By FX Empire.com

EUR/USD Technical Analysis for the Week of February 20, 2012

The EUR/USD pair has bounced yet again from the 1.30 level. It is becoming increasingly obvious that somebody somewhere doesn’t want sub-1.30 prices. The latest move was done after the newswires picked up a “rumor” that the European Central Bank was going to swap out Greek bonds that were coming due with longer dated ones. In other words – bail them out through a back door plan.

The level has seen a miraculous announcement or move almost every time it is approached, so one has to see it as a major level to overcome for the bears. The weekly candle was a hammer, and it looks as if the market wants to buy Euros overall. However, this might be more of a habitual thing than anything else. Certainly, it isn’t based upon anything closely resembling fundamentals at this point.

The 1.3250 level has been very resistive, and as such we have seen a fairly tight trading range lately. The weekly charts look calm over the last month or so, but the day to day movements have been very whippy, so trading this pair has been an aggravation to many traders. The levels are fairly straight forward in our eyes, and trading this pair for more than a scalp is going to take a breaking of the aforementioned levels.

On a break above the 1.3250 level, we are willing to buy this pair as it would shoe that it just won’t die. The daily candle that closes above that level is what we will use as our signal. A daily close sub-1.30 has us short of this market. A sub-1.29 level close has us aggressively short as it shows the last remnants of support have given way. If we get this signal, it would almost certainly have the pair falling back down to the 1.26 level where a real fight will begin.

There are a lot of analysts out there calling for the pair to reach 1.18, and some are even calling for parity. The biggest problem we see with that isn’t the fundamentals, as the Euro is highly overvalued at this point, but the simple fact that it puts up a massive fight as we try to sink lower. 

EUR/USD Fundamental Analysis for the Week of February 20, 2012

Economic Events: (GMT)

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Historical:

Highest: 1.5091 USD on 03 Dec 2009.

Average: 1.3709 USD over this period.

Lowest: 1.19 USD on 07 Jun 2010.

Rules:

Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.

The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.

Trading comprises of careful market studying, strategizing, planning and executing the plan in a timely manner. This is entirely different to scalping which is resorted to by many a trader on a regular basis. These traders are often clueless as to the market situation and just use this as a type of defense mechanism to compensate for the general lack of information and knowledge. The EUR/USD is a currency pair that certainly offers a lot of currencies trading opportunities if handled correctly.

Characteristics

Average broker spread: 2-3 pips 
Daily range average: 90-100 pips 
Best time to trade: Euro Session (0700 GMT – 1700 GMT) 
some factors affecting the EUR/USD rate: 

• The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
• Dollar strength drives EUR/USD lower
• FED intervention to weaken the dollar the sends EUR/USD higher

Trading the EUR/USD 

Trading Experience: New and Advanced currency traders 
Trading Style: Day trading and Swing trading 

1) Applying Technical Analysis and/or Analyzing Fundamental News from the Euro and US zone to make EUR/USD trading decisions. Breaking strong psychological levels (1.3000, 1.2000,..) and/or surprising economic news releases can make the EUR/USD move a lot in one direction without much retracements. 

2) Since the EUR/USD pair tends to be negatively correlated to the USD/CHF, it is always a good idea to compare both EUR/USD and USD/CHF charts in order to predict future moves, if USD/CHF breaks above an important resistance level and EUR/USD didn’t break support level yet, the EUR/USD is very likely to break below support level. 

Analysis and Recommendation:

The EUR/USD is trading today at 1.3139 after seesawing all week, almost breaking the 1.33 mark and falling to below the 1.30 level. There was little in the way of economic data that influenced the pair. It was all on rumor, news and actions in Greece, between the off again on again deal in Greece.

Beginning the week with votes in Athens to problems between Germany and Greece, to comments and accusations hurdled between leaders. On to the ECB old bond new bond swap.. Finally ending on Friday with comments from Merkel and Monti that a deal could be in place on Monday. Today’s news now says that the ECB bond swap is scheduled for March 8. No details on any side.. just innuendo and rumors.

Good luck figuring this one out. US markets are closed on Monday for the Presidents Day Holiday

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

 

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

USD/JPY Technical Analysis for the Week of February 20, 2012

USD/JPY shot straight up during the week as the Bank of Japan announced that it was going to expand its bond buying program as a measure to flood the market with liquidity. The weakening of the Yen was sharp for the week, but the 80 level looms large ahead, and it is there that we think the next longer-term trade will be decided by the reaction to that level. We will not be trading this pair until the end of the week as the close will have a massive signal as to where we go next. If the market is above the 80 mark at the end of the week, we think this will become a long term buy and hold. If we close below the 80 level, or even with a hammer – we would short.

USD/JPY Fundamental Analysis for the Week of February 20, 2012

Economic Events:  (GMT)

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Rule:

The USD/JPY foreign currency exchange rate is the price of one U.S. dollar – the base currency – in terms of Japanese yen – the quote currency. For example, a bid/ask quote of 89.29/89.32 means that one U.S. dollar can be bought for 89.32 yen and one U.S. dollar can be sold at 89.29 yen.

If the U.S. dollar is expected to appreciate against the yen, then the above quote might rise to say, 89.73/89.76. The forex strategy in this case would be to buy USD/JPY. If, on the other hand, the U.S. dollar is expected to depreciate against the yen, then the above quote might fall to say, 88.68/88.71. The forex strategy in this case would be to sell USD/JPY.

In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying to fade it.

Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment. 

Daily range average : 80-90 pips
Best time to trade: Asian Session (2400 GMT – 0900 GMT) 
Some factors affecting the USD/JPY rate: 

• The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
• Japanese government intervention to maintain their currency sends USD/JPY lower

 

Analysis and Recommendation:

The USD/JPY climbed at the end of the week on positive US news causing the safe-haven yen to take significant losses. The better than expected US Unemployment Claims and Philly Fed Manufacturing Index led to investor risk taking throughout the evening session. The USD/JPY hit a 3 ½ month high before hitting significant resistance close to the 79.00 level.

The Yen is trading at of this writing at 79.56. There are no significant economic reports due in Japan this week and the US markets are closed on Monday for the Presidents Day Holiday

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

 

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

GBP/USD Technical Analysis for the Week of February 20, 2012

The GBP/USD pair fell for most of the week, but triggered a sell signal from the shooting star printed the week before. The move will have caught a lot of sellers on the back foot, and this looks like a consolidation move waiting to happen. However, it should be noted that the candle for the Friday session is a shooting star, and at the 1.58 level. This suggests that the next move could easily be down. The breaking of the top of the candle for last week negated this idea of course, but the breaking of the bottom of the hammer from this week has the market running for much lower levels. Expect choppiness in the meantime. 

GBP/USD Fundamental Analysis for the Week of February 20, 2012

Economic Events

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Historical:

Highest: 1.681 USD on 17 Nov 2009.

Average: 1.5807 USD over this period.

 Rule:

GBP/USD: While the ranges are wider (and so should stops be), the lines are rather distinctive, especially towards the borders of the long term wide range. This pair makes for good trades, with the new austerity program implemented in the UK, the GBP is moving more on Fundamentals now.

Characteristics

Average broker spread: 4-5 pips 
Daily range average: 150-200 pips 
Best time to trade: Euro Session (0700 GMT – 1700 GMT)
Some factors affecting the GBP/USD rate: 

• The interest rate differential between the Bank of England(BoE) and the Federal Reserve
• High yield and attractive growth in the UK drives GBP/USD higher

 

Trading the GBP/USD 

Trading Experience: Expert currency traders
Trading Style: Day trading and Swing trades 

How to trade? 

Applying Technical Analysis and/or Analyzing Fundamental News from the UK and US zone to make GBP/USD trading decisions. Watch out for false break outs. Surprising economic news releases can make the GBP/USD move a lot in one direction without much retracement. 

Analysis and Recommendation:

The GBP/USD  is up at 1.5828. This past week the BoE announced an additional round of QE slightly surprising the markets. Also UK retail sales figures came in way above estimates bolstering the sterling. In the US, economic data gave strength to the recovery with a drop in unemployment claims and an increase in housing starts ( multi family ) along with other supporting reports.

 Most of the week the markets ignored everything but Greece, investors jumped in and out of currencies based on rumor, innuendo, conjecture and news. The USD was up and down all week long. It will most likely continue this way in the upcoming week, with the US markets closed on Monday. Late in the week, UK GDP is expected to move the pound depending on reports and data.

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

 

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

EUR/GBP Technical Analysis for the Week of February 20, 2012

The EUR/GBP isn’t one market that traders who are looking for excitement typically trade. It has a long history of being a slow grinder, and sudden moves aren’t all that common. They do happen, but typically it is a result of some kind of shock to the system.

The problems in Europe certainly have a detrimental effect on both currencies, and as such this pair will more than likely continue to be choppy in the near term. However, the last month has seen a very tight range that will more than likely give way to a larger move as the 100 pip range cannot continue forever. The 0.84 level has obviously been very resistive in the recent past, and the 0.83 is starting to flex its muscles as well. This cannot continue forever.

The currencies are heavily intertwined, and as a result – anything that sinks Europe will eventually sink Britain. The UK sends over 40% of its exports to the European Union, and if that area is in a massive recession, there is a real chance that the problems cause the UK massive economic headaches. Also, the British banks are highly exposed to what goes on in the EU. The debt being held in London isn’t necessarily as safe as people would want to think, and because of this – what happens across the Channel will continue to put a bit of a damper on the Pound as a whole.

However, the Euro will be hit harder by bad news, and as such this pair should continue to fall overall. The trend is most certainly down, and as a result we prefer to sell anyway. The breaking of 0.83 becomes our signal to sell, and we would like to see at least a daily close below that area in which to take that trade. If the market closes on a daily chart above 0.84, we see that the 0.85 above is even more resistive, so we wouldn’t bother going long on that move. The Euro will more than likely put up a fight form time to time, but the reality is that Europe is in trouble for some time to come.

EUR/GBP Fundamental Analysis for the Week of February 20, 2012

Economic Events:

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Historical:

Highest: 1.2336 EUR on 29 Jun 2010.

Average: 1.1548 EUR over this period.

Lowest: 1.0686 EUR on 13 Oct 2009.

Rule:

EUR/GBP: The cross tends to move in ranges, with relatively clear barriers. The narrower ranges made it somewhat harder, but it seems to return to wider ranges. The GBP is does not seem to move in response to the EUR as directly currently. The UK austerity program vs. The EU debt crisis seems to have them moving in opposing distances. They are developing new trading personalities and there is a good deal of profit to be made trading this pair. They can be volatile.

Characteristics

Average broker spread: 2-3 pips 
Daily range average : 25-50 pips 

What moves EUR/GBP?

• The interest rate differential between the European Bank(ECB) and the Bank of England(BoE)
• European and UK economic data
• Growth differentials between the Euro zone and UK

Trading the EUR/GBP 

Applying Technical Analysis and Analyzing Fundamental News from the Euro and UK zone. EUR/GBP is excellent for the beginning forex trader because it’s low volatility. 

Analysis and Recommendations

The EUR/GBP is trading today at 0.8302 after peaking on Friday at 0.8333 on unexpected increases in UK retail sales. Most of the week the markets are simply trading Greece, although their was statements from the BoE this week along with the BoE inflation letter. The Bank of England announced an additional round of QE this past week

The euro sailed and dropped all week on Greece. It will most likely continue the same this week.

Towards the end of the week will be GDP reports in the UK which could cause some activity for the pound.

US markets are closed on Monday for the Presidents Day Holiday

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

 

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

USD/CHF Technical Analysis for the Week of February 20, 2012

USD/CHF continued to try and gain for the week, but still remains a bit sluggish at this point. While the candle was positive, the shape is a shooting star, and this is very bearish. The pair simply cannot seem to gain traction, but the support is holding up quite nicely as well. With this in mind, the long-term trading of this pair is a bit difficult unless you are very, very patient.

The 0.91 to 0.90 levels seem to be the supportive area, and as long as the Swiss are supporting the Euro against the Franc at 1.20, it is hard to think that the Franc will be able to appreciate significantly against any currency, especially the Dollar which has been fairly reliable lately. Because of this, we are more apt to buy this pair than sell it. The close we get to 0.91, the happier we are to pick up more Dollars. Selling isn’t a thought because this pair will move in concert with the EUR/CHF pair – and that one won’t be going down anytime soon.

USD/CHF Fundamental Analysis for the Week of February 20, 2012

Economic Events: (GMT)

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Historical

Highest: 1.1664 CHF on 07 Jun 2010.

Average: 0.9699 CHF over this period.

Lowest: 0.7224 CHF on 09 Aug 2011.

Rules:

USD/CHF: The pair tends to break to an all-time low, then range back to the previous low. The ranges are very distinct. A break to the upside will likely meet another previous low. Pair are reliable.

Characteristics

Average broker spread: 4-5 pips 
Daily range average: 120-135 pips 
Best time to trade: Euro Session (0700 GMT – 1700 GMT) 
Factors affecting the USD/CHF rate: 

• Global stability and global recovery will send USD/CHF higher
• USD/CHF rallies on geopolitical instability

Trading the USD/CHF 

Trading Experience: Moderate and Advanced currency traders 
Trading Style: Day trading and Swing trades 

How to trade? 

1) Applying Technical Analysis Analyzing Fundamental News from the CHF and US zone to make USD/CHF trading decisions. 

2) Since the USD/CHF pair tends to be negatively correlated to the EUR/USD, it is always a good idea to compare both EUR/USD and USD/CHF charts in order to predict future moves, if EUR/USD breaks above an important resistance level and USD/CHF didn’t break support level yet, the USD/CHF is very likely to break below support level. This also illustrates how EUR/USD tends to lead the move ahead of USD/CHF.

Analysis and Recommendations:

USD/CHF is trading at exactly .9200. There was little news to effect the Swissie this week. There has been good to excellent news in the US with unemployment claims falling and housing starts climbing. The news had little effect on the USD as the markets were all about Greece and the settlements. The USD was strong on minute and weak the next. Early in the week politicians in Athens met the new requirements of the EU and then other problems continued to develop. There was rumor and news all week moving the markets with each bit of news.

There is little news coming this week to effect the Swissie so it will continue to be all about Greece and the USD.

US markets are closed on Monday for the Presidents Day holiday.

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

 Greek saga never ending, ECB wants special treatment old bond new bond swap

• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

EUR/CHF Technical Analysis for the Week of February 20, 2012

EUR/CHF fell again during the week, but still remains lifted by the floor that the Swiss National Bank has put out in this market. The 1.20 level is the “minimum acceptable rate” according to the SNB, and as such – the market simply cannot fall. The market cannot rise either, so this is something to note as well. The Euro strength just doesn’t seem to be found in this market. The 1.24 level above continues to keep a lid on the market, and the 1.25 level above that will certainly do the same as it is a large round psychologically important number. With this in mind, we simply don’t trade this pair on the longer-term charts at the moment.

EUR/CHF Fundamental Analysis for the Week of February 20, 2012

Economic Event: (GMT)

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Historical

Highest: 1.5193 CHF on 10 Oct 2009.

Average: 1.3271 CHF over this period.

Lowest: 1.026 CHF on 10 Aug 2011.

Rules:

Characteristics

Average broker spread: 3-5 pips 
Daily range average: 35-48 pips 

What moves:

• The interest rate differential between the European Bank(ECB) and the Swiss National Bank(SNB)
• Swiss and Euro zone fundamentals

Trading the EUR/CHF 

News from the Euro and Swiss zone. EUR/CHF is frequently chosen for carry trades which involves going long a high-yielding currency (EURO – 3.50%) against a low-yielding one (CHF – 1.50%). Traders earn daily interest fees when holding this pair long (rollover fees). 

Analysis and Recommendations:

The EUR/CHF is trading as 1.2088 almost at the point they started the week off. The Swissie itself has been very boring this week. The duo moved all week but only in relation to the moved of the euro, which has been to the high of highs and the low of lows on new and rumors from Greece. The euro hit highs against the USD almost breaking the 1.33 level and falling below the 1.30 level all on Greece.

This week will be the same, with little data in Switzerland and the US markets closed on Monday.

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

 

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

AUD/USD Technical Analysis for the Week of February 20, 2012

The AUD/USD pair had a fairly quiet week over the last 5 sessions as the 1.08 level continues to keep a bit of a cap on this pair. The candle shape is of a doji, and this shows how tentative the markets are at the moment. The candle from the previous week was a bit of a shooting star, and this shows that perhaps the market is ready to pullback. However, we don’t necessarily want to get overly short of this pair, as it will more than likely be a pullback and not a meltdown. A sub-1.04 level print will more than likely send this pair crashing, but until then – we think a trade to the down side on a break of the lows from this past week gets us short, but we don’t expect a massive drop. A break above the 1.0850 level would have us long and aiming for the 1.10 level.

AUD/USD Fundamental Analysis for the Week of February 20, 2012

Economic Events: (GMT)

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Rule:

The Australian dollar still isn’t in its good old days, but the performance is definitely improving. Resistance lines tend to work in a smoother manner than support lines, but they also work well. The pair move well together, not much volatility, but easy to chart and easy to trade with low risk factors

 Weekly Analysis and Recommendation:

The AUD/USD is trading at 1.0706 over the weekend.  The Aussie climbed to a weekly high of USD1.0797 on Friday on optimism over a rescue package for Greece, but gains were capped below the 1.0800 figure before a key meeting on Monday that my produce an official an agreement. This has been a crazy week for all the USD trading partners as economic data in the US was strong as well as positive data in Australia, but the market flow was controlled by Greece all week long with the euro surging and falling. Monday US markets are closed and news is expected from Greece and the EU.

The RBA surprised markets and held rates.

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

 

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

USD/CAD Technical Analysis for the Week of February 20, 2012

The USD/CAD pair continued to grind around the parity level this past week as the oil markets are continuing to focus on the problems between Iran and the West. The threat of an oil disruption continues to have traders worried, and as a result the price of oil remains elevated. With this being the case, there will continue to be a bid for the Loonie, as money will flow into Canada.

The pair has several support levels below however, and as a result we are hesitant to sell it. The 1.01 level to the upside will have to be overcome for the bulls to push prices higher at this point as well. Because of this, we are currently flat in this market as it is simply too tight and choppy.

USD/CAD Fundamental Analysis for the Week of February 20, 2012

Economic Events

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Historical:

Highest: 1.0842 CAD on 01 Nov 2009.

Average: 1.0147 CAD over this period.

Lowest: 0.9435 CAD on 26 Jul 2011.

Rule:

The Canadian Dollar moves in reaction to the US Dollar. Movements are small and easy to track and trade. The Canadian Dollar also responds to economic reports within Canada. It has little action against foreign currencies except during major moves or crisis.

The USD/CAD is the single biggest beneficiary of rising oil prices. Canada which is already the biggest exporter of oil to the US will experience a boost to its economy when oil price continue to increase. Therefore, if oil rises the Canadian dollar is likely to follow. Over the past years, the correlation between the Canadian dollar and oil prices has been approximately 81%. 

Trading Ideas 

1) if you believe the price of oil will keep rising, it might be a good strategy to buy the Canadian dollar because it’s 81% positive correlation to oil over the past years. 

2) Since the USD/CAD pair tends to be highly correlated to oil, it might be a good idea to compare both Canadian dollar and oil charts in order to predict future moves, if for example oil breaks above an important resistance level and USD/CAD didn’t break resistance level yet, the USD/CAD is very likely to break above also. This illustrates how oil tends to lead the move ahead of USD/CAD. 

Analysis and Recommendation:

The USD/CAD is trading at 0.9972. This pair just went along for the ride this week. Reacting to Greek news.. over the on again off again deal that has taken center stage all week, developing into an exciting new screen play, with scandals in Germany, accusations and innuendo flying from Berlin to Athens.

New players coming and going, new rumors, statements and news causing drastic reactions from investors. As the USD moved so did this pair. Ignoring improved economic data from the US and releases in Canada.

US markets are closed on Monday for the Presidents Day Holiday

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

NZD/USD Technical Analysis for the Week of February 20, 2012

NZD/USD has stalled recently as the 0.8350 level continues to be resistive. The last two weeks have produced shooting stars and shows just how heavy the market is starting to get. The massive move straight up hasn’t pulled back yet, and as a result it looks as if we could see that in the near future. The breaking of the 0.8230 level shows the recent range being broken, and the pullback would begin. A break of the tops of the last two candles would show more bullish momentum, and have us long.

NZD/USD Fundamental Analysis for the Week of February 20, 2012

Economic Events: (GMT)

Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast

US Markets closed on Monday for Presidents Day Holiday

Feb. 21	00:30		AUD				Monetary Policy Meeting Minutes
	13:30		CAD				Core Retail Sales (MoM)
Feb. 22	09:30		GBP				MPC Meeting Minutes
	15:00		USD				Existing Home Sales
Feb. 23	09:00		EUR				German Ifo Business Climate Index
	13:30		USD				Initial Jobless Claims
Feb. 24	07:00		EUR				German GDP (QoQ)
	09:30		GBP				GDP (QoQ)
	15:00		USD				New Home Sales

 

Historical

Highest: 0.8816 USD on 31 Jul 2011.

Average: 0.7543 USD over this period.

Lowest: 0.6619 USD on 07 Jun 2010.

Rule:

NZD/USD: The recent strength of the kiwi, a currency sometimes overlooked by traders, made its moves much more predictable. This applies to support and resistance lines alike. This is a very safe pair to trade, not a great deal of volatility but predictablilty.

Analysis and Recommendation:

NZD/USD is trading on Sunday at 0.8321after opening at 0.8330. The kiwi spent the week chasing the USD, which was supported by a week of good economic reports including unemployment and CPI. But the main mover of the week was and has been Greece as the markets chased every bit of news, rumor and statement from Greece and the EU markets reacted drastically, sending the euro below the 1.30 critical point and then back up close to the 1.33. The USD moved against the euro effecting all of its trading partners. The US markets are closed on Monday so it should be a fairly quiet day, at least on volume

Strength

• Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
• German ZEW investor confidence figure rises to best since April
• Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
• Philly and NY manufacturers  surveys up but components mixed as headline #’s are not sum of parts
• Housing starts continue to grow for multi-units (apt/condo)
• NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
• India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
• Australia central bank surprises with a hold on interest rates
• UK announces new round of QE
• Australia and NZ have positive economic reports
• China reduces bank reserves
• ECB deposit facility falls
• Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

 

Weakness

• Greek saga never ending, ECB wants special treatment old bond new bond swap
• Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
• Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
• Singapore confirms Jan estimate of Q4 GDP contraction
• Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
• Chinese FDI in Jan falls .3%, 3rd month in a row of declines
• US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
• CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

 

Economic Highlights Feb 13-17 actual v. forecast

Feb. 14

JPY

Interest Rate Decision

0.10%

0.10%

0.10%

JPY

BoJ Press Conference

EUR

German ZEW Economic Sentiment

5.4

-11.6

-21.6

GBP

BOE Inflation Letter

USD

Core Retail Sales (MoM)

0.7%

0.6%

-0.5%

USD

Retail Sales (MoM)

0.4%

0.8%

0.0%

Feb. 15

EUR

German GDP (QoQ)

-0.2%

-0.3%

0.6%

GBP

Claimant Count Change

6.9K

3.2K

1.9K

GBP

BoE Inflation Report

GBP

BoE Gov King Speaks

USD

FOMC Meeting Minutes

Feb. 16

USD

Initial Jobless Claims

348K

364K

361K

USD

Fed Chairman Bernanke Speaks

Feb. 17

GBP

Retail Sales (MoM)

0.9%

-0.2%

0.6%

CAD

Core CPI (MoM)

0.2%

0.1%

-0.5%

USD

Core CPI (MoM)

0.2%

0.3%

0.1%

USD

CPI (MoM)

0.2%

0.3%

0.0%

 

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP