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Daily Forex Technical Report

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Daily Forex Technical Report − Bailout Plan Negotiations Stall, Yen Comeback on WaMu Failure

Fri, Sep 26 2008, 07:52 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Bailout Plan Negotiations Stall, Yen Comeback on WaMu Failure

US politicians' debate on the bailout plan seems neverending. Just as markets thought an agreement is reached, the negotiation stalled as a group of House Republicans said the plan outlined by Paulson, back by Bush and Democrats. Instead, they offered a plan calling for a mortgage-backed security insurance fund, rather than taxpayer-funded purchases of "troubled assets". The proposal called for Treasury to design a system to charge premiums to the security holders, rather than putting the burden on tax payers. Also, it suggest the government to "remove regulatory and tax barriers" for private capital formation so that private capital can be drawn into the market instead of taxpayers' money. The negation will resume on Friday but when a deal could be reached is highly uncertain.

Another big news overnight was the failure of Washington Mutual. The Federal DEposit Insurance Corp seized WaMu on Thursday and sold the banks' asset to JP MOrgan Chase for $1.9b. This is the largest bank failure in US's history so far. A sense of risk aversion is seen in the financial markets with Asian and European stock markets down today. The Japanese yen is also trying to fight back in with yen crosses broadly lower in early European session. On the other hand, the dollar continues it's recovery against major rivals.

On the economic data front, New Zealand GDP dropped less than expected by -0.2% qoq in Q2 with yoy rate slowed less than expected to 1.0%. Japan CPI moderated unexpectedly to 2.1% yoy in Aug with core CPI flat. Germany import price dropped less than expected by -0.8% mom in Aug, with yoy rate unchanged at 9.3%. Swiss KOF leading indicator will be released in the US session and is expected to drop from 0.68 to 0.56 in Sep. US Q2 GDP final print is expected to be unchanged at 3.3% qoq annualized growth rate.

More Forex Technical Analysis Reports Here.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 194.90; (P) 196.03; (R1) 196.86; More

GBP/JPY's fall from 197.42 extends further today and breaking of 194.30 minor support as well as 4 hours MACD's breaking of its uptrend are taken as the first alert that whole rebound from 184.47 has completed. Intraday bias is flipped back to the downside for 189.74 support first. Further break will confirm this case and bring retest of 184.47 low. On the upside, above 197.42 is now needed to signal rebound from 184.47 has resumed for 202.50/206.51 resistance zone. Otherwise, intraday risk remains on the downside.

In the bigger picture, whole down trend from 251.09 has resumed after corrective rebound from 192.60 was limited at 215.87 by 55 weeks EMA. Such decline is expected to extend further to 61.8% projection of 251.09 to 192.60 from 215.87 at 179.72 (close to 180 psychological support) first. While some rebound should be seen in near term, medium term outlook will remain bearish as long as 215.87 resistance holds.

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Published on  Fri, Sep 26 2008, 07:58 GMT