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Daily Forex Technical Report

Daily Forex Technical Report − Focus On UK CPI, German ZEW, US PPI and Retail Sales

Tue, Nov 14 2006, 08:20 GMT
by ActionForex.com Team

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Forex Daily Technical Report

Focus On UK CPI, German ZEW, US PPI and Retail Sales

Markets remains in consolidation mode ahead of some important economic indicators today. From UK, Oct CPI is expected to increase 0.3% mom, 2.6% yoy, faster from prior 0.1% mom, 2.4% yoy growth. Quickened consumer inflation data today will balance out yesterday's mild disappointment in PPI data ahead of Wed's key event of BoE quarterly inflation report. Nov German ZEW investor confidence is expected to improve slightly from 13-year low of -27.4 to -25, indicating that even though pessimists still outnumber optimists, the worst could be over.

From US, Oct PPI is expected to drop 0.5% mom and 0.4% yoy on falling oil price. Meanwhile, core PPI is expected to rebound and increase 0.1% mom, 1.6% yoy. Retails sales is expected to drop 0.4% with ex-auto sales dropping 0.2%. Just like other indicators, market will look into the details of the reports rather than just the headline numbers. This could again cause much volatility right after release of the data.

Just released, Germany GDP increased 0.6% only, below expectation of 0.7% while Oct HICP is confirmed at 0.1%, below previous release of 0.2%. Reaction is muted as traders await ZEW.

Earlier today, the yen was boosted by stronger than expected GDP data which increased 0.5% qoq in Q3, above expectation of 0.2%. However, USD/JPY is still stuck in recent range and outlook remains mixed.

Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.

USD/CHF

Daily Pivots: (S1) 1.2381; (P) 1.2420; (R1) 1.2483; More.

USD/CHF's recovery has reaches as high as 1.2458 so far before turning sideway. Since a short bottom is formed at 1.2344 with bullish convergence condition in 4 hours MACD, further consolidation will likely follow as long as USD/CHF stays above 1.2357 minor support. However, we'd expect upside to be contained below 1.2523 resistance and bring decline resumption. Below 1.2358 will suggest fall has resumed for 1.2281/91 support (100% projection of 1.2704 to 1.2406 from 1.2579 at 1.2281)

In the bigger picture, USD/CHF's medium term rebound from 1.1919 should have completed after meeting upside target of 61.8% retracement of 1.3283 to 1.1919 at 1.2762 and hence deeper decline is in favor to follow towards key support 1.2182. Firm break below 1.2182 will argue that year long down trend from 1.3283 has possibly resumed with a test of 1.1919 low to follow first. However, a rebound to above 1.2523 resistance will argue that the break of the channel line was a false break and put focus back to 1.2768 high.

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Published on  Tue, Nov 14 2006, 08:24 GMT

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