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U.S. Non-Farm Payrolls Declines 95,000 in September

Nonfarm payrolls in the world’s largest economy fell 95K in September after tumbling 57K the month prior amid economists’ expectations of -5K. At the same time, the unemployment rate remained unchanged at 9.6 percent. The breakdown of the report showed that private payrolls rose less than forecasts, while manufacturing payrolls unexpectedly dropped 6K. Following the dismal report, most major currencies pushed hight against the U.S. dollar but quickly reversed course. Going forward, we may see the greenback regain some ground against the euro, aussie, and the kiwi as U.S. traders come online.

The data does not bode well for the world’s largest economy as concerns regarding QE measures linger. Spending going forward will likely scale back as consumer’s fear further declines in the labor force, while credit conditions remain tight. It is worth noting the massive drop in census workers; however, there are only approximately 6,000 census workers that remain on payrolls.

U.S. Non-Farm Payrolls

Source: Bloomberg

Taking a look at price action, the EURUSD rallied initially following the disappointing report; however, the pair quickly reversed course and now looks poised to crossover the lower bounds of the ascending channel which has remained intact since the beginning of September. A close below this range will validate downside risks as the pair trades in overbought territory.

EURUSD Daily Chart

Source: Bloomberg – Prepared by Michael Wright

 

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Forex: U.S. Dollar Mix On Thin Trading, Euro Holds Tight Range

Talking Points

* Japanese Yen: Mixed Against Majors
* Pound: U.K. Banks Raise Borrowing Costs
* Euro: Holds Narrow Range For Third Day
* U.S. Dollar: ECB Trichet, Fed’s Yellen on Tap

The Euro fell back from a high of 1.4006 during the overnight trade to maintain the narrow range from the end of the previous week, and the exchange rate may hold steady throughout the day as the economic docket remains fairly light for Monday. The EUR/USD was unphased by the comments from the European Central Bank as price action held within a 90pip range, but the speech by central bank President Jean-Claude Trichet scheduled for 16:00 GMT could spark increased volatility in the exchange rate as investors weigh the outlook for future policy. ECB board member Guy Quaden said the Governing Council may decide to normalize monetary policy further in the first quarter of 2011 as he expects the region to grow at a “slower, more moderate pace,” and went onto say that current policy remains “appropriate” during an interview with Bloomberg News.

At the same time, Governing Council member Lorenzo Bini Smaghi held a hawkish tone during an interview with Market News International and said “some inflationary pressures” are becoming apparent, led by higher energy costs, and the central bank may look to reestablish its exit strategy going into the following year as they maintain their one and only mandate to ensure price stability. ECB President Trichet may talk up the likelihood for a rate hike in the beginning of 2011 as the outlook for growth and inflation improves, and hawkish comments from the central bank head could drive the EUR/USD higher going into the end of the year as market participants speculate the Federal Reserve to increase quantitative easing at its next rate decision in November. However, as the recent rally in the euro-dollar remains overbought, with the daily relative strength index holding at 77, a corrective retracement may unfold in the days ahead, which could lead the pair to test 1.3500, the 50.0% Fibonacci retracement from the 2009 high to the 2010 low, for near-term support.

The British Pound bounced back from a low of 1.5913 during the European trade, with price action holding above the 10-Day moving average at 1.5850, and the GBP/USD may continue to trend higher over the near-term as it maintains the rally carried over from the previous month. As a result, the pound-dollar may make another run at 1.6000 later today as it retraces the overnight decline, but a shift in market sentiment could push the exchange rate lower as the U.S. dollar appears to be regaining its footing against its major counterparts. Meanwhile, a report by the Bank of England showed commercial lenders in the U.K. raised the cost of two-year fixed mortgage rates with a 25% deposit in September to 3.79% from 3.74% in the previous month, and the central bank is likely to maintain a dovish outlook for future policy as household and businesses continue to face tightening credit conditions. The BoE minutes due out later this month is likely to show the majority of the MPC vote to maintain its current policy in October, but a three-way split within the central bank could trigger a selloff in the British Pound as investors speculate the board to expand QE in the coming months.

U.S. dollar price action was slightly mixed overnight, with the USD/JPY slipping to a low of 81.71, and the greenback could face choppy price action throughout Monday’s trade as the U.S. bond market remains closed in observance for Columbus Day. With no scheduled event risks, risk trends are likely to dictate price action as the equities market are set to open their doors, but here could be a shift in market sentiment as members of the Fed are scheduled to speak throughout the day.

 

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Forex: U.S. Dollar Weighed By Prospects of U.S. Monetary Easing

Talking Points

* Japanese Yen: Under Pressure Amid Risk Appetite
* Pound: Jobless Claims Tops Expectations in September
* Euro: Poised to Test 1.40 On The Back of U.S Dollar Weakness
* U.S. Dollar: Import Prices and Monthly Budget Statement on Tap

The EUR/USD continued to trend higher during the overnight trade on Wednesday as the ascending channel dating back to the beginning of September maintains its course. Taking a look at the economic docket during the overnight trade, industrial production in the 16 member euro area topped expectations in August as figures rose 1.0 percent after climbing a mere 0.1 percent in July. At an annualized rate, output gained 7.9 percent. The breakdown of the report showed that Germany lead the advance in output, while Spain pared last month’s decline and posted a 0.7 percent increase. The data fueled momentum in the euro as trends as of late supports and suggests that the industry will continue to push higher in the coming months. Despite today’s rise, I expect industrial production in the near term to come under increased pressure as governments in the bloc implement tough austerity measures in order to battle their budget debts.

Price action with regards to the EUR/USD has maintained its ascending channel from last month, and until we see a break and a close below the lower bounds of the range, upside risks remain. Indeed, the relative strength index remains deep in overbought territory, but it is noteworthy that the pair could trade within a congested area before pushing higher again. Not to overlook, our speculative sentiment index now stands at -1.74, and signals for additional gains. All in all, if you are not trading this pair, I would recommend sitting on the sidelines until further developments arise. However, a trader that is already long may want to keep this position open until the pair changes direction and closes below 1.3850. Looking ahead, equity futures are pointing to a higher open for the U.S. markets, and risk appetite could continue to weigh on the greenback during the North American trade.

The British pound pared yesterday’s decline and is now bounded by the 10 and 20-day SMA’s. The jobless change report was released today and figures rose 5.3K in September after climbing a revised 3.8K the previous month amid economists’ expectations of 4.5K. At the same time, the claimant count rate was unchanged at 4.5 percent, while the ILO unemployment rate unexpectedly fell to 7.7 percent from 7.8 percent in July. Despite the decline in the ILO sector, today’s rise in jobless claims pushed the total jobless claims up to 1.47 million. This fact was quickly digested by GBP traders as the British pound quickly lost steam. After testing 1.60 for the first time since the beginning of August, the pair looks poised for a correction to the downside. Some technical developments to take note of are the change in the Parabolic SAR, the MACD crossover, and the break and close below the 10-day moving average. Market participants will now shift their focus to the Bank of England’s meeting of the minutes, which will be released on October 20th. Andrew Sentance will dissent against the majority, continuing to push for a rate hike. However, it is possible that we could see a three way split as committee member Adam Posen recently expressed concerns about quantitative easing.

The greenback is down against all of its major counterparts except for the Japanese yen, with the euro up the most against the U.S. dollar as most currencies benefit against the dollar amid weakness in the world’s largest economy. The dollar index continues to maintain its descending channel that has remained intact since the beginning of September. Until we see a break above the range, downside risks remain. Heading into the U.S. trade, market participants are faced with a relatively light docket as import prices and the monthly budget statement are on tap. Tomorrow, the trade balance and producer prices reports will be released. The latter is of particular importance in that producers tend to pass on higher costs to consumers, thus the report serves as a leading indicator to inflation.

 

[FXCM-PR Rep]

Forex: Bearish U.S. Dollar Sentiment Gathers Pace, Euro Breaks Narrow Range

Talking Points

* Japanese Yen: Mixed Amongst Major Currencies
* Pound: BOE’s Posen Sees Scope For Further Easing
* Euro: ECB Says Rates ‘Appropriate’
* U.S. Dollar: Producer Prices, Trade Balance on Tap

The U.S. dollar weakened further against its major currency counterparts, with the EUR/USD rallying to a high of 1.4121 on Thursday, and the bearish momentum behind the greenback may carry into the end of the week as investors expect the Fed to expand monetary policy further. As EUR/USD breaks out of the narrow range from earlier this week, we are likely to see the pair continue to retrace the decline from earlier this year, and euro-dollar looks poised to make a run at 1.4440-50, the 78.6% Fibonacci retracement from the 2009 high to the 2010 low, as price action holds steadily above the 61.8% Fib around 1.3890-1.3900. With the 50-Day moving average (1.3158) approaching the 200-Day SMA at 1.3165, the bullish crossover suggests that the exchange rate will continue to push higher throughout the month, but there could be a corrective retracement in the coming days as the recent rally remains overbought. Given the strong bearish sentiment underlying the greenback, we would need the RSI to fall back below 70 to see a pullback in the exchange rate, and the rally may carry into the following week as the index bounces back to 78.

Meanwhile, the European Central Bank reiterated that the interest rate is “appropriate” in its monthly report and went onto say that price growth remains contained as the ongoing slack within the economy bears down on inflation. At the same time, ECB board member Yves Mersch said that the recovery in Europe remains in-line with the central bank’s forecast and that the recent slew of soft data “does not warrant increased pessimism” for the region, but went onto say that it remains “too early to claim victory” as the economic outlook remains clouded with uncertainties. As the Governing Council maintains a neutral outlook for future policy, the ECB may look to reestablish its exit strategy going into 2011, which would instill a bullish outlook for the single-currency in the beginning of the following year as the Fed maintains a dovish stance.

The British pound rallied to a fresh monthly high of 1.6066 during the overnight, and the exchange rate is likely to push higher going into the end of the week as carves out a short-term bottom around 1.5700, the 38.2% Fibonacci retracement from the 2009 low to high. As a result, the GBP/USD looks poised to test the 23.6% Fib around 1.6230-40, and the pair may continue to retrace the decline from the beginning of this year as the rally gathers pace. Meanwhile, Bank of England board member Adam Posen said that the global economy needs increased monetary stimulus according to an article in the Handelsblatt newspaper, and Mr. Posen may push to expand policy further in the coming months given the substantial amount of slack within the real economy. As a result, the British Pound is likely to face increased volatility over the following week as the BoE is scheduled to release its policy meeting minutes on Wednesday, and a three-way split within the MPC could spark a sharp selloff in the GBP/USD as market participants see scope for the BoE to expand quantitative easing further over the coming months.

The greenback weakened against all of its major counterparts, with the USD/JPY tumbling to a fresh yearly low of 80.88, but the dollar is likely to face increased volatility going into the end of the week as the economic docket is expected to reinforce a mixed outlook for future growth. Producer prices in the world’s largest economy is forecasted to increase at an annualized pace of 3.7% in September after rising 3.1% in the previous month, while the trade deficit is expected to widen to -$44.0B in August from -$42..8B in the month prior. However, market participants may turn a blind eye to the economic developments as they look towards the Fed’s interest rate decision on November 3, and comments from the central bank are likely to play an increased role in dictating price action as investors weigh the prospects for future policy.

 

[FXCM-PR Rep]

Fed's Bernanke Sees Case For "Further Action"

Prior to the slew of releases from the world’s largest economy, Fed Chairman Ben Bernanke said that he sees case for “further action” amid too-low inflation. In turn, the U.S. dollar lost ground against all major currencies, while the Japanese yen continued its northern journey against the buck, and now looks poised test the record low. Meanwhile, annualized inflation figures for the U.S. remained unchanged at 1.1 percent, while advance retail sales topped expectations, climbing 0.6 percent. Nonetheless, empire manufacturing for the month of October soared to 15.73 from 4.10 the month prior, with the breakdown of the report showing that the number of employees jumped to 21.67 during the month.

There was muted price action following today’s releases as market participants digested the reports. It wil be interesting to see if Mr. Bernanke’s comments serve as another downturn for the greenback as the central bank head said that additional stimulus may be necessary amid depressed employment and too low inflation. On the other hand, the fundamental releases were quite positive. Annualized consumer prices remained unchanged at 1.1 percent , while advance retail sales topped expectations as auto sales and electronics rose 1.6 percent and 1.5 percent respectively as lower prices drove demand. Not to overlook, Empire manufacturing soared to 15.73 amid expectations of 6.00. The breakdown of the report bodes well for the U.S. as the number of employees rose to 21.67 from 14.93 in September, a signal that manufacturing will continue to drive the recovery in the U.S.

Going forward, we may see whipsaw price action in U.S. dollar as traders digest the releases and Bernanke's comments. Focus now turns to the University of Michigan confidence report for the month of October. As of late, economists are forecasting an increase towards 68.9 from 68.2 the previous month.

EURUSD Daily Chart

Charts Created Using FXCM’s Strategy Trader – Prepared by Michael Wright

The EURUSD continues to maintain its ascending channel that has remained intact the middle of September. Indeed, the pair is overbought, and a correction to the downside may be on the horizon. However, until we see a break and a close below the range, I would be cautious of entering a short position before confirmation is apparent.

USDJPY Daily Chart

Charts Created Using FXCM’s Strategy Trader – Prepared by Michael Wright

After rallying on the back of the Bank of Japan intervention earlier last month, the USDJPY looks to have worked its way into a descending channel, and the pair now looks poised to test the record low of 79.70 as traders continue to bet on another intervention by Japan’s central bank. As of late, our speculative sentiment index now stands at 8.31, and signals for further downside risks. All in all, remain on the sidelines until further developments arise.

 

[FXCM-PR Rep]

Forex: Euro Carves Near-Term Top, U.S. Dollar Benefits From Safe-Haven Flows

Talking Points

* Japanese Yen: Strengthens Across the Board
* Pound: Remains Range Bound Ahead of BoE Minutes
* Euro: ECB Says Rates “Appropriate”
* U.S. Dollar: Industrial Production, NAHB Housing Index on Tap
The Euro slipped to a low of 1.3830 during the overnight trade as policy makers in Europe held a cautious outlook for the region, and the single-currency may trend lower throughout the day as investors scale back their appetite for risk. European Central Bank President Jean-Claude Trichet said that the Governing Council remains “cautious” on the recovery during a conference in Marrakech, Morocco, and warned that excess volatility in the currency market could have an adverse effect on economic stability as it bears down on global trade. Mr. Trichet argued that the euro-area needs “more ambitious” reforms as the governments operating under the fixed-exchange rate system struggle to manage their public finances, and went onto say that most members of the ECB agrees with continuing its asset purchase program as the economic outlook remains clouded with uncertainties.

At the same time, Governing Council board member Ewald Nowotny voiced his support to maintain the emergency programs during an interview with an Austrian newspaper and said that the extraordinary measures will help to “correct imbalances in the capital markets” as the global financial system remains fragile. As European policy makers retain a cautious outlook for the region, we may see the ECB maintain the expansion in monetary policy throughout the beginning of 2011, and the soft tone held by the central bank could drag on the exchange rate as investors weigh the outlook for future policy. As the EUR/USD struggles to hold above 1.3900, the 61.8% Fibonacci retracement from the 2009 high to the 2010 low, we may see a corrective retracement unfold this week as the daily relative strength index finally falls back from overbought territory, and the exchange rate may work its way back towards the 50.0% Fib at 1.3500 to test for near-term support.

The British Pound slipped to a low of 1.5837 on Monday to maintain the narrow range from the previous week, and the GBP/USD may continue to trend sideways over the next 24 hours of trading as investors wait for the Bank of England policy meeting minutes due out on Wednesday at 8:30 GMT. We expect to see an 8-1 vote count amongst the MPC as board member Andrew Sentance sees scope to start normalizing monetary policy, but the central bank may hold a dovish tone for future policy given the substantial amount of slack within the real economy. However, a three-way split within the central bank is likely to trigger a selloff in the British Pound as market participants speculate the BoE to expand monetary policy further, and lead the GBP/USD to retrace the advance carried over from the previous month. Nevertheless, the economic docket showed home prices in the U.K. increased at the fastest pace in eight months, with the Rightmove index jumping 3.1% in October following the 1.1% in the previous month, and the stickiness in price growth could lead the BoE to maintain a neutral policy stance going into the following year as it aims to balance the risks for the economy.

The greenback continued to bounce back against most of its major counterparts, while the UJSD/JPY slipped to a low of 81.12 as the Japanese Yen strengthened across the board, and safe-haven flows are likely to dictate price action throughout the day as the economic docket remains fairly light for Monday. Industrial outputs in the world’s largest economy is forecasted to expand 0.2% for the second consecutive month in September, while the NAHB housing market index is projected to increase to 14 in October from 13 in the month prior, but the dollar may show little reaction to the economic developments as risk trends continue to dictate price action in the foreign exchange market.

 

[FXCM-PR Rep]

USD Off the Ropes Following Bernanke and Geithner 1-2 Punch Combination

FUNDYS
After nearly breaking the intense bullish sequence of 27 consecutive closes higher than the previous daily low on Friday (as we had projected), the Euro finally officially broke the sequence on Monday in dramatic fashion, dropping some 70 points in the final hour of trade. As per our analysis in previous commentary, the break of this sequence could now open a further drop of some 300-400 points before we see any real resumption of Euro buying.

Relative Performance Versus USD Tuesday (As of 10:35GMT)
1. EURO-0.14%
2. AUSSIE -0.17%
3. SWISSIE-0.19%
4. YEN-0.26%
5. KIWI-0.33%
6. CAD-0.33%
7. STERLING-0.60%


The recovery in the US Dollar over the past few days has been brought on by a scaled back expectation for a second round of quantitative easing from the Fed, which had initially accelerated following the Bernanke speech on Friday. While it is certainly true that the Fed Chair outlined the possibility for another round of quantitative easing, the fact that he did so should not have come as a shock to market participants with the subject of the speech being "Monetary Policy Objectives and Tools in a Low-Inflation Environment.” However, the fact that Bernanke failed to hint at any timing for such measures, or offer any real specifics on the policy, while also reminding investors of the “if necessary” language in the monetary policy statement, was indeed unexpected (not by us), and therefore resulted in some profit taking on USD shorts. This was the set-up for the anticipated reversal and fundamental catalyst for the start to the comeback in the Greenback.

So from here, what then would be the next market event to trigger additional USD buying and help build momentum for the current USD rally? Well, that came late Monday when Treasury Secretary Geithner was out with some rather strong language on the US Dollar that we believe should send a clear message to the markets.

While it is certainly true that the US has maintained a questionable strong US Dollar policy in light of what appears to be actions on behalf of the government that would be anything but USD positive, to us, it is highly telling that Treasury Secretary Geithner went over and beyond on Monday with regard to the official stance on the US Dollar. Should the Treasury Secretary have wanted to keep things status quo, he simply could have just said that the US maintains a strong USD policy. However, Geithner came out swinging after saying that the USD would remain the reserve currency in our lifetime, the US supported a strong Dollar, and the US would not resort to policy to force a devaluation in the currency.

We believe this should send a strong message to the markets that just maybe, the US does really maintain a strong USD policy, and as we have said in previous commentary, the fact that the USD is weaker right now is more a function of loose monetary policy in order to stimulate growth, rather than a specific desire or mandate to weaken the currency in order to rebalance the economy.

We need to remind ourselves that the world relies heavily on a stronger US Dollar. The system works because the US is able to consume product from abroad at attractive prices because the US Dollar is stronger and other currencies are happily weaker. Other major economies heavily rely on their export sectors and therefore are encouraged to have a weaker currency in order to promote their product. This is why quantitative easing measures (that devalue currency) in other economies can be more easily justified and why we feel the Fed should be much more sensitive (and we believe they are) to the longer-term impact and inflationary threats from the implementation of additional quantitative easing measures.

We acknowledge and commend the Fed for their efforts to this point and feel they have done an excellent job at managing the economy and prioritizing the immediate threats over the longer-term fallout from such policy. However, from here, the risks for any additional QE measures should be weighed heavily, as we fear that if the Fed goes to far, it will pass that hyperinflationary pointof no-return just like Japan did several years back. But in this case, the fallout will be more substantial and threatening to the global economy.

In our opinion, US government and Fed officials are very aware of this and have stepped up their efforts to remind us of this fact. Bernanke continues to retain a balanced and cautious approach, only willing to implement additional easing measures “if necessary.” The markets have incorrectly chosen to focus on the other language which outlines such measures, and has for the most part ignored the “if necessary” language. But perhaps these latest remarks from Geithner highlight a coordinated effort to make it all the more apparent that just maybe, another round of quantitative easing is in fact not guaranteed, and even if we do see another round, it will not be anything like what the markets have been pricing in.

Geithner’s comments are sending a strong message to us and that message is to not be overly aggressive in selling the Dollar. No economy has ever flourished and prospered as a dominant global power with a weak currency, and we think that the US government is well aware of this fact and ultimately, will do what is necessary to ensure the stability and strength of the Greenback.

The technical evidence for a major USD rally is being confirmed on the fundamental front, and while we would not abandon the possibility for renewed USD selling at some point, for now, the risks are for the US Dollar to continue to mount an across the board come back. Our target for the Euro over the coming days comes in by 1.3500-1.3600.

Elsewhere, the RBA released the Minutes from the latest central bank decision which were rather balanced after the central bank failed to signal to investors that they would be looking to hike rates at the next meeting. The RBA said that they would need to continue to monitor data and developments before being able to make another decision. The central bank also conceded that the stronger currency helped to offset the need for additional rate rises. We believe that just as QE2 has been incorrectly priced in to the markets, so too has the strength in the Australian Dollar. In our opinion the antipodean is at risk for a major depreciation over the medium and longer-term, with the currency at cyclical highs and the very hot economy at risk for a cooling off.

Meanwhile in the Eurozone, data was on the whole quite mixed, with the current account coming in weaker, while the ZEW was much stronger. However, any bids on the back of the stronger Eurozone ZEW, were easily offset by a weaker than expected German ZEW print. Overall, the data hardly factored into price action. Over in the UK, economic data failed to inspire any confidence in the Pound, with CBI business optimism and trends total orders coming in far worse than expected.

Looking ahead, US building permits (575k expected) and housing starts (580k expected) are due at 12:30GMT, followed by the Bank of Canada rate decision (on hold at 1.00% expected) at 13:00GMT. The official circuit is stacked with speakers today, and the aggregated comments could very well influence price action. ECB President Trichet speaks on the topic of the economy at 12:30GMT, followed by Fed Evans, Dudley, Lockhart, Fisher, and Kocherlakota, all speaking on the topic of the economy as well, at 13:40GMT, 14:00GMT. 15:30GMT, 16:50GMT, and 17:20GMT respectively.

GRAPHIC REWIND

TECHS

EUR/USD: The market has finally broken a major bullish sequence of 28 consecutive closes higher than the previous daily low, with the pattern having supported a massive push higher in the Euro over the past several weeks from roughly 1.2600-1.4100. Daily studies have turned down from overbought and the close below 1.3935 on Monday officially negates the sequence and opens the door for deeper setbacks towards 1.3500 over the coming sessions. Any intraday rallies should be very well capped ahead of 1.4000, with a break below 1.3775 to accelerate. The market has also managed a close below the 10-Day SMA for the first time since early September.

USD/JPY: Daily studies are well oversold and the latest setbacks have stalled out for now just ahead of the record lows by 80.00 from 1995. A bullish hammer close last Thursday and Friday could suggest that the market is finally ready for a short-term correction, but we would need to see a break back above 81.85 to help reaffirm these prospects and officially relieve downside pressures. Back below 80.90 opens the door for a direct test on the critical barriers at 80.00.

GBP/USD: Rallies have been very well capped above psychological barriers at 1.6000 and the market has since stalled out and reversed course in favor of a bearish resumption. The risk from here is for additional weakness, with a break back below 1.5755 to confirm bearish outlook and accelerate declines. Ultimately, only back above 1.6000 would negate outlook and give reason for pause.

 

[FXCM-PR Rep]

U.S. Dollar Continues to Trend Lower Subsequent to G-20 Meeting

Talking Points

* Japanese Yen: Reaches Fresh 15-Year High Against the Buck
* British Pound: BBA Mortgage Approvals Falls to 18-Month Low
* Euro: Industrial New Orders Tops Expectations in August
* U.S. Dollar: Tumbles Against All Major Currencies Post G-20 Meeting
After testing the 20-day SMA, the EURUSD has since then reversed course and now looks poised to extend its advance towards 1.4100 in the near term as the U.S. dollar continues to remain under pressure post the G-20 meeting in South Korea this past weekend. The group of finance chiefs pledged to avoid weakening their currencies in order to boost their exports. Indeed, the greenback continued its southern journey during Monday’s trade as the meeting omitted any U.S. undertaking regarding further QE measures. Going forward, market participants will shift their focus to the FOMC rate decision which is expected to be released on November 3rd. As of late, traders are pricing in a zero percent chance that the Fed will hike borrowing costs twenty five basis points, according to the Credit Suisse overnight index swaps.

Taking a look at the economic docket overnight, Euro-zone industrial new orders topped economists’ expectations as figures rose 5.3 percent in August after falling a revised 1.8 percent the previous month, while the annualized rate soared 24.4 percent. The breakdown of the report showed that capital goods lead the advance, climbing 8.1 percent, and was followed by a 5.4 percent gain in durable consumer goods. Indeed, today’s report marks the largest increase since March of this year, and was one of the main reasons for the euro’s gain against the U.S. dollar overnight. Though the data bodes well for the 16 member euro area, the single currency is expected to come under pressure in the beginning months of 2011 as governments within the bloc implement tough austerity measures in order to battle their high budget debts. Until then, it is likely that traders may witness the EURUSD test 1.4100, with a break above this level exposing 1.4200 as technical indicators on the weekly chart point to further gains. Across the news wire overnight, ECB’s Tumpel-Gugerell said that the recovery in the Euro-zone is “still on track,” and added that policy is “still appropriate.”

The British pound continues to find support at the 50-day SMA, and until a break and close below this level is apparent, the GBPUSD will continue its northern journey. During the overnight session, the British Bankers Association released the loans for house purchases report in which showed that figures topped expectations in September but slowed from the previous month prior and marked the lowest level since March 2009. With the demand for homes likely to scale back further in the upcoming months amid the violent spending cuts in the U.K. paired with uncertainty in growth prospects, the British pound will begin to lose ground against the dollar, and may decline further against the euro. Thus, the Bank of England is likely to refrain from raising its key overnight lending rate until at least the second quarter of next year. At the same time, with uncertainty concerning economic prospects gathering pace, the split amongst the MPC will also widen in the near term.

The greenback is down against all major currencies and may continue its southern journey as traders await the FOMC minutes next week. The economic docket is fairly light today; however disappointing releases could fuel further speculation of quantitative easing by the Fed. On tap are the existing home sales, Dallas Federal Manufacturing activity report and the Chicago Federal National activity index.

 

[tokmat™]

FXCM dah ok utk trade ke skrg....?

 

[FXCM-PR Rep]

U.K. GDP Tops Expectations In The 3rd Quarter, GBPUSD Extends Advance

Fundamental Headlines

• U.K. GDP Data Beat Expectations – Wall Street Journal

• Asian Markets Decline – Wall Street Journal

• Stable Dollar Leaves Bourses Trendless - Financial Times

• U.K. GDP Rises Twice As Much As Forecast on Stimulus - Bloomberg

• Weber Says He Won’t Change His Strips to Become ECB President - BloombergGBPUSD: Economic activity in the U.K. soared 0.8 percent in the third quarter after climbing 1.2 percent the quarter prior amid economists’ expectations of 0.4 percent. At the same time, the annualized rate jumped 2.8 percent to mark the highest reading since September 2007. Indeed, the British pound began its advance prior to the release amid rumors that the report was leaked. However, at 8:30 GMT, economic activity was confirmed and the sterling extended its northern journey. Taking a look at the breakdown of the report, total services advanced 2.1 percent from a year ago, while construction added a massive 10.9 percent. Today’s report bodes well for Great Britain and reduces the likelihood that the BoE would expand quantitative easing in the near term as many market participants were expecting. Traders will now shift their focus to the economic releases from the world’s largest economy due out later today. On tap are the U.S. consumer confidence, house price index, and the Richmond Fed Manufacturing reports.