27th of October 2010 - Fundamental Forex Market Overview

DAILY Fundamental Forex Market Overview
27 October 2010 – 8:00 GMT
Wednesday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


FUNDAMENTAL ANALYSIS at 0800 GMT

USD

The dollar continued to find support during the Asia session after a slightly weaker than expected CPI report from Australia, and a newspaper article which said the FOMC would likely ease in "measured" fashion. EURUSD traded 1.3802-1.3878, USDJPY 81.32-81.76. Although the scope of any further Fed easing remains a significant unknown, consecutive days of decent US data have probably encouraged investors to scale back some short dollar positions. Comments by New York Fed President Dudley overnight may also have helped. While he supports further easing, he said, "I would put very little weight on what is priced in or not priced into the market. We make our decision on the way we think is the best way to achieve our mandate."

US equities closed flat while Treasury yields picked up, likely due to moderating expectations for further QE. The Conference Board consumer confidence index rose more than expected to 50.2 though there was some deterioration in the current assessment of the labor market. The S&P/Case Shiller home price index fell 0.3% m/m in August as prices have turned from rising in Q2 to falling in Q3 following the expiration of homebuyer tax credits. We maintain our view that the dollar could benefit from too much QE being priced in ahead of Nov 3. Durable goods and new home sales are due.

EUR

The euro was weaker on the broader dollar rally, despite claims by ECB Governing Council Member Quaden that the euro's current value is not out of line with economic fundamentals. ECB Governing Council Member Weber said that Germany's recovery is not yet fully self-sustaining.

The Irish government announced a target of EUR15 bn in budget savings over four years, almost double the figure announced in the December 2009 Stability Programme update but in line with a recent estimate by a government-sponsored think-tank. Details should be in the 4-year fiscal plan, which is scheduled for mid-November.

GBP

MPC Member Posen has reaffirmed his dovish stance, saying that overshooting the inflation target by a little over a percentage point does not mean inflation is high, and that looking at short-term data can miss the point.

UK preliminary Q3 GDP was reported +2.8% y/y, vs consensus for +2.4% and the Q2 reading of +1.7%. The improvement was largely driven by construction and the y/y figure was the highest since Q3 2007. The service sector's contribution to growth remained limited. The better GDP and S&P's decision to change the UK ratings outlook to stable from negative and affirm the AAA rating helped sterling gain versus the euro while cable came back down on the back of the broader dollar move.

Although the latest data decreases QE expectations, we stay cautious on sterling as recently announced spending cuts will likely weigh on domestic growth.

AUD

The AUD fell heavily after Q3 CPI missed expectations. The headline reading came in just short at +0.7% q/q (cons. +0.8%, prev. +0.6%). The core reading also missed, rising only +0.6% q/q (cons. +0.7%, prev. +0.5%). Consequently, our Australia economics team no longer expect the RBA will raise the cash rate next week. Instead, they now think the next 25bp hike will come in Feb. 2011.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

27th of October 2010 - Technical Forex Market Overview

DAILY Technical Forex Market Overview
27 October 2010 – 8:00 GMT
Wednesday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


TECHNICAL DATA

USDCHF 1.0329 next resistance.

EURUSD BULLISH Look for a break above 1.4159 for resumption of the bull trend. Support at 1.3637/1.3559 zone

USDJPY BEARISH While resistance at 82.52 holds, expect decline towards 79.75 with scope for 77.91 next.

GBPUSD BULLISH Recovery has scope for 1.6107. Support holds at 1.5606

USDCHF BEARISH Rise through 0.9918 breakout low exposes 1.0329. Support holds at 0.9463 ahead of 0.9225.

AUDUSD BULLISH Move above 1.0004 would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low

USDCAD BEARISH As long as 1.0380 continues to cap the upside, expect decline towards 0.9981 and 0.9820 next.

EURCHF BULLISH Violation of 1.3665 leaves next resistance at 1.3924. Near-term support at 1.3456 ahead of 1.3265

EURGBP BULLISH Sudden decline through 0.8773 exposes 0.8689 and 0.8636 next. Resistance at 0.8885 yesterday's high

EURJPY BULLISH Need a break below 111.56 to trigger bear trend. Upside capped at 115.68.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

26th of October 2010 - Fundamental Forex Market Overview

DAILY Fundamental Forex Market Overview
26 October 2010 – 8:00 GMT
Tuesday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


FUNDAMENTAL ANALYSIS at 0800 GMT

USD

The dollar was largely range-bound throughout a quiet Asia session, with little news or economic data to act as drivers. Asia equity performance has been mixed, although the S&P 500 closed fractionally ahead. EURUSD traded 1.3908-1.3993, USDJPY 80.67-80.89. Kansas City Fed President Hoenig again called for Fed rate hikes and claimed that embarking on another round of QE would be a "dangerous gamble". New York Fed President Dudley said that he "would put very little weight" on what the market has priced in for the scale of further easing - the FOMC will decide what is best to satisfy its mandate. He said that if the Fed sticks to its mandate, then the dollar will look after itself. Existing home sales rose more than expected in September at 10.0% and the upturn in contract closings, reflected in the data, appears roughly consistent with the earlier improvements in mortgage applications and in initial sales contract signings in the pending home sales index. Although the sales pace was still weak on a historical basis, sales appear to have bottomed. The current activity index in the Dallas Fed manufacturing survey rose to 2.6 in October from -17.7 in September versus consensus -8.0. Other regional surveys had previously shown improvement or at least a fading of weakness. S&P/Case Shiller, Conference Board consumer confidence and the Richmond Fed manufacturing survey are due.

EUR

ECB Governing Council Member Weber said he saw no point in commenting on euro levels though he was critical of excessive currency volatility. Weber said the quicker the European interbank market recovers, the quicker the ECB should be able to withdraw nonconventional measures and return to a more normal monetary policy. He also said current rates are appropriate but the ECB should not keep rates too low for too long.

At 24.4% y/y (cons. 17.1%, prev. 11.2%) and 5.3% m/m, Eurozone industrial new orders for August were well above expectations. The trend in new orders suggests that industrial activity may continue to hold up. The August numbers benefited from a lower euro but it remains to be seen how recent appreciation will affect external demand.

EURUSD long positioning remains near this year's extremes and we are still cautious on chasing significant upside above 1.40.

JPY

Rhetoric levels from Japanese officials escalated over the past 24 hours, despite the G20 pledge to "refrain from competitive devaluation". Finance Minister Noda said Monday's FX moves were somewhat one-sided, a term he used ahead of the Sept 15 act of intervention. He also noted that the G20 felt excessive FX moves were undesirable, a clear indication that he sees justification in the text of the communiqu? for further intervention. Noda said he is watching FX markets with great interest and is ready to take decisive action when needed.

Economy Minister Kaieda warned that "excessive intervention should be avoided but the government can be allowed to do so if currency moves are volatile and one-sided". Deputy Finance Minister Igarashi also suggested that FX intervention remains very much an option and said: "A surprise move would probably be effective to some extent. We can't make an announcement in advance that we will act, but, on the other hand, we can't say that we won't act either." He had earlier said that any intervention would be aimed at restraining excessive currency swings and the latest G20 language appeared to give them the green light on that basis.

GBP

The advance estimate of Q3 GDP is expected lower at consensus 0.4% q/q (UBSe 0.5%) after 1.2% previously. But on a y/y basis, we expect to see an increase from the previous reading. We remain cautious on sterling given the government's recently announced spending cuts.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

26th of October 2010 - Technical Forex Market Overview

DAILY Technical Forex Market Overview
26 October 2010 – 8:00 GMT
Tuesday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


TECHNICAL DATA

USDJPY targets 79.75.

EURUSD BULLISH Remains constructive above 1.3637/1.3559 support zone, trigger to bear trend. Resistance at 1.4159 ahead of 1.4373.

USDJPY BEARISH The pair targets 79.75 with scope for 77.91 next. Resistance at 81.49 yesterday's high.

GBPUSD BULLISH Holds above 1.5606 keeping our focus on the upside. Resistance at 1.5942 ahead of 1.6107.

USDCHF BEARISH Recovery has scope for 0.9918 breakout low. Next big support below 0.9463 at 0.9225.

AUDUSD BULLISH Upside potential targets 1.0004; move above the level would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low.

USDCAD BEARISH Break of 1.0162 brings focus back to the downside with next support at 0.9981. Tough resistance at 1.0380/1.0407 area.

EURCHF BULLISH Violation of 1.3665 leaves next resistance at 1.3924. Near-term support at 1.3456 ahead of 1.3265.

EURGBP BULLISH Momentum is positive; expect extension of gains towards 0.9039 and 0.9150 next. Near-term support defined at 0.8773.

EURJPY BULLISH Need a break below 111.56 to trigger bear trend. Upside capped at 115.68.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

25th of October 2010 - Technical Forex Market Overview

DAILY Technical Forex Market Overview
25 October 2010 – 8:00 GMT
Monday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


TECHNICAL DATA

EURCHF 1.3924 resistance.

EURUSD BULLISH Remains constructive above 1.3637/1.3559 support zone, trigger to bear trend. Resistance at 1.4159 ahead of 1.4373.

USDJPY BEARISH Outlook is bearish, expect extension of downleg towards 79.75 ahead of 77.91.

GBPUSD BULLISH Holds above 1.5606 keeping our focus on the upside. Resistance at 1.5942 ahead of 1.6107.

USDCHF BEARISH Recovery has scope for 0.9918 breakout low. Next big support below 0.9463 at 0.9225.

AUDUSD BULLISH Upside gains held at 1.0004; move above the level would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low.

USDCAD BEARISH Remains heavy below 1.0380/1.0407 area. Initial support at 1.0162 ahead of 0.9981.

EURCHF BULLISH Violation of 1.3665 triggers acceleration of gains towards 1.3924. Near-term support at 1.3456 ahead of 1.3265.

EURGBP BULLISH Move above 0.8908 exposes 0.9039 next. Near-term support defined at 0.8773.

EURJPY BULLISH Focus is back on the upside; expect gains to target 115.68 and 116.68 next.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

25th of October 2010 - Fundamental Forex Market Overview

DAILY Fundamental Forex Market Overview
25 October 2010 – 8:00 GMT
Monday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


FUNDAMENTAL ANALYSIS at 0800 GMT

USD

The outcome of the G20 meeting seemed to boost the risk appetite, but it was not until a strong Australian PPI reading was reported that the US dollar began to weaken significantly. EURUSD traded in a range of 1.3917-1.4044, and USDJPY traded 80.90-82.20. Asian equities were slightly firmer and US stocks closed fractionally ahead on Friday, inspired by the latest Q3 earnings and the prospect of further Fed easing drawing ever nearer. The G20 failed to agree on specific limits for current account imbalances. On the subject of FX intervention, G20 countries pledged "to refrain from competitive devaluation". Nevertheless, delegates agreed to remain vigilant to "disorderly movements in exchange rates", with the aim of reducing the risk of "excessive volatility in capital flows facing some emerging countries". This does not suggest a willingness to engage in coordinated intervention, but is rather an acknowledgement that policy decisions in advanced economies "including those with reserve currencies" can create problems for emerging markets.

Treasury Secretary Geithner said that the US, Europe and Japan recognized the importance of preserving FX stability, and he reaffirmed that the policy of the US is to support a strong dollar. Philadelphia Fed President Plosser said he is not convinced that more asset purchases will help the economy at this juncture, and said Fed policymakers hold differing views on the relative merits of "shock and awe" versus incremental asset buying. Director of Research Waller at the St. Louis Fed said the probability of further easing being announced on Nov 3 is "probably pretty high", adding that a case could be made for an initial easing of $500 bn followed by subsequent steps of $250 bn.

EUR

The German Economy Minister Bruederle said intensive G20 discussions took place on US liquidity policy, by which he presumably means the policy of quantitative easing. He said he does not support an increase in US liquidity as it indirectly influences the exchange rate.

Referring to the debate over G20 current account imbalances, ECB President Trichet implied that a focus on Germany's large trade surplus alone would be misguided, and that the current account of the EU as a whole should instead be considered. Trichet added that, according to some G20 participants, the monetary policy of advanced economies could create problems for EM.

JPY

After the G20 meeting, Finance Minister Noda said that he had gained an understanding from his G20 counterparts on Japan's policy of FX intervention, and that Japan would continue to take decisive steps on FX as needed. Noda added that he does not expect the debate over current account imbalances to be settled at the upcoming G20 Summit on Nov. 11-12.

Against expectations, the adjusted trade balance for September was broadly stable despite the stronger yen, coming in at ?587.6 bn (cons. ?495.5 bn, prev. ?570.2 bn).

AUD

The AUD got a significant boost from a much stronger than expected Q3 PPI rising +2.2% y/y (cons. +1.4%, prev. +1.0%). This suggests upstream price pressures are intensifying, which should keep the RBA hawkish, although Wednesday's Q3 CPI will still be key to the November policy decision.

RBA Governor Stevens spoke but offered few clues on the likely path of the policy rate. He showed his determination to maintain the RBA's 2-3% target range for the cash rate and said higher inflation will not be tolerated. He said mining investment is now at its strongest since the 1960s, and would very likely increase further.

CAD

Canadian CPI was slightly stronger than expected on a monthly basis at +0.2% m/m (cons. +0.1%), but the headline annualised rate was in line at +1.9% y/y, and probably not strong enough to force the BoC back onto a more hawkish track. Core inflation actually dipped to +1.5% y/y (cons. +1.6%). Retail sales meanwhile were much stronger in August, growing +0.5% (cons. -0.1%, prev. +0.1%). Ahead, Canada CPI readings for September will be released as will retail sales for August.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

22nd of October 2010 - Technical Forex Market Overview

DAILY Technical Forex Market Overview
22 October 2010 – 8:00 GMT
Friday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


TECHNICAL DATA

EURCHF 1.3665 next resistance.

EURUSD BULLISH Need a break below 1.3637/1.3559 support zone to trigger the bear trend. Resistance at 1.4159 ahead of 1.4373.

USDJPY BEARISH While resistance holds at 83.03, expect extension of downleg towards 79.75 ahead of 77.91.

GBPUSD BULLISH Remains constructive above 1.5606 keeping our focus on the upside. Resistance at 1.5942 ahead of 1.6107.

USDCHF BEARISH Rise through 0.9729 exposes 0.9918 breakout low. Next big support below 0.9463 at 0.9225.

AUDUSD BULLISH Upside gains held at 1.0004; move above the level would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low.

USDCAD BEARISH Tough resistance in 1.0380/1.0407 area. Initial support at 1.0162 ahead of 0.9981.

EURCHF BULLISH Climb through 1.3494 clears the way for a run towards 1.3665 and 1.3924 next. Near-term support at 1.3265 ahead of 1.3072.

EURGBP BULLISH Sudden recovery through 0.8840 and 0.8894 exposes 0.9039 next. Near-term support defined at 0.8773.

EURJPY BULLISH Focus is back on the upside; expect gains to target 115.68 and 116.68 next.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

22nd of October 2010 - Fundamental Forex Market Overview

DAILY Fundamental Forex Market Overview
22 October 2010 – 8:00 GMT
Friday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


FUNDAMENTAL ANALYSIS at 0800 GMT

USD

The dollar clawed back some lost ground during the early part of the Asia session, but risk currencies found a bid on remarks from US Treasury Secretary Geithner. He said that G20 countries should cap their external imbalances at a particular, though unspecified, share of GDP. It appears that the aim of any such measure would be to force export-dependent economies to focus instead on stimulating domestic demand, and this should in theory reduce local objections to currency appreciation. Geithner conceded that countries with large raw material exports could be made exempt from such a rule. This proposed exemption would appear to favour Australia, and should be AUD supportive. EURUSD traded in a range of 1.3889-1.3966, and USDJPY stayed in a range of 81.14-81.37.

Asian equities are slightly firmer at the time of writing and US equities earlier closed fractionally ahead. FOMC voter and St. Louis Fed President Bullard said that "we are not here to ratify what the markets think" suggesting there was no pre-commitment on the November 3 FOMC decision. However, Bullard said that if the Fed did go ahead with further quantitative easing, he would favor asset purchases in increments of $100bn. On the data front, initial jobless claims fell from 475k to 452k for the most current reading. The Philadelphia Fed Index rose to 1.0 from -0.7 previously. The growth-related details of the survey were slightly more positive, with improvement in employment and shipments indices. New orders remained soft, albeit less weak than in September. Philadelphia Fed President Plosser is due to speak at a seminar on regulatory reform. The G20 finance ministers and central bank governors are due to convene in Korea.

EUR

Germany's PMI manufacturing was far stronger than expected in October, coming in at 56.1 vs. 54.6. Services PMI was also strong at 56.6 vs. 54.9 expected. This has managed to lift the corresponding Eurozone figures too, and has provided an extra layer of support for the EUR.

Ahead, the German IFO is due to be released. Our European economists expect the business climate index to weaken slightly to 105.1 (prev. 106.8).

GBP

UK retail sales fell by 0.2% in Sept after a downwardly revised -0.7% decline (-0.5% previously), lower than market expectations of a 0.4% increase. This is the 2nd month retail sales have dropped. The official data stands in contrast to some of the major surveys such as the CBI, BRC and the BoE, which continue to point to retail sales volume growth. We expect retail sales volume growth to strengthen in Q4, ahead of the January VAT hike.

JPY

Finance Minister Noda described as "unrealistic" US Treasury Secretary Geithner's proposals to limit the size of a country's current account balance. He added that the G20 meeting is unlikely to discuss the currency policies of any individual country. BoJ Governor Shirakawa said he would not comment on the capital control measures of any individual country. He added that China's recent rate hike will promote sustainable growth.

CHF

Swiss trade data were much firmer than expected, coming in at CHF1.69bn in surplus vs. CHF1.20bln expected. However, this was largely due to a sharp drop in imports as exports also dipped by 3.8% on the month.

The SNB also announced mass diversification of their assets in Q2, buying over $10bln, ¥1tln, CAD5bln and CHF6bln in other currencies.

CAD

Ahead, Canada CPI readings for September will be released as will retail sales for August.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

21st of October 2010 - Technical Forex Market Overview

DAILY Technical Forex Market Overview
21 October 2010 – 8:00 GMT
Thursday

_____________________________________________________________________
Market Analysis Desk

Foreign Exchange Research: www.fibosignals.com/5585/resources.html

_____________________________________________________________________


TECHNICAL DATA

EURJPY break of 111.77 exposes 110.66

EURUSD BULLISH Break of 1.3775 reaction low exposes 1.3637/1.3559 support zone.

USDJPY BEARISH Next support at 79.75 ahead of 77.91. Upside potential capped at 83.03.

GBPUSD BULLISH Look for a break below 1.5606; till then pullback is seen as a correction. Resistance at 1.5942 ahead of 1.6107.

USDCHF BEARISH Rise through 0.9729 exposes 0.9918 breakout low. Next big support below 0.9463 at 0.9225.

AUDUSD BULLISH Upside gains held at 1.0004; move above the level would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low.

USDCAD BEARISH Tough resistance in 1.0380/1.0407 area. Initial support at 1.0162 ahead of 0.9981.

EURCHF BULLISH While 1.3494 continues to cap recoveries, support lies at 1.3265 ahead of 1.3072.

EURGBP BULLISH Momentum is positive; expect gains to target 0.8840 with scope for 0.8894 and 0.9039 next. Near-term support holds at 0.8689.

EURJPY BULLISH Move below 111.77 exposes 110.66 ahead of 107.73. Upside capped at 115.68.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. White
Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

21st of October 2010 - Fundamental Forex Market Overview

DAILY Fundamental Forex Market Overview
21 October 2010 – 8:00 GMT
Thursday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


FUNDAMENTAL ANALYSIS at 0800 GMT

USD

The dollar briefly strengthened sharply during the Asia session on wire headlines citing US Treasury Secretary Geithner as telling the Wall Street Journal that there is no need for the dollar to sink further against the euro and the yen. However, given the lack of a supporting quote, the market came to doubt the accuracy of the remark, and the dollar gave back most of its gains against the yen. EURUSD traded 1.3872-1.3983, USDJPY 80.99-81.83. Asian equities closed slightly weaker, despite a strong finish in New York that took the S&P 500 over +1% higher. Gold continued to lose ground, and it is changing hands for $1341.98/oz at the time of writing.

During the US session, the dollar hit a sizable weak patch, which was variously attributed to German Chancellor Merkel's comments or the appearance of an early draft of a G20 statement. The draft suggested the group may take a clear stand against what has been called a global "currency war" as the G20 economies vow to "refrain from competitive undervaluation" of their currencies. But the move may have been due more to market talk of a US think-tank saying that the Fed will, at its Nov. 3 meeting, launch $500 bn worth of QE over three to six months. QE2 expectations remain firmly in place as the latest Fed Beige Book said economic activity continued at a modest pace, though the tone was slightly more positive than previously, and investors paid no heed to Philadelphia Fed President Plosser being somewhat disinclined to pursue further easing. Richmond Fed President Lacker, an FOMC voter in 2012, said the dollar seems to be responding to shifting expectations about policy in different countries. Initial jobless claims are due and the Fed's Hoenig and Bullard are likely to sound more hesitant on QE2 prospects.

EUR

German Chancellor Merkel said fiscal problems persist in the Eurozone but that rescue mechanisms cannot run beyond 2013. Merkel added that the euro is still being shielded by the various rescue packages. While near-term dollar weakness is the overwhelming factor supporting EURUSD, Merkel's comments underscore our concern for the medium-term prospects for the euro.

PMIs are in focus for the Eurozone today as they are expected to ease slightly in October but the recent euro strength will likely not deter growth prospects in the near term.

GBP

The minutes from the October 7 MPC meeting revealed a three-way split in the policy vote. As expected, MPC policymaker Sentance voted for a policy rate hike and at the other end of the spectrum MPC policymaker Posen voted to begin another round of quantitative easing. Sterling fell slightly on the split vote and the size of the asset purchases Posen had in mind was a factor as he voted for £50bn more, a substantial sum that would have increased the BoE's stock of Gilts by 25%. The minutes also noted most MPC members stood ready to alter policy in either direction although some felt that the chances of more stimulus being needed had increased. November's Inflation Report was explicitly mentioned as providing the next opportunity to review the economic outlook thoroughly.

The Comprehensive Spending Review (CSR) provided few surprises, as the budget deficit forecasts were held unchanged. The lack of surprises and continued dollar weakness overcame any hangover from the latest BoE MPC minutes and cable remained supported. But while the CSR was as expected, it still means the UK faces a significant period of austerity, which keeps us cautious on sterling in the medium-term.

M4 money supply made another all-time low, coming in well below expectations at +0.9% y/y. BoE Governor King said M4, pay, and demand growth are likely the best guides to the inflation path and this print could be concerning.

JPY

Finance Minister Noda repeated that excessive FX moves are undesirable and that Japan will take decisive action on FX, including intervention when needed. Noda went on to say that the yen's appreciation against other Asian currencies puts Japan's trade at a disadvantage.

CAD

The BoC MPR provided more details on the forecast changes mentioned in the earlier policy statement. But the report did mention that the inflation forecast assumes a "gradual" rise in rates and in the ensuing press conference Governor Carney sounded less dovish on the domestic economy than the policy statement reflected, which helped support the Canadian dollar during the session.

A. White
Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

20th of October 2010 - Technical Forex Market Overview

DAILY Technical Forex Market Overview

20 October 2010 – 8:00 GMT

Wednesday

_____________________________________________________________________
Market Analysis Desk

Foreign Exchange Research: www.fibosignals.com/5585/resources.html

_____________________________________________________________________


TECHNICAL DATA

USDCAD 1.0380 tough resistance.

EURUSD BULLISH Break of 1.3775 reaction low exposes 1.3637/1.3559 support zone.

USDJPY BEARISH Next support at 79.75 ahead of 77.91. upside potential capped at 83.03.

GBPUSD BULLISH Room toward support at 1.5606, but as long as it holds, view pullback as correction.

USDCHF BEARISH Rise through 0.9729 exposes 0.9918 breakout low. Next big support below0.9463 at 0.9225.

AUDUSD BULLISH Sharp decline yesterday exposed 0.9542 reaction low. Momentum is picking up; expect recovery towards 1.0004 trend high.

USDCAD BEARISH Tough resistance in 1.0380/1.0407 area. Initial support at 1.0162 ahead of 0.9981.

EURCHF BULLISH Upside potential holds below 1.3494; break of the level would expose 1.3665. Initial support lies at 1.3265 ahead of 1.3072.

EURGBP BULLISH Momentum is positive; expect gains to target 0.8840 with scope for 0.8894 and 0.9039 next. Near-term support holds at 0.8689.

EURJPY BULLISH Move below 111.77 exposes 110.66 ahead of 107.73. Upside capped at 115.68.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. White
Analyst at Fibosignals.com

20th of October 2010 - Forex Market Overview

DAILY Fundamental Forex Market Overview
20 October 2010 – 8:00 GMT
Wednesday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________


FUNDAMENTAL ANALYSIS at 0800 GMT

USD

Risk appetite finally stabilized during the Asia session in the aftermath of yesterday's surprise policy hike by China. EURUSD traded 1.3698-1.3811, USDJPY 81.32-81.67. The dollar has been slowly giving back yesterday's gains ever since Shanghai equities opened and quickly recovered their poise. Although several Fed officials spoke, there was little market impact given that many of their views on further easing were already known. Fed Presidents Evans, Dudley and Lockhart continued to support further easing while Fisher and Kocherlakota continued to sound caution on more action. Lockhart, a 2011 FOMC alternate and 2012 voter, mentioned a pace of $100 bn of purchases a month is among the range of considerations. Chairman Bernanke did not offer any new insights. Fed Governor Duke reminded markets that a further round of easing on Nov. 3 is not yet a done deal, and that lowering the interest rate paid on excess reserves is another policy option. Investors expectations for more easing remain in place but calibration of those expectations is key, as the quantity and duration of more easing are moving targets. Press reports that a large US asset manager and the New York Fed are looking to put-back bad mortgages to a major US bank contributed to the atmosphere of risk aversion earlier, and mixed data did little to help investor sentiment as housing starts were better than expected and housing permits fell more. Between now and the Nov. 3 FOMC meeting, we expect pressure to remain squarely on the dollar.

EUR

ECB Executive Board Member Stark noted that there are risks associated with the ECB's bond purchases, and that the ECB must avoid intervening in functioning markets. He said that the bond buying program risks becoming 'quasi fiscal' in nature, and that low interest rates reduce the incentive for fiscal consolidation. These comments bring Stark a little closer to ECB Governing Council Member Weber's stance on the matter, but for now Weber is the only policymaker who has publicly called for the program to be disbanded.

Stark added that he sees clear signs of normalization in money markets and cautioned that while there is no apparent currency war yet, there is the risk that ample liquidity could trigger more defensive responses. Weber said it is too early to call an end to the crisis, echoing Trichet's comments at the latest press conference, but his comments focused more on regulatory issues than monetary policy.

The German ZEW survey was much stronger than expected at 72.6. However, the boost to the euro was limited as markets continue to assess whether QE2 is now fully priced and reduced risk-seeking worked against the euro.

GBP

Broader dollar strength kept sterling under pressure but the currency has its own obstacles to come in the next 24 hours. The BoE MPC minutes should show if a 3-way split has occurred, with policymakers Posen and Sentence possibly on opposite ends of the policy spectrum, and headlines from the Comprehensive Spending Review will be watched as fiscal austerity could hamper growth and weigh on sterling.

BoE Governor King said monetary policy is still a potent weapon but that policy must balance risks to inflation and the MPC is conscious of risks to inflation expectations. He saw upside and downside risks to inflation though he did say it could be some time before inflation falls to target. King also said the weaker pound supports rebalancing of the economy and that the G7 willingness to work together "has ebbed." He also mentioned that M4, pay and demand growth are likely better guides to future inflation. M4 data is also due today.

JPY

BoJ Deputy Governor Nishimura observed that the yen's rise is a major downward risk to the economy, and that it may contribute to deflationary forces. IMF First Managing Director Lipsky met with Finance Minister Noda, and said that the BoJ's recent easing was a welcome move. Noda said that FX intervention was not discussed at the meeting. Deputy Cabinet Secretary Fukuyama said there has been no change in Japan's position on FX intervention.

Nishimura added that China's rate hike yesterday is a good decision that would help ensure long and stable growth.

CAD

The BoC kept its policy rate unchanged as expected and revised down its growth outlook for 2010 and 2011, also in line with expectations. But the decision to tune down inflation forecasts was less expected, as the BoC pushed back its time-frame for when it sees the output gap closing. The BoC kept in place its policy guidance, saying again that further reductions in monetary stimulus would have to be "carefully considered" and seemingly expanded its view of downside risks. With the BoC on hold for now, the CAD will continue to lose luster to the other dollar-bloc currencies as a relative value G10 play. The BoC Monetary Policy Report will be released and should echo the changes outlined in the policy statement.

A. White

Chief Analyst at Fibosignals.com