FOREXYARD: Forex News Blog | |
- Crawling Towards the EU Economic Summit
- EUR Stable Following Italian Budget Reforms
- FX Majors Consolidating after Yesterday’s Rally
- Central Banks and US Data Boost Risk Appetite
| Crawling Towards the EU Economic Summit Posted: 06 Dec 2011 04:57 AM PST
The news stream over the past 24 hours has been EUR negative with the exception of German industrial orders from October. Yet the EUR has begun to crawl back above the 1.34 level before the strong German data. As I was writing the latest entry for the FOREXYARD forex blog German industrial orders were released and the data simply blew away the consensus forecasts. The October numbers rose 5.2% m/m on expectations of an increase of only 0.9%. The September numbers were revised lower to -4.6% m/m from -4.3% but this did not deter EUR bids. The data underlines comments from German Economics Minister Philip Roesler whom Dow Jones quoted as saying, "Germany is the stability anchor in Europe…Germany is not concerned by short-term decisions of one ratings agency." This morning's statement that the Bundesbank and the US will not support IMF contributions to the EFSF added to the negative sentiment from yesterday's move by S&P to put 15 euro zone nations on negative credit watch. The announcement by S&P came on the heels of press conference with Merkel and Sarkozy to implement additional oversight and penalties on those nations who violate EU budget parameters. These issues will be debated at the two day EU economic summit in Brussels which is set to begin on Thursday. Despite the news of the past 24 hours being mostly EUR negative the EUR/USD has climbed as high as 1.3425. One reason for this may be market positioning. The most recent CFCT IMM data shows EUR non-commercials have their largest short position built in the futures market since June of last year. The one sided positioning could create a short squeeze if European leaders begin to instill a bit of investor confidence towards the end of the week. EUR/USD resistance is found at yesterday's high of 1.3490 and at Friday's high of 1.3550. Support looks to be at the November 30th low of 1.3260.
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| EUR Stable Following Italian Budget Reforms Posted: 05 Dec 2011 05:01 AM PST
In light trade this morning the EUR is higher after Italy presented new austerity measures to help calm bond investors who have been pressuring Italy over the past two months. According to the most recent IMM data FX traders continue to favor bearish bets against the EUR. Italy unveiled an austerity program designed to save EUR 30 bn over the next 3-years. This has helped 10-year Italian bond yields to fall as low as 5.83% from their highs above 7%. This week is an important week in the European debt crisis. Today there will be meetings between Sarkozy and Merkel in Paris. US US Treasury Secretary Geithner will be making the rounds to push European leaders to come to an agreement. The hectic week of meetings will culminate with the EU economic summit in Brussels where EU leaders are expected to form an agreement for closer fiscal ties. What this all means for currency traders is that the FX markets will be more driven by the headlines and press conferences that follow these meetings. FX markets appear to be fairly illiquid this morning with the EUR up slightly both versus the USD and in the crosses. The Financial Times has reported a number of liquidity providers have seen lower volumes since the end of Q3. The most recent COT report of the IMM data shows EUR speculative shorts continue to grow, rising to a net short position of -104K contracts, the largest short position since the summer of 2010. The risk is for European leaders to come to an agreement on Friday which would induce a large amount of EUR short covering. The EUR/USD has support at last Friday's low of 1.3360 with a rising trend line on the hourly chart from the November 25th low which comes in at 1.3315. Resistance is found at last Friday's high of 1.3550 and the November 18th high of 1.3610. The EUR/JPY is moving higher towards the resistance of 105.65 where the pair's 55-day moving average comes into play. Support is seen back at the November low of 102.50. Read more forex trading news on our forex blog. |
| FX Majors Consolidating after Yesterday’s Rally Posted: 01 Dec 2011 04:59 AM PST
Successful bond auctions in Spain and France have kept the markets buoyant with Asian equities rallying, though this may be just be markets playing catch up with their American counterparts after yesterday's rally. European stocks are mixed while the major currencies appear to be consolidating. This is not surprising as we approach some important US data both this afternoon and tomorrow. European bonds are up for the day with French 10-year bonds the best performers following decent bond auctions in both Spain and France. The move to increase USD liquidity has carried over into today but market players may be overlooking European data that was released this morning. Euro zone final manufacturing PMI was in-line with market expectations at 46.4 but is down for the sixth straight month and well below the 50 boom/bust level. Traders will now turn their attention to US data releases with the ISM survey today and the jobs report tomorrow. The EUR/USD is within yesterday's wide range but a move above yesterday's high and the pair could test the 1.3610 resistance from the November 18th high. Support is found back at 1.3410 from this morning's low. The kiwi is looking stretched after rallying 5.5% from last week's lows against the USD. The NZD/USD has found resistance at its 55-day moving average at 0.7820. A break here could propel the pair to the 0.8020 from the trend line off of the August and October highs. Support comes in at yesterday's low of 0.7575 and the November low of 0.7400. Read more forex trading news on our forex blog. |
| Central Banks and US Data Boost Risk Appetite Posted: 01 Dec 2011 01:13 AM PST
Today's data releases from the UK and the US may help higher yielding assets receive a bid following yesterday's coordinated central bank move and a reduced Chinese reserve requirement. This morning we'll get UK manufacturing PMI which is forecasted to fall to 47.1 from 47.4. Sterling has been bid the past 3-days versus the USD and the GBP/USD may find initial resistance at yesterday's high of 1.5780, followed by the November 18th high of 1.5890. Support comes in at the November low of 1.5420. Building on yesterday's positive ADP jobs report and pending home sales the strong US economic data looks to continue into today and tomorrow. ISM manufacturing PMI will likely show the momentum from Q3 is carrying over in to Q4 which could translate into stronger GDP and finally put to bed the idea of a double dip US recession. Stronger data will likely keep the USD on its back foot and the USD/JPY could test yesterday's low of 77.30 with scope for the November 18th low of 76.55. Read more forex trading news on our forex blog. |
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