8/3/2019 FX Weekly Commentary - Oct 9 - Oct 15 2011
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The risk aversion drive that has gained sinceJuly slowed significantly last week, the $DXY
dollar index made highs at 79.84. The
greenback is not the typical safety asset.
Rather, the benchmark requires a near-
extreme level of fear to leverage its universal
appeal: liquidity. If one is looking for liquidity
then the US Dollar is where they go. Without
an absolute shift in capital away from
leverage and risky positions, there is little that
the dollar can do to draw capital in. What we
need to ask, is this a key reversal to furthergains in the near future for the world reserve
currency or are we going to be looking at a
reversal from this rally back down for further
declines? Well it is difficult to tell at the
moment, we have the FOMC meeting minutes
this week which will give key indication if the
Fed will be taking further QE measures to help
void a recession. If we do get more QE
measures then we will likely see the US Dollar
continue to pullback to further levels from this
current move up from record lows. Also the
Fed's release of Operation Twist will have
some updates come Wednesday during
minutes release.
The EURO lost it's gains to highs from last
week after the downgrades that occurred
Friday. Although rates remained on hold at
1.50 percent, which if market participants
were forecasting a cut should have boosted
the Euro, it was President Trichets
commentary that weighed on the regions
common currency during his final press
conference. He sated risks to economic
growth remain on the downside. The
European Central Bank announced that it
would resume its covered-bond purchases
and reintroduce year-long loans for banks, asa way to free up liquidity. Another liquidity
crisis onset by a Greek default would destroy
the market, just as what happened when
Lehman Brothers Holdings Inc. collapsed in
September 2008. We await the solution for
the crisis in Greece, and will likely get some
volatile news releases until the solution is
provided by the EU. Look for continued market
uncertainty in the weeks to come.
The U.K. central bank last week raised the
ceiling for its asset purchases, or so-calledquantitative easing, to 275 billion pounds
($428 billion) from 200 billion pounds.
Britains economy grew less than initially
estimated in the second quarter, with gross
domestic product rising 0.1 percent rather
than the initial estimate of 0.2 percent, data
last week showed. With the UK having
flexibility to continue to raise it's asset
purchase gives more reason for why in the
medium to longer term GBPUSD trade is likely
to reach the 1.4000s and maybe further. Adeeper rally could be on tap prior to the next
major move down in the GBPUSD, but don't
be fooled in an long term moves to the upside
in this pair, we have too much evidence
pointing towards a weaker pound.
Fundamental Outlook
Elite Global
Trading Forex Weekly CommentaryOct 9th Oct 15th 2011 Volume 1, Issue 23
In this issue:
Fundamental
Outlook
EURUSD1
AUDUSD
EURAUD2
EURCAD
EURUSD3
Event Risk 4
Contact Info
Disclaimer5
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Elite Global
Trading
Oct 9th Oct 15th 2011 Volume 1, Issue 23
AUDUSD: The Australian dollar struggled tohold its ground on Friday and the pullbackfrom 0.9877 may gather pace over the
following week as the Reserve Bank of
Australia shows an increased willingness to
reduce interest rate from 4.75 percent. After
keeping the cash rate unchanged in October,
the central bank reiterated that the economic
recovery is weaker than initially expected, and
talked down the risk for inflation, stating that
medium-term price growth is expected to be
consistent with the 2 to 3 percent target
range.
As the AUD/USD fails to push back above the
38.2% Fibonacci retracement from the 2010
low to the 2011 high around 0.9930-50, the
pair appears to have placed a lower high last
week, and the exchange rate may trend lower
over the near-term as the fundamental
outlook for Australia deteriorates. Moreover,
should market sentiment continue to taper off
over the following week, the flight to safety is
likely to sap demands for the high-yielding
currency, and we may see the aussie-dollar
may a run to test lows near .9400. A break of
this would extend this move down to .9200.
Outlook: Remains bearish, a rally orconsolidation may be the present state we are
still in prior to the next major move down.
Price being capped at .9880, shorting the
rally's is still favored, a break above .9880
exposes parity at 1.0000.
Australian Dollar / United States Dollar
EURAUD: This pair is positioned for anothermove towards the 1.3400. A reversal of last
weeks high positrons this weeks move
bearish. We will look for a rally for a better
entry from where it is currently trading. A rally
to 1.3750 could be expected prior to the
move down to 1.3400.
Outlook: Bearish Bias, a rally to 1.3750-1.3826. Short play around 1.3800, with a
stop at 1.4000, and a target of 1.3400.
Euro / Australian Dollar
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Elite Global
Trading
Oct 9th Oct 15th 2011 Volume 1, Issue 23
EURUSD: Continued weakness followingthrough lower from last week, further
weakness can be expected. As the same time
we are carving out a short term bottom for a
deeper recover back up towards the 1.3800
area. Ahead of that recovery further lows is
certainly probable, such a case, the 1.3300
level will be targeted at first ahead of the
1.3245 level, its Jan 172011 low and then its
bigger support standing at 1.2874 level, its
Jan2011 low. Looking up the 1.3799 level,
its Sept2011 high will have to be taken out to
reduce its present weakness and possibly
bring further strength towards the 1.3835
level. Further out, resistance resides at the1.3936 level, its Sept 092011 high.
Outlook: Bearish Bias Remains, starting this
week out we see a test of 1.3300-1.3245, a
recovery up towards 1.3600 area and a break
above 1.3700 will bring the 1.3800 in
perspective of a testing. We like this pair short
below 1.3936 level, we look for shorts on the
rallies, ideal shorts are around 1.3800. We
are targeting 1.2900 area in the weeks to
come.
Euro / United States Dollar
EURCAD: This pair has been trading in a rangeof over 1000pips and gives great swings.
Currently trading near the break down point of
1.3850 area. A close below this area we will
likely get momentum to lower prices.
Outlook: Bearish Bias, targeting 1.3680 area.A rally up to the 1.3950 area would be
preferred to take this short, with entry at
1.3950, stop above 1.4130, and targeting
1.3680.
Euro / Canadian Dollar
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Elite Global
Trading
Oct 9th Oct 15th 2011 Volume 1, Issue 23
Monday:EUR: French Industrial Production 2:45am
EUR: Sentix Investor Confidence 4:30am
AUD: NAB Business Confidence 8:30pm
Tuesday:EUR: ECB President Trichet Speaks 3:30am
GBP: Manufacturing Production 4:30am
CAD: Housing Starts 8:15am
AUD: Home Loans 8:30am
Wednesday:GBP: Claimant Count Change 4:30am
EUR: Industrial Production 5am
USD: FOMC Meeting Minutes 2pm
EUR: ECB President Trichet Speaks 2:30pm
AUD: Employment Change 8:30pm
AUD: Unemployment Rate 8:30pm
Thursday:CNY: Trade Balance
EUR: ECB Monthly Bulletin 4am
CAD: Trade Balance 8:30am
USD: Trade Balance 8:30am
CNY: CPI 10pm
Friday:G20 Meeting
EUR: CPI 5am
USD: Core Retail Sales 8:30am
USD: Prelim UoM Consumer Sentiment9:55am
Weeks Event Risk
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The information contained in this
newsletter is for general information
purposes only. The information is
provided by Elite Global Trading and
while we endeavor to keep the
information up to date and correct,
we make no representations or
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News letter Authors:
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Tel: 786-759-0348
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