Forex Market Commentary for November 30, 2007 by Cornelius LucaGFT Daily Market Commentary
Carry trades enjoyed another day in the sun on Wednesday, and this means that the high yielders – the pound and the antipodean currencies did well, while the low-yielders – the yen and the franc didn’t. The equity indices soared and the oil fell, so the world seems to be perfect again, and that’s just because Citigroup will pay +11% for the money infusion from ADIA! You gotta be kidding!
The risk is now on the other side but sell carry trades only on a confirmation – choppy trading remains the rule of the game. The revision of the third quarter GDP, the price index report for the third quarter and the new home sales report for October are due on Thursday.
Euro/dollar
The overbought euro/dollar sank aggressively following the apparent bearish reversal pattern on Tuesday but only for part of the day. It then closed virtually unchanged, so expect more choppy trading today.
Initial support remains at 1.4800. Below 1.4777, the next floor is at 1.4714. This is followed by 1.4635 and 1.4560.
Immediate resistance is still seen at 1.4910. Above 1.4940, strong resistance is seen at 1.4966. This is followed by 1.5000. Distant resistance is now pegged at 1.5130.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
The oversold dollar/yen made another aggressive rally on Wednesday following the bullish reversal a day earlier. Again, this will last only if the love for carry trades continues, and this is doubtful. But sell dollar/yen only on a confirmation.
Immediate resistance is at 110.35 from a 50-point pivot that targets 109.85 and 110.85. Strong resistance follows at 111.00.
Good support now comes at 109.15 from another 50-point pivot that targets 109.65 and 108.65.
Oscillators are rising.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Sterling/dollar
The high-yielding sterling/dollar had a big day on Wednesday, when it reversed early gains to rally to a two-week high. The upside is overdone here, so lower trading is likely.
Immediate support remains at 2.0720. This is followed by 2.0660 and 2.0590. Below 2.0520, there is distant support at 2.0455.
Above 2.0833, resistance now comes at 2.0875. Distant resistance looms at 2.0980.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Along with dollar/yen, the oversold low-yielding dollar/Swiss rallied on Wednesday following a bullish reversal signal the day before. It remains oversold, but today should see only consolidation.
Initial resistance is at 1.1205. This is followed by 1.1285. Distant resistance is at 1.1390.
Immediate support is at 1.1060. This is followed by 1.1010. Below 1.0960, support remains pegged at the pivotal low of 1.0892.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish