Action Insight | Written by ActionForex.com | Nov 30 07 07:41 GMT |
Forex Daily Technical Report Dollar Steady after Bernanke Signaled Rate Cut
Yen and Swissy weakens mildly today as risk aversions abates following dovish comments from Fed Chairman Bernanke. Dollar remains in tight range against Euro and Sterling. In a speech overnight, Bernanke said that outlook has been “importantly affected over the past month by renewed turbulence in financial markets” and policy makers should judge whether balance of risks has shifted. Bernanke also noted there are greater than usual uncertainty surrounding the outlook and Fed will be “exceptionally alert and flexible”. Housing slump and rising energy prices is expected to create some ‘headwinds for the consumer in the months ahead.’ The comments basically echoed Kohn’s and suggest that Fed will likely go into another rate cut on Dec 11.
The economic calendar is exceptionally busy today. Released in Asia, Japanese national CPI unexpectedly rose 0.3% yoy in Oct, the first positive yoy CPI result this year. But that’s primarily due to the recent surge in energy prices. However, the ex-food and energy measure remained negative and dropped -0.3%, same as in Sep. The positive result for a month is not enough for BoJ to resume tightening yet. Also, movements yen will likely continue to be driven by carry trade. Other data from Japan saw unemployment rate staying at 4.0% in Oct. Housing spending rose 0.6%, both met expectation. Construction orders dropped sharply by -20.3% while housing starts dropped -35%.
Data from Swiss saw CPI accelerated fro 1.3% yoy to 1.8% yoy in Nov, much higher than expectation of 1.4%. Q3 GDP rose 2.9% yoy versus expectation of 2.6%. Germany retail sales was hit hard in Oct, falling -3.3% mom, keeping yoy rate negative at -0.6%. Eurozone Q3 GDP, economic sentiments will be featured next together with Nov flash HICP which is expected to rise from 2.6% yoy to 2.7%. UK Gfk consumer confidence will also be released in European session.
From US, Oct personal income and spending report will be released. Headline PCE is expected to continue to climb up from 2.4% yoy to 2.8% yoy while core PCE remains unchanged at 1.8% yoy. Income and spending are expected to rise 0.4% and 0.3% respectively, same as in Sep. CHicago PMI and construction spending will be released too.
USD/CAD is back pressing parity level again and will look into today’s GDP data for the catalyst to break out of recent tight range. EUR/USD
Daily Pivots: (S1) 1.4696; (P) 1.4770; (R1) 1.4817; «www.actionforex.com»
EUR/USD continues to trade in tight range above 1.4711 support today. Outlook remains unchanged. Correction from 1.4966 is still expected to extend lower as long as 1.4859 resistance holds, probably towards 1.4519 clusters support. Above 1.4859 will indicate that fall from 1.4966 has possibly completed and bring retest of 1.5 cluster resistance.
As discussed before, while rise from 1.4014 is completed, it’s early to confirm that rise from 1.3360 has completed too. Focus is now on 1.4519 cluster support (50% retracement of 1.4014 to 1.4966 at 1.4490). Decisive break of this support zone will add much credence to the case that rally from 1.3360 has completed too after failing 1.5 key medium resistance and bring deeper correction to 1.4014/4281 support zone before resuming the long term up trend. But strong rebound above this level will suggest another rise should be seen before making a medium term top.
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 is now close to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which will overlap with 1.5 psychological resistance. Upside could be limited by this resistance initially on overbought condition. 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) 2.0532; (P) 2.0673; (R1) 2.0752; «www.actionforex.com»
Cable’s fall from 2.0830 is contained above mentioned 2.0579 support and turns sideway. Short term outlook remains neutral at this moment. With 2.0845 cluster resistance (61.8% retracement of 2.1161 to 2.0353 at 2.0852) remains intact, the original view still holds. That is, rise from 1.9652 has completed after touching medium term rising channel resistance. Fall from 2.1161 is expected to extend further to retest medium term rising channel support (now at 2.0067) after finishing the current corrective rebound from 2.0353. Below 2.0579 support will bring retest of 2.0353 low first. However, sustained break of 2.0845 cluster resistance will indicate that fall from 2.1161 has completed and will bring retest of this high.
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. Break of 61.8% projection level at 2.0677 now encourages further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.
USD/CHF
Daily Pivots: (S1) 1.1118; (P) 1.1163; (R1) 1.1223; «www.actionforex.com».
USD/CHF’s rebound fro 1.0890 continues today and edges higher to 1.1215 so far. At this point, further rally is still in favor as long as 1.1097 support holds. However, upside is still expected to be limited by 1.1298 resistance and bring resumption of the fall from 1.2467. on the downside, below 1.1097 will flip intraday bias back to the downside, indicating recovery is completed and bring retest of 1.0890 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 resumed. Sustained trading below 1.1100 clusters support (95 low and 100% projection of 1.3283 to 1.1919 from 1.2467 at 1.1103) encourages decline to next medium term target of 161.8% projection at 1.0260. On the upside, however, break of 1.1298 resistance will be bring stronger rebound towards 38.2% retracemment of 1.2467 to 1.8090 at 1.1492 first.
USD/JPY
Daily Pivots: (S1) 109.49; (P) 109.90; (R1) 110.34; «www.actionforex.com».
USD/JPY’s rebound resumes today and edges higher to 110.53 so far. At this point, intraday bias remains on the upside as long as 109.46 minor support holds and further rise could still be seen. But still, upside is expected to be limited by 111.76 resistance and bring resumption of fall from 117.94. On the downside, below 109.46 will indicate rebound has possibly completed and bring 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 key long term support zone of 101.22/65. On the upside, above 111.76 resistance will suggest that fall from 117.94 has completed and bring lengthier consolidation. But a break of 115.91 resistance is needed to signal down trend from 124.13 has completed too. Otherwise, medium term outlook remains bearish.
EUR/JPY
Daily Pivots: (S1) 161.22; (P) 162.41; (R1) 163.27; «www.actionforex.com»
EUR/JPY recovers after drawing support from 4 hours 55 EMA (now at 161.75). Intraday outlook remains neutral for the moment while short term outlook remains unchanged. With EUR/JPY still kept below 164.00/26 cluster resistance and struggling at 55 days EMA (now at 162.86), 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 and the last falling leg is in progress, with price actions from 158.67 as interim consolidation. Below 161.56 will suggest that EUR/JPY has failed the 164.00/26 cluster resistance again and will encourage a retest of 159.36 support first.
Also, note that choppy trading could still continue until a break of the established range of 158.67 and 164.30. 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. On the upside, sustained break of 164.00/26 cluster resistance will 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
«www.bloomberg.com»
«www.bloomberg.com»
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«c.moreover.com»
Fri, 30 Nov 2007 04:29:00 GMT from Economictimes
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Fri, 30 Nov 2007 04:12:00 GMT from China Post
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Fri, 30 Nov 2007 04:05:00 GMT from Reuters UK
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Fri, 30 Nov 2007 03:56:00 GMT from The Australian
«c.moreover.com»
Fri, 30 Nov 2007 03:37:00 GMT from Stockhouse Canada
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:15 JPY Japan Manufacturing PMI Nov 50.8 N/A 49.5
23:30 JPY Japan Unemployment rate Oct 4.00% 4.00% 3.80%
23:30 JPY Japan Tokyo CPI Y/Y Oct 0.30% 0.10% 0.00%
23:30 JPY Japan National CPI Y/Y Oct 0.30% 0.00% -0.1
23:30 JPY Japan Household spending Y/Y Oct 0.30% 0.60% 3.20%
00:00 USD Fed’s Bernanke speaks
00:30 AUD Australia Current account Q3 -15.6B -16.4B -15.9B
05:00 JPY Japan Construction orders Oct -22.70% -20.30% -16.30%
05:00 JPY Japan Housing starts Y/Y Oct -35.00% -36.00% -44.00%
06:45 CHF Swiss CPI M/M Nov 0.50% 0.10% 0.90%
06:45 CHF Swiss CPI Y/Y Nov 1.80% 1.40% 1.30%
06:45 CHF Swiss GDP Q/Q Q3 0.80% 0.60% 0.70%
06:45 CHF Swiss GDP Y/Y Q3 2.90% 2.60% 2.80%
07:00 EUR Germany Retail sales M/M Oct -3.30% -0.40% 2.30% 1.60%
07:00 EUR Germany Retail sales Y/Y Oct -0.60% 0.10% -2.20%
10:00 EUR Eurozone GDP Q/Q Q3 0.70% 0.30%
10:00 EUR Eurozone GDP Y/Y Q3 2.60% 2.50%
10:00 EUR Eurozone Business climate Nov 0.78 0.87
10:00 EUR Eurozone Economic sentiment Nov 105 105.9
10:00 EUR Eurozone HICP flash Y/Y Nov 2.70% 2.60%
10:00 EUR Euro zone CPI est. Y/Y Nov 2.80% 2.60%
10:30 GBP U.K. Gfk survey Nov -9 -8
13:30 CAD Canada GDP M/M Sep N/A 0.20%
13:30 CAD Canada Annualized GDP 3Q 2.10% 3.40%
13:30 USD U.S. PCE core M/M Oct 0.20% 0.20%
13:30 USD U.S. PCE core Y/Y Oct 1.80% 1.80%
13:30 USD U.S. PCE index M/M Oct N/A 0.20%
13:30 USD U.S. PCE index Y/Y Oct 2.80% 2.40%
13:30 USD U.S. Personal income Oct 0.40% 0.40%
13:30 USD U.S. Personal spending Oct 0.30% 0.30%
14:45 USD U.S. Chicago PMI Nov 50.3 49.7
15:00 USD U.S. Construction spending Oct -0.20% 0.30%
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