{"id":14273,"date":"2010-10-21T08:12:07","date_gmt":"2010-10-21T12:12:07","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=14273"},"modified":"2010-10-21T08:12:07","modified_gmt":"2010-10-21T12:12:07","slug":"forex-daily-market-commentary-137","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/10\/21\/forex-daily-market-commentary-137\/","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

The dollar briefly strengthened sharply during the Asia session on \t\t\twire headlines citing US Treasury Secretary Geithner as telling the \t\t\tWall Street Journal that there is no need for the dollar to sink \t\t\tfurther against the euro and the yen. However, given the lack of a \t\t\tsupporting quote, the market came to doubt the accuracy of the \t\t\tremark, and the dollar gave back most of its gains against the yen. \t\t\tEURUSD traded 1.3872-1.3983, USDJPY 80.99-81.83. Asian equities \t\t\tclosed slightly weaker, despite a strong finish in New York that \t\t\ttook the S&P 500 over +1% higher. Gold continued to lose ground, and \t\t\tit is changing hands for $1341.98\/oz at the time of writing. During \t\t\tthe US session, the dollar hit a sizable weak patch, which was \t\t\tvariously attributed to German Chancellor Merkel’s comments or the \t\t\tappearance of an early draft of a G20 statement. The draft suggested \t\t\tthe group may take a clear stand against what has been called a \t\t\tglobal “currency war” as the G20 economies vow to “refrain from \t\t\tcompetitive undervaluation” of their currencies. But the move may \t\t\thave been due more to market talk of a US think-tank saying that the \t\t\tFed will, at its Nov. 3 meeting, launch $500 bn worth of QE over \t\t\tthree to six months. QE2 expectations remain firmly in place as the \t\t\tlatest Fed Beige Book said economic activity continued at a modest \t\t\tpace, though the tone was slightly more positive than previously, \t\t\tand investors paid no heed to Philadelphia Fed President Plosser \t\t\tbeing somewhat disinclined to pursue further easing. Richmond Fed \t\t\tPresident Lacker, an FOMC voter in 2012, said the dollar seems to be \t\t\tresponding to shifting expectations about policy in different \t\t\tcountries. Initial jobless claims are due and the Fed’s Hoenig and \t\t\tBullard are likely to sound more hesitant on QE2 prospects.
\nEUR<\/span><\/em><\/strong><\/p>\n

German Chancellor Merkel said fiscal problems persist in the \t\t\tEurozone but that rescue mechanisms cannot run beyond 2013. Merkel \t\t\tadded that the euro is still being shielded by the various rescue \t\t\tpackages. While near-term dollar weakness is the overwhelming factor \t\t\tsupporting EURUSD, Merkel’s comments underscore our concern for the \t\t\tmedium-term prospects for the euro.
\nPMIs are in focus for the Eurozone today as they are expected to \t\t\tease slightly in October but the recent euro strength will likely \t\t\tnot deter growth prospects in the near term.
\n GBP<\/span><\/em><\/strong><\/p>\n

The minutes from the October 7 MPC meeting revealed a three-way \t\t\tsplit in the policy vote. As expected, MPC policymaker Sentance \t\t\tvoted for a policy rate hike and at the other end of the spectrum \t\t\tMPC policymaker Posen voted to begin another round of quantitative \t\t\teasing. Sterling fell slightly on the split vote and the size of the \t\t\tasset purchases Posen had in mind was a factor as he voted for \u00a350bn \t\t\tmore, a substantial sum that would have increased the BoE’s stock of \t\t\tGilts by 25%. The minutes also noted most MPC members stood ready to \t\t\talter policy in either direction although some felt that the chances \t\t\tof more stimulus being needed had increased. November’s Inflation \t\t\tReport was explicitly mentioned as providing the next opportunity to \t\t\treview the economic outlook thoroughly.
\nThe Comprehensive Spending Review (CSR) provided few surprises, as \t\t\tthe budget deficit forecasts were held unchanged. The lack of \t\t\tsurprises and continued dollar weakness overcame any hangover from \t\t\tthe latest BoE MPC minutes and cable remained supported. But while \t\t\tthe CSR was as expected, it still means the UK faces a significant \t\t\tperiod of austerity, which keeps us cautious on sterling in the \t\t\tmedium-term.
\nM4 money supply made another all-time low, coming in well below \t\t\texpectations at +0.9% y\/y. BoE Governor King said M4, pay, and \t\t\tdemand growth are likely the best guides to the inflation path and \t\t\tthis print could be concerning.
\n JPY<\/span><\/em><\/strong><\/p>\n

Finance Minister Noda repeated that excessive FX moves are \t\t\tundesirable and that Japan will take decisive action on FX, \t\t\tincluding intervention when needed. Noda went on to say that the \t\t\tyen’s appreciation against other Asian currencies puts Japan’s trade \t\t\tat a disadvantage.
\n CAD<\/span><\/em><\/strong><\/p>\n

The BoC MPR provided more details on the forecast changes mentioned \t\t\tin the earlier policy statement. But the report did mention that the \t\t\tinflation forecast assumes a “gradual” rise in rates and in the \t\t\tensuing press conference Governor Carney sounded less dovish on the \t\t\tdomestic economy than the policy statement reflected, which helped \t\t\tsupport the Canadian dollar during the session.
\n
\nTECHNICAL OUTLOOK<\/span><\/strong><\/p>\n


\n<\/span><\/strong> EURJPY break of 111.77 exposes 110.66
\nEURUSD BULLISH Break of 1.3775 reaction low exposes 1.3637\/1.3559 \t\t\tsupport zone.
\nUSDJPY BEARISH Next support at 79.75 ahead of 77.91. Upside \t\t\tpotential capped at 83.03.
\nGBPUSD BULLISH Look for a break below 1.5606; till then pullback is \t\t\tseen as a correction. Resistance at 1.5942 ahead of 1.6107.
\nUSDCHF BEARISH Rise through 0.9729 exposes 0.9918 breakout low. Next \t\t\tbig support below 0.9463 at 0.9225.
\nAUDUSD BULLISH Upside gains held at 1.0004; move above the level \t\t\twould expose 1.0166. Support defined at 0.9662 ahead of 0.9542 \t\t\treaction low.
\nUSDCAD BEARISH Tough resistance in 1.0380\/1.0407 area. Initial \t\t\tsupport at 1.0162 ahead of 0.9981.
\nEURCHF BULLISH While 1.3494 continues to cap recoveries, support \t\t\tlies at 1.3265 ahead of 1.3072.
\nEURGBP BULLISH Momentum is positive; expect gains to target 0.8840 \t\t\twith scope for 0.8894 and 0.9039 next. Near-term support holds at \t\t\t0.8689.
\nEURJPY BULLISH Move below 111.77 exposes 110.66 ahead of 107.73. \t\t\t \t\t\t \t\t\tUpside capped at 115.68.<\/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":"

The dollar briefly strengthened sharply during the Asia session on wire headlines citing US Treasury Secretary Geithner as telling the Wall Street Journal that there is no need for the dollar to sink further against the euro and the yen. However, given the lack of a supporting quote, the market came to doubt the accuracy of the remark, and the dollar gave back most of its gains against the yen.<\/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-14273","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14273","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=14273"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14273\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=14273"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=14273"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=14273"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}