• Home ::
• Technical ::
• Analysis Reports ::
• Daily Forex Technical Report

• Send
• Print
• Add To
• Rss

Daily Forex Technical Report

13459de1-9eb3-4165-b83d-82268045f218

0

0

Daily Forex Technical Report − Markets Gap after GSEs Bailout

Mon, Sep 8 2008, 07:20 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Markets Gap after GSEs Bailout

Markets reversed sharply and gapped today after US Treasury announced a four-part plan to rescue Fannie Mae and Freddie Mac over the weekend to save the US housing markets. Both GSEs will be put into conservatorship. Portfolios of both GSEs are allowed to increase modestly through to end of 2009, followed by annual 10% reduction starting in 2010. Treasury could buy as much as $1b of senior-preferred stock in each company to maintain positive net worth. Unlimited lending facility will continue to be provided to both GSEs. The short-term funding will be lent at a rate of Libor plus 50 basis points. Fed Bernanke said in a statement that he supported the Treasury plan as these are "necessary steps" to strengthen the U.S. housing market and promote stability in the financial markets.

Asian equity markets gapped up today following the news and extends gains throughout the session, with Nikkei rising over 400 pts and HSI rising over 700 pts. Yen is naturally sharply lower and return of risk appetites sent most major currencies higher against the greenback too. Nevertheless, the moves lost steam into European session and key near term levels in all pairs are still holding. In other words, there is no confirmation of reversal in recent trends yet. Though, judging from the prices actions so far, short term bottoms could be seen in yen crosses already but the greenback could remain firm in general.

In the opening statement to House Economics Committee, RBA Governor Stevens said that growth outlook for he Australian economy is subdued in the near term. House hold spending and demand has slowed. Housing markets has softened. Credit growth slowed markedly. Inflation will remain uncomfortably high in near term and may peak at 5% but should moderate gradually back to the bank's target of 2-3% next year.

On economic data front, Japan economic watch DI dropped to 28.3 in Aug. Swiss jobless rate climbed to 2.4% in Aug. Main focus turns to UK PPI in Aug and Canadian building permits.

More Technical Analysis Reports Here

EUR/JPY Daily Outlook

Daily Pivots: (S1) 151.57; (P) 152.62; (R1) 154.71; More.

EUR/JPY gaps up today and rebounds strongly to as high as 156.99 so far. Break of 154.37 minor resistance indicates that an intraday bottom is in place. Further recovery could now be seen but consolidation should still be relatively brief as long as 157.83 cluster resistance (38.2% retracement of 169.96 to 150.59 at 157.99) holds and retest of 149.27 key medium term support should be seen. However, break of 157.83 will indicate that a short term bottom is already in place and stronger rebound should be seen towards 163.07 resistance.

In the bigger picture, last week's sharp fall and sustained trading below the long term rising channel added strong evidence that whole up trend from 88.97 (00 low) has completed, with bearish divergence conditions in weekly MACD and RSI and with monthly MACD remains below signal line. Focus now turns to 149.27 support and break will confirm this case and bring deeper medium term fall to 38.2% retracement of 88.97 to 169.96 at 139.02 first. On the upside, above 163.07 is needed to indicate fall from 169.96 has completed and invalidate the above view. Otherwise, medium term outlook now remains bearish.

Stay tuned with our Forex Newsletters

ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.

Published on  Mon, Sep 8 2008, 07:26 GMT