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Daily Trading Forecast

Euro Rate Cut − What is Anticipated and What is Not

Wed, Jan 14 2009, 10:43 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG

Buy on rumor, sell on fact - or better, act on rumors, forget the facts. If you would apply that to the euro, where a 50 basis point rate cut by the ECB is already built in, you would not put your bets on a further falling euro for the time being. So let’s forget about the rate cut and concentrate on the remarks M. Trichet is delivering with it tomorrow. Should he omit any hint that the ECB will cut rates further, the euro could very well rally. Taking a look at the charts, the EUR / USD pair is still on very oversold levels, so from that view at least a pause in the pair’s decline is likely.

In today’s trading, we anticipate a see-saw market in tradeable volatility on both sides. See the projected trading ranges below. U.S. retail sales data for the important month of December are scheduled at 14:30 CET - a bad number is expected. Also keep in mind that Mr. Bernanke’s speech yesterday supported the dollar, giving the impression that the U.S. economy could be out of the worst by mid-2009. Fed member Charles Plosser, an economist with good press coverage, will speak today at 14:30 CET too, most probably expressing a more positive view as well.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
Recovery in late Asian trading turned into renewed weakness in the early European hours for the pair, currently priced at 1.3220. We expect the 1.3140 support to be tested in today’s trading, but not broken. It would be a buying opportunity, leading to levels of 1.3290, the resistance point for today. From there, another weakness is in the cards.

GBP / USD
With weak performance in European morning trading, cable is approaching the 1.4480 support level and is currently at 1.4515. We see that level being tested soon, but not broken. Recovery moves from there are likely, which we expect to go as far as 1.4650. Then we see a new trading range between 1.4650 and 1.4480 being established.

USD / CHF
A see-saw market set in yesterday for the dollar against the Swiss franc, with the lower side limited at 1.1120 and the upper side at 1.1240. With the market right now at 1.1145, we expect that trading range to dominate today’s trading, with both sides being tested repeatedly.

USD / JPY
Against the yen, the dollar has entered a narrow sideways range between 89.90 and 88.80. Currently the market is trading at 89.40 and we see that trading range remaining more or less intact today, with no new directive signal for the pair.

Published on  Wed, Jan 14 2009, 10:44 GMT