FX Weekly Commentary - Nov 13 - Nov 19 2011
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Transcript of FX Weekly Commentary - Nov 13 - Nov 19 2011
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8/3/2019 FX Weekly Commentary - Nov 13 - Nov 19 2011
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Last week we began the week trading in a tight
range with small swings until Wednesday when
the bottom fell out of the market on European
headlines. Contrary to market expectations the
markets broke out of their ranges to the downside
sharply, surprising many traders. Continuing the
surprise, markets quickly reversed losses and
closed back into the range they began the week at
leaving many traders wondering which way the
market is going. One thing for sure these both
were purely risk on/off plays which have been
leading the markets.
We saw the massive sell off in risk appetite due to
widening bond yields. Markets are actively
watching the yields of both French & Italian yields
in over the next week and movement sovereign
debt markets will continue to tip the risk appetite.
Last week we saw ECB step in to purchase Italian
debt once the yields extended above 7%. This is
the dangerous level markets have seen previously
with Greek debt yields that quickly gave way to
rapidly increasing yields as the country struggled
to sell additional debt to keep the country going.
Italy has a significantly larger issuance of debtabove a trillion Euros placing it out of reach of the
EFSF rescue. The ECB quickly stepped in to
purchase the Italian debts to bring the yield back
under 7% to prevent a major Euro problem.
Last week we also saw S&P rating agency post a
downgrade of French debt on their website which
was quickly removed and declared a mistake by
the S&P leadership. Markets quickly reacted
punishing French 10 Year bonds by dumping in
the wake of this release. French bonds yields
reached record highs on the already stressed
country. Big question here is why did S&P have
that type of announcement ready to be released
and was it a preview of whats to come for the
country? A French downgrade would severely
undermine the EFSF and its ability to leverage up
to meet EURO-Zone obligations. If French 10 Year
bonds continue to rise we will see more
requirements on the EFSF to increase its 20%
guarantee in order to seek additional leverage for
the fund.
Spanish 10 year bond yield spread over German
10 Year bond yields are above the Aug 2011 highs
where ECB had to step in to bring the yield back
within acceptable limits. While the Spanish 10
year bond yield is still below the Aug 2011 highs
keep an eye out for the ECB to step in and relieve
some pressure for the Spanish bond markets also
in the coming weeks.
Last week we saw US Jobless claims fall below the
significant 400K level to 390K which is significant
for the US labor markets. Keep an eye out for this
weeks retail sales numbers as markets look for
more reasons to increase risk appetite.
EURO is scheduled to have a GDP number release
which is not expected to impress the markets that
are being described as one negative headline
away form tumbling. Expect market volatility on
headlines out of the EU and pay close attention tothe 10 year bond markets as there are far
reaching impacts to many EU member states as
the 10 year yields continue to rise and questions
surround the EFSF and ECBs ability to stabilize
the EuroZone. The ECBs balance sheet is already
Fundamental Outlook
Elite Global
Trading Forex Weekly CommentaryNov 13th Nov 19th 2011 Volume 1, Issue 28
In this issue:
Fundamental
Outlook
1
GBPUSD
USDCAD2
EURUSD
AUDUSD
EURCAD
3
Event Risk 4
Contact Info
Disclaimer5
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8/3/2019 FX Weekly Commentary - Nov 13 - Nov 19 2011
2/5
Elite Global
Trading
Nov 13th Nov 19th 2011 Volume 1, Issue 28
GBPUSD: With a strong move off lows fromlast Wednesday at 1.5868 up to 1.6093, this
pair holds a range that has been in place for a
few weeks now. A move to the lower part of
the range to start the week out is likely, down
to 1.5900. We see that this pair still has
potential for a move to 1.6200 range in the
weeks to come, with current range in play
respect that and look for a break in the weeks
to come.
Outlook: Neutral, range high stands at1.6166, and low sits at 1.5868. With the
probable move lower to start the week look
for levels on the way down at, 1.6040,
1.6007, 1.5980, 1.5955, 1.5900, and low at
1.5868.
UK Pound Sterling / United States Dollar
USDCAD: The dollar last week made a strongrally and gave up most gains to close the
week, not giving the USDCAD enough of a
boost to break range high at 1.0265. With
range still in play we look to respect that and
watch for breaks above or below in the weeks
to come. A break to new lows in the weeks to
come, with the daily and weekly looking heavy
for another move lower. Either way we are
currently in a range and needs to be
respected.
Outlook: Neutral, range high stands at 1.0265and low sits at 1.0055. Currently trading at
bottom of range, with a probability of moving
to the top over the beginning of this week
near 1.0200. Levels to watch for on way up,
1.0136, 1.0154. 1.0172, 1.0200.
United States Dollar / Canadian Dollar
member banks continuing to decrease deposits held with the ECB and 7.7 Bln Euros in emergency
funding requested by banks from the ECB over the weekend.
EuroZone banks have a 9% capital requirement imposed on them which forces them to liquidate
holdings in order to shore up their balance sheets. Under normal conditions this is very reasonable in
order to protect the banks however with the Euro-Zone implementing this capital increase at this stage
of the game has an undesired consequence. Banks are liquidating riskier holdings in sovereign debt
causing 10 year yields to increase making it harder for Euro-Zone member states to raise the capital
required to run their nations.
This weeks trends will be heavily intertwined with a risk on / risk off mentality and extremely volatile
on headlines out of Europe. Keep close watch on the Italian, Spanish & French 10 Year bond yields as
the ECB is forced to keep up purchases to contain the yields. The IMF looming in the background as
markets look for the organization to step up activity to stabilize the Euro-Zone. Expect to see headlines
from Italy as the country races to formalize their coalition government.
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8/3/2019 FX Weekly Commentary - Nov 13 - Nov 19 2011
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AUDUSD: This pair is purely a risk pair movingvery nicely with the risk trends. With risk
reversing at a short term bottom on Thursday,this pair has placed it's short term bottom at
1.0052. We look for direction from here, we
are dead center of top formed in October at
1.0753 and bottomed formed last week at
1.0052. The daily wants to push higher with
eye's on 1.0500 in the week to come, a move
lower is likely around 1.0150 a possible target
for a higher bottom before the move to the
1.0500 region.
Outlook: Neutral, looking for a pullback off the
high of 1.0345 that the week opened at to the
1.0200 area. With some basing action to
occur in their we will look for a move highertowards the 1.0500 area. Levels to watch
1.0255, 1.0200, 1.0160 and 1.0134 on
downside, and on the way up look out for,
1.0370, 1.0400, 1.0432, 1.0446, 1.0500,
1.0567.
Australian Dollar / United States Dollar
Elite Global
Trading
Nov 13th Nov 19th 2011 Volume 1, Issue 28
EURUSD: After the move we have just haddown to 1.3484 from 1.4246, over the past
few weeks, looks like a move back to the
upside may be on tap. We closed the month
of October reversing from the highs at 1.4246
area and have had a nice 2day reversal
pattern closing out last week, with a possible
short term bottom at 1.3484. Still many shaky
events to come in Europe, which is important
when taking longs in the Euro pairs, getting to
bullish can be risky, but taking the swings that
are clear with nominal risk is certainly viable.
If we continue to get positive outcomes inEurope we will see this pair trade back around
1.4000 in the weeks to come, but be careful
of the news out of Europe that could easily
drop this pair to lower levels with negative
events to continue to unravel.
Outlook: Neutral, we are currently in a range,high at 1.4246 and low at 1.3484. With this
range in play we are currently in the center
which gives way for a continued move higher
in the med term, in short term we may start
this week out with a pullback to a lower level
test around the 1.3680 area. Levels to watch
for, 1.3566, 1.3600, 1.3650, 1.3700,
1.3715, and levels on way up, 1.3860,
1.3955, 1.3988, 1.4050, 1.4170, 1.4246.
With the daily looking to make a move higher,
ahead of that we may see the 240 come back
down to create higher bottoms, which may
occur to start the week off, keep an eye on
the levels.
Euro / United States Dollar
EURCAD: Stands strong in the range that hasbeen ongoing for the past several weeks with
high standing at 1.4175 and low sitting at
1.3800. Currently moving off bottom of range
looking to make a move higher in the days to
come. Congestion zone to watch for is 1.3900
-1.4000.
Outlook: Range Bound, High of range is1.4175, and low is 1.3800, respecting the
range we see a move to the top of the range
to happen this week. Keep eye on break of
this range, when it happens will likely be a
strong break, for this range is going strong for
6 weeks now.
Euro / Canadian Dollar
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8/3/2019 FX Weekly Commentary - Nov 13 - Nov 19 2011
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Elite Global
Trading
Nov 13th Nov 19th 2011 Volume 1, Issue 28
Monday:EUR: Industrial Production 5am
GBP: Nationwide Consumer Confidence
AUD: Monetary Policy Meeting Min 7:30pm
Tuesday:EUR: French Prelim GDP 1:30am
EUR: German Prelim GDP 2am
GBP: CPI 4:30am
EUR: German ZEW Economic Sentiment 5am
USD: Core Retail Sales 8:30am
USD: PPI 8:30am
USD: Retail Sales 8:30am
JPY: Monetary Policy Statement
Wednesday:GBP: Claimant Count Change 4:30am
EUR: CPI 5am
GBP: Inflation Report 5:30am
USD: Core CPI 8:30am
USD: TIC Long Term Purchases 9am
NZD: PPI Output 4:45pm
Thursday:GBP: Retail Sales 4:30am
USD: Building Permits 8:30am
USD: Unemployment Claims 8:30am
USD: Philly Fed Manufacturing 10am
Friday:EUR: German PPI 2am
CAD: Core CPI 7am
USD: Treasury Currency Report
Weeks Event Risk
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Any reliance you place onsuch information is thereforestrictly at your own risk.
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News letter Authors:
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Tel: 786-759-0348
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