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Daily Trading Forecast

Greenback in Sideways Swing Mood before U.S. Election Day

Mon, Nov 3 2008, 11:16 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG

Whether a Republican or Democrat will sit in the Oval Office next January and whether this will have an impact on the dollar is as good as anyone’s guess. Political implications on currencies are much more complex than just naïve black-and-white thinking. Remember François Mitterand at the beginning of the Eighties, when the Forex world was convinced his socialist regime would give the French franc the final downkick. Instead the franc made faces at that opinion and rose during Mitterand’s administration. Another fact is by far more important. History has it that during the first 2 years the U.S. incumbent endorses a restrictive fiscal and monetary policy, to make room in the second 2 years for a U-turn of that policy to ensure his administration’s second term. That is most probably why the dollar holds up so well in these times, just correcting a little its newly-gained strength.

For today’s trading, we expect the dollar to be in a continued see-saw market. Right now the weakness sown in Asian and early European trading has found support and a bid tone is emerging. See the details in the major pairs’ discussion below. Note today’s release of the U.S. ISM Manufacturing Index for October at 16:00 CET, a market mover, where another decrease is expected.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The buying mood in the pair eased in early European trading, having reached a high of 1.2897, and is currently priced at 1.2839. We expect some further weakness, testing the 1.2790 level, and then renewed recovery up to the 1.2950 level as today’s resistance.

GBP / USD
Cable recovered in early European trading to a high of 1.6398 and failed to break the 1.6400 handle level, falling back to currently 1.6211. The downmove might continue right now, but not breaking the 1.6090 level on the downside. We expect rather another upmove from there, leading again to near 1.6400.

USD / CHF
The week began with an upmove for the dollar against the Swiss franc, but the bid tone is already fading this European morning. Currently priced at 1.1566, we do not see much upside potential in today’s trading, not above 1.1590, and rather reckon with further downward potential to 1.1450.

USD / JPY
The dollar continuously gained ground against the yen in Asian and European morning trading and is currently at 99.22. We expect the resistance line for today at 99.60 to hold and see downside potential to the 98.50 level.

Published on  Mon, Nov 3 2008, 11:18 GMT