Dollar Resumes Decline as Markets Cheer EU Progress


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Action Insight Market Overview Markets Snapshot

Dollar Resumes Decline as Markets Cheer EU Progress

Dollar is broadly lower today as markets cheer the progress made by EU summit overnight. Expectations were low just before the summit and thus, the surprises were quite pleasant. The raising of bank capital requirement and explicit deadline of June was well received. EU also agreed with Institute of International Finance on a deal that imposes 50% losses on Greek debt. Also, EU leaders have agreed to leverage the EFSF fund by four to five times to around EUR 1T. DOW staged an impressive late rally to close 1.39% higher and the positive sentiments carried on to Asian session. Dollar resumed recent decline against Euro, Aussie and Canadian dollar and is soft against, Swiss franc, yen and sterling. Dollar index dropped to as low as 75.59 so far and is set to extend recent decline from 79.838.
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AUD/USD Daily Outlook

Daily Pivots: (S1) 1.0335; (P) 1.0385; (R1) 1.0449; More
AUD/USD's rise from 0.9387 resumed after brief retreat and reaches as high as 1.0567 so far today. Intraday bias is back on the upside for 1.0764 resistance first. Also, note again that correction from 1.1079 has completed with three waves down to 0.9387 already. Above 1.0764 would pave the way to retest 1.1079 record high. On the downside, below 1.0464 minor support will turn bias neutral and bring retreat. But downside should be contained above 1.0117 support and bring another rise.
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RBNZ Leaves OCR Unchanged At 2.5% As Outlook Masked By European Crisis

The RBNZ left the OCR at 2.5% in October, citing downsides risks on global and domestic economic outlooks as driven by the European sovereign debt crisis. Policymakers worried that the country’s commodity export prices will be hurt and funding cost will increase over the coming year. Yet, the central bank maintained the tightening bias that ‘gradually increasing pressure on domestic resources will require future OCR increases’.
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BOC Leaves Rates Unchanged, Downgraded Growth Forecasts

The Bank of Canada left the policy rate unchanged at 1% and delivered a more dovish statement citing weakening global and domestic economic outlook. The loonie fell after the report as the central bank is unlikely to withdraw the stimulus anytime soon.
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Economic Indicators Update
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GMT Ccy Events Actual Consensus Previous Revised
20:00 NZD RBNZ Rate Decision 2.50% 2.50% 2.50%
21:45 NZD Trade Balance (NZD) Sep -751M -440M -641M -697M
23:50 JPY Retail Trade Y/Y Sep -1.20% -0.10% -2.60%
4:30 JPY BoJ Rate Decision 0.10%
0.10%
8:00 EUR Eurozone M3 Y/Y Sep
2.80% 2.80%
9:00 EUR Eurozone Consumer Confidence Oct F
-19.9 -19.9
9:00 EUR Eurozone Economic Confidence Oct
93.8 95
9:00 EUR Eurozone Industrial Confidence Oct
-7 -5.9
9:00 EUR Eurozone Services Confidence Oct
-1 0
10:00 GBP CBI Reported Sales Oct
-15 -15
12:30 USD GDP (Annualized) Q3 A
2.50% 1.30%
12:30 USD GDP Price Index Q3 A
2.30% 2.50%
12:30 USD Initial Jobless Claims
400K 403K
14:00 USD Pending Home Sales M/M Sep
0.10% -1.20%
14:30 USD Natural Gas Storage
88B 103B

EUR German CPI M/M Oct P
0.10% 0.10%

EUR German CPI Y/Y Oct P
2.50% 2.60%
Orders and Options Watch

European Session: Orders and Options Watch

EUR: The single currency rallied after yesterday's retreat to 1.3798 in late New York and as EU leaders reached agreement on EFSF leverage, the news of 50% Greek haircut pushed euro higher again and just triggered option barrier at 1.4000, hit an intra-day high of 1.4015. At the moment, bids are lined up from 1.3980 down to 1.3940 with light stops tipped below 1.3940 and 1.3910/15 but sizeable stops only emerging below 1.3850-60. On the upside, offers are reported at 1.4020 and 1.4050 (where another option barrier is located) with more stops placed above latter level.
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Forex Trade Ideas

Trade Idea Wrap-up: EUR/USD – Target met and buy again at 1.3945

Despite yesterday’s sharp retreat from 1.3976 to 1.3798, the single currency found renewed buying interest in line with our expectation (we recommended to buy at 1.3810) and staged a rally from there, the breach of said resistance confirms recent upmove has resumed and further gain to 1.4050 and possibly 1.4075/80 would be seen, however, near term overbought condition should limit upside to 1.4115-20
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Trade Idea: USD/JPY – Buy at 75.50

Despite rebounding from yesterday’s low of 75.71, failure to penetrate resistance at 76.31 and current retreat suggest a retest of said support would be seen, break would extend major downtrend to 75.50, however, loss of downward momentum should prevent sharp fall below 75.20/25 and bring a rebound later. A sustained breach of said resistance would suggest a temporary low is possibly formed
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Candlesticks Intraday Trade Ideas Update Schedule (GMT):
1st Update: 0630 - 0700; 2nd Update: 0930 - 1000; 3rd Update: 1230 - 1300; 4th Update: 1500 - 1530
Pairs Covered: EUR/USD, USD/JPY, GBP/USD, USD/CHF
Elliott Wave Daily Trade Ideas Update Schedule (GMT):
AUD/USD, EUR/JPY: 0800 - 0830; EUR/GBP, USD/CAD: 1430 - 1500
Suggested Readings
Fundamental Highlights
Technical Highlights


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Dollar Selling Returns after Solid Durable Goods Orders. EU Summit Awaited


ActionForex.com

Action Insight Market Overview Markets Snapshot

Dollar Selling Returns after Solid Durable Goods Orders. EU Summit Awaited

Dollar's recovery was rather weak and selling returns in early US session after solid durable goods orders lift risk appetite. Headline durables missed expectation and dropped -0.8% versus consensus of -0.7%. But ex-transport orders impressively grew 1.7% in September, strongest in six months. The data suggests that core capital spending continues to push higher and could help US avoid returning to recession. Also, sentiments are lifted mildly by news that German parliament has approved leverage of the EFSF Fund. Dollar index breaks 76 level again an reaches as low as 75.88 so far.
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USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.8750; (P) 0.8799; (R1) 0.8826; More...
USD/CHF drops further to as low as 0.8728 so far in early US session and intraday bias remains on the downside for the moment. Current correction from 0.9315 is still in progress for 0.8647 (100% projection of 0.9315 to 0.8880 at 0.9082 at 0.8647) and possibly below. But, we're expecting strong support above 0.8246 (50% retracement of 0.7065 to 0.9315 at 0.8190) to contain downside and bring resumption of rebound from 0.7065 eventually. On the upside, above 0.8845 minor resistance will turn bias neutral first. Break of 0.9082 will flip bias back to the upside and target a retest on 0.9315 high.
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The Long-Awaited EU Summit – What Will It Deliver?

Rumors and headlines will continue to be thrown from everywhere until the EU leaders deliver a communiqué after the meeting at October 26. The latest news flow said that policymakers are threatening to trigger a formal default on Greek debt unless banks accept losses of as much as 140B euro on their holdings or a haircut of around 50%. Both Reuters and Bloomberg also quoted the need of around 100B euro for bank recapitalization. The Reuters report also mentioned a haircut of 50% but emphasized that 'several major areas of disagreement remain', especially in the EFSF plan and 'it will require vast amounts of hard negotiation between Sunday and Wednesday to strike a deal that convinces financial markets and Europe's major trading partners that the crisis is in hand' while according to the Bloomberg report policymakers are heading toward using the EFSF to 'guarantee bond sales as a way to extend its reach. A second option is to set up an EFSF-insured fund that would seek outside investment in troubled bonds'
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Economic Indicators Update
Top trading expert speakers, analysts and exhibitors. Discover the Newest Comer to the market, analyze latest market trends explore different trading platforms, and explore a wide opportunity on future investments. The 9th ME Forex & Investment Summit 2011

Don’t miss this year’s World MoneyShow London, 11-12 November 2011 at the Queen Elizabeth II Conference Centre. Be there as recommendations and advice are revealed for how to best position your portfolio for profit—in 2011 and beyond. Don't miss out... Register Free Today!
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Corporate Service Price Y/Y Sep -0.10% -0.40% -0.40% -0.30%
00:00 NZD NBNZ Business Confidence Oct 13.2
30.3
00:30 AUD CPI Q/Q Q3 0.60% 0.60% 0.90%
00:30 AUD CPI Y/Y Q3 3.50% 3.50% 3.60%
00:30 AUD CPI RBA Trimmed Mean Q/Q Q3 0.30% 0.60% 0.70% 0.80%
00:30 AUD CPI RBA Trimmed Mean Y/Y Q3 2.30% 2.70% 2.70% 2.60%
00:30 AUD CPI RBA Weighted Median Q/Q Q3 0.30% 0.60% 0.90% 0.80%
00:30 AUD CPI RBA Weighted Median Y/Y Q3 2.60% 2.70% 2.70% 2.90%
10:00 GBP CBI Trends Total Orders Oct -18 -7 -9
12:30 USD Durable Goods Orders Sep -0.80% -0.70% -0.10%
12:30 USD Durables Ex Transportation Sep 1.70% 0.50% -0.10%
14:00 USD New Home Sales Sep
300K 295K
14:30 CAD BoC Monetary Policy Report



14:30 USD Crude Oil Inventories

-4.7M
20:00 NZD RBNZ Rate Decision
2.50% 2.50%
Orders and Options Watch

US Session: Orders and Options Watch

EUR: Once again the single currency rebounded in New York opening partly due to risk appetite and offers at 1.3960-70 were absorbed, however, selling interests from Eastern European names are still noted from current level up to psychological resistance at 1.4000 where a large option barrier is located with more stops seen above there. On the downside, bids from European and U.S. names are lined up from 1.3900 (option expiry) down to 1.3850 with stops building up below latter level and mixture of bids and stops remains at 1.3820-30.
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Forex Trade Ideas

Trade Idea Update: EUR/USD – Buy at 1.3810

Although euro has continued to trade with a firm bias after rebounding from 1.3850 and marginal gain above yesterday’s high of 1.3960 cannot be ruled out, weakening of near term upward momentum should prevent sharp move beyond 1.3975/80 and reckon psychological resistance at 1.4000 would hold on first testing, loss of near term upward momentum has increased risk for a correction later.
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Trade Idea: AUD/USD – Sell at 1.0450

The Australian dollar faltered below this week’s high of 1.0502 and has retreated sharply yesterday, suggesting a temporary top has been formed there and consolidation with mild downside bias is seen for retracement to 1.0300 and possibly 1.0250, below there would add credence to this view and extend weakness to 1.0190/00, however, reckon support at 1.0147 would limit downside and price should stay well above support at 1.0118
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Candlesticks Intraday Trade Ideas Update Schedule (GMT):
1st Update: 0630 - 0700; 2nd Update: 0930 - 1000; 3rd Update: 1230 - 1300; 4th Update: 1500 - 1530
Pairs Covered: EUR/USD, USD/JPY, GBP/USD, USD/CHF
Elliott Wave Daily Trade Ideas Update Schedule (GMT):
AUD/USD, EUR/JPY: 0800 - 0830; EUR/GBP, USD/CAD: 1430 - 1500
Suggested Readings
Fundamental Highlights
Technical Highlights


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US investment house seen on top in EUR/USD as well


Link to ForexLive
Posted:
…But says there is nothing concrete on China’s investment in the EFSF SPV… EFSF spokeman: Cannot confirm China’s commitmment to participate in investing in the SPV EFSF’s Head Regling is travelling to China on Friday  for talks with buyers of EFSF bonds..
Posted:
AUD’s still feeling the effects of that CPI data o/n and is now looking at the Asian lows around 1.0355. The 200 day MA at 1.0395 seems to be proving tough resistance this morning in Europe and EUR/AUD buying in continuation of yesterday’s big rally isn’t helping the cause either. Seems to be some bids [...]
Posted:
Having been as high as 1.3949 we’re down at 1.3925 presently. Busy going nowhere…….   It’s doing my head in
Posted:
We’re down at 1.6005 from around 1.6035 when I arrived.  Talk is a UK clearer with strong far eastern connections has been notable seller this morning. Yesterday I mentioned sell orders layered 1.6020 through 1.6060 and they’re proving sticky for the cable bulls so far, the most recent rally fizzling out around 1.6040.
Posted:
ITALY DATA: October business confidence fell to 94.0 from 94.5 in September on worsening order expectations, posting the lowest level since January 2010 (93.4), ISTAT said. October current orders fell to -29 from -27 in September; while current inventory levels (+1) and the 3-month outlook for output remained stable (-1), posting the same level as [...]
Posted:
In recent trade.  That’s the central bank by sounds of it.  Not that we’re alot lower mind you.  We’re at 1.3933 from session high 1.3942.
Posted:
Well if there was any doubt earlier, then there isn’t now. Barrier option interest in EUR/CHF at 1.2200 is now history. THE major Swiss commercial bank has been notable seller of USD/CHF in recent trade. We’re down at ..8740 from around .8780 when I sat down.  The cross is down at 1.2180.
Posted:
Aid for countries must come with strict conditions Euro zone institutions must directly intervene in countries Reiterates call to create euro zone finance ministry Arguement for finance ministry stronger now than in June Comments from guest commentary in Handlesblatt. As reported by Dow Jones.
Posted:
Hey matey, lend us a few bob.
Posted:
11:00 GMT:  Merkel to address Parliament on EU summit 15:15-15;45 GMT:  Arrival of members of the European Council 16:00-17:00 GMT:  Euro-area summit 27 heads of state 17:15 GMT:  Leaders of 17 euro zone countries meeting EUR/USD touch firmer at 1.3930. And guess who’s been buying? Yes indeedy, it’s our good friends from the Middle East… Talk [...]
Posted:
Whatever…. EUR/USD sits at 1.3925 in very quiet trade.  It’s almost as though the market is waiting for something.
Posted:
He isn’t wrong.
Posted:
FRANCE DATA: Global demand for French manufactured goods has slowed, with a majority of manumfacturers expecting demand to fall further in the fourth quarter – France 4q mfg demand outlook -6 vs 3q +7 (+8)–INSEE survey – France 4q mfg foreign demand outlook -1 vs 3q +14 – France oct sa mfg capacity utilization 82% [...]
Posted:
According to newspaper Kathimerini,  Greek FinMin Venizelos told Greek banks that the most likely outcome of EU summit is a 50% haircut for bondholders, who would receive cash and new 30 year bonds in return for the debt. Reuters reporting.
Posted:
No need for state funds. Banks’ reserves stronger than ever Banks ready to help Greece Haircut on Greek debt not an issue for Soc Gen Italy has means to pay its debt Confident about EU summit on debt crisis Amount needed for recapitalization will be manageable
Posted:
September: +0.6% m/m, +6.9% y/y MNI survey median: +0.5% m/m, +6.9% y/y MNI survey range: -0.3% to +1.1% m/m August: -0.7% m/m, +6.6% y/y July: +0.8% m/m, +7.5% y/y – FRANKFURT (MNI) – Import price inflation in Germany came in marginally higher than expected in September, boosted by gains in all major components, led by [...]
Posted:
GERMANY DATA: September import prices +0.6% m/m, +6.9% y/y; aug +6.6% y/y – Germany September import prices above MNI median m/m fcast (+0.5%) – Germany September export prices unch m/m, +2.9% y/y; aug +3.2% y/y – Germany September ex-oil/oil products unch m/m, +3.6% y/y – Germany September import prices: energy goods +1.9% m/m, +28.4% y/y [...]
Posted:
DAX futures down -0.3%, CAC 40 futures down -0.3%.
Posted:
Slightly stronger than Reuters’ median forecasts of +0.5%, +6.8% respectively. EUR/USD steady around 1.3910 in cagey start to European trading.
Posted:
Bloomberg article.
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