{"id":16842,"date":"2010-12-14T08:45:45","date_gmt":"2010-12-14T13:45:45","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=16842"},"modified":"2010-12-14T08:45:45","modified_gmt":"2010-12-14T13:45:45","slug":"forex-daily-market-commentary-175","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/12\/14\/forex-daily-market-commentary-175\/","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 continues to trade on a soft note as a variety of \t\t\tinvestors have found adverse December trading conditions to be no \t\t\tbarrier to enter fresh longs, though there is still enough event \t\t\trisk to induce plenty of intra-day volatility. The main focus is on \t\t\tthe FOMC later in the day but the Eurozone also has much to clear, \t\t\tincluding a Spanish bill auction and a confidence vote in Italy, \t\t\twhose result continues to hang in the balance. EURUSD traded \t\t\tovernight in a range of 1.3374-1.3417 and USDJPY 83.38-83.55, \t\t\tlargely due to a lack of drivers during the Asia session. In the US, \t\t\twhile the recent pick-up in yields may have raised some concerns for \t\t\tthe upcoming FOMC meeting, we do not think the Fed will adjust QE2 \t\t\tat the current juncture. Our economists also note that the \t\t\texpectation of a likely larger than expected fiscal package would \t\t\targue for an unchanged Fed, as the September FOMC minutes cited \t\t\tfiscal policy uncertainty as one reason for lowering FOMC Members’ \t\t\tforecasts. Elsewhere, Moody’s said the recent US tax proposal \t\t\tincreases the likelihood of a negative outlook on the US AAA rating \t\t\tover the next two years as the negative effects are likely to \t\t\toutweigh the positive effects of higher growth. Retail sales data is \t\t\tdue ahead of the FOMC decision.
\n EUR<\/span><\/em><\/strong><\/p>\n

The euro drifted higher during a quiet session with few surprises on \t\t\tthe Eurozone front. German officials continued to remain outspoken \t\t\ton the notion of a common Euro Area bond while the ECB announced it \t\t\tcompleted EUR 2.67bn of bond purchases settled in the previous week \t\t\tto December 10, versus EUR 1.97bn. The increase in the figures was \t\t\texpected given the reported buying the same day as the December 2ECB \t\t\tpolicy rate decision. Meanwhile, Spain announced it would sell EUR \t\t\t6bn on Tuesday and Thursday of this week. The press reported that \t\t\tabout 2-3bn would consist of the 2020 and 2025 bonds set for \t\t\tThursday’s auction.
\nThe one item to note was the report that Eurozone central bank \t\t\tsources are considering requesting a rise in capital. Further \t\t\tdetails were limited but this likely refers to ECB capital \t\t\tsubscriptions, which are updated very 5 years and is done according \t\t\tto share of total EU population and EU GDP. This could have been \t\t\tviewed as euro negative but the euro shrugged off the headlines.
\nThe ZEW and IFO releases are due in Germany and investors will be \t\t\tkeen to assess whether the country’s economic momentum can be \t\t\tmaintained. Also, the Italian Premier Berlusconi faces a \t\t\tno-confidence vote in both chambers of parliament
\n JPY<\/span><\/em><\/strong><\/p>\n

BoJ Governor Shirakawa again raised the possibility of further JGB \t\t\tpurchases if the economy slows down faster than expected.
\nIndustrial production figures in Japan confirmed a 2% monthly \t\t\tdecline (4.3%y\/y), while capacity utilization registered a 2.3% \t\t\tdecline in October. The data underscore the need for the BoJ to \t\t\tmaintain current policy and relative policy differentials.
\nThe BoJ will be closely on watch for any sign of further dovish \t\t\tcomments on the part of the Fed as they would need to respond in \t\t\tkind with their own rhetoric or policy to ensure policy gaps stay \t\t\tremain conducive to JPY weakness. The Q4 Tankan survey is the major \t\t\trelease this week.
\n GBP<\/span><\/em><\/strong><\/p>\n

The Rightmove house price index showed a 3% monthly decline, another \t\t\tsoft reading after the prior -3.2%m\/m print. Annualised prices were \t\t\tup only 0.4%y\/y.
\nCPI figures are due in the UK and the BoE will be closely watching \t\t\twhether headline prices will remain stubbornly high amid a \t\t\tstill-challenging growth outlook. Deputy Governor Charles Bean, who \t\t\thas been fairly reserved in voicing his concerns of late sounded \t\t\tslightly more hawkish than usual, repeating the comments of other \t\t\tmembers that inflation is likely to persist in the near term.
\n CAD<\/span><\/em><\/strong><\/p>\n

BoC Governor Carney again said he is watching the Canadian dollar \t\t\tclosely and the risk of a stronger currency on growth is now being \t\t\tpartly realized. Carney reiterated the limits of divergence between \t\t\tthe US and Canadian economies and also said Canadian household debt \t\t\tlevels are unprecedented. He said Canadian banks should not be \t\t\tcomplacent on lending and this dovetailed with Finance Minister \t\t\tFlaherty’s comment that he would tighten mortgage rules again if \t\t\tneeded.<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong>
\nEURCHF 1.2766 support
\nEURUSD NEUTRAL Following the recovery yesterday, model has turned \t\t\tneutral. Initial resistance at 1.3471, support at 1.3337
\nUSDJPY BULLISH Break of 83.45 exposes 82.34, but broader focus is on \t\t\tthe upside with resistance defined at 84.41
\nGBPUSD NEUTRAL Push through 1.5892 exposes 1.5965. Support at 1.5720
\nUSDCHF BEARISH Decline through 0.9726 opened up the way towards \t\t\t0.9548. Resistance at 0.9727
\nAUDUSD BULLISH Break of 0.9965 exposes 1.0031. Support holds at \t\t\t0.9833, yesterday’s low
\nUSDCAD BEARISH Look for a break below 0.9978\/31 support zone for \t\t\tconfirmation of bear trend. Resistance at 1.0141
\nEURCHF BEARISH Break of 1.2933 exposes 1.2766. Resistance at 1.3100
\nEURGBP BEARISH Sudden recovery cleared 0.8429 exposing 0.8528, but \t\t\toverall focus is on the downside at 0.8335\/31 support zone.
\nEURJPY NEUTRAL Choppy action holding support at 109.57 ahead of \t\t\t108.35. Resistance at 112.07.<\/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":"

The dollar continues to trade on a soft note as a variety of investors have found adverse December trading conditions to be no barrier to enter fresh longs, though there is still enough event risk to induce plenty of intra-day volatility. The main focus is on the FOMC later in the day<\/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-16842","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/16842","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=16842"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/16842\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=16842"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=16842"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=16842"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}