Thu 15 May 2008
Action Insight | Written by ActionForex.com | Dec 06 07 14:01 GMT |
Forex Mid-Day Technical Report BoE Cut Rates, ECB on Hold
After holding rates unchanged for four months, BoE delivered the first rate cut in over 2 years, lowering the main repurchase rate target by 25bps from 5.75% to 5.50%. The accompanying statement noted that “conditions in financial markets have deteriorated and a tightening in the supply of credit to households and businesses is in train, posing downside risks to the outlook for both output and inflation further ahead”. On inflation, the bank judged that slowing demand growth will pull inflation “back to target in the medium term.” Sterling dived lower after the release but recovers quick back into earlier range of today. «www.bankofengland.co.uk»
ECB left rates unchanged at 4.00% as widely expected. In the following press conference, Trichet said that latest information confirms upside pressure to price stability. He reiterated that ECB will act in a “firm and timely manner” to counter such inflation risks. However, Trichet also said that ECB will pay great attention to financial market developments. ECB staff’s inflation projection for 2008 is raised from 1.5% -2.5% to 2.0% -3.0%. on higher food and oil prices and with the assumption of no second-round effects. 2008 GDP growth forecast is lowered from 2.2% - 2.8% to 1.5% - 2.5%.«www.ecb.int»
Data released today saw US jobless claims dropped from 353k to 338k. UK industrial production rose 0.4% mom, 1.0% yoy, better than expectation of 0.2% mom, 0.7% yoy. Manufacturing production rose 0.3% mom 0.3% yoy versus consensus of 0.2%, 0.4%. German factory orders was strong in Oct, rising 4.0% mom, 14.0% yoy comparing to expectation of 0.9% mom, 6.2% yoy. Canadian dollar is lifted mildly after building permits unexpectedly rose 6.8% in Oct, much higher than expectation of 0.8%. EUR/USD
Daily Pivots: (S1) 1.4545; (P) 1.4658; (R1) 1.4724; «www.actionforex.com»
EUR/USD dives further to as low as 1.4524 today, inches above mentioned key near term support zone of 1.4490/4519 cluster support (50% retracement of 1.4014 to 1.4966 at 1.4490). At this point, intraday bias remains on the downside as long as 1.4647 resistance holds and further decline is still in favor. As discussed before, with daily MACD’s dip below signal line as well as mild bearish divergence condition in daily RSI, a decisive break below 1.4490/4519 cluster support will indicate that whole rise from 1.3360 has also completed at 1.4966, after failing 1.5 psychological resistance. In such case, deeper decline should be seen to 55 days EMA (now at 1.4439) or lower before staging another rally.
However, note that strong rebound from 1.4490/4519 cluster support will indicate that price actions from 1.4966 is merely consolidation to rise from 1.4014 only and rally from 1.3360 is still in progress. Above 1.4647 minor resistance will turn intraday outlook neutral first. Further break of 1.4769 resistance will indicate correction from 1.4966 has completed and bring retest of 1.5 psychological resistance.
In the bigger picture, regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and has failed 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which will overlap with 1.5 psychological resistance on overbought condition as seen in weekly RSI. On the upside, sustained trading above this key resistance is needed to confirm medium term rally is still underway to next projection target of 100% projection at 1.7048. On the downside, firm break of 1.3851 resistance turned support is needed to be the first signal that this up trend from 1.1639 has completed. Otherwise, long term outlook remains bullish.
GBP/USD
Daily Pivots: (S1) 2.0138; (P) 2.0374; (R1) 2.0503; «www.actionforex.com»
Cable’s fall from 2.0830 continues today and extends further to as low as 2.0179. At this point, intraday bias remains on the downside as long as 2.0352 minor resistance holds and further decline is still in favor. As discussed before, rise from 1.9652 has completed after touching medium term rising channel resistance. Subsequent fall from 2.1161 is expected to head towards medium term rising channel support (now at 2.0076) before completion. On the upside above 2.0352 will turn intraday outlook neutral first but further decline is still in favor as long as 2.0523 support turned resistance holds.
In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. The current from from 2.1161 is still treated as interim correction to such rally only. Strong support should be seen between 2.000 psychological support, 100% projection of 2.1161 to 2.0353 from 2.0830 2.0022 and the medium term channel support (now at 2.0076). Strong rebound from there, followed by break of 2.0523 resistance will indicate that fall from 2.1161 has completed and medium term up trend could have resumed.
However, sustained break of 2.0 psychological support will indicate that whole medium term rally from 1.7047 has possibly completed. Deeper decline should then be seen to next medium term support at 1.9652 first.
USD/CHF
Daily Pivots: (S1) 1.1189; (P) 1.1237; (R1) 1.1322; «www.actionforex.com».
USD/CHF’s rebound from 1.0890 is confirmed to have resumed after breaking of 1.1326 resistance. At this point, further upside is still expected towards 38.2% retracement of 1.2467 to 1.0890 at 1.1492 before completing this corrective rebound from 1.1326. On the downside, break of 1.1150 support will indicate that rebound from 1.0890 has completed and will bring retest of this low.
In the bigger picture, the current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend from 1.3283 resumed . Such medium term decline is tentatively treated as resumption of the long term down trend from 1.8305 (00 high) which should extend further to parity after taking out 1.1100 key support after finishing the current consolidation from 1.0890. On the upside, break of 1.1891 is needed to indicate such down trend from 1.3283 has completed. Otherwise, long term outlook will remain bearish
USD/JPY
Daily Pivots: (S1) 110.07; (P) 110.51; (R1) 111.32; «www.actionforex.com».
Outlook remains unchanged in USDJPY. After being supported above 109.46 support, USD/JPY continues to crawl higher and is pressing 111.21 resistance. Intraday outlook remains neutral for the moment. Even though further upside could still be seen, upside is expected to be limited by 111.76 resistance and bring another fall. On the downside, below 109.46 support will indicate that corrective rebound from 107.21 has completed and encourage a retest of 107.21 low.
In the bigger picture, sharp decline from 124.13 remains in force and is expected to extend at least further to 100% projection of 124.13 to 111.59 from 117.94 at 105.40 and will likely bring retest of key long term support zone of 101.22/65. While the interim fall from 117.94 has completed, break of 115.91 resistance is needed to signal that the fall from 124.13 has ended too. Otherwise, medium term outlook remains bearish.
EUR/JPY
Daily Pivots: (S1) 161.31; (P) 162.18; (R1) 162.88; «www.actionforex.com»
Not much to add. EUR/JPY continues to engage in choppy consolidation inside established range of 158.67 and 164.30 and it looks like such consolidation will extend further before completion. Nevertheless, as discussed before, 164.26/30 cluster resistance (61.8% retracement of 167.62 to 158.67 at 164.26) remains intact and EUR/JPY still struggling to take out 55 days EMA decisively. The case that rise from 149.27 has already completed at 167.72 is still in favor. That is, price actions from 168.93 is developing into larger scale consolidation The last falling leg is in progress, with price actions from 158.67 as interim consolidation.
Having said that, on the downside, break of 158.67 will confirm fall from 167.62 has resumed for 61.8% retracement of 149.27 to 167.72 at 156.31 first. However, on the upside, sustained break of 164.00/26 cluster resistance will dampen this case and flip favors back to the case that price action from 167.72 is merely consolidation to rise from 149.27 and will bring retest of this high and then 168.93 key resistance.
In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed.
Forex News Digest
«c.moreover.com»
Thu, 6 Dec 2007 09:21:00 GMT from International Herald Tribune
«c.moreover.com»
Thu, 6 Dec 2007 08:57:00 GMT from Philippine Daily Inquirer
«c.moreover.com»
Thu, 6 Dec 2007 08:57:00 GMT from Philippine Daily Inquirer
«c.moreover.com»
Thu, 6 Dec 2007 08:45:00 GMT from Irish Times
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
21:00 NZD RBNZ rate decision Dec 8.25% 8.25% 8.25%
05:00 JPY Japan Leading indicators 20.00% 20.00% 0.00%
06:00 JPY Japan Machine tools orders Y/Y Nov 13% N/A 16.60%
06:45 CHF Swiss Unemployment rate Nov 2.70% 2.60% 2.60%
09:30 GBP U.K. Industrial prod’n M/M Oct 0.40% 0.20% -0.40%
09:30 GBP U.K. Industrial prod’n Y/Y Oct 1.00% 0.70% -0.20%
09:30 GBP U.K. Manufacturing prod’n M/M Oct 0.30% 0.20% -0.60%
09:30 GBP U.K. Manufacturing prod’n Y/Y Oct 0.30% 0.40% -0.10%
11:00 EUR Germany Factory orders M/M Oct 4.00% 0.90% -2.50% -1.60%
11:00 EUR Germany Factory orders Y/Y Oct 14.00% 6.20% 1.10% 1.90%
12:00 GBP BOE rate decision Dec 5.50% 5.75% 5.75%
12:45 EUR ECB rate decision Dec 4.00% 4.00% 4.00%
13:30 EUR ECB Press Conference
13:30 USD U.S. Jobless claims Dec 338K 335K 352K 353K
13:30 CAD Canada Building permits Oct 6.80% 0.80% -1.70% -1.10%
15:00 CAD Canada Ivey PMI Nov 55 57.1
