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/13679\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=13679"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=13679"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=13679"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}