{"id":14455,"date":"2010-10-25T08:42:48","date_gmt":"2010-10-25T12:42:48","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=14455"},"modified":"2010-10-25T08:42:48","modified_gmt":"2010-10-25T12:42:48","slug":"forex-daily-market-commentary-139","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/10\/25\/forex-daily-market-commentary-139\/","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 \t\t\toutcome of the G20 meeting seemed to boost the risk appetite, but it \t\t\twas not until a strong Australian PPI reading was reported that the \t\t\tUS dollar began to weaken significantly. EURUSD traded in a range of \t\t\t1.3917-1.4044, and USDJPY traded 80.90-82.20. Asian equities were \t\t\tslightly firmer and US stocks closed fractionally ahead on Friday, \t\t\tinspired by the latest Q3 earnings and the prospect of further Fed \t\t\teasing drawing ever nearer. The G20 failed to agree on specific \t\t\tlimits for current account imbalances. On the subject of FX \t\t\tintervention, G20 countries pledged “to refrain from competitive \t\t\tdevaluation”. Nevertheless, delegates agreed to remain vigilant to \t\t\t“disorderly movements in exchange rates”, with the aim of reducing \t\t\tthe risk of “excessive volatility in capital flows facing some \t\t\temerging countries”. This does not suggest a willingness to engage \t\t\tin coordinated intervention, but is rather an acknowledgement that \t\t\tpolicy decisions in advanced economies “including those with reserve \t\t\tcurrencies” can create problems for emerging markets. Treasury \t\t\tSecretary Geithner said that the US, Europe and Japan recognized the \t\t\timportance of preserving FX stability, and he reaffirmed that the \t\t\tpolicy of the US is to support a strong dollar. Philadelphia Fed \t\t\tPresident Plosser said he is not convinced that more asset purchases \t\t\twill help the economy at this juncture, and said Fed policymakers \t\t\thold differing views on the relative merits of “shock and awe” \t\t\tversus incremental asset buying. Director of Research Waller at the \t\t\tSt. Louis Fed said the probability of further easing being announced \t\t\ton Nov 3 is “probably pretty high”, adding that a case could be made \t\t\tfor an initial easing of $500 bn followed by subsequent steps of \t\t\t$250 bn.
\nEUR<\/span><\/em><\/strong><\/p>\n

The German Economy Minister Bruederle said intensive G20 discussions \t\t\ttook place on US liquidity policy, by which he presumably means the \t\t\tpolicy of quantitative easing. He said he does not support an \t\t\tincrease in US liquidity as it indirectly influences the exchange \t\t\trate.
\nReferring to the debate over G20 current account imbalances, ECB \t\t\tPresident Trichet implied that a focus on Germany’s large trade \t\t\tsurplus alone would be misguided, and that the current account of \t\t\tthe EU as a whole should instead be considered. Trichet added that, \t\t\taccording to some G20 participants, the monetary policy of advanced \t\t\teconomies could create problems for EM.
\n JPY<\/span><\/em><\/strong><\/p>\n

After the G20 meeting, Finance Minister Noda said that he had gained \t\t\tan understanding from his G20 counterparts on Japan’s policy of FX \t\t\tintervention, and that Japan would continue to take decisive steps \t\t\ton FX as needed. Noda added that he does not expect the debate over \t\t\tcurrent account imbalances to be settled at the upcoming G20 Summit \t\t\ton Nov. 11-12.
\nAgainst expectations, the adjusted trade balance for September was \t\t\tbroadly stable despite the stronger yen, coming in at ?587.6 bn \t\t\t(cons. ?495.5 bn, prev. ?570.2 bn).
\n AUD<\/span><\/em><\/strong><\/p>\n

The AUD got a significant boost from a much stronger than expected \t\t\tQ3 PPI rising +2.2% y\/y (cons. +1.4%, prev. +1.0%). This suggests \t\t\tupstream price pressures are intensifying, which should keep the RBA \t\t\thawkish, although Wednesday’s Q3 CPI will still be key to the \t\t\tNovember policy decision.
\nRBA Governor Stevens spoke but offered few clues on the likely path \t\t\tof the policy rate. He showed his determination to maintain the \t\t\tRBA’s 2-3% target range for the cash rate and said higher inflation \t\t\twill not be tolerated. He said mining investment is now at its \t\t\tstrongest since the 1960s, and would very likely increase further.
\n CAD<\/span><\/em><\/strong><\/p>\n

Canadian CPI was slightly stronger than expected on a monthly basis \t\t\tat +0.2% m\/m (cons. +0.1%), but the headline annualised rate was in \t\t\tline at +1.9% y\/y, and probably not strong enough to force the BoC \t\t\tback onto a more hawkish track. Core inflation actually dipped to \t\t\t+1.5% y\/y (cons. +1.6%). Retail sales meanwhile were much stronger \t\t\tin August, growing +0.5% (cons. -0.1%, prev. +0.1%).
\n CAD<\/span><\/em><\/strong><\/p>\n

Ahead, Canada CPI readings for September will be released as will \t\t\tretail sales for August.
\n
\nTECHNICAL OUTLOOK<\/span><\/strong><\/p>\n


\n<\/span><\/strong> EURCHF 1.3924 resistance.
\nEURUSD BULLISH Remains constructive above 1.3637\/1.3559 support \t\t\tzone, trigger to bear trend. Resistance at 1.4159 ahead of 1.4373.
\nUSDJPY BEARISH Outlook is bearish, expect extension of downleg \t\t\ttowards 79.75 ahead of 77.91.
\nGBPUSD BULLISH Holds above 1.5606 keeping our focus on the upside. \t\t\tResistance at 1.5942 ahead of 1.6107.
\nUSDCHF BEARISH Recovery has scope for 0.9918 breakout low. Next big \t\t\tsupport 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 Remains heavy below 1.0380\/1.0407 area. Initial \t\t\tsupport at 1.0162 ahead of 0.9981.
\nEURCHF BULLISH Violation of 1.3665 triggers acceleration of gains \t\t\ttowards 1.3924. Near-term support at 1.3456 ahead of 1.3265.
\nEURGBP BULLISH Move above 0.8908 exposes 0.9039 next. Near-term \t\t\tsupport defined at 0.8773.
\nEURJPY BULLISH Focus is back on the upside; expect gains to target \t\t\t115.68 and 116.68 next.<\/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 outcome of the G20 meeting seemed to boost the risk appetite, but it was not until a strong Australian PPI reading was reported that the US dollar began to weaken significantly. EURUSD traded in a range of 1.3917-1.4044, and USDJPY traded 80.90-82.20.<\/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-14455","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14455","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=14455"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14455\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=14455"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=14455"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=14455"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}