• Home ::
• Technical ::
• Market View ::
• Daily Forex News

• Send
• Print
• Add To
• Rss

Daily Forex News

c22c9a2f-66c9-483f-89ad-97432152f0fd

7

0

Forex − Norges Bank Expected To Raise Rates

Thu, Oct 29 2009, 10:51 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Forex News and Events:

Dark clouds (in the figurative not Japanese candlestick sense) are clearly forming over risk appetite. Wall Streets severely underperformed yesterday and Asian equity markets are broadly lower with our favorite risk barometer the Shanghais composite down -2.33%. The Baltic Dry index has closed lower in the last two days. Both the Norges Bank and RBNZ were significantly less hawkish then the markets had anticipated prompting an unwinding of rate expectations. Economic data from the US, UK, Eurozone and Japan has failed to impress and actually points to a decline in the moment of recovery. But today with the anniversary of the October 1929 share market crash in the back to trader’s minds today brings a critical US GDP figure. After the disappointing UK GDP figure last week (q/q -0.4% vs. 0.2% exp) a limp US growth figure will have the risk correlated trades feeling very vulnerable (however a better figure will have participants pushing the entrenched recovery story). While Gold was the first to top out at $1070 its seems that traders are following crude prices direction. We believe this short term correction is the paired down of G4 growth expectations and should not turn into a complete risk appetite overthrow. However in the near term the rapid climb in VIX to 27 and oils 3% decline doesn’t board well for the very crowded risk trade. In Japan, Industrial production for September printed ahead of expectations at +1.4% m/m (cons. 1.0%, prev. 1.6%) and -18.9% y/y (cons. -19.3%, prev. -19.0%) a 7th consecutive monthly increase. This should be enough to prompt the inflation indicators and jobless rate to bottom out. Earlier, the RBNZ left the Official Cash Rate unchanged at 2.50% as the market had universally expected. The accompanying statement was dovish relative to the markets expectations as the text failed to remove the threat of further rate cuts or move forward their forecast for rate hikes (continuing a trend if less hawkish central bank statements). The initial reaction was selling of NZDUSD down to 0.7165 but has recovered since. It seems self evident that the Central Bank is very concerned with the NZD strength and rightly believe they must anchor expectations. The statement said this "The high level of the New Zealand dollar has limited the scope for exports to contribute to the recovery, and reinforces a bias towards domestic expenditure". Looking ahead to today’s session there are a number of further key releases. First up will be Norwegian Retail Sales (Sep), where the market is looking for a 0.4% increase MoM after the 0.3% gain last month. The spate of impressive figures from Norway in the last few months has pushed ambitions high, and this number is likely follow suit. However, if there is a downside miss in the numbers, NOK could suffer acutely as positioning and market sentiment is primed for an unwind in commodity currencies today. The other major release of the European session will be Eurozone Consumer Confidence (-18 expected, -19 prior); given sentiment we believe the bias strongly favours EURUSD weakness as better-than-expected figure will be unlikely to present a compelling case for buying EUR, but a weak number will almost certainly add fuel to the risk aversion fire. For today, sentiment clearly remains critical with US Q3 GDP with market consensus looking for 3.2 % q/q growth. However, with some analyst already reducing their forecast, expectations may be somewhat less optomistic. 

Today's Key Issues (time in GMT):

09:00 NOK Retail sales, m/m Sep 0.3 exp, 0.3 prior
09:30 GBP BoE publishes sectoral breakdown of M4 data Sep 
10:00 EUR Consumer confidence, index Oct -18 exp, -19 prior 
10:00 EUR Industrial confidence, index Oct -22 exp, -24 prior 
12:30 USD Real GDP, % q/q saar (y/y) Q3 1st 3.1 (-2.4) exp, -0.7 (-3.8 prior 
12:30 USD GDP price index, % q/q saar (y/y) Q3 1st 1.4 (0.8) exp, 0.0 (1.5) prior 
12:30 USD Initial jobless claims, thous (4wk ma) 24-Oct 523 (525) exp, 531 (532) prior 
14:00 USD Homeowner vacancy rate, % Q3 2.5 prior 
14:00 SEK Riksbank Deputy Governor Wickman-Parak speaks 

The Risk Today:

EurUsd After taking out stops through one of our medium term uptrend channels 1.4850 / 75, 1.4850 now serves as first resistance to the topside, with 1.4967 as a fairly decent resistance zone above there. 1.4580 is the near-term support, but another leg down to the lower channel at 1.4620 would not be surprising if USD strengthens again today. 

GbpUsd GBP is still a fundamentally troubled currency and technically 1.6484 should serve as a primary resistance today with 1.6272 a potential neckline in a very short term head & shoulders. If this formation does pan out to be a H&S within the second shoulder of a longer term H&S then the moves will start to become extremely dramatic into the year end. For now, intraday shorts expected at 1.6484 and longs at 1.6272. Any break lower and one can expect 1.6038 in the coming days. 

UsdJpy Monday USDJPY collided with cloud covering at 92.30 and has been on a back footing ever since. The sharp pullback puts the focus on 90.10 with heavy resistance at 90.91. 

UsdChf USDCHF continues to make higher highs and looks to test channel resistance at 1.0297. The break of 1.0230 trend resistance already hurt the pairs bearish tone but a break to the upside will provide plenty of reversal signals. Support now stands at 1.0170. 

Resistance and Support: 

Published on  Thu, Oct 29 2009, 11:12 GMT