Tuesday, December 9, 2008
Technical Analysis, Wednesday December 10, 2008
Date: 2008/12/10
Time: 07:33 (GMT +2)
Ticker: EUR
Last: 1.2818
Pivot: 1.25
1st sup. 1.25
2nd sup. 1.212
3rd sup. 1.2
1st res. 1.31
2nd res. 1.33
3rd res. 1.36
Title: EUR/USD ST: bounce
Summary: As long as 1.25 is not broken down, we favour an upmove with 1.31 and then 1.33 as next targets.
Story: We move up our pivot point to 1.25.
Our preference: As long as 1.25 is not broken down, we favour an upmove with 1.31 and then 1.33 as next targets.
Alternative scenario: A break below 1.25 would invalidate our bullish scenario. the currency could then decline to 1.2.
Comment: The daily technical indicators are reversing up and are advocating for a technical rebound.
Trend: ST limited rise; MT bearish.
Supports and resistances:
1.36 ***
1.33 **
1.31 **
1.2818 last
1.25 ***
1.212 **
1.2 **
Euro Outlook
04:32 GMT December 10th The EUR/USD opened in Asia at 1.2920 after easing from 1.3000 during the US afternoon when Wall Street slumped into the close. After trading at 1.2913 the EUR/USD started to grind higher when Asian equities bucked the US lead and moved higher. Reports that Congress agreed to a bailout plan for the automakers sent Asian equities much higher with the Nikkei up over 3% at one stage. The surge higher in equities sparked EUR/JPY buying that helped push the EUR/USD to 1.2960. Good selling interest lined up between 1.2960 and option expiries at 1.3000 helped to discourage aggressive attempts higher, but the EUR/USD remained bid around the 1.2950 level for the balance of the session.
Sentiment towards the EUR/USD is mixed. Some analysts feel that the equity markets will rally into year-end and the USD is due for a broad correction lower due to expectations of aggressive Fed easing and heavy government spending. Others feel that the EUR/USD upside is limited due to risk-aversion remaining high as evidenced by the safety bid in US Treasuries and concerns that year-end USD funding might be difficult. (JN)
Yen Outlook
05:25 GMT December 10th USD/JPY and the JPY crosses moved higher in Asia today with the crosses firmly in the lead. Short-covering looks to have been the major theme with JPY as a safe haven destination abating on the now almost consistent stream of bad economic data out of Japan. Yesterday, it was Q3 GDP, today it was October core machinery orders. The Nikkei also surprised to the upside following the plunge on Wall Street overnight, with heavy gains seen in the afternoon following reports that the Bush administration had tentatively agreed on an automaker bail-out package with Congress. Taking its lead from the crosses, USD/JPY rose from 92.08 early to 92.68. Some trader stops are eyed above 93.10, the high yesterday, with larger stops noted above 94.00. EUR/JPY was especially well bid, trading up from 119.01 to 120.07. Trader stops are noted above 120.10 and 120.30 topside and large above 121.00. AUD/JPY rose from 60.53 to 61.47 and NZD/JPY from 49.77 to 50.87. GBP/JPY rose from 135.80 to 136.99. Despite the rather large rally in the Nikkei however, fresh buy-side flows were sparse, limiting the upside for most pairs.
Sterling Outlook
04:03 GMT December 10 The GBP/USD opened in Asia around 1.4760 after
retreating from 1.4840 in the last couple of hours of US trading due to a weak
close on the Dow. The GBP/USD spent the Asian session churning between 1.4735/85
and underperformed the other dollar-bloc currencies due to heavy GBP/NZD selling
that was rumoured to be an Asian central bank. The GBP/NZD fell from 2.7280 to
2.6960 as a result of the selling flow. Reports that Congress agreed to a
bailout for troubled US automakers boosted Asian equities and sent the EUR, AUD
and NZD higher against the USD and JPY, but the GBP lagged due to the GBP/NZD
selling flow.
The GBP has been sold heavily against a number of currencies this week,
as investors fear that the UK will be hit particularly hard by the global
slowdown and the BOE will be particularly aggressive in easing rates. The
GBP/USD could get support if European equities follow the Asian lead, but talk
of more GBP selling to be done on the crosses could limit the gains.
Swiss Outlook
December 9th USD/CHF opened in NY at 1.2144 and began shedding its overnight
gains as equities retraced much of Monday"s gains, eventually pulling the
EUR/CHF off its midday highs just shy of key technical resistance at 1.5665.
USD/CHF fell in the final few hours of the London session, eventually running
into buyers between yesterday"s 1.2020 low and 1.2000. Hints from ECB"s Trichet
that the bank might pause for a meeting or two before easing and a rise in the
Swiss jobless rate to 2.7% from 2.6% were fodder in early London trading to sell
the CHF, but the ECB may be shooting itself in foot and the SNB may decide to
cut less if they suspect the ECB are going to go slow. The franc managed to
recover in the US as recent hefty CHF losses against a variety of currencies
left it ripe for profit-taking in the midst of stock selling. The arrest of the
Gov of Illinois for trying to profit from Senator Omaba"s seat may have caused a
stir, though early reports are the Pres-elect is not involved in the charges.
The SNB rate decision on Thursday is the next major event risk, with only
the Swiss ZEW survey for December due out Wednesday.
Canadian Dollar Outlook
21:37 GMT, December 9th USD/CAD opened Toronto around 1.2575 and was already
trading at 1.2650 ahead of the BoC 75bp rate cut. Local money markets had priced
in 60bp, so the fact it came in at the extreme of expectations and at 1.5% is at
a 50-yr low, drove USD/CAD up to 1.2743 at its peak. There was talk of a large
pension fund accumulating USD on the way up. US IBD/TIPP optimism index fell
5.8, its largest drop in 3-yrs, and US pending home sales fell 0.7%, but were
better than expected. Oil gyrated alongside stocks, oil closed down $1.64 at
$42.07 on the NYMEX; the Dow dropped 2.72%. When oil rallied to $43.75 at noon
USD/CAD fell to 1.2555, but bounced back to close at 1.2645 after CAD/JPY sales.
A report from the EIA forecasting that 2008 will reveal an average drop in
oil demand of 50k bpd, and a further drop of 450k bpd on average in 2009 drove
oil prices and stocks lower as energy companies sold off. This is the first drop
in world demand since 1983 that followed 3-yrs of falling demand which heralded
a 6-yr price drop. CAD/JPY sales helped bully USD/CAD higher as equities fell,
the pair dropped from 73.63 afternoon highs to 72.85 at the close.
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