FOREXYARD: Forex News Blog | |
- EUR/CHF Fails at Long Term Trend Line
- US Unemployment Claims Falls to 403K
- Unexpected Jump in British Retail Sales
- Swiss Trade Surplus Supports Peg Move
- EUR Rallies on EFSF Draft
- US CPI Dips in October
- Impending US Construction Expected to Fall Shy of Forecasts
- Japanese Industry Falling Behind
| EUR/CHF Fails at Long Term Trend Line Posted: 20 Oct 2011 07:39 AM PDT
It has been a while since I've touched on the EUR/CHF as the SNB has done a good job of holding the floor at 1.20. However, today the pair has tested and failed to break above its long term falling trend line which puts the ball back in the court of the SNB to continue to weaken the CHF. Wednesday's have typically been good for the EUR/CHF as a weekly SNB meeting leads to speculation of further policy moves by the Swiss National Bank. When the end result is nothing but market rumors the Swiss franc will often strengthen on Thursdays. This is the case today with the EUR/CHF down 200 pips. With a lack of stabilization in the euro zone and a respite in the defense of the Swiss franc by the SNB, the risk is increasing for speculators to begin to test the resolve of the SNB to hold the 1.20 line in the sand. Should additional downward pressure be felt then the pair could test the supports of 1.2210 from the mid-September and October lows and the key 1.2000 level, setting up a showdown between speculators and the SNB.
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| US Unemployment Claims Falls to 403K Posted: 20 Oct 2011 06:46 AM PDT
Though the data released at 13:30 GMT may not appear optimistic, it nevertheless points to a slightly better week than last in terms of unemployment data. Last week traders saw a rise to 409,000 individuals filing for first-time unemployment benefits. This week the number seems to have slid mildly to 403,000. Expectations, however, were being priced in to see a rise of 401,000, making this data seem worse than it actually was. The reading was above forecasts, but below previous results, giving off mixed sentiment. This data may play into short term moves today, but it seems far fetched to base today's strategy off this employment figure. Read more forex trading news on our forex blog. |
| Unexpected Jump in British Retail Sales Posted: 20 Oct 2011 06:43 AM PDT
A report out of the UK Office of National Statistics this morning revealed a surprise uptick in retail sales across Great Britain this month. Analysts were expecting zero growth in consumer spending on retail goods and services, but the actual figure has so far helped spur some optimism among traders. The unexpected jump in retail sales from last month's contraction of 0.3% to this month's surprise expansion of 0.6% is helping to further the bullish gains of the British pound (GBP). Should tomorrow's public sector net borrowing figure reveal further growth in spending, we could see the pound run strongly bullish before the week closes. Read more forex trading news on our forex blog. |
| Swiss Trade Surplus Supports Peg Move Posted: 20 Oct 2011 06:40 AM PDT
With the declining trade balance numbers from just a few months back, it was becoming obvious that Switzerland's ability to export was being severely undermined by a rising franc (CHF). As response to that weakness, among other factors, the Swiss National Bank (SNB) chose to peg the CHF to the EUR at a fixed rate. This month's trade numbers support that move. As exports were falling, the Swiss economy was at threat of losing much of the gains made through the recession. The pegging move helped stabilize the value of the Swissie. This stabilization appears to have translated over into a higher trade surplus than was forecast, giving impetus to the idea that pegging the currency was a good move. Moreover, the ZEW reading on the Swiss economy this morning was also much more optimistic than last month, adding weight to this notion. Read more forex trading news on our forex blog. |
| Posted: 20 Oct 2011 04:23 AM PDT
The release of draft guidelines for the EFSF helped the EUR to rally while the USD is trading at its lowest level of the day though European bourses remain in the red. While the EFSF draft does not provide any new information the potential for a more rapid response to a future financial crisis by European leaders is a positive. A draft of the EFSF was handed to German lawmakers and may allow Europe to respond to the next financial crisis faster and with greater flexibility. The EFSF, the new mechanism for dealing with financial difficulties and the replacement for ECB bond purchases will be able to buy sovereign debt both directly from the issuer along with purchases in the open market with the approval from a European Working Group and the EFSF Board. This is an improvement on the process, eliminating the need for 17-nation approval which was a long and drawn out process with the approval of the original July 21st agreement. However, primary market purchases would require the approval of European finance ministers. The fund would have the ability to leverage its assets, or the bonds it already holds on its books so as to increase its bond buying or lending capabilities. With the draft guidelines now in the hands of German politicians market participants will await news from the surprise Sarkozy-Merkel meeting in Frankfurt today. The French proposal would have the EFSF obtain a banking license with the ability to leverage the funds' assets with the ECB. Germany has not been convinced of this need and the potential for disappointment from the meeting could weigh on EUR during the North American trading session Yesterday afternoon the EUR/USD rally ran out of steam near 1.3870 with US equities falling on disappointing US data and reduced expectations of a positive outcome from the upcoming meeting EU economic summit on the 23rd. My expectations have not changed for a EUR rally going into the weekend. Today the EUR/USD came off of its lows from 1.3670 to trade as high as 1.3840 though the price action remains consolidative. A break of 1.3850 could test 1.3940 with further scope towards 1.4050. A failure to continue today's rally and the pair could run out of steam with a support coming in at 1.3650 and a retracement target of 1.3620. Read more forex trading news on our forex blog. |
| Posted: 20 Oct 2011 01:38 AM PDT
The measures released this afternoon from the US economy regarding its consumer price index (CPI) underlined a potential slowdown in price growth as the holiday season approaches. This report tends to tie directly in to currency value as inflation translates to growth and is the result of increased demand for goods, which implies demand for the nation's currency that is required to purchase those goods. With CPI growth slowing in October, the USD's rise may be affected over time. Read more forex trading news on our forex blog. |
| Impending US Construction Expected to Fall Shy of Forecasts Posted: 20 Oct 2011 01:00 AM PDT
As reported early Wednesday afternoon, the building permits report from the United States' economy revealed an impeding shortfall in construction, albeit mildly. Forecasts on housing tend to be more estimated than other figures, making them carry less significance for the forex market. Market watchers and economists were anticipating a month-on-month rise of roughly 610,000 building permits issued in October. The actual result was only 590,000 permits, falling just shy of forecasts. The impact may be a muted rise in the greenback as more traders turn to safety. Read more forex trading news on our forex blog. |
| Japanese Industry Falling Behind Posted: 20 Oct 2011 12:57 AM PDT
Coming in line with Monday's statement on revised industrial production, this morning's release on All Industry Activity in Japan revealed another sluggish month for the island economy. Expectations were for a mild downturn, making the report less surprising, however. The results revealed a month-on-month contraction of approximately 0.4%. Following Monday's release of industrial production, which fell short of market forecasts, makes this report more ominous for Japan. The yen may find itself coming under pressure as a result. Read more forex trading news on our forex blog. |
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