Oct 25, 2011

Forex Crunch EUR/USD Oct. 25 – Choppy in High Range Before Second Summit

Forex Crunch EUR/USD Oct. 25 – Choppy in High Range Before Second Summit

EUR/USD Oct. 25 – Choppy in High Range Before Second Summit

Posted: 25 Oct 2011 02:28 AM PDT

Euro dollar is trading in high range as tension mounts towards the second EU Summit. A lot depends on the size of the leveraged bailout fund, as well as the size of the Greek haircut.

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

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Europe’s deepening financial potholes

Posted: 25 Oct 2011 12:26 AM PDT

If European leaders hoped that the progress they had made over the weekend might help to placate investors and traders, then Monday's price action should send them back to the drawing board. After reaching a high early on of 1.3954, the euro fell back by more than one big figure by late morning as the consensus developing was that Europe's policy-makers were still two steps behind. Bond spreads for troubled sovereigns continued to widen relative to German bunds, with the IT/GER 10yr government bond spread out another 13bp to 390bp at one stage. France is not off the hook either – the FR/GER 10yr spread widened another 5bp to 118bp.

European leaders made a brave fist of attempting to resolve their differences over a solution to the worsening sovereign debt and banking crisis over the weekend, but unfortunately it appears that they will again underwhelm when they announce details of their response on Wednesday. In some respects, such is the incredible pace with which underlying circumstances are shifting that Europe's key policy-makers are struggling to catch up. Indeed, one is reminded of the little boy using his fingers to attempt to plug holes in a dike – eventually, he runs out of fingers, and, even worse, his fingers just aren't big enough to fill the holes.

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Forex Daily Outlook – October 25 2011

Posted: 24 Oct 2011 02:00 PM PDT

CB Consumer Confidence in the US and Current Account in the UK are the main events lined up.  Let’s see what awaits us today.

In the US, The Conference Board (CB) Consumer Confidence, Monthly Survey (around 5,000 homes) to rate the present and upcoming financial conditions and overall economic conditions, rise up to 46.2 points is expected from 45.4 points on September.

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Haircut for the ECB – A Step Forward for a Comprehensive Solution

Posted: 24 Oct 2011 10:45 AM PDT

The banks have now reportedly agreed for a 40% haircut on Greek debt. Germany and other countries want more even 60%. But wait. This is by no means a reduction of 40% or 60% in the Greek Olympus of debt. It applies only the private sector. 

In order for the Greek debt to become sustainable, and the solution to be comprehensive, the haircut should be more even and include another big bondholder – the ECB, part of the “Official Sector”.

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USD/JPY: Trading the US CB Consumer Confidence Index

Posted: 24 Oct 2011 06:00 AM PDT

The Conference Board Consumer Confidence Index is based on a monthly survey of about 5,000 US households regarding their opinion of economic conditions and the overall economic climate. Its release always has a strong impact on market prices.

Here are all the details, and 5 possible outcomes for USD/JPY.

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EUR/USD: Trading New Home Sales

Posted: 24 Oct 2011 05:00 AM PDT

The New Home Sales report is a leading indicator of housing activity. The indicator is released on a monthly basis, and helps analysts track consumer spending. A higher reading than that expected by the market is bullish for the dollar.

Here are all the details, and 5 possible outcomes for EUR/USD.

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