Sep 7, 2011

Forex Crunch EUR/USD Sep. 7 – Hope Is Very Limited

Forex Crunch EUR/USD Sep. 7 – Hope Is Very Limited

EUR/USD Sep. 7 – Hope Is Very Limited

Posted: 07 Sep 2011 03:28 AM PDT

Euro dollar enjoyed a nice rise in German industrial production and a relief from Germany’s constitutional court, that didn’t reject bailouts. But these gains are limited as the situation in Greece remains very sensitive, especially as the Finnish threats to bail out of the Greek bailout become more serious.

Here's a quick update on technicals, fundamentals and what's going on in the markets.

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Hint of a Rate Cut? ECB Preview

Posted: 07 Sep 2011 02:34 AM PDT

No change is expected in the upcoming rate decision in the euro-zone. Trichet is likely to soften his stance on inflation. But how soft will he be? ECB Preview.

In the recent rate decision, Jean-Claude Trichet remained upbeat on inflation risks. He used the code words “very closely monitoring”, which mean that a rate hike isn’t like in the next meeting, but could appear afterwards. This is likely to change now

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Don’t Get Too Excited About the German Court’s Bailout Approval

Posted: 07 Sep 2011 01:17 AM PDT

While this was widely expected, the German constitutional court paved the way for further bailouts. This ignited a fast rally in EUR/USD that faded quickly. The court didn’t put the brakes on bailouts, but the limited success of these bailouts (to say the least) put the brakes on the rally. Enabling the current format of bailouts doesn’t really solve the problem.

The pair jumped above 1.41 and reached 1.4150 before retreating. The court noted that the ruling was quite tight, and this serves as a warning sign for the next moves.

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G7: together they stand…but divided?

Posted: 07 Sep 2011 12:55 AM PDT

This Friday's meeting of G7 finance ministers and central bankers in Marseilles promises to be eventful, and quite possibly pivotal. After the SNB's exceedingly bold and risky decision to set an explicit target for EUR/CHF, the new minister of finance in Japan has been making loud noises about raising the issue of the extraordinary strength of his currency at the meeting. Separately, finance officials are likely to discuss how they might respond both individually and collectively to the growing perception that most of their economies appear to be heading back into recession.

For its part, the ECB certainly has plenty of room for manoeuvre. For instance it could cut the refi rate by at least 50bp at some point (which would still leave some firepower for the future), and it could ramp up its SMP. The Fed is already likely to be discussing the need for additional monetary policy action – a twist operation (extending the average maturity of its balance sheet) seems highly likely. The Bank of England MPC is probably already contemplating the need for more QE, and the BoC could contemplate lowering rates given the clear weakening in growth. Elsewhere, Brazil and Turkey have both announced surprise cuts in key rates over recent weeks.

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GBP/USD Recovery Halts on Falling House Prices in Britain

Posted: 07 Sep 2011 12:07 AM PDT

Britain’s Halifax HPI, a wide measure of house prices, disappointed with a significant drop of 1.2% in August. A rise of 0.5% was expected, after last month’s 0.2% rise (revised downwards from +0.3%).

GBP/USD that already managed to recover and rise above 1.60, is now retreating.

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AUD/USD Pushes Forward on Strong Growth

Posted: 06 Sep 2011 06:33 PM PDT

The Australian dollar is marching forward against the greenback as the Australian economy rebounded nicely in Q2: the growth rate of 1.2% exceeded expectations for an expansion of 1%. 

AUD/USD is up to 1.0580 from around 1.0540 before the release. In Q1, the Australian economy squeezed by 1.2% according to the initial report. This was now revised to the upside – contraction of only 0.9%.

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Forex Daily Outlook – September 7 2011

Posted: 06 Sep 2011 02:00 PM PDT

Manufacturing Production in the UK and BOC Rate Statement in Canada are the main events today.  Here is an outlook on the market-movers awaiting us

In the US, Beige Book, one of 3 books (Green, Blue & Beige) that the Federal Open Market Committee (FOMC) uses to decide on the next interest rates.

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EUR/USD Loses 1.40 As Debt Crisis Hits Hard, US QE3 Fades

Posted: 06 Sep 2011 08:14 AM PDT

EUR/USD dropped under the weight of the debt crisis complications and fell below 1.40. Next support is at 1.3950, followed by 1.3838, which was a swing low back in July. 

The move challenges the fierce announcement by the SNB to defend an exchange rate of 1.20 for EUR/CHF. The move initially helped the euro. In the meantime, EUR/CHF remains above this floor.

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US Services Sector Continues Growing Nicely – USD/JPY Rises

Posted: 06 Sep 2011 07:03 AM PDT

US ISM Non Manufacturing PMI rose from 52.7 points to 53.3 points in August, above expectations, that stood on 51 points. This means that growth continues in America’s largest sector.

The dollar reacts with a small rise against the yen, but retreats against the beaten euro. This may reverse later on, as this lowers the chance of QE3.

Read the rest of the article US Services Sector Continues Growing Nicely – USD/JPY Rises
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