Action Insight | Written by ActionForex.com | Dec 07 07 13:55 GMT |
Forex Mid-Day Technical Report No Surprise from NFP, CAD Boosted by Job Growth

The highly anticipated Nov Non-Farm Payroll report delivered no surprise to the markets. 94k jobs were added in Nov, similar to expectation of 90k. Prior month’s data was revised slightly higher from 166k to 170k. Though, job growths for Sep were cut by more than half to 44k. Unemployment was unchanged at 4.7%. The more noticeable deviation from expectation was indeed the average housing earnings which rose 0.5% mom comparing to consensus of 0.3%.

Canadian dollar extends rebound in early US session after stronger than expected employment report showing 42.6k jobs added in Nov, much higher than expectation of 15k. Even though unemployment rate rose from 5.8% to 5.9% in Nov, that was mainly due to the fact that labor force growth outpaced job creation. The overall job market remains healthy. EUR/USD

Daily Pivots: (S1) 1.4558; (P) 1.4605; (R1) 1.4684; «www.actionforex.com»

EUR/USD’s recovery from 1.4524 extends further in early US session. A short term low is probably in place at 1.4524 after fall from 1.4966 was supported above mentioned 1.4490/4519 cluster support (50% retracement of 1.4014 to 1.4966 at 1.4490). Intraday outlook remain neutral for the moment as from a short term angle, EUR/USD is at a juncture. Strong rebound from the current level and a break of 1.4769 resistance will indicate that price actions from 1.4966 is merely correction to rise from 1.4014 and has completed. Retest of 1.5 psychological resistance should be seen in such case.

However, sustained break of 1.4490/4519 support zone, with daily MACD’s dip below signal line as well as mild bearish divergence condition in daily RSI as background, will indicate that whole rise from 1.3360 has also completed at 1.4966, after failing 1.5 psychological resistance. In such case, deeper decline should be seen to 55 days EMA (now at 1.4453) or lower to 1.4014/4281 support zone before staging another rally.

In the bigger picture, regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and has failed 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which will overlap with 1.5 psychological resistance on overbought condition as seen in weekly RSI. On the upside, sustained trading above this key resistance is needed to confirm medium term rally is still underway to next projection target of 100% projection at 1.7048. On the downside, firm break of 1.3851 resistance turned support is needed to be the first signal that this up trend from 1.1639 has completed. Otherwise, long term outlook remains bullish.

GBP/USD

Daily Pivots: (S1) 2.0201; (P) 2.0256; (R1) 2.0332; «www.actionforex.com»

Cable recovers mildly after dipping to as low as 2.0179. Nevertheless, intraday bias remains on the downside as long as 2.0352 minor resistance holds and further decline is still expected. As discussed before, rise from 1.9652 has completed after touching medium term rising channel resistance. Subsequent fall from 2.1161 is expected to head towards medium term rising channel support (now at 2.0081) before completion. On the upside above 2.0352 will turn intraday outlook neutral first but further decline is still in favor as long as 2.0523 support turned resistance holds.

In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. The current from from 2.1161 is still treated as interim correction to such rally only. Strong support should be seen between 2.0000 psychological support, 100% projection of 2.1161 to 2.0353 from 2.0830 2.0022 and the medium term channel support (now at 2.0084). Strong rebound from there, followed by break of 2.0523 resistance will indicate that fall from 2.1161 has completed and medium term up trend could have resumed.

However, sustained break of 2.0 psychological support will indicate that whole medium term rally from 1.7047 has possibly completed. Deeper decline should then be seen to next medium term support at 1.9652 first.

USD/CHF

Daily Pivots: (S1) 1.1256; (P) 1.1305; (R1) 1.1344; «www.actionforex.com».

USD/CHF continues to be bounded in tight range below 1.1352 in early US session. Outlook remains unchanged. Corrective rebound from 1.0890 is still in progress and further upside is still expected towards 38.2% retracement of 1.2467 to 1.0890 at 1.1492 before completion. On the downside, break of 1.1150 support will indicate that rebound from 1.0890 has completed and will bring retest of this low.

In the bigger picture, the current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend from 1.3283 resumed . Such medium term decline is tentatively treated as resumption of the long term down trend from 1.8305 (00 high) which should extend further to parity after taking out 1.1100 key support after finishing the current consolidation from 1.0890. On the upside, break of 1.1891 is needed to indicate such down trend from 1.3283 has completed. Otherwise, long term outlook will remain bearish

USD/JPY

Daily Pivots: (S1) 110.81; (P) 111.14; (R1) 111.64; «www.actionforex.com».

USD/JPY’s rebound from 107.21 extends further higher today and is now pressing mentioned 111.76 resistance as well as inner falling trend line (now at 111.88). At this point, we’d still expect upside to be limited by this double resistance and bring another fall. Below 110.61 minor support will indicate an intraday top is in place. Further break of 109.55 will indicate that corrective rebound from 107.21 has completed and encourage a retest of 107.21 low.

However, sustained trading above 111.76/88 resistance zone will indicate much stronger rebound is underway. In such case, further rise should be see to outer trend line resistance (124.13 to 117.94, now at 114.98) and will serve as the first warning the fall from 124.13 has possibly completed too.

In the bigger picture, sharp decline from 124.13 remains in force and is expected to extend at least further to 100% projection of 124.13 to 111.59 from 117.94 at 105.40 and will likely bring retest of key long term support zone of 101.22/65. While the interim fall from 117.94 has completed, break of 115.91 resistance is needed to confirm that the fall from 124.13 has ended too. Otherwise, medium term outlook remains bearish.

EUR/JPY

Daily Pivots: (S1) 161.72; (P) 162.42; (R1) 163.63; «www.actionforex.com»

EUR/JPY strengthens further today but after all it’s still bounded in choppy consolidation inside established range of 158.67 and 164.30. It looks like such consolidation will extend further before completion. Nevertheless, as discussed before, 164.26/30 cluster resistance (61.8% retracement of 167.62 to 158.67 at 164.26) remains intact and EUR/JPY still struggling to take out 55 days EMA decisively. The case that rise from 149.27 has already completed at 167.72 is still in favor. That is, price actions from 168.93 is developing into larger scale consolidation The last falling leg is in progress, with price actions from 158.67 as interim consolidation.

Having said that, on the downside, break of 158.67 will confirm fall from 167.62 has resumed for 61.8% retracement of 149.27 to 167.72 at 156.31 first. However, on the upside, sustained break of 164.00/26 cluster resistance will dampen this case and flip favors back to the case that price action from 167.72 is merely consolidation to rise from 149.27 and will bring retest of this high and then 168.93 key resistance.

In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed.

Forex News Digest

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«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«c.moreover.com»
Fri, 7 Dec 2007 10:52:00 GMT from Metronews

«c.moreover.com»
Fri, 7 Dec 2007 10:05:00 GMT from Thunder Bay Chronicle-Journal

«c.moreover.com»
Fri, 7 Dec 2007 09:59:00 GMT from Edmonton Sun

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan GDP Q/Q Q3 0.40% 0.60% 0.60%
23:50 JPY Japan GDP annualised Q3 1.50% 2.60% 2.60%
23:50 JPY Japan GDP deflator Y/Y Q3 -0.40% -0.30% -0.30%
11:00 EUR Germany Industrial prod’n M/M Sep -0.30% -0.50% 0.30% 0.10%
11:00 EUR Germany Industrial prod’n Y/Y Oct 6.00% 5.70% 6.00% 5.80%
12:00 CAD Canada Unemployment rate Nov 5.90% 5.90% 5.80%
12:00 CAD Canada Net Change in Employment Nov 42.6K 15.0K 63.0K
13:30 USD U.S. Non-farm payrolls Nov 94K 90K 166K 170K
13:30 USD U.S. Unemployment rate Nov 4.70% 4.80% 4.70%
13:30 USD U.S. Avg. hourly earnings M/M Nov 0.50% 0.30% 0.20% 0.10%
15:00 USD U. Michigan survey P Dec 75.3 76.1

«www.actionforex.com»

The anecdotal evidence for surging retail interest in forex is cropping up everywhere. Moreover, investors are no longer even limiting themselves to the spot market, utilizing derivatives to speculate on future exchange rates. In the UK, for example, 10% of investors intending to purchase real estate in the EU are utilizing forward agreements to hedge their exposure to the Euro, which has risen 10% against the Pound since the beginning of 2008. Evidently, prospective home buyers are hoping that the Euro returns to 2007 levels, which would significantly lower the cost of buying property there. However, if the Euro continues to appreciate, such investors could end up losing more than they bargained for. Homes Worldwide reports:

Even the movement in the markets over a couple of days can make the difference between owning a property and no longer being able to afford it.

Read More:

Action Insight | Written by ActionForex.com | Oct 01 07 14:34 GMT |
Forex Mid-Day Technical Report Dollar Consolidation Continues after ISM, Yen Sent Lower

Dollar continues to consolidate against European majors after the release of ISM manufacturing index. Headline index fell more than expected to 52.0 in Sep. This marks the 3rd consecutive decline in the index and brought it to the lowest since March. Though, the index remains in expansionary level. Price paid dropped further to 59.0. Meanwhile, the employment component recovered mildly from 51.3 to 51.7 which is supportive to a rebound in Friday’s NFP report.

Market’s attention in the European session was on UBS’s announcement of a $690m loss in Q3 as well as profit warning from Citigroup that its earnings would drop 60% in Q3 due to $1.3b loss in subprime mortgages. Normally, this would have prompted some risk aversion carry trade unwinding in the yen but instead, the Japanese yen remains weak across the board. Euro and Sterling were both softer after another falling month in the PMI manufacturing indices. More pressure is added to the Euro after ECB Trichet underscored US’s strong dollar policy ahead of G7 meeting later this month. Trichet referred to “extreme attention that US Treasury Secretary and US Fed Governor have said strong dollar in US interest”. But after all, both currencies remains generally firm against dollar and the yen. EUR/USD

Daily Pivots: (S1) 1.4181; (P) 1.4230; (R1) 1.4316; «www.actionforex.com»

EUR/USD’s retreat from 1.4281 continues but after all further rise is still mildly in favor as long as 1.4189 resistance turned support holds. Sustained trading above 200% projection of 1.3360 to 1.3719 from 1.3550 at 1.4268 will encourage further rise towards next important resistance zone of 1.4523 (95 high). However, on the downside, below 1.4189 support will warn that a short term top is formed and bring pull back towards channel support (now at 1.4094). Break will indicate rise from 1.3550 has completed and bring deeper pull back. But downside should be contained by 1.3828./3926 support zone and bring another rise.

In the bigger picture, medium term up trend from 1.1639 is still in force. Also, such rise is treated as resumption of the long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and is expected to extend to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance. However, EUR/USD will need to overcome next important cluster resistance zone at 1.4523 (261.8% projection of 1.3360 to 1.3719 from 1.3550 at 1.4490 and 200% projection of 1.3262 to 1.3851 from 1.3360 at 1.4538) first. Based on current overbought condition, rise from 1.3360 will likely be limited there initially and bring consolidation first.

On the downside, sustained break of 1.3828 support will indicate that rise from 1.3360 has likely completed and bring deeper correction. But still, the medium term up trend from 1.1639 remains in force as long as EUR/USD is supported by the medium term rising channel (support at 1.3488).

GBP/USD

Daily Pivots: (S1) 2.0278; (P) 2.0383; (R1) 2.0572; «www.actionforex.com»

Cable retreats mildly after edging higher to 2.0492 earlier today. An intraday top is in place and further consolidation could be seen. But rise from 1.9879 should still be in force as long as pull back is contained above 2.0195 support. Above 2.0492 again will indicate rally from 1.9879 has resumed for next upside target of 100% projection of 1.9652 to 2.0365 from 1.9879 at 2.0592 and probably extends further to retest 2.0652 high too

In the bigger picture, a medium term top is in place at 2.0652 with bearish divergence condition and daily and weekly MACD. The three wave structure of the fall from 2.0652 suggest that such correction is either completed at 1.9652, or is developing into sideway consolidation. Hence, 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 remains a key resistance. Decisive break of this resistance is needed to confirm rally from 1.7047 has resumed for 100% projection of 1.3680 to 1.9554 from 1.7047 at 2.2901. Otherwise, another fall could still be seen before completing the consolidation.

On the downside, below 2.0195 will warn that the rise from 1.9652 has completed and break of 1.9879 low will confirm this case. In other words, the last leg of consolidation that started at 2.0652 has begun in such case and a retest of 1.9652 low could be seen.

USD/CHF

Daily Pivots: (S1) 1.1595; (P) 1.1668; (R1) 1.1710; «www.actionforex.com».

USD/CHF recovers mildly after reaching as low as 1.1622 but after all, further decline is still expected as long as 1.1740 resistance holds. Next downside target will be 100% projection of 1.2467 to 1.1816 from 1.2214 at 1.1590. However, above 1.1740 resistance will indicate that the fall from 1.2150 has completed and bring stronger rebound towards 1.1800/1922 resistance zone.

In the bigger picture, sustained trading below the lower trend line support (1.1919, 1.1878, 1.1816) confirmed medium term bearishness. Current fall from 1.2214 is treated as resumption of decline from 1.2467 and is expected to head towards mentioned 1.1590 projection target first. Also, this will be tentatively treated as resumption of medium term down trend that started at 1.3283 which could extend further to retest 1.1288 (04 low).

On the upside, even though stronger rebound could be seen in case of a break of 1.1922 resistance, break of 1.2214 resistance is needed to confirm a medium term bottom is formed. Otherwise, further decline is still in favor, just after lengthier consolidation.

USD/JPY

Daily Pivots: (S1) 114.43; (P) 115.04; (R1) 115.40; «www.actionforex.com».

USD/JPY strengthens today on broad based yen weakness and is now pressing inner falling trend line. But after all, short term outlook remains neutral before a break out and choppy sideway trading could still continue. On the upside, above 116.36 will suggest rebound from 111.59 has resumed for 100% projection of 111.59 to 117.11 from 112.58 at 118.10 before completing such corrective rise. On the downside, break of 112.58 support will be the first alert that consolidation has possibly completed and encourage a retest of 111.59 low.

In the bigger picture, as discussed before, daily MACD’s stay above signal line suggests that the whole decline from 124.12 could have already completed at 111.59. Hence, further break of this low is needed to confirm that sharp fall from 124.13 has resumed. Otherwise, USD/JPY could still develop into lengthier consolidation.

Prior break of long term rising trend line (101.65, 108.99) indicates the the whole up trend from 101.65 could also have completed at 124.13 already, with bearish divergence condition in weekly MACD and RSI.. Break of 111.59 will indicate fall from 124.13 has resumed for support zone between 108.99 and 61.8% retracement of 101.65 to 124.13 at 110.23.

EUR/JPY

Daily Pivots: (S1) 163.02; (P) 163.43; (R1) 164.19; «www.actionforex.com»

EUR/JPY remains firm on broad based weakness in yen and extends higher to 165.04 today. Further rally is still expected as long as 162.65 support holds. Next upside target is 165.39 cluster resistance (100% projection of 149.27 to 159.67 from 155.15 at 165.55). Break will bring retest of 168.93 high. Below 162.65 will turn intraday outlook neutral first and warn that a short term top is possibly formed. Further break of 160.70 support, which will also have short term rising trend line (now at 161.01) taken out, will confirm such case and bring deeper decline to 155.15 support.

In the bigger picture, firstly the break of trend line support (137.16, 150.75) confirmed that rally from 130.60 has already completed at 168.93, with bearish divergence condition in weekly RSI. Hence, an important medium term top is in place at 168.93 already. However, secondly, since EUR/JPY is still supported within the rising channel shown in the monthly chart. the whole up trend from 88.9 could still be in force and price actions from 168.93 is probably just developing into consolidation to this long term up trend. Also, the three wave structure of the fall from 168.93 to 149.27 suggests that it’s probably developing into sideway consolidation instead of deeper correction.

So, further rise to retest 168.93 high cannot be ruled out. But firm break of 168.93 is needed to confirm long term up trend has resumed, otherwise, another fall could still be seen before completing the consolidation that started from 168.93. On the downside, a firm break of 149.27 low will have the long term channel support taken out too. This will add much favor to the case that up trend from 88.9 has indeed completed and bring much deeper decline.

Forex News Digest

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«c.moreover.com»
Mon, 1 Oct 2007 12:12:00 GMT from Reuters

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Mon, 1 Oct 2007 12:04:00 GMT from Reuters UK

«c.moreover.com»
Mon, 1 Oct 2007 11:46:00 GMT from Reuters

«c.moreover.com»
Mon, 1 Oct 2007 11:40:00 GMT from Bloomberg

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Tankan capex Q3 8.70% 7.50% 7.70%
23:50 JPY Japan Tankan big manufacturing Q3 23 21 23
07:30 CHF Swiss SVME PMI Sep 57.6 63 65.1
07:55 EUR Germany PMI manufacturing Sep 54.9 55 56
08:00 EUR Eurozone PMI manufacturing Sep 53.2 53.2 54.3
08:30 GBP U.K. PMI manufacturing Sep 55.1 55.6 56.3
14:00 USD U.S. ISM manufacturing Sep 52 52.9 52.9
14:00 USD U.S. ISM price paid Sep 59 62 63

«www.actionforex.com»

The anecdotal evidence for surging retail interest in forex is cropping up everywhere. Moreover, investors are no longer even limiting themselves to the spot market, utilizing derivatives to speculate on future exchange rates. In the UK, for example, 10% of investors intending to purchase real estate in the EU are utilizing forward agreements to hedge their exposure to the Euro, which has risen 10% against the Pound since the beginning of 2008. Evidently, prospective home buyers are hoping that the Euro returns to 2007 levels, which would significantly lower the cost of buying property there. However, if the Euro continues to appreciate, such investors could end up losing more than they bargained for. Homes Worldwide reports:

Even the movement in the markets over a couple of days can make the difference between owning a property and no longer being able to afford it.

Read More:

The anecdotal evidence for surging retail interest in forex is cropping up everywhere. Moreover, investors are no longer even limiting themselves to the spot market, utilizing derivatives to speculate on future exchange rates. In the UK, for example, 10% of investors intending to purchase real estate in the EU are utilizing forward agreements to hedge their exposure to the Euro, which has risen 10% against the Pound since the beginning of 2008. Evidently, prospective home buyers are hoping that the Euro returns to 2007 levels, which would significantly lower the cost of buying property there. However, if the Euro continues to appreciate, such investors could end up losing more than they bargained for. Homes Worldwide reports:

Even the movement in the markets over a couple of days can make the difference between owning a property and no longer being able to afford it.

Read More: