Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from rainy Hamburg and welcome to our Daily FX Report. Yesterday a gunman attacked Canada’s parliament but he was shot dead and the Prime Minster Stephen Harper was safely removed. Before the gunman get killed he shot dead a soldier, who was guarding the National War Memorial in central Ottawa. Security in Ottawa came under criticism after the gunman was able to run through the unlocked front door of the main parliament building. Until now no group claimed responsibility for the attack.
Anyway, we wish you much success in trading today.
Market Review – Fundamental Perspective
Yesterday the Dow Jones Index of shares dropped 0.9 percent and the Standard & Poor’s Index fell 0.7 percent. On Wednesday data showed that applications for U.S. home mortgages increased last week. The Mortgage Bankers Association said it seasonally adjusted index, which includes both refinancing and home purchase demand, gained 11.6 percent. In addition another report showed that U.S. consumer-price index rose 0.1 percent after dropping 0.2 percent in August. Core inflation, excluding volatile food and fuel, also strengthened 0.1 percent after being nearly unchanged in August. As a result the USD advanced to a one-week high versus its major peers as the data underscored that the world’s largest economy is gaining momentum. The USD/JPY rose for a fifth day which is the longest streak in more than a month. The EUR declined versus nearly all major peers as the market weighed the prospects of additional easing measures from the ECB. The EUR/USD weakened 0.5 percent to 1.2649 and the EUR/JPY tumbled 0.4 percent to 135.52. The USD/JPY strengthened 0.1 percent to 107.14.
Yesterday minutes of the Bank of England’s last meeting showed that policy makers saw larger risks to the U.K. from a euro-area slump, damping investor bets on an increase in interest rates. Only two officials voted to raise rates by 25 basis points and the remaining seven opted to keep it at 0.5 percent. The GBP/USD tumbled 0.4 percent to 1.6047.
Yesteday the Bank of Canada left interest rates unchanged at 1 percent but removed the word neutral from a statement on its next move, fueling bets it may be a chance for an interest rate increase. The USD/CAD traded at 1.1240 after touching 1.1184, the strongest since October 13. The NZD was set for the largest drop in three weeks after a report showed the consumer price index tumbled to 1 percent. the NZD/USD fell 0.7 percent to 0.7873.
Daily Technical Analysis
EUR/CHF (4 Hours)
The EUR/CHF dropped from a two month high around 1.2137 to the support level around 1.2056. Since then it is in a sideways trend and rebounded several times at the strong resistance level around 1.2077. Currently it is at the lowest Bollinger band and we might expect another attempt to cross the upper hurdle while the Stoachastic shows signs of a bullish movement.
Support & Resistance (4 Hours)
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Editors’ Picks
AUD/USD gains momentum above 0.6500 ahead of Australian Retail Sales data
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EUR/USD: Federal Reserve and Nonfarm Payrolls spell action this week
The EUR/USD pair temporarily reconquered the 1.0700 threshold last week, settling at around that round level. The US Dollar lost its appeal following discouraging United States macroeconomic data indicating tepid growth and persistent inflationary pressures.
Gold trades on a softer note below $2,350 on hotter-than-expected US inflation data
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Week ahead: Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
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