International Trading

EUR/USD Current Price: 1.3924

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EUR/USD spent most of the European session hovering around the old strong support at 1.3890, the 61.8% retracement of the 1.5140/1.1870 rally. Currently heading higher after a much better than expected TICS’ reading in the US, pair has a slightly bullish tone according to hourly chart, with price above 20 SMA (that holds a strong bearish slope anyway) and indicators heading north, yet below their midlines. Price needs at least to consolidate above 1.3935 to turn intraday bullish, while lose of 1.3880 should signal further falls for today.

Support levels: 1.3880 1.3840 1.3810 

Resistance levels: 1.3935 1.3970 1.4010

GBP/USD Current Price: 1.5874

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 Pound has turned strongly bearish after losing 1.6000 price zone past week, with hourly chart still showing indicators heading south, below their midlines, while 20 SMA contains the upside around 1.5920. 4 hours chart however, is giving some signs of exhaustion to the downside that could keep downside limited. Still, lose of 1.5840 could trigger a bearish run with next strong support around 1.5770 support.

Support levels: 1.5840 1.5810 1.5770

Resistance levels: 1.5920 1.5960 1.6000

USD/JPY Current Price: 81.29

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Unchanged since last updates, pair holds a tight range with a persistent bearish tone as indicators in the hourly chart hold below their midlines, while 20 SMA acts as dynamic resistance area, limiting the upside for now. Double floor around 80.85 remains valid, with the neckline around 81.65: only above this last, pair could turn intraday bullish, aiming to test the 82.00/20 price zone. 

Support levels: 81.10 80.80 80.40

Resistance levels: 81.65 82.00 82.25 

USD/CHF: Current Price: 0.9576

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Back losing ground, the bearish trend remains intact in the cross, as long as below 0.9700 price zone; a daily close above that level could signal a bullish at least corrective movement, still not seen at this point. Approaching 0.9550 immediate support and daily low, hourly chart holds a bearish tone as per indicators aiming to cross their midlines, and price developing below 20 SMA. Lose of mentioned level will confirm the bias for today.

Support levels: 0.9550 0.9500 0.9460 

Resistance levels: 0.9590 0.9620 0.9660

International Trading

International Trading

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International Trading


 Of late the U.S dollar has experienced across the board downside pressure as the markets speculate over the size of the Federal Reserve’s second round of quantitative easing. Although, there are schools of thought argue the effects have been fully priced in, and that any disappointment on the size of asset purchasing will result in a dollar rally. After Ben Bernanke’s calculated speech on Friday the dollar has bounced off its lows as the prospect of a surprise diminishes, and the markets consider the validity of further dollar selling. 

• Yields on debt issued by some of the European Peripheral Nations have narrowed against the benchmark German bund, and the CDS market has eased. Improvements in the bond market coincided with ECB member Axel Weber’s hawkish rhetoric over the central bank’s role as buyers of debt resulted in EUR/USD temporarily breaching the 1.4000 handle at the end of last week’s trade. However, ECB president Jean-Claude Trichet failed to continue in a hawkish tone as he was quoted as saying that Weber’s views would be met with disagreement from other ECB members. The single currency is off the highs and is currently priced at 1.3900. 

• The Japanese Yen is the only major currency to trade slightly higher as the failed intervention by the Bank of Japan has led to a crisis of credibility for the central bank. After much jawboning, and a wasted $25bn the Yen continues to strengthen against the dollar. USD/JPY continues to grind higher despite the pair approaching the key 79.722 all time low. U.S dollar funded carry trades are growing in popularity as the Federal Reserve keep rates at all time lows, and eye further easing measures. 

• AUD/USD is trading off the parity highs as traders wait for the RBA minutes from October’s meetings. The RBA kept rates on hold at 4.50% as the stronger currency off-sets potential inflation. Australia and their currency have benefitted from China’s appetite for resources as they continue to out grow much of the developed world.

International Trading


On Tap This Week: Fed Speakers and Data on Manufacturing and Housing

The US data focuses on 2 key themes. The first is a slew of Federal Reserve Officials giving speeches. The data that is on tap this week will have to share the spotlight. On the data front, we get a look into manufacturing and housing. These are two key sectors and are on the mind of FOMC policy makers. While manufacturing helped spearhead the recovery, activity and job gains have cooled. Meanwhile, the housing market hit a rough patch following the end of the expiration of the government’s home-buyer tax credit.

The next important date for the US calendar will be the Fed’s Nov. 2-3 meeting. With the amount of Fed speakers on tap before then, it seems likely that the Fed will clarify the criteria that will trigger more easing, and perhaps offer some clues as to the size and scope of purchases.



Mid-Week: Fed Officials Make the Rounds and Beige Book

Tue 10AM FOMC Member Dudley – Due to speak at the Regional economic briefing, in New York.

7PM FOMC Member Duke – Due to speak at the Money Marketeers Club, in New York.

Wed 2PM Beige Book

Thu 2PM FOMC Member Bullard – Due to speak on the US economic outlook and monetary policy at the Federal Reserve Bank, in St Louis.

9:45PM FOMC Member Hoenig Speaks – Due to speak about the US economic outlook at the business and community leaders conference, in Albuquerque.

This week we have 4 member of the FOMC taking to the podiums and their comments will set the tone for the week as they embark on the messaging of more quantitative easing, and what triggers are needed for the FOMC to start more quantitative easing come Nov. 3rd. In addition to official speeches, the Fed will release its Beige Book on Wednesday. This compilation of anecdotal economic data is being prepared in advance of the November policy meeting, so this will be the most up to date information that the FOMC will be basing their decision.

Manufacturing – Industrial Production and Philly Fed Survey

On Monday, the Fed itself will report on industrial production and capacity for September. This indicators gives measures the output from the nation’s manufacturers, mines and utilities. The consensus is for a 0.2% rise, matching the gain seen in August. The capacity utilization rate – or the percentage of factories in use – is projected to edge up to 74.8% from 74.7%.



Here’s a look at the year-over-year change courtesy of tradingeconomics.com and we can see the sharp slide as the US fell into recession, and the healthy rebound and gains during 2010. However, now the pace of growth is slowing, as manufacturers more closely align their inventories to sales and the ratio between the two has more or less normalized.

In a second look at manufacturing, we get the Philadelphia Fed survey, a leading indicator as it measures October. Expectations are for the general conditions index to improve to 0.5 from -0.7 in September. The NY Empire index, which was released last week on Friday, was unexpectedly strong 15.7 (expectations had been a climb to 7.1 from September’s 4.1).

I wonder if the decline of the Dollar will show up in manufacturing data soon, as a weaker greenback can help spur exports growth.

Housing – Starts

Tuesday brings data on housing, a look at demand for new homes in the form of housing starts. The median forecast is for starts to fall 3.2% to an annual rate of 579K during September, after starts had jumped 10.5% in August. Building permits are projected to rise 1.2% to 578K.



The pace of new housing starts has been bouncing along the bottom since February 2009. While last month saw a decent bounce back of 10%, we are working from very depressed levels. So, while things may not be getting worse, we’ll see if the pace of starts falls back again in September.

A second report on housing, provided by the National Association of Home Builders, will give us a look at confidence of home builders. The housing market index for October is expected to edge up to 14 this month from a very low reading of 13 in September. This is a leading indicator compared to the housing starts data, and will actually come out first on Monday.

Our Weekly Look at Jobs

Another key data point will be Thursday’s weekly jobless claims because it will cover the pay period for the October employment report. Economists expect claims for the Oct. 16 week to total 455,000, not low enough to suggest strong hiring in October.



Claims have hovered between 450K and 490K for almost a year, but are now in the lower part of the range. Still until claims get below 450K we are not going to see the unemployment rate coming down.

International Trading

International Trading


A very busy week expects forex traders, with rate decisions in the UK, Europe, Japan and Australia, and many employment figures. The American Non-Farm Payrolls, closes the week in the monthly circus.

The theme in the past week continued to be a weaker dollar. Not all currencies enjoyed this equally – the Aussie and the Euro are the big winners, while the British Pound and the loonie are only enjoying small gains. This week, it’ll be around the NFP. Let’s start:

1. US Pending Home Sales: Monday, 14:00. The amount of homes that are still waiting the final closure of a deal recovered last month with a 5.2% after terrible months beforehand. This housing sector figure will probably continue recovering, with a more modest rise this time – 2.6%.
2. Japanese rate decision: Tuesday morning. After the big intervention in the yen, Japanese policymakers meet again to discuss the state of the export-oriented economy, that is still suffering from the strong currency. No change in the rates is expected. The focus will be on any comments about further interventions – comments directed to forex.
3. Australian rate decision: Tuesday, 3:30. After 4 pauses in rate hikes, there are some expectations that the RBA will resume rate hikes once again, especially as employment is strong. On the other hand, there’s still a lot of uncertainty about the situation in the US and the value of the China’s yuan – Australia’s main trade partner. Any result will rock the Aussie. It’s also important to watch the accompanying statement for hints about future policy.
4. US ISM Non-Manufacturing PMI: Tuesday, 14:00. Last month, the purchasing managers’ index for the services sector was released after the Non-Farm Payrolls. This time, we’ll get an early indication. Last month’s figure disappointed with a drop from 54.3 to 51.5 points, still above the critical 50 point mark, still indicating economic expansion. We’ll probably see a a slightly better number now – 52.2 points. A drop under 50 will be bad for the dollar.
5. US ADP Non-Farm Employment Change: Wednesday, 12:15. This report totally missed on the result of the Non-Farm Payrolls – it showed a drop in private sector jobs while the actual number in the NFP was positive for this sector. Nevertheless, the publication always triggers lots of action in currency markets. After a drop of 10K last month, a nice rise is expected now – 22K.
6. Australian Employment data: Thursday, 00:30. After one month of mixed results, Australia returned to post excellent job figures – a gain of over 30K jobs, and a drop in the unemployment rate to 5.1%. This time, a smaller gain is expected in the employment change figure, 20K, and the unemployment rate will probably remain unchanged.
7. British rate decision: Thursday, 11:00. British inflation refuses to slide back into the 1-3% target, and there’s still one member of the MPC, Andrew Sentance, that pledges a rate hike. The other members aren’t convinced, and even talk about more pound printing, so the rate will probably remain unchanged at 0.50%. The focus will be on the accompanying statement – will it be optimistic or pessimistic regarding the recovery?
8. European rate decision: Thursday, 11:45. The president of the ECB sees inflation gradually rising in the Euro-zone, but unemployment is still high. The gap between the different European countries is widening. The result will probably be another month of an unchanged rate at 1%. Any comment about the state of the economies and especially about the debt issues, now in Ireland, will move the markets.
9. US Unemployment Claims: Thursday, 12:30. The last job-related indicator before the Non-Farm Payrolls is unlikely to supply a real clue – this weekly indicator moves in quite a narrow range for quite some time. A rise above 500K will be dollar negative, while a dive under 430K will be positive. An unchanged number of 453K is predicted now.
10. Canadian employment data: Friday, 11:00. Canada enjoyed an nice gain in jobs last month, 35K, but the unemployment rate ticked up once again to 8.1%, showing that the recovery is still slow. A much smaller gain in jobs will probably be seen now, 11K, and the unemployment rate is likely to tick back down to 8%.
11. US Non-Farm Payrolls: Friday, 12:30. The king of forex was finally better than expected last month – a loss of only 54,000 exceeded expectations and showed that the situation isn’t as devastating as earlier thought. This release is the final release that consists of an impact from the decennial census. The number of people employed by the census dropped from 83K to around 9K. So, this is the last time that the private sector payrolls will be of high importance. The unemployment rate will probably remain around the same levels and will continue to have a smaller impact. Headline NFP is expected to remain almost unchanged with a minor gain of 3K, while the unemployment rate is likely to rise to 9.7%.

That’s it for the major events this week. Stay tuned for coverages on specific currencies.