The Dollar rallied to a 2 week high against a basket of currencies on Tuesday as worries about a deteriorating global economy prompted investors to reduce riskier assets and run into safety of the Dollar. A break of the recent trading ranges further exacerbated selling pressure on the Euro. The Euro came under pressure despite a better-than-expected reading in a key German ZEW survey, weighed down by steep losses in Crude Oil and US stocks. The Yen traded broadly higher as worries over slowing growth kept up the pressure on carry trades, in which low-yielding currencies like the Japanese currency are used to buy assets in higher-yielding ones.
News and Events:
The Dollar rallied to a 2 week high against a basket of currencies on Tuesday as worries about a deteriorating global economy prompted investors to reduce riskier assets and run into safety of the Dollar.
A sell-off in world stock markets further reduced investors’ appetite for risk, boosting demand for the Dollar and the Japanese Yen. A break of the recent trading ranges further exacerbated selling pressure on the Euro.
The Yen traded broadly higher as worries over slowing growth kept up the pressure on carry trades, in which low-yielding currencies like the Japanese currency are used to buy assets in higher-yielding ones. The Euro came under pressure despite a better-than-expected reading in a key German ZEW survey, weighed down by steep losses in Crude Oil and US stocks.
EurUsd fell to a two-week low at 1.2477 and traded last down 1.84% at 1.2512. UsdJpy last traded down 0.71% at 97.29. EurJpy fell 2.55% to 121.73. UsdChf rose 0.69% at 1.1873. GbpUsd dropped 1.62% at 1.5382 while GbpJpy lost 2.34% at 149.64. EurGbp hit 12 years record high on concerns that the UK economy will suffer even more than the euro zone. EurGbp hit a 0.8215 record high and last traded down 0.21% at 0.8135.
Today’s Key Issues (time in GMT):
08:00 EUR October Spain CPI 0.3% vs 0.0% (mom)
08:00 EUR October Spain CPI 3.6% vs 4.5% (yoy)
09:30 GBP September Average earnings 3mth 3.3% vs 3.4% (yoy)
09:30 GBP October Claimant count unemployment change 40k vs 31.8k
09:30 GBP September ILO unemployment rate 5.8% vs 5.7%
10:00 EUR September Industrial production -1.3% vs 1.1% (mom)
10:00 EUR September Industrial production -0.9% vs 0.7% (yoy)
21:45 NZD September Retail ex-auto 0.4% vs 0.8% (mom)
21:45 NZD September Retail sales 0.4% vs 0.4% (mom)
21:45 NZD Q3 Retail sales -1.3% vs -1.5% (qoq)
21:45 NZD September Retail sales 1.1% vs -0.9% (yoy)
23:50 JPY October Corp goods price -1% vs -0.4% (mom)
23:50 JPY October Corp goods price 5.5% vs 6.8% (yoy)
The Risk Today:
EurUsd: Market dropped as low as 1.2330 on October 28th and sharply rebounded to 1.3298 high Thursday last week. This shows actual trading range 1.2330 � 1.3298. On the downside, renewed weakness will open the way down to trendline support 1.2208. Next long-term support holds 1.1640 November 2005 low. Further support holds 1.0739 September 2003 low. On the upside, only a return over 1.4000 (former trendline support) and 1.5000 will release actual pressure and may put key resistance 1.6000 into focus. Resistance holds 1.4002 former trendline support. Initial resistance holds 1.3769 14th October high.
GbpUsd: Market hit 1.5265 low on 24th October and then recovered up to 1.6673 high last week. This holds trading range 1.5265 � 1.6673. Strong support holds 1.5279 Monday 24th October low. Deep following supports are 1.4560 trendline and 1.3682 March 2001 low. On the upside, strong resistance holds 1.6673 last weeks high ahead of 1.7144 (38.2% retracement of 2.0158 � 1.5265 3-month drop). Further resistance holds 1.7744 (50% retracement).
UsdJpy: Market is holding slightly below 99.80 September-October trendline resistance following two weeks ago drop to 90.91 on Friday 24th October. Initial resistance holds 99.48 Monday high. On the upside, only a recovery over 103 upper trendline and 105 pivot point will put focus again on 108 and 110.67 15th August high. Strong resistance holds 100 pivot point. Staying in the current downtrend might open the way down to 79.70 April 1995 low.
UsdChf: Market hit 1.1896 new 1-year high yesterday. Further strength may open the way over 1.1895 October 2007 high and strong resistance. On the downside, renewed weakness below 1.1203 Friday low would undermine the current uptrend and reverse through 1.0692 22nd September low and down to 1.0500 and 1.0375. Such a move may look for 1.0013 15th July low in front of 0.9637 17th March low.
Resistance and Support:
By Jean-Claude Braha - ACM Advanced Currency Markets, Geneva, Switzerland