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NZD/USD: technical comments

 

 

This week NZD/USD traded sideways in a $0.8150/8235 range: on the downside the pair is supported by the 50-day MA, while the upside is capped by the $0.8200 hurdle.

 

Specialists at BNZ expect NZD/USD to remain around these levels by the end of 2012. In their view, the pair will move lower in the mid-2013. The kiwi may get under pressure as the US economy finally starts to rebound and New Zealand’s external accounts continue to deteriorate.

 

 

 

nzdusd_13-13_(1).gif

Chart. Daily NZD/USD

 

 

 

 

 

 

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GBP/USD: bearish prospects

 

GBP/USD rebounded from the levels below $1.6000 tested earlier this week to $1.6090.

 

Short-term

 

Commerzbank: The market has topped at $1.6300. Pound’s rally will be contained at $1.6146 (20-day MA) and $1.6200 (near-term resistance line). The bears will return into their full power only when pound slides below $1.6000. In this case the pair will target $1.5900 (50% retracement of the advance from August lows to September highs) and $1.5800/1.5780 (200-day MA).

 

Longer-term

 

Wells Fargo: “Expect the pound to wax and wane along with European sentiment in the coming months, followed by gradual sterling weakness through 2013 as the UK economy underperforms relative to the US”.

 

 

 

daily_gbpusd_17-20.gif

Chart. Daily GBP/USD

 

 

 

 

 

 

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October 15: forex news

 

 

 

The currency market opened the week in a risk-off mood. AUD/USD moves down for a second consecutive day and failed to overcome the 100-day MA. Aussie is under pressure despite the positive Chinese trade data, released on Saturday (trade surplus overcame the forecasts and reached 27.7B). The second largest world economy shows signs of stabilization as exports improved. China’s CPI came out in line with forecasts (1.9% y/y in September). Investors expect the RBA to release the meeting minutes on Tuesday. Last Friday the RBA Governor Glenn Stevens said there is scope to further lower borrowing costs, so the traders are bearish on the currency. NZD/USD tested the levels below the 50-day MA and opened a new monthly low at $0.8127.

 

EUR/USD declined to the levels just above $1.2900 from Friday’s high of $1.2991. The pair remains in the sideways range. Euro was actively sold today in Asia as Reuters said citing as senior euro zone sources that Spanish bailout will most likely take place in November – the market wants it sooner. In addition, demand for euro is limited ahead of German ZEW economic sentiment which will be out tomorrow. Today there are no important data releases in Europe, so all eyes are on US retail sales (12:30 GMT).

 

GBP/USD moves down and trades below $1.6100. Tomorrow watch for UK CPI figures. USD/JPY went up to 78.55 approaching the major resistance. USD/CHF is moving sideways in the 0.9400/9270 zone. USD/CAD remains flat at the 0.9800 mark. Today the Bank of Canada is to release the business outlook survey.

 

 

 

 

 

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Key options expiring today

 

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.2895, $1.2900, $1.2925, $1.2970 (L), $1.3000, $1.3050, $1.3100;

 

GBP/USD: $1.6150 (large);

 

USD/CHF: 0.9525;

 

AUD/USD: $1.0100, $1.0200, $1.0250;

 

NZD/USD: $0.8200;

 

EUR/JPY: 101.00.

 

 

 

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CFTC trader positioning data

 

 

Here are the essentials of the latest Commitments of Traders (COT) report, released on Friday, October 12, by the Commodity Futures Trading Commission (CFTC) for a week ended October 9.

 

The bets for US dollar contracted for the second week in a row to 1-month minimum. The value of USD net short position decreased from $16.31 to $6.43 billion. Also note that net shorts on EUR rose amid uncertainty about a possible bailout request for Spain.

See more in the table below.

 

 

cftc_eng.jpg

 

It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.

 

 

 

 

 

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Credit Suisse: bullish on EUR/USD

 

 

Technical analysts at Credit Suisse believe that EUR/USD may climb to 1-month maximum of $1.3172.

 

According to the specialists, the fact that EUR/USD managed to hold above 200-day MA last week means much. In their view, this support will continue to be intact.

 

 

daily_eurusd_15-57.gif

Chart. Daily EUR/USD

 

 

 

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BBH: factors of JPY weakness

 

 

Demand for the high-yielding currencies is up following the Asian stocks. AUD/USD strengthens but still remains below the $1.0300 hurdle. The Aussie moves up even despite the dovish RBA meeting minutes. The expectations of the RBA rate cut in November remain high, but it has already been priced in by the markets. Meanwhile, NZD/USD dropped after data showed inflation is on its lowest level in 13 years. CPI rose by 0.8% y/y in Q3 versus the 1.0% y/y projection. The markets, therefore, expect the RBNZ to cut rates and the kiwi – to weaken.

 

EUR/USD rose above Friday’s close, to $1.2970, staying generally range bound. Euro strengthened ahead of EU 2-day summit starting on Thursday. Financial Times reported citing an unidentified Spanish economy ministry official that Spain is preparing to make request for a rescue. Today in Europe watch for German ZEW economic sentiment (market expects improvement, though the reading will likely still be negative) and euro zone’s sentiment and CPI data.

 

JPY weakened versus the majority of its peers before US data forecast to show improvement in industrial production today and housing starts tomorrow, reducing demand for yen as a refuge. USD/JPY reached 1-month maximums not far from 79 yen.

 

GBP/USD remains in a consolidation mode around the $1.6070 mark. The speculators are waiting for the UK CPI data at 08:30 GMT (forecast: 2.2% y/y, prev.: 2.5%). USD/CAD also trades sideways slightly above 0.9800. Today Canada is to release manufacturing sales and foreign securities purchases (12:30 GMT).

 

 

 

 

 

 

 

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Key options expiring today

 

 

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.2900, $1.2925, $1.2950, $1.3040, $1.3045, $1.3050;

 

GBP/USD: $1.5890, $1.6190;

 

USD/JPY: 79.40;

 

AUD/USD: $1.0150, $1.0200;

 

NZD/USD: $0.8190;

 

EUR/GBP: 0.8055;

 

EUR/JPY: 100.00.

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AUD/USD: is Aussie going to turn?

 

 

So far, there was a lot of talk that the Reserve bank of Australia may and even is likely to cut rates from the current level of 3.25% when it meets again on November 6. The RBA October meeting minutes released today was quite dovish.

 

On the one hand, the idea of RBA’s another cut has been floating for some time, so it may be completely priced in Aussie’s rate. This supposition is confirmed by the fact that AUD/USD went up today testing the 100-day MA at $1.0275.

 

Yet, analysts at UBS and BK Asset Management still claim that the fundamental factors for Australian dollar are bearish. In their view, AUD/UD will slide below the parity. According to UBS, domestic issues will overshadow whatever developments occur in the euro area. Australian domestic problems include declining surpluses, rising unemployment and the fact that the country’s mining investment boom is close to peaking. “If the rest of the economy is unable to take up the slack given the high exchange rate and still comparatively high interest rates, sharp AUD falls may be needed to restore growth,” says UBS.

 

Note that AUD/USD faces a band of resistance up to $1.0340 (200-day MA, 200-period MA on H4 chart) – see the H4 chart ($1.0290 – last week’s highs/resistance from September highs, $1.0300 – 100-period MA, $1.0310 – Ichimoku Cloud top on H4, $1.0330).

 

daily_audusd_12-21.gif

Chart. H4 AUD/USD

 

From a broader perspective, once AUD/USD settles down below $1.0160, the double top pattern seen on the daily chart will get activated creating grounds for a significant decline.

 

In our view, the pair has a chance to get up to $1.4000 on positive news from Europe, but then fail in that area or earlier on RBA and Australian economy.

 

daily_audusd_12-21.gif

Chart. Daily AUD/USD

 

 

 

 

 

 

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SNB: the moments of peace?

 

 

2010 and 2011 were tough years for the SNB: the central bank had to fight franc’s appreciation as strong national currency was hurting Swiss exporters and heightening deflation risks. On September 6, 2011, the SNB promised buy as many euros as necessary to prevent EUR/CHF from sliding below 1.20. At that time the analysts skeptical about the SNB’s ability to make the market respect the floor, now there aren’t any doubts left. It has been hard to find EUR/CHF on the front pages during the majority of 2012 – the pair has been trading dully above the threshold and then even took off reaching 1.2184. Where the things stand now and what’s likely to happen with the peg?

 

Firstly, it’s not as flawless as it may appear from the surface. SNB’s foreign exchange reserves surged from 238 billion francs in April to 429 billion ($456 billion) by the end of September. That’s about 75% of Swiss GDP. As the SNB’s reserves are primarily in euro, the central bank risks many losses in case the single currency loses values.

 

Still, there are the reasons for the SNB to maintain its policy: Swiss authorities are backing the central bank and the nation’s economic performance remains discouraging (Swiss exports contracted by 0.7% in Q2; CPI fell by 0.5% in August). Moreover, Barclays points out that the floor broke the correlation between negative developments in the euro area and franc’s strengthening.

 

As long as inflation expectations remain low, there is no reason for the floor to be challenged even in the face of uncertainty in the euro zone. The ECB promised to buy unlimited quantities of euro zone sovereign bonds, so the market’s tensions have significantly eased so far.

 

Thomas Jordan, SNB chairman, said that the floor is “not for eternity”. UBS thinks that the central bank may, for example, more from the peg to euro to setting limit for franc against some currency basket. As for the option of raising the floor, or would probably cause lots of criticism on the SNB’s head as GDP and unemployment figures aren’t that bad for such a move.

 

Some experts think that the best way is just to give the initiative to the market. In the recent weeks EUR/CHF strengthened and the odds are that it didn’t happen because of the SNB’s actions. If the euro zone’s policymakers achieve some progress with debt crisis, franc may keep weakening.

 

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October 17: forex news

 

 

 

The markets switched to the risk-on mode yesterday in the evening and remained so during the Asian session. Higher yielding currencies renewed highs, though subsided a bit by the moment of writing. S&P 500 added 1% in New York, MSCI Asia Pacific Index was also up. AUD/USD rose to 2-week maximum at $1.0323.

 

US dollar broadly weakened on the expectations that data released later today will show that new housing construction in the United States climbed in September reducing demand for safe havens even more.

 

EUR/USD has reached 1-momth high at $1.3124 today on the talk that Spain will move towards requesting financial aid. Moody’s Investors Service left Spain’s credit rating at investment grade (Baa3), though with negative outlook. Spain will sell bonds due in 2022, 2016 and 2015 tomorrow. The nation’s 10-year yields declined to 5.80%. Yesterday 2 senior German coalition lawmakers said that Germany is open to Spain seeking a precautionary credit line from the ESM. The markets are waiting for EU 2-day summit starting on Thursday: teh question of providing Greece with the next aid tranche is on the agenda.

 

GBP/USD is fluctuating around Tuesday’s maximum at $1.6130, capped by the 20-day MA. The market’s eyeing UK unemployment data and MPC meeting minutes, both at 12:30 GMT. The minutes may provide hints on the Bank of England’s approach to quantitative easing.

 

USD/JPY was stopped by resistance at 79.00/22 yen (the top of the daily Ichimoku Cloud) and returned below 100-day MA to 78.70. USD/CAD reached highs since the beginning of October in the 0.9860 region and stalled there for now.

 

 

 

 

 

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Key options expiring today

 

 

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.3000, $1.3030, $1.3100, $1.3115;

 

GBP/USD: $1.6010;

 

USD/JPY: 78.50, 78.90, 79.00;

 

USD/CHF: 0.9345, 0.9350, 0.9375;

 

AUD/USD: $1.0205, $1.0215 (large), $1.0220 (large), $1.0240, $1.0250, $1.0300;

 

EUR/GBP: 0.8150.

 

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USD/JPY: Will the Cloud dissipate?

 

 

 

As you may see on USD/JPY chart, yesterday the pair stalled below the daily Ichimoku Cloud top (79.00). Today it remains inside the Cloud.Yet, the technical picture for the pair has considerably improved in the last 2 days: on Tuesday the greenback managed to close above the 100-day MA (78.75) and opened above this line today – there has been no such thing since the pair dipped below this MA in May.

 

Now we are watching whether USD manages to break above the Cloud or not – a substantial increase above this level will be seen as the strongest bullish signs for the pair in months.

 

A month ago one would be very skeptical about dollar’s ability to strengthen (remember QE3?), now the situation seems different. US data improved and the faith in American economy is reviving, while Japan will likely have to disburse much more stimulus, especially taking into account the fact that Japanese inflation is still far away from the 1% target.

 

Bearish candle which is forming today represents consolidation after 4 bullish candles (almost 80 pips is a big move for USD/JPY these days). Note that the pair found support at the bottom of the Cloud/previous resistance line (78.60). The downside risks for USD/JPY include concerns about US and global economic growth, US fiscal cliff and prolonging uncertainty about Spain. If USD/JPY fails to break above resistance mentioned above, it will return to trading in sideways range.

 

Resistance: 78.95 (yesterday’s maximum), 79.20 (September maximum), 79.38 (200-day MA), 79.64 (August maximum).

 

Support: 78.53/43 (61.8% retracement of the decline from September 19 high to September 28 low4 50-day MA), 78.30 (50% retracement), 78.15, 77.95 (October 11, 2 minimums, September 12 maximum, etc), 77.65 (June 1 minimum), 77.12 (September 13 minimum).

daily_usdjpy.gif

Chart. Daily USD/JPY

 

 

 

 

 

 

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Pimco: US downgrade is a question of time

 

 

Experts at Pimco, the world’s largest bond fund, warn about potential US credit downgrade.

 

“The US will get downgraded; it’s a question of when,” said Scott Mather, Pimco’s head of global portfolio management, reports Bloomberg. “It depends on what the end of the year looks like, but it could be fairly soon after that.”

 

Credit rating firms may discount the fact that US total debt (of federal and state governments and consumers) fell to the lowest level since 2006 (3.29 times GDP).

 

US fiscal cliff (automatic spending cuts and tax increases taking place at the beginning of 2013) will push American economy into recession. US lawmakers plan to deal with the problem after presidential elections on November 6. Yet, there are serious disagreements between the Democrats and the Republicans and it’s not clear whether this stalemate will be solved in time and how hard this process will be.

 

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Greece faces massive strikes

 

 

According to a Spiegel report, Germany and France have already made a decision to give Greece the next 31.5 billion euro aid tranche by the end of November. The decision will be officially announced the Troika inspectors. German and Paris require putting the tranche on a special escrow account in order to tighten control of Greek expenditures.

 

Meanwhile, Greece for the second time in three weeks went on a general strike, confined to the EU summit. Tens of thousands of people took part in rallies to protest against austerity measures, needed to get financial support from the European creditors.

 

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Photo: Protesters attack police by gazoline bombs

 

 

 

 

 

 

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Commerzbank: comments on EUR/GBP

 

EUR/GBP hit a four-month high at 0.8136 yesterday after having broken above the strong resistance at 0.8100/15 (recent highs, 200-day MA and the 2011-2012 downtrend).

 

Analysts at Commerzbank expect EUR/GBP to consolidate at current levels before further growth. They concede a short-term downward correction to 0.8102. In their view, a close above 0.8114 will confirm the inverse “head-and-shoulders” pattern (head at 0.7753). The next targets will be seen at 0.8157 (June maximum) and 0.8221 (January minimum). The medium-term goal is seen at 0.8480.

 

eurgbp_16-40.gif

Chart. Daily EUR/GBP

 

 

 

 

 

 

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EUR/JPY: ready for another step up

 

EUR/JPY is testing the levels above 104 yen. The pair rose today to the highest level since September 17 – if it manages to break above this level, we’ll see more gains.

 

On the daily Ichimoku chart Tenkan-sen went above Kijun-sen forming the golden cross – strong bullish signal as it happened above the Cloud. The Cloud itself is bullish. The picture ion H4 Ichimoku chart is also quite positive. All the lines have formed an uptrend.

 

Analysts at MIG Bank underline that the pair broke above the upper border of the symmetrical triangle this week and this, in their view, may bring the pair up to 105.90. On the way there’s 104.75/80 (the 61.8% retracement of the decline from March highs to July lows). All in all, from the technical point of EUR/JPY seems capable to rise to the resistance line of the longer-term downtrend in the 107.00 area.

 

For now the pair looks overbought, so the correction and the pullbacks may be used to enter the market.

 

daily_eurjpy_17-09.gif

Chart. Daily EUR/JPY

 

 

 

 

 

 

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October 19: forex news

 

 

 

EUR/USD is sitting at $1.3070. The bulls were quite active in the middle of the week, but didn’t go to test September highs of $1.3172.

 

The first day of the EU summit was rather quite. European leaders agreed on a legal roadmap to establish a single bank supervisor, expected to enter into force in 2013, but this was no news to the market. Spanish Prime Minister Mariano Rajoy said that the potential Spanish bailout wasn’t mentioned yesterday.

 

US dollar strengthened on Thursday during American session versus its riskier counterparts as Google’s shares slumped by 10% after its earnings report was leaked too early and showed that the company earned less than expected.

 

AUD/USD stands still at $1.0365 after piercing $1.0400 yesterday. USD/JPY is hovering below the 200-day MA at 79.40. Yen weakened versus its main counterparts as investors expect the Bank of Japan to announce more easing at the end of the month. GBP/USD didn’t manage to reach $1.6200 this week and slid to $1.6040.

 

Watch for UK public sector net borrowing at 8:30 GMT and US core CPI and existing home sales at 12:30 and 14:00 GMT respectively.

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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Key options expiring today

 

 

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.3015, $1.3050, $1.3100, $1.3175, $1.3195, $1.3200;

 

GBP/USD: $1.6050;

 

USD/JPY: 79.00, 79.10, 79.25;

 

AUD/USD: $1.0225, $1.0350, $1.0380, $1.0400;

 

NZD/USD: 0.8100;

 

EUR/JPY: 103.50.

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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USD/CHF: bearish in the medium-term

 

 

For a few weeks since the middle of September USD/CHF was trading in range between 0.9430 on the upside and 0.9280/60 on the downside. This week the pair has dipped below 0.9260 hitting 5-month minimum at 0.9215.

 

On the daily chart the outlook seems negative. 50-day MA went below the 100-day one this month and the bearish Ichimoku Cloud is wide.

 

daily_usdchf_12-49.gif

Chart. Daily USD/CHF

 

Note that the weekly Cloud is getting more and narrower. So, if USD/CHF slips below 0.9100 entering the Cloud, it will likely move down to its lower border targeting 0.8930 and 0.8600. Such scenario seems the most likely in the medium term. In this case the market’s top at 0.9970 (July maximum) will get confirmed. The greenback’s prospects will improve only above 0.9660 (August 22 high). At the same time, don’t forget that we’re still in the long-term downtrend with an extremely strong resistance around the 200-week MA (0.9900) – the last time USD/CHF was sustainably trading above this line was in 2002.

 

weekly_usdchf_12-50.gif

 

 

Resistance: 0.9287 (intraday high), 0.9325 (daily Tenkan and Kijun), 0.9390 (200-day MA), 0.9470 (daily Cloud bottom, 50-day MA).

 

Support: 0.9140 (100-week MA), 0.9105 (top of the weekly Ichimoku Cloud).

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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Japan's stimulus limited by political impasse

 

 

 

This week Japanese Prime Minister Yoshihiko Noda has ordered the government to come up with a new round of stimulus measures by November. The policymakers can’t stand aside: if Japan doesn’t cut spending or issue new bonds, next month the government will run out of cash.

 

However, that’s is a tough task as the opposition party, which controls the upper house of parliament is against the idea of allowing the nation’s huge debt to increase more and won’t let the bill that would allow the government to issue debt to finance the deficit pass. So, Noda can either use the nation’s reserves to pay for stimulus or reallocate money from special accounts in the budget.

 

Many analysts expect the Japanese economy to contract in Q3 and Q4 2012. As the Noda’s room for economic measures is limited by the stand-off between government and opposition, the pressure on the Bank of Japan may increase. The BOJ is widely expected to ease policy in November in order to support the economy and fight deflation. RBS believes the regulator will expand its balance sheet by 10 trillion yen.

 

Credit rating agency Moody’s expressed concerns about Japan’s political impasse. If Japanese authorities don’t manage to resolve the contradictions, the country may be downgraded by the rating agencies – the outcome which is certainly negative for Japanese yen. Moody’s currently rates Japan at Aa3, three notches below the top AAA rating, with a stable outlook.

 

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Image: Bllomberg

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

fbsana.png

 

 

 

 

Key options expiring today

 

 

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

 

Here are the key options expiring today:

 

EUR/USD: $1.3000, $1.3050 (large - 1 billion as the reports say), $1.3125, $1.3200;

 

GBP/USD: $1.6000;

 

USD/JPY: 79.00, 79.15, 79.20, 79.30;

 

USD/CHF: 0.9400;

 

AUD/USD: $1.0250, $1.0375, $1.0400;

 

EUR/GBP: 0.8100;

 

EUR/JPY: 103.50.

 

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Have a profitable trade with FBS!

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Comment here http://www.fbs.com/analytics/2012-10-22/19662-key-options-expiring-today

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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FX majors from top forecasters

 

 

 

Here are the forecasts for EUR/USD, GBP/USD, USD/JPY, USD/CHF and EUR/JPY from top forecasters. Data were submitted on October 19.

 

forecast.png

Source: FX Week

 

 

 

 

 

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Comment here http://www.fbs.com/analytics/2012-09-03/19035-fx-majors-top-forecasters

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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EUR/USD: direction - sideways

 

 

 

EUR/USD has been moving sideways in the recent month between $1.3170/40 on the upside and $1.2820/00 on the downside. Sellers are active at $1.3070, while buyers – around $1.3010 and $1.2890.

 

Such dynamics may be explained by the absence of game-changing news and may persist for now. The key events of this week include the FOMC meeting, Chinese HSBC flash manufacturing PMI and US advance GDP, but they probably won’t cause large volatile moves.

 

Analysts at JPMorgan think that the corrective manner of the market “is still consistent with the view that this rally from the July low is incomplete.” Resistance for EUR/USD lies at $1.3080, $1.3140, $1.3172 (September high), $1.3280 (May maximum), $1.3385/1.3485 (March & February maximums). For support watch the MAs on H4 chart ($1.3005, $1.2972 and $1.2943) as well as the Fibonacci fan lines.

 

daily_eurusd_11-51.gif

Chart. Daily EUR/USD

 

 

 

 

 

Have a profitable trade with FBS!

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Recent market news from FBS

 

 

Comment here http://www.fbs.com/analytics/2012-10-23/19687-eurusd-direction-sideways

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