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Daily Trading Forecast

British Pound the Weakest Among the Majors

Wed, Nov 4 2009, 11:11 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG

And most probably the first to recover against the dollar, considering the oversold status of this market. That the pound has a downside volatility bigger than other currencies is not a surprise. Taking together all the fiscal and monetary expansion to fight the recent crisis (including yesterday's RBS increased bailout), the QE amount per head of the country is bigger than that of the U.S. That increases the vulnerability to future inflation compared to other countries, although we find inflation worries a little overdone at this point in time. Also predicting when inflation will appear is a hard thing to do.

For today's trading, we see a somewhat weaker USD, which is more or less overbought again. The pound is already on a recovery path, with the euro following. Important reports today are Mortgage Applications and Challenger Job Cuts at 13:00 CET, ADP Employment Change at 14:15 CET and ISM Non-Manufacturing at 16:00 CET. Note the FOMC rate decision is at 20:15 CET today, although we do not expect much change in the Fed's policy.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
On a continous recovery path this European morning, the euro is currently trading near the day`s high (1.4772) and is currently at 1.4760 against the dollar. We see some down corrections to come, but only on a minor scale. They would represent the opportunity to buy again, with a final objective of 1.4830.

GBP / USD
The strong and quick upmove has brought the pound quickly into an overbought situation, which calls for corrections. Currently trading at 1.6540, we expect these corrections to find support around the 1.6500 mark, which could serve as a springboard to renewed upmoves, this time up to 1.6620.

USD / CHF
The dollar lost further ground in early European trading against the Swiss franc, trading right now at 1.0240. We expect some more downward potential for today's trading, down to support 1.0180, before some meaningful upward correction can set in.

USD / JPY
In one of its typical maverick moves against the yen, the dollar strengthened in Asian and early European trading, touching now the 90.90 mark. We see some more of this strength developing today, to the 91.40 level, before down corrections would set in.

Published on  Wed, Nov 4 2009, 11:12 GMT