Sari la conținut Daily Analysis - 18/09/2008

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Daily Forex Analysis


Today’s US Dollar Trading


• US data seen as USD-negative

• Volumes improve as majors rally

• Some new weekly highs as USD wilts across the board


Overnight Preview


• Look for the USD to continue lower

• Whipsaw possible to end the week




The USD continued lower across the board today after equities failed to respond positively to government steps taken to restore confidence; DJIA was down over 300 points at mid-day and remained deeply in the red into the final hour of forex trading today. US housing data continued to show weakness in the housing sector but traders were unconvinced that the slightly lower numbers indicate a potential bottoming in the troubled housing markets. Finding stops on a breakout higher, GBP and EURO rallied to new daily and weekly highs as the USD wilted further during New York trade; GBP high print at 1.8245 dragging EURO higher for a high print at 1.4385 before selling from longs capped the move into the afternoon. Traders note that volumes improved during the day and order-flow was considered orderly. USD/JPY remained inside existing weekly ranges but managed a low print at 104.36 before recovering slightly to trade the 105.00 handle late; traders note cross-spreading was the main driver of volatility during the day today. Swissy extended weekly losses to a 1.0992 low print before bouncing slightly as the technical picture suggested an objective from the highs may have been reached; traders note that the rate has likely been pressured from the advance in Gold. Oil prices advanced today as well which likely supported the EURO and pressured equities but the market is still below the psychological point of $100/BBL at $97.00; traders note that higher prices will likely support EURO through the end of the week. The one higher performer on the board was USD/CAD scoring a 108.11 high print before reversing hard to fall back under the 107.00 handle to close lower on the day; traders note the rate had aggressive selling into the highs by large names. In my view, today’s USD action significantly underscores the fundamental weakness of the USD despite the recent euphoric rally. Traders note that volatility has been very high and the majors continue to respond with higher action suggesting that the dips will continue to be bought near-term. Look for the USD t0 continue lower overnight and through the end of the week. Tomorrows US data is the last for the week so expect Friday to be volatile as traders will likely cover open trades to end the week.





Resistance 3: 1.8350

Resistance 2: 1.8300/10

Resistance 1: 1.8250

Latest New York: 1.8196

Support 1: 1.7730

Support 2: 1.7620/30

Support 3: 1.7580



Rate rallies hard as stocks wilt, cross spreading also noted. Sovereign interest under the 1.7850 area this morning lifted into stops above the 1.8100 area. In my view, the GBP has weathered the storm fairly well and it suggests no additional down move near-term. Cross spreaders seen active on the sell side but volumes lighter. OK to buy the rate the next 24 hours and I would look for a dip under the 1.7830 area for the buy but that looks unlikely after the rally today. Traders note stops mixed with offers above the market also. Major support has held last Friday, any weakness likely to be bought hard. Profit-taking bids continue as well. Hook reversal from the toolbox still valid. Short-covering rally may be over due to sharpness of the move. Close back above the 1.8100 area likely turns the rate positive.


Data due Thursday: All times EASTERN (-4 GMT)

4:00am GBP MPC Member Dale Speaks

4:30am GBP Retail Sales m/m

4:30am GBP M4 Money Supply m/m

4:30am GBP Public Sector Net Borrowing





Resistance 3: 1.4480

Resistance 2: 1.4430

Resistance 1: 1.4380/90

Latest New York: 1.4336

Support 1: 1.4080

Support 2: 1.4000/10

Support 3: 1.3940/50



Rate rallies away from support, some upside drawn from Cable no doubt. Expect more two-way action but the next dip could be larger after today’s rally. Traders note the rate is firm on dips so far despite the uncertainty in the market. Some sympathy trade from GBP; lows likely in finally from last week. Volumes better during the day. Traders report offers in size being absorbed. Traders suggesting that the rate is trading technically. Market likely beginning to correct oversold condition with this rally; close over the 1.4500 area can’t be ruled out this week. Rate continues to track Cable and vice-versa. Now that more stops are cleared a rotation higher is even more likely. Remaining US data this week likely to be unfriendly so be ready for more whipsaw but expect a solid higher close for the week. If long, look to add to positions on any weakness.


Data due Thursday: All times EASTERN (-4 GMT)


Join us for the Afternoon US Dollar Wrap-Up daily at 3:15 pm Central/Chicago time (GMT -6)


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Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

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