{"id":13903,"date":"2010-10-11T08:20:19","date_gmt":"2010-10-11T12:20:19","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=13903"},"modified":"2010-10-11T08:20:19","modified_gmt":"2010-10-11T12:20:19","slug":"forex-daily-market-commentary-129","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/10\/11\/forex-daily-market-commentary-129\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

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

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

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

Price action on Friday evening was dictated by the US payrolls \t\t\treport. Both the headline print and the private payrolls component \t\t\tdisappointed expectations. US 2y yields fell to another lifetime low \t\t\tof 33.5bp, which piled further downward pressure on USDJPY, and took \t\t\tthe pair to a new 15-year low. The euro saw some erratic price \t\t\tswings immediately after the numbers, but soon settled back to \t\t\tpre-announcement levels. EURUSD traded 1.3834-1.3986, USDJPY \t\t\t81.73-82.57. Our US economics team now believe that the FOMC will \t\t\tformally announce renewed balance sheet expansion on Nov 3. The \t\t\tchange in forecast comes after a week in which Fed officials \t\t\tcontinued to express concern about the state of the US recovery, and \t\t\tto make the case for a pre-emptive monetary policy response.
\nNevertheless, our analysts see a risk that, after rallying hard on \t\t\tthe prospect of QE, the US Treasury market could yet be disappointed \t\t\tif the Fed fails to commit to buying a large and specific sum of \t\t\tTreasury securities over several quarters. The September payrolls \t\t\treport confirmed that the trend in private employment growth was \t\t\tfairly steady in Q3. However, the report also showed a sharp decline \t\t\tin government payrolls which was much broader than Census-related \t\t\teffects could explain. The weekend G7\/IMF\/World Bank meetings ended \t\t\twithout any specific agreement on FX matters and the issue will \t\t\tlikely resurface at the G20 meeting of finance ministers and central \t\t\tbankers which begins on October 22. More specifically, there was no \t\t\tofficial criticism of Japan’s decision to intervene in the FX market \t\t\tby selling yen. We believe this increases the chance of a further \t\t\tround of intervention should the yen continue to appreciate.
\nEUR<\/span><\/em><\/strong><\/p>\n

ECB President Trichet said he does not believe the term “currency \t\t\twars” reflects the current reality, a view also expressed by ECB \t\t\tGoverning Council Member Weber. Both agreed that exchange rates \t\t\tshould reflect economic fundamentals. Eurogroup Chairman Juncker \t\t\tsaid that the dollar is currently not in line with economic \t\t\tfundamentals and that he is not happy with the euro having reached \t\t\t$1.40. ECB Governing Council Member Nowotny said that the euro’s \t\t\tincrease is not helping the Eurozone recovery.
\nJuncker added that there is no need for a new global currency deal. \t\t\tFrance’s Finance Minister Lagarde said that, as far as currencies \t\t\tare concerned, the G7 agreed that concerted action is preferable to \t\t\tunilateral action.
\nECB Executive Board Member Stark continued to take a moderately \t\t\thawkish stance, noting that the risks to the inflation outlook \t\t\tremain “slightly tilted to the upside”. He expressed concern that \t\t\tmaintaining accommodative monetary policy for too long can pose \t\t\tserious risks both to the economy and to price stability. He did \t\t\tconcede though that the phasing out of unconventional measures would \t\t\tneed to be gradual. An IMF spokesperson implied that the recent \t\t\ttightening of Greece bond yields suggests that Greece will be able \t\t\tto return to international debt markets in 2012 and would then be \t\t\table to fully cover its external financing needs. However, she added \t\t\tthat, were refinancing concerns to linger, the IMF and the EU have \t\t\tthe option to extend Greece’s loans further out. ECB Executive Board \t\t\tMember agreed, but noted that no extension had yet been finalised.
\nEU Economic and Monetary Affairs Commission Rehn said that he sees \t\t\trisks that the fiscal consolidation plans of some European countries \t\t\tlack specifics, and include over-optimistic macroeconomic \t\t\tassumptions.
\n JPY<\/span><\/em><\/strong><\/p>\n

There was no specific public criticism of Japan’s FX intervention \t\t\tpolicy at the series of weekend meetings, which raises the risk of \t\t\tfurther intervention in our view. Finance Minister Noda emerged from \t\t\tthe G7 meeting to say that “we did not discuss anything about the \t\t\tfuture, but I believe we’ve gained understanding on our basic \t\t\tstance”.
\nNoda and US Treasury Secretary Geithner met separately for a \t\t\tbilateral meeting, at which Noda explained the details of Japan’s \t\t\tfiscal stimulus steps. Noda said no specific mention of Japan’s \t\t\tintervention policy was made.
\n CAD<\/span><\/em><\/strong><\/p>\n

Canada’s Finance Minister Flaherty said that IMF\/G20 countries need \t\t\tto work towards “rules of engagement” on the circumstances that \t\t\twould justify FX intervention. Flaherty said that although he is \t\t\tconcerned about Canada’s weak export growth, no currency \t\t\tintervention is being considered. Looking ahead to the upcoming G20 \t\t\tmeetings, he said he does not expect any complete resolution of \t\t\tcurrency discussions even then.
\nEmployment declined by -6.6K in September, falling well short of \t\t\tconsensus expectations. However, the unemployment rate unexpectedly \t\t\tticked lower to 8.0% (cons. 8.1%, prev. 8.1%). The BoC’s senior loan \t\t\tofficer survey showed an overall easing in business lending \t\t\tconditions to Q3. This was the fourth successive quarter in which \t\t\tloan availability improved.<\/p>\n


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

On Friday, RBA Deputy Governor Battellino said it would be a mistake \t\t\tfor Australia to try to manage the AUD, effectively ruling out the \t\t\tpossibility of FX intervention. He pointed to the important role a \t\t\tstrong currency plays in helping the economy.
\n
\nTECHNICAL OUTLOOK<\/span><\/strong><\/p>\n


\n<\/span><\/strong> EURGBP stalled at 0.8808.
\nEURUSD BULLISH Violation of 1.4029 will trigger further acceleration \t\t\tto 1.4194. Near-term support holds at 1.3799 ahead of 1.3637.
\nUSDJPY BEARISH Bearish trend remains intact; break of 82.88 exposes \t\t\t79.75. Resistance remains at 83.99 ahead of 85.40.
\nGBPUSD BULLISH Sustained break of 1.6018\/69 would expose 1.6276. \t\t\tSupport at 1.5670 ahead of 1.5503.
\nUSDCHF BEARISH Next support below 0.9500 lies at 0.9078. Resistance \t\t\tat 0.9739 ahead of 0.9918 breakout low.
\nAUDUSD BULLISH Upside potential held at 0.9918 ahead of 1.000 \t\t\tpsychological resistance. Pullback clears 0.9773 exposing 0.9542.
\nUSDCAD BEARISH Recovery has resistance at 1.0380. Violation of \t\t\t1.0108 shifts focus to 0.9931 with scope for 0.9820 next.
\nEURCHF BULLISH Clearance of 1.3482 puts odds in favor of bullish \t\t\ttrend; expect gains to target 1.3697 measured objective. Support at \t\t\t1.3265.
\nEURGBP BULLISH Bullish pressure stalled in front of 0.8808 with next \t\t\tresistance at 0.8894. Support holds at 0.8689 ahead of 0.8563.
\nEURJPY BULLISH Upside potential capped at 116.68 ahead of 119.33. \t\t\t \t\t\t \t\t\tNear-term support comes in at 113.89 ahead of 111.47.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/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 on Friday evening was dictated by the US payrolls report. Both the headline print and the private payrolls component disappointed expectations. US 2y yields fell to another lifetime low of 33.5bp, which piled further downward pressure on USDJPY, and took the pair to a new 15-year low.<\/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-13903","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/13903","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=13903"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/13903\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=13903"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=13903"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=13903"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}