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Daily Trading Forecast

Markets Await BoE, ECB Rate Cut Due Tomorrow

Wed, Dec 3 2008, 11:21 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG

The major pairs are only range trading in this European morning, with the EUR / USD showing some selling tone ahead of the expected rate cuts in Europe. With the the Bank of England and the European Central Bank having still much maneuvering room to lower interest rates, the question is not if they do it now but by how much. The markets expect the BoE will lower aggressively, perhaps more than 1 percentage point, while it is suspected the ECB could again be more cautious. Along with interest rate decisions due tomorrow (BoE at 13:00 CET, ECB at 13:45 CET), it will be interesting to learn more about the banks’ stances. Here again, the BoE’s recent remarks have been unmistakably clear lately, while the ECB has spoken of the dangers in slashing interest rates too quickly.

For today’s trading, we prefer to buy / sell within the ranges described below, again not expecting any significant directional moves, where we are still waiting for another confirmation for continued strength in the USD (a decisive move towards the EUR / USD lower support around 1.2400 and a break of that). Watch for the announcement of the U.S. ISM Non-Manufacturing Index at 16:00 CET.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The selling tone of the pair in early European trading is currently easing somewhat and is trading now at 1.2630. We are currently in the support zone between this level and 1.2590 – we expect this support to hold in today’s trading and anticipate recovery moves but not beyond resistance at 1.2700.

GBP / USD
Cable is about to test the long-term support zone around the 1.4600 level, dropping considerably in European morning trading and currently at 1.4735. We do not see much more downside risk and rather anticipate upmoves – leading again to the resistance level at 1.4850.

USD / CHF
The dollar picked up some strength against the Swiss franc in early European trading. Currently priced at 1.2105, it seems to be attacking the resistance at 1.2190 today. We do not expect this move to come quickly today, but rather see slow trading up to that level without breaking it.

USD / JPY
The dollar lost further ground against the yen in early European trading and is now caught in a trading range between 93.60 and 92.80, currently trading at 93.00. Since these prices are near the year’s low at 90.95, we do not expect much more downside risk today. An upmove to the 93.60 resistance is likely.

Published on  Wed, Dec 3 2008, 11:24 GMT