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NFP: market's and analysts' expectations"(2012-10-04)

 

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NFP: market's and analysts' expectations

 

 

 

The market participants await the release of US employment data on Friday. The statistics is attracting special attention ahead of the November presidential elections as it may be used to judge the efficiency of Obama’s economic policy. So, let’s try to examine the dynamics of the American labor market.

 

According to forecasts, the US economy created 115K jobs (NFP) in September vs. 96K in August. The unemployment rate is expected to have risen to 8.2% from 8.1%. It’s necessary to note that the jobless rate remains above 8% since February 2009 and reached a record high of 10.2% in October 2009.

 

On Wednesday the ADP report showed that private payrolls increased by 162K last month (cons.: 145K; prev.: 189K). This report provided some relief, but many analysts say the positive data shouldn’t necessarily be seen as a forerunner for the real NFP number.

 

All in all, economists’ outlook for the US employment at the end of 2012 has deteriorated after another weak NFP data in August. The effects of QE3, announced last month, will be seen not earlier than by the end of the year, so the analysts expect NFP to remain in the range of 80K-130K.

 

According to specialists at BNP Paribas, the business sector will keep on the wait-and-see approach until the problem of the fiscal cliff is avoided. Therefore, labor market situation may improve only after the presidential elections. Specialists also recommend watching out for the Fed’s meeting minutes release later today: the Fed’s decisiveness on asset purchases will drive the Treasuries up and dollar – down.

 

 

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"Draghi’s comments lift euro to $1.3000"(2012-10-04)

 

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Draghi’s comments lift euro to $1.3000

 

 

 

here are the essentials of mario Draghi's comments at today's press conference:

 

• Inflation’s expected to remain above 2% in 2012 and then fall below this level in 2013.

 

• Euro zone’s economic growth is expected to remain weak, market tensions will remain.

 

• Euro’s irreversible. Rapid implementation of Fiscal Compact will improve confidence.

 

• The OMT is ready today, mechanism is in place. Conditionality is a key to the OMT as it reduces moral hazard by governments and protects the independence of the ECB. Conditionality doesn’t always mean something punitive. Social benefits of reform should outweigh the costs.

 

• Portugal: significant progress has been made, but it’s still in progress. The OMT may be applied to countries in full bailouts only when the nation in question returns full access. As for Spain, it has such access.

 

• Greek debt rescheduling would be a form of monetary financing.

 

 

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Chart. Daily EUR/USD

 

 

 

 

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October 5: forex news!

 

 

 

 

 

 

 

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October 5: forex news

 

 

The market is trading in a risk-on mood. High-yielding currencies are moving up after the stocks went higher. AUD/USD returned above the 100-day MA and trades above $1.0250 after 2 days of growth. The pair, therefore, managed to hold above the significant support of $1.0165. However, demand for the Aussie is limited after a report showed construction shrank by the most in a year. Weak economic data is raising concerns the RBA may reduce borrowing costs further. According to Bloomberg data, 87% of economists expect a rate cut to happen at the November 6 RBA meeting. NZD/USD also moves up and has already touched $0.8250.

 

EUR/USD rose on Thursday to 2-week high above $1.3000 after the ECB Bank President Mario Draghi said the central bank is ready to start buying government bonds as part of a program to help ease borrowing costs for the euro zone’s troubled economies. Euro shorts were also covered as German Finance Minister Schaeuble claimed that he wouldn’t oppose the Spanish bailout.

 

The market now awaits US non-farm payrolls data (cons.: +114K; prev.: +96K). The analysts seem rather skeptic of how much the NFP figures can do to provide some relief to the greenback. In Europe watch for German factory orders.

 

USD/JPY formed a spinning top yesterday with high around 78.70 and slid today below the 50-day MA hitting 78.27. Yen strengthened as the Bank of Japan refrained from expanding monetary stimulus and kept the size of its bond-buying program at 55 trillion yen ($702 billion). GBP/USD consolidates below $1.6200 after yesterday’s significant growth. USD/CAD hovers around 0.9800.

 

 

 

 

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Key options expiring today: 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: $1.2900, $1.2950, $1.2975, $1.3000, $1.3020, $1.3050, $1.3100;

 

GBP/USD: $1.6100, $1.6125;

 

USD/JPY: 78.00, 78.50, 79.00;

 

USD/CHF: 0.9200, 0.9370;

 

AUD/USD: $1.0150, $1.0160, $1.0200, $1.0225, $1.0250;

 

USD/CAD: 0.9845, 0.9900.

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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EUR/USD: outlook aheaf of NFP

 

 

 

EUR/USD retreated from 2-week highs around $1.3030 hit yesterday, but is still trading above $1.3000. There’s the talk of sell orders in the $1.3040/50 area and buy orders in the $1.2970/80 zone. The pair still has resistance at $.3045 and $1.3170 (September high).

 

Bear in mind that the potential lack of Spanish bailout in the coming weeks is what limits euro on the upside. At the same time, the focus today is on US NFP report (12:30 GMT; cons.: +114K, prev.: +96K) – key event to the future fate of the greenback.

 

There’s some tricky think about the NFP report. Weak figures will be USD-negative, but better-than-expected data may be perceived differently: as USD-negative (supports risk), USD-positive (implies less QE).

 

Saxo Bank: NFP reading in line with forecasts might be more supportive of the USD than other scenarios.

 

The risk appetite would be supported if the jobs report is moderately firm, in other words, if it provides reason for bond purchases, but allows investors to hope for improvement in the foreseeable future. Still, no matter how good today’s figures are, they won’t bring any considerable change to the present situation at American labor market and the prospects of continuing QE3 unless the official rate goes closer to 7% than 8%. The recent poor data is a reason to be ready for a weak release.

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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Gold reached 2012 maximums

 

 

 

Gold has so far reached the 10-month high of $1,796.10 as the speculation about the central banks’ stimulus steps is encouraging demand for the precious metal as a way to protect wealth.

 

RBS, Scotiabank: From the technical point of view, there’s a resistance area between $1,787 and $1,802. There may be some pullbacks here. If the price gets above $1,802, it will target the record maximum of $1,920. A break through support at $1,750 will lead to a deeper correction. Watch for today’s NFP release: what makes USD weaker, makes gold stronger.

 

 

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Market Analytics: FBS Markets Inc.

 

 

 

 

 

 

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Obama's Presidency in charts

 

The 44-th US President Barack Obama has been standing at a helm since January 20, 2009. How has the largest world economy changed during these years? We offer you to take a glance at the charts.

 

1. Non-farm payrolls

 

Job reductions rose in early 2009, and steadily declined throughout the year. The employers started creating jobs on a wave of optimism early in 2010, but pulled back in the summer. The same trend is seen at 2011 and 2012: strong job growth early in the year stalls in spring.

 

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Chart. Non-farm payrolls (2009-2012)

 

2. Unemployment rate

 

The jobless rate surged to 10.2% in Obama's first year and has declined gradually to 8.1% in 2012. However, many analysts explain the recent unemployment fall by the extremely low labor force participation: only 63.6% of Americans over the age of 16 have a job are searching for it.

 

 

 

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Chart. Unempoyment rate (2009-2012)

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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NZD/USD: technical picture

 

 

 

NZD/USD hit a new monthly low at $0.8147, what is slightly below the Friday’s minimum. The pair touched the 50-day MA, but then went up slightly.

 

The next support lies at $0.8130 (50% Fib. retracement from the September uptrend) and at $0.8080/75 (61.8% Fib. retracement and September 10 minimum). According to specialists at Westpac, NZD/USD targets $0.8130 for the week ahead. Note that on a downside the pair is supported by the upward-directed 50-, 200- and 100-day MAs.

 

Resistance is seen at $0.8184 (38.2% Fib. retracement), $0.8200, $0.8222 (August maximum) and $0.8264 (October 5 maximum). Further kiwi growth could bring the pair to $0.8350 (September highs).

 

 

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Chart. Daily NZD/USD

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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CFTC trader positioning data

 

 

 

Here are the essentials of the latest Commitments of Traders (COT) report, released on Friday, October 5, by the Commodity Futures Trading Commission (CFTC) for a week ended October 2.

 

As you may see, the positioning of the large speculators didn't change much. The major development was the coverage of AUD longs were covered. Yet they still remain at a very high level.

 

 

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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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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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USD/JPY: Ichimoku analysis

 

 

 

On Friday USD/JPY reached the October peak of 78.86. This level provided strong resistance for the prices (100-day MA and Senkou Span A - lower boundary of the Cloud). As a result, the pair started the week by breaking below the 50-day MA on Monday (78.40), but stalled around 78.15, near the flat Kijun-sen and Tenkan-sen.

 

It’s necessary to note that on the downside yen’s strength is limited by the fear of Bank of Japan’s intervention, so we don’t expect declined below 77.40. Tenkan-Sen and Kijun-Sen came close to each other and may form a golden cross (bullish signal, though not very strong). Note that the lines have intersected quite often during the recent months – it happens as the market is trending sideways swinging around some middle axis which is bowing down.

 

There is a lack of strong impulse on the market, but the general tendency remains bearish. Though the bearish Cloud is rather thin, it has proven to be a serious hurdle on the upside. Chinkou-Span tried to break above the price, but slid back.

 

Support: 78.15 (tankan-Sen); 77.78 (October 1 minimum); 77.65 (June 1 minimum, end of the downtrend); 77.43 (September 28 minimum); 77.12 (September 13 minimum).

 

Resistance: 78.80/86 (100-day MA, lower boundary of the Cloud and October high); 79.20/25 (September high and upper boundary of the Cloud); 79.65 (August high).

 

 

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Chart. Daily USD/JPY

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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Commerzbank: technical levels for GBP/USD

 

 

 

GBP/USD didn’t manage to break above $1.6300, the thing it was trying to do during the second half of September. Today the pair has breached support of $1.6070.

 

Commerzbank: If GBP/USD rallies remain capped by $1.6260/1.6310, it would mean last week’s increase was only a correction. Sterling will slide to $1.5912/00 (50% retracement of the advance in August and September; August 23 maximum). Only if pound manages rise above $1.6310, which is seen as unlikely, it will have chance to strengthen to $1.6495 (2009-2012 resistance line). Initial resistance lies at $1.6228.

 

 

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Chart. Daily GBP/USD

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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USD/CHF: technical picture

 

 

 

USD/CHF is moving up after forming a two-week low at 0.9274 last Friday. The greenback strengthened to 0.9356, but was capped by Tenkan-Sen (daily Chart). The next resistance for the pair is seen at 0.9395 (200-day MA) and 0.9438 (October high and Kijun-Sen), while support – at 0.9274 (October 5 minimum) and 0.9234 (September 13, lowest since May 9). The pair trades right below the 50-week MA.

 

MIG Bank: The pair formed a head-and-shoulders figure by moving below the 0.9329 support (H1 chart). Strong resistance is seen at 0.9347 (upper boundary of the declining channel).

 

Commerzbank: The bias will remain slightly bearish below 0.9420. If the bulls push up above this resistance, a rise to 0.9606/35 will become possible.

 

 

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Chart. Daily USD/CHF

 

 

 

 

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Market Analytic s:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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USD may strengthen in 2013

 

 

 

According to most analysts, the greenback will strengthen even despite the QE3 and the fiscal cliff.

 

In their view, demand for the reserve US currency will remain high as the American economy is stronger in comparison to the other countries. However, specialists don’t expect the greenback to rise until 2013 as in Q4 2012 euro will benefit from reduced crisis concerns. They also recommend paying attention on the emerging currencies in 2013: the domestic economies will allow currency appreciation to help control inflation without raising interest rates.

 

Westpac: If the US economy keeps performing well, it shouldn’t cause the U.S. dollar much damage. Monetary easing is only a short-term negative for the dollar.

 

Danske Bank: The market can no longer underestimate the Fed’s decision to boost growth. That will benefit the economy and the dollar. We see the dollar picking up from the second quarter next year.

 

Wells Fargo: In the near-term the ECB policy actions could offer some support to the euro as the worst-case scenarios are priced out. The dollar’s weakness in late 2012 is temporary and related to near-term developments in the European debt crisis.

 

Monex Europe: We have entered a new era of seemingly unlimited central-bank stimulus. For returns, investors have to look to emerging market currencies.

 

 

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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: $1.2920, $1.2960, $1.2975, $1.3000, $1.3025, $1.3050, $1.3100;

 

GBP/USD: $1.6140;

 

USD/JPY: 77.00, 78.00, 79.20, 79.45, 79.50;

 

AUD/USD: $1.0235, $1.0250;

 

EUR/JPY: 102.00, 103.00.

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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AUD/USD: technical picture

 

 

 

Daily chart

 

AUD/USD keeps on rising for a second day in a row. The pair overcame yesterday’s high at $1.0218, but the upside is capped by the 100-day MA. Yesterday the pair hit a three-month low at $1.0148, but today bounced back above the lower boundary of a descending channel formed in September. The upside for the pair is limited by the 100-, 200- and 50-day MAs. The pair still has chances to confirm a “double top” reversal pattern (August and September highs) if it continues a downward movement.

 

 

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Chart. Daily AUD/USD

 

 

H4 chart

 

 

On the H4 chart one can see a bearish convergence (buying signal). A break above the resistance line, connecting October 5 and 8 maximums would also be positive for the Aussie. However, the upside is limited by the downward-looking 50-, 200- and 100-period MAs. Note that the 200- and 100-period MAs are ready to cross - in this case the resistance will become stronger. The pair trades below the descending Ichimoku cloud. In our view, the pair has some potential for a short-term upward correction, but the overall trend remains bearish.

 

The next resistance is seen at $1.0246 (today’s high and a 100-day MA), $1.0273 (October 5 maximum) and $1.0294 (50-period MA on the H4 chart and 200-hour MA on the H1), while support – at $1.0181 (October 4 minimum), $1.0165 (May minimums) and $1.0148 (October 8 minimum).

 

 

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Chart. H4 AUD/USD

 

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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EUR/CHF consolidates around 1.21

 

 

 

EUR/CHF keeps hovering above the floor in a 1.2075/2140 range. Today the pair peaked to 1.2142, but slid back towards the comfortable 1.2100 area. On a downside the pair is supported by the 50-, 200- and 100-MAs in the 1.2050/30 area.

 

According to specialists at RBC Capital Markets, EUR/CHF is expected to remain flat. The pair is unlikely to slide back to the peg from the current levels: going short at 1.2100 doesn’t offer much incentive for the investors. The pair could strengthen on the back of the positive news from Europe or if the floor itself would be heightened (both alternatives is unlikely). The stronger is the euro, the bigger is the risk bears step into the game.

 

Analysts believe these days the Swiss National Bank will not interfere to push EUR/CHF up: in September-October the pair found natural support on decreased euro zone’s concerns. Of course, there is some suggestion the regulator helps to push EUR/CHF higher, but even if it is happening, the volumes are insignificant.

 

 

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Chart. Daily EUR/CHF

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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Earnings season starts in the US

 

 

 

Today the season of corporate earnings releases for Q3 begins in the US. Aluminum giant Alcoa is the first one to publish its financial results for July-September.

 

There are no reasons to cheer up: this season is expected to the worst in the last 3 years, the experts speak say that more than 80% of companies may face potential decline of profits compared with the same period last year.

 

Such pessimism is caused by several factors. Firstly, business activity has slowed down all over the world. Secondly, there’s no more space for cost reduction. Finally, many companies are buying back their own securities in an attempt to become more independent from the volatile market.

 

In 2010 the earnings of US companies added 30%, in 2011 – about 15%. As for 2012, their earnings may be less than 5%, the forecasts say. So, you see, there’s a serious reason for risk aversion.

 

 

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Image from economictimes.indiatimes.com

 

 

 

 

 

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October 10: forex news

 

 

The general risk sentiment remains negative as global growth worries and uncertainty over Spain and Greece continue to weigh on the markets. AUD/USD strengthens for three days in a row and trades above the $1.0200 mark. Demand for the Aussie was supported as prices for iron ore, Australia’s biggest export, surged to a two-month high. According to today’s release, Westpac consumer sentiment improved in October. However, data tomorrow may show the unemployment in Australia climbed to a three-month high (5.3%). NZD/USD declines for a second day. The pair hit a new monthly low at $0.8143, but bounced back from the 50-day MA. Kiwi dropped as Asian stocks followed a slide in global stocks.

 

EUR/USD is falling for the third day in a row. Today the pair hit $1.2835. The meeting between German Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras failed to reassure investors an accord is imminent on Greece’s next aid installment.

 

In Spain, another troubled euro zone’s economy, 10-year yields briefly rose back above 6.0% on Tuesday as a meeting of euro zone finance ministers where there was no movement on a possible Spanish bailout. Spain’s Prime Minister Mariano Rajoy meets French President Francois Hollande today in Paris.

 

Reports today may show French and Italian industrial production decreased in August. Italy will auction up to 11 billion euro in 12- and 3-month maturities, while Germany will try to sell up to 5 billion euro in 5-year papers. The Fed’s Beige Book will be the main highlight in the evening. Tomorrow is the G-7 meeting.

 

GBP/USD slid below $1.6000 after four days of losses. According to yesterday’s release, UK manufacturing production shrank in August. Meanwhile, NIESR released a positive Q3 GDP estimate: according to forecasters, UK economy rose by 0.8% and, therefore, is out of the double-dip recession. USD/CAD moves up and trades below 0.9800 after testing 0.9806 on Tuesday. USD/JPY keeps lowering. The pair slid below the 200-hour MA to 78.20.

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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EUR/USD: news from the battlefield

 

 

 

EUR/USD hit $1.2835 during the Asian session, the minimal level since October 1. All eyes are now fixed on the key support levels – $1.2825 (200-day MA) and $1.2800.

Commerzbank: The market’s trying to choose what it wants to avoid more – US QE3 or the European problems and the lack of clarity about the fate of peripheral nations. Note that the Fed’s Beige Book might question the positive labor market report released last week. At the same time, if EUR/USD slides below $1.2825, it won’t have enough strength to go and test $1.3000 once more. Upside potential will be limited with resistance at $1.2975.

Nordea: EUR/USD should be able to hold above $1.28 unless stock markets perform really badly. For now EURO STOXX 50 Index is down by 0.6%. Watch for the headlines about US earnings season. At the same time, even if equities turn higher, uncertainty about Spain and Greece will weigh on the euro and limit any gains.

 

 

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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: $1.2880, $1.2900, $1.3000, $1.3150 (large);

 

GBP/USD: $1.6000, $1.6050;

 

USD/JPY: 78.25, 78.55, 78.60, 79.00 (large);

 

USD/CHF: 0.9350, 0.9375;

 

AUD/USD: $1.0115, $1.0150, $1.0250;

 

EUR/JPY: 99.95, 100.00.

 

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AUD/USD: bearish picture

 

 

 

AUD/USD broke back above the 100-day MA and touched $1.0286 today. The Aussie reached the highest level in more than a week and tested the upper boundary of a sideways range $1.0275/1.0150. We concede the upward correction may continue if the pair closes above the 100-day MA, but the upside is limited by a strong trend line resistance, connecting September 14 and 28 highs. A break below $1.0150 will confirm a bearish trend continuation.

 

Analysts at Westpac also remain bearish on the Aussie. According to specialists at Westpac, AUD/USD is moving towards parity, so they recommend using the current growth towards $1.0300 as selling opportunity. In their view, negative China’s data increase concerns about the Australian economy, despite the optimism on the iron ore and steel markets in recent weeks. However, the Fed’s dovish monetary policy won’t let the pair slide far below $1.0000. On the other hand, risk aversion can make the greenback attractive anyway.

 

 

audusd_11-55.gif

Chart. Daily AUD/USD

 

 

 

 

 

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USD/JPY: technical picture

 

 

 

USD/JPY tested levels below 78.00 yen earlier today and then rose to the 50-day MA at 78.40.

 

Commerzbank: There’s a bullish falling wedge pattern on the daily chart. The model will be confirmed if USD/JPY closes above the Ichimoku Cloud resistance at 79.00 and preferably above the 200-day MA at 79.35. Until that happens, one should expect further consolidation and, probably, decline lower.

 

In the short-term, the key level is to watch 78.40 – if the pair manages to rise above this level, we’ll see 3 consecutive higher lows that means that the bulls are gaining some grounds.

 

Support: 78.15 (Kijun-sen); 77.95 (October 11, 2 minimums, September 12 maximum, etc); 77.65 (June 1 minimum); 77.12 (September 13 minimum).

 

Resistance: 78.80/86 (100-day MA, lower boundary of the Cloud and October high); 79.00/20 (September high and upper boundary of the Cloud); 79.35 (200-day MA), 79.65 (August high).

 

 

daily_usdjpy_15-27.gif

Chart. Daily USD/JPY

 

 

 

 

 

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October 12: forex news

 

 

Demand for the high-yielding currencies went up. Yesterday’s US employment data had a positive impact on the risky assets. Risk appetite was also helped by US vice-presidential debate, though the IMF-WB-G7 statements about Asian economic slowdown a bit cooled investors’ sentiment.

 

AUD/USD keeps rising and tests the levels above the 100-day MA ($1.0275). The Aussie is supported by the increased commodity prices. NZD/USD tests the $0.8200 level, staying above the 50-day MA. Weekend China data is now in focus as markets await the release of the nation’s economic data for September (trade balance, inflation numbers and the Q3 GDP).

 

As expected, EUR/USD is trading sideways in the $1.2800/3000 range. Today only a minor data is released in Europe with August industrial production as the most important one (cons.: -0.4%; prev.: 0.5%). Spanish government holds its regularly weekly meeting today, so the market hopes for some bailout headlines. Also note that Finnish government approved a “single bank supervisor” solution to bailing out the EU’s troubled banks. In the US watch core PPI figures and September consumer sentiment which may be near the strongest since May. Data released yesterday showed that the number of jobless claims fell to the minimal level since February 2008.

 

GBP/USD continues hovering around the 1.6000 mark. The cable remains under a slight bearish pressure. USD/CAD remains in a sideways range below the 0.9800 handle. JPY weakened versus its major counterparts as demand for safe havens subsided. USD/JPY touched 78.53, but then returned below the 50-day MA. EUR/JPY is trading above 101 yen facing resistance of 200-day MA. USD/CHF is down at 0.9359 after falling from 0.9400 yesterday.

 

 

 

 

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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: $1.2820, $1.2875, $1.2950, $1.3000, $1.3100;

 

GBP/USD: $1.5950, $1.6110, $1.6200;

 

USD/JPY: 77.00, 78.00, 78.15, 78.35, 78, 78.60, 78.70;

 

USD/CHF: 0.9300;

 

AUD/USD: $1.0200, $1.0225, $1.0250, $1.0270, $1.0300.

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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EUR/GBP: reasons for a drop

 

 

EUR/GBP is trading below the 0.8100 resistance. The pair twice failed to break above this crucial level (September and October highs), so we would expect the pair to return to the downtrend. A decline below 100- and 50-day MAs and the 0.7920 support would confirm a double top reversal pattern. From a technical point of view, strong resistance is concentrated in the 0.8080/8120 area: the upper boundary of the 2011-2012 descending channel and the 200-day MA.

 

A break above the 200-day MA is unlikely, but could open the way for the further gains. Next resistance is seen at $0.8161 (June 2012 high and 50% Fib.retrenchment of the 2006-2008 uptrend).

 

eurgbp_14-21.gif

Chart. Weekly EUR/GBP

 

 

 

 

 

 

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Comment here http://www.fbs.com/analytics/2012-10-12/19547-eurgbp-reasons-drop

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