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Daily Analysis Article

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UK problems could send GBP lower

Mon, Jul 13 2009, 17:44 GMT
by Ralph Shell

ForexRazor

EUR/USD Commentary and Trade Ideas

Bias: Lower Bias Term: Medium Support: 1.3870 1.3770 1.3620 Resistance: 1.3980 1.4060 1.4110

GBP/USD Commentary and Trade Ideas 

The pound has been reeling under pressure from IMF comments, who claims that the UK budget deficit, estimated to reach 14% of GDP is quite dire. Further stimulus, bail outs, and quantitative easing is not affordable, in their opinion. With Gordon Brown's unpopular administration fumbling and bumbling along, trying to stay in power, does anyone really think they will heed the IMF warnings? The concern is that some of the UK banks will need further assistance. The UK Telegraph however, perhaps in response to the IMF, said there were a lot of bad loans in the EZ too. The lengthy bull run from the high 1.30's is showing signs of rolling over. Prefer the short side of the pound in the 1.6150 area. In a similar vein, consider owning the EUR/GBP, currently trading at .8640. This pair is showing signs of breaking out of the top side of the channel that has been in place since mid-March.

Bias: Lower Bias Term: Medium Support: 1.6090 1.5970 1.5740 Resistance: 1.6190 1,6260 1.6340

USD/JPY Commentary and Trade Ideas 

The COT futures report released on Friday showed the speculators, large and small had been massive buyers of the yen in the last reporting period. The large spec was a buyer of 13,587 contracts and reduced his short by 4643 contracts. Smaller speculators were also on the buy side of the yen. The selling to the specs was obviously done by the commercials. Most likely this intense spec activity is an offset for another trade, perhaps by hedge funds, but it hard enough keeping your own books. It appears that the selling is over, after four days of a sideways trade. The equities market has been battered ahead of the earnings season. What happens if some of the stimulus happy money provides us with some bullish surprises? Try the long side of the yen in the low 92 area with an appropriate money management risk control.

Bias: Neutral Bias Term: Medium Support: 92.20 91.60 90.80 Resistance: 92.90 93.40 94.60

 USD/CHF Commentary and Trade Ideas

This pair continues to move sideways stuck in neutral. A morning report that the Swiss PPI is down 5.6% from year ago numbers was largely ignored. In the latest COT report, commercials reduced longs and increased short to 59% of the total futures OI. Commercials have been very good front runners seemingly always ahead of SNB intervention. Try the long side of this market on a sell off under 1.0750.

Bias: Neutral Bias Term: Medium Support: 1.0820 1.0760 1.0700 Resistance: 1.0890 1.0940 1. 1010

USD/CAD Commentary and Trade Ideas

We are remaining in the 1.14/17 trading range, but the morning the CAD got a boost on a very positive Bank Of Canada survey of business optimism and a stronger equity market. Our preference has been to sell the USDCAD in the 1.17 area but this has been too cautious. Currently we are trading at 1.1535. Perhaps not all of the earnings season reports will be constructive so let's try to sell a rally back to 1.1650

Bias: Lower Bias Term: Long Support: 1.1540 1.1470 1.1400 Resistance: 1.1650 1.1740 1.1790

AUD/USD Commentary and Trade Ideas 

After selling off to .77 we have since returned to a little over .78 as the equities market has recovered this morning. The bull has been in control for quite a while and we are starting to see some liquidation. Try the short side of this pair if the current rally carried back toward the .79 level.

Bias: Lower Bias Term: Medium Support: .7750 .7670 .7510 Resistance: .7810 .7930 .8010

NZD/USD Commentary and Trade Ideas 

This pair has rallied from a sell off close to .62 and is now trading at .6290. NZ retails sales came in a little better than expected making some think the worst recession in years is abating. The COT futures report shows we have had some very modest long liquidation in a market that is very long. My preference is to sell strength, but this pair is a very slow mover.

Bias: Lower Bias Term: Long Support: .6250 .6210 .6160 Resistance: .6320 .6400 .6500

Published on  Mon, Jul 13 2009, 17:51 GMT