{"id":14854,"date":"2010-11-03T08:30:54","date_gmt":"2010-11-03T12:30:54","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=14854"},"modified":"2010-11-03T08:30:54","modified_gmt":"2010-11-03T12:30:54","slug":"forex-daily-market-commentary-146","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/11\/03\/forex-daily-market-commentary-146\/","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

As expected, \t\t\tObama\u2019s government had to accept a painful defeat at the mid-term \t\t\telections for Congress. In the future, President Obama has to work \t\t\tcloser together with the Republicans. The results of the elections \t\t\tshouldn\u2019t have any major impact on the FX market, since the focus is \t\t\tdefinitely on the decision of the Fed tonight. Against this \t\t\tbackdrop, US economic data due for publication today (ADP employment \t\t\tchange index, ISM non-manufacturing index, factory orders) is \t\t\tunlikely to gain much attention. Especially since it is clear that \t\t\teven if economic data surprises positively the Fed will not refrain \t\t\tfrom announcing further measures of quantitative easing (QE2).<\/p>\n

A strong group within the Fed does not seem to be satisfied with \t\t\tgrowth rates around potential for the US economy in the near future. \t\t\tDo they want to \u201cartificially\u201d reduce unemployment with more rapid \t\t\tgrowth? It is far from certain whether that can be achieved by \t\t\tmonetary policy means. The only thing that can help the dollar today \t\t\tis if things turn out to be not so bad regarding the quantitative \t\t\teasing as some of the real pessimists have been predicting.<\/p>\n

So that leaves the question what markets are really expecting. Other \t\t\tthan in the case of fundamental data (or as is the case with the BoE \t\t\tthese days) there is no consensus poll on the expected QE extension. \t\t\tThat is also due to the fact that it was not even clear how exactly \t\t\tthe Fed would announce further steps. After all 53 of the 56 \t\t\tanalysts polled by Bloomberg expect the Fed to extend its QE \t\t\tmeasures. Just under half of them also expect it will immediately \t\t\tpromise to buy a further USD 500bn. worth of US Treasuries. 12% of \t\t\tthe analysts bank on the Fed purchasing between USD 50bn. and 100bn. \t\t\tper month, without announcing a total volume. The remaining analysts \t\t\teither predict a volume of up to a maximum of USD 500bn. or have not \t\t\tquantified their expectations. The uncertainty among analysts \t\t\treflects the disagreement among the Fed members. Only a few days ago \t\t\tsome Fed members clearly set out their very contrasting views. In \t\t\tthe end, the continued USD weakness is due to the obvious \t\t\tdisagreement of the FOMC members. If the most important decision \t\t\tmakers cannot agree on an important issue such as this, the matter \t\t\tmust be far from simple.<\/p>\n

Against this background what can we expect for EUR-USD today? We \t\t\tconsider the following market reactions to be possible: Should the \t\t\tFed announce a careful approach with monthly purchases we consider \t\t\tit more likely that EUR-USD will come under pressure. Should the Fed \t\t\tannounce a total volume we consider a volume of approx. USD 500bn. \t\t\tto be neutral. Should the Fed clearly exceed this level EUR-USD is \t\t\tlikely to breach its range between 1.37 and 1.41 to the upside. On \t\t\tthe other hand the Fed could also surprise with other announcements, \t\t\twhich exceed a specific volume, such as an inflation target, a \t\t\tgrowth target, a yield target or a change in its communication \t\t\t(\u201cextended period of time\u201c) etc. etc.
\n<\/p>\n

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

The manufacturing PMI easily beat expectations on Monday, but \t\t\tTuesday’s construction PMI fell short of consensus.<\/p>\n

We expect the BoE’s policy meeting on Thursday to come sharply into \t\t\tfocus once the outcome of today’s FOMC meeting is known. Investors \t\t\tare concerned that the BoE may embark on another round of Gilt \t\t\tpurchases if the FOMC eases again today. Although the upcoming BoE \t\t\tmeeting may be a be a non-event, the fear of a surprise announcement \t\t\tcould cause some near-term sterling weakness.
\n<\/p>\n

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

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


\n<\/span><\/strong> EURUSD BULLISH Look for a break above 1.4159, which would trigger \t\t\tanother bullish run towards 1.4373. Support holds at 1.3698<\/p>\n

USDJPY BEARISH Outlook is bearish; next big support below 79.75 lies \t\t\tat 77.91. Resistance at 81.41, Monday’s reaction high.<\/p>\n

GBPUSD BULLISH Stalled in front of 1.6107; climb through the level \t\t\twould expose 1.6276 and 1.6458 next. Support comes in at 1.5878 \t\t\tahead of 1.5606<\/p>\n

USDCHF BEARISH Bounce-off from 0.9463 pushed through resistance at \t\t\t0.9929. Near-term support at 0.9703.<\/p>\n

AUDUSD BULLISH Push through 1.0004 exposes 1.0222, measured target. \t\t\tSupport at 0.9866 ahead of 0.9542 reaction low.<\/p>\n

USDCAD BEARISH Momentum is negative; the pair targets 0.9981 with \t\t\tscope for 0.9820. Resistance at 1.0203 ahead of 1.0380<\/p>\n

EURCHF BULLISH Targets 1.3924 with scope for 1.4041 next. Near-term \t\t\tsupport at 1.3540<\/p>\n

EURGBP BULLISH Break of 0.8772 would expose 0.8942 and reinstate the \t\t\tbull trend. Support holds at 0.8636<\/p>\n

EURJPY BULLISH Only a break below 110.66 would hurt the positive \t\t\ttone. Resistance at 113.78 ahead of 115.68<\/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":"

A strong group within the Fed does not seem to be satisfied with growth rates around potential for the US economy in the near future. Do they want to \u201cartificially\u201d reduce unemployment with more rapid growth? It is far from certain whether that can be achieved by monetary policy means. <\/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-14854","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14854","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=14854"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14854\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=14854"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=14854"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=14854"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}