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Forexpros.com Daily Analysis - 13/11/2008

Discussion in 'Fundamental Analysis' started by ForexAnalysis, Nov 13, 2008.

  1. ForexAnalysis

    ForexAnalysis Contributing Member

    Apr 13, 2008
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    Forex Analysis - Daily

    Today’s US Dollar Trading

    • Thin conditions exaggerate moves, USD firms
    • GBP at new six-year low
    • Other pairs two-way and volatile

    Overnight Preview

    • Look for two-way action overnight
    • USD likely to consolidate ahead of news

    Looking Ahead to Thursday
    All times EASTERN (-5 GMT)
    • 8:30am USD Trade Balance
    • 8:30am USD Unemployment Claims
    • 11:00am USD Crude Oil Inventories
    • 11:00am USD FOMC Member Plosser Speaks
    • 2:00pm USD FOMC Member Stern Speaks
    • 2:00pm USD Federal Budget Balance

    Thin liquidity continued to plague traders today as USD buying at the London Fix drove the majors to fresh lows for the week and in the case of the GBP to multi-year lows. GBP is now trading at prices not seen since January of 2002 with a low print at 1.4893 before likely profit taking bids supported for a rally to the 1.5000 handle. Gains were short-lived after the noon hour as both the GBP and EURO slowly deflated to finish lower on the day. Dragged lower by GBP, EURO held above the 1.2450 area of rumored stops for a low print at 1.2466 before recovering a full handle in later trade; gains evaporated as the rate returned to the 1.2500 area in to the end of day. Traders note in both pairs that moves may have been exaggerated but the bears remain in control although EURO is holding firmer likely due to cross-spreading for Sterling which took the brunt of the moves today. USD/JPY fell as stocks retreated as has been the case dropping to a low print at 94.46 before short-covering lifted the rate a full handle back to the 95.60 area in late trade. Yen crosses again in focus the past 24 hours as the Yen appears the strongest currency on the board today; traders note that all the major Yen and Sterling pairs are suffering deep losses and volatility making for violent and difficult trade. Spillover weakness against the USD appears to be by default but the result is the same as traders hold long USD. USD/CHF fell making a hook reversal on the day for a low print at 1.1762 before recovering a full handle back to the 1.1860 area putting the bears on the defense after early topping formations are pressured. Traders note that commodity pricing and weaker stocks may be adding a bit of lift to the rate as gold and oil were lower today. Despite USD two-way action elsewhere the USD/CAD remains firm finding stops and active buying above the 1.2300 handle with tech resistance between 1.2330 and 1.2390 area offering some cap to the rate; traders note the rate has retraced a solid 50% from the recent drop and sellers are active but still plagued by thin conditions. In my view, the USD is whipsawing hard exacerbated by thin conditions and signs of topping are evident but so far the bid is still on for Greenbacks. Overseas data is light tonight but heavy in the US suggesting a round of profit-taking by the USD longs may surface tonight in Asia. Look for more two-way consolidation ahead of US data in the morning.

    GBP/USD Daily

    Resistance 3: 1.5800
    Resistance 2: 1.5500
    Resistance 1: 1.5250
    Latest New York: 1.4944
    Support 1: 1.4900
    Support 2: 1.4810/20
    Support 3: 1.4750

    Selling just relentless as cross-spreaders and thin conditions find no bids; low prints at 1.4895 are a new six-year low. Some stops noted on the break of 1.5100 but absolutely no two-way action yet. Technical trade overnight, more expected tonight as well as traders decide near-term action with little to go on but the charts. Resistance now at the 1.5500 area likely to cap near-term. BOE rate cut next month increasingly likely but that is likely completely factored in at this point. Traders note unwinding of Yen cross-spreads driving a lot of trade after the open. EURO/GBP still near a record high encouraging a round of profit taking soon I think. Traders note liquidity is only moderate and still on the lower side. Aggressive traders can look to buy the next dip. Expect more whippy action. Two-way action needed to find a bottom.
    Data due Thursday: All times EASTERN (-5 GMT)

    EURO/USD Daily

    Resistance 3: 1.3200/10
    Resistance 2: 1.3150
    Resistance 1: 1.3030
    Latest New York: 1.2490
    Support 1: 1.2480
    Support 2: 1.2420/30
    Support 3: 1.2400

    Rate drops back in thin conditions; resistance is sold but large names on the dips traders say; Russians possibly buying on the dips. Two-way action all day despite weakness elsewhere; lows hold around weekly lows despite new low by GBP. Stops under the 1.2450 area possibly in size; rate holding 1.2500 into the close a good sign for the bulls. On a rally, traders note large stops at the 1.2950 area with more over 1.3000 but offers likely to cap on strength ahead of 1.2700 I think; bids on dips from profit-taking shorts some desks report. Rate possibly getting spillover effect from GBP and vice-versa suggesting both pairs may track each other near-term. Support also from cross-spreaders as they unwind Yen. Official interest noted traders say. Rate is an absolute screaming buy in my view—I can’t see further weakness being ignored by the buyers. Traders note the rate is finding profit-taking bids on dips so far despite the uncertainty in the market.

    Data due Thursday: All times EASTERN (-5 GMT)
    2:00am EUR German Prelim GDP q/q
    2:45am EUR French CPI m/m
    4:00am EUR ECB Monthly Bulletin

    Join us for the Afternoon US Dollar Wrap-Up daily at 3:15 pm Central/Chicago time (GMT -6)

    Analysis Provided by: Forexpros - Written by Jason Alan Jankovsky

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