Dukascopy Morning Forex Overview

Dukascopy Fundamental Analysis
EUR

“I expect further cheapening of [Italian] bonds”
– Alessandro Giansanti, rate strategist at ING
Italian government bonds fell on Tuesday, pushing three-year and ten-year yields higher before an auction on Thursday, where Rome plans to sell 8.5 billion of debt, as investors are worried the euro zone’s third-largest economy may lose access to financial markets.

USD

“Consumers are more optimistic that business conditions, employment prospects and their financial situations will get better”
– Conference Board Inc.
U.S. consumer confidence rose to an eight month high in December as consumers became more optimistic on the outlook of the country’s economy, the Conference Board Inc. said on Tuesday.

GBP

“U.S. data is providing what markets have been looking for in terms of a wider economic improvement and rising employment”
– Witold Bahrke, a senior strategist at PFA Pension A/S
U.K. banks were closed on Tuesday in observance of Boxing Day.

CHF
“With small volume, the markets can move without much effort”
– Benno Galliker, a trader at Luzerner Kantonalbank
Swiss stocks snapped a five-day rally on Tuesday after S&P/CS report showed U.S. house prices fell more than expected.

JPY
“There’s no outstanding catalyst to buy stocks”
– Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.
Japanese stocks dropped on Tuesday amid slow holiday trading. The Nikkei 225 lost 0.46%, or 38.78 points, to 8,440.56, while the broader Topix fell 0.30%, or 2.19, to 724.25.

Dukascopy Technical Analysis
EUR/USD

“The question on most traders’ minds isn’t whether the euro/dollar will rise or fall, but whether it will actually survive the year intact”
– GFT Forex (based on Reuters)
The outlook for EUR/USD is from neutral to positive, since the indicators suggest a rather calm day for the pair.

EUR/JPY

“The upcoming year is shaping up as a do-or-die year for the euro”
– GFT Forex (based on Reuters)
The Euro is expected to keep on depreciating relative to the Japanese Yen.

GBP/USD

“Sterling is going to benefit immensely as a new breed of safe haven. The out-performance of the pound is a sign of bigger things to come”
– Swissquote Bank SA (based on Bloomberg)
The immediate resistance for the Cable is situated at 1.5779, while a higher level is at 1.6165.

USD/JPY

“[Japanese] industrial production seems set to expand for the next two months, but whether it can continue to grow beyond the short term is uncertain”
– Bank of Japan
While being capped by a tough resistance at 78.00/25 the nearterm bias for the pair is bearish which has been confirmed by a dip below 78.00 level.

USD/CHF

“People are going to be quite cautious in terms of trading events. It’s going to be a quiet week”
– Deutsche Bank AG (based on Bloomberg)
Correction lower might extend even lower while USD/CHF is being capped by a resistance line at 0.9399.

What To Read Today
Europe

Euro Seen Having Another Bumpy Ride in 2012
2011 was the most dramatic year for the euro in the decade since the single currency was launched.

USA

Washington’s year of drama leaves little done regarding debt
Reid Ribble, a Wisconsin roofing contractor-turned-Republican lawmaker, has helped change the way Washington talks about the national debt. That’s not to say he has done much about the debt itself.

Asia & Pacific

Japan pact raises Chinese yuan’s status
An agreement reached this week that will see Japan hold Chinese bonds as part of its foreign-exchange reserves may herald the emergence of China’s yuan as a new global reserve currency, according to analysts.

Dukascopy Afternoon Forex Overview

Dukascopy Fundamental Analysis
EUR

European shares opened higher after Christmas holidays, though trading volumes are predicted to be relatively low. Stoxx 600 gained 0.2% at 242.41, whereas France’s CAC 40 added 0.5% to 3,116.11. German benchmark DAX index surged 0.4% attaining 5,902.32. London markets stayed closed in prolonged holiday break.

USD

The prices of real estate decreased more than predicted, said S&P/Case-Shiller group on Tuesday. S&P/Case-Shiller index of real estate value in 20 cities fell 3.4% in October compared to corresponding period last year. Economists surveyed by Bloomberg forecast a 3.2% decline. Index currently is down 32.1% compared to its top figure in 2006.

GBP

UK retail sales slumped on the Boxing Day – the major December sales day in the high street shops of London. Although the sales had been up by almost 22 per cent in comparison with the same period last year, they were flattened out by results of the sales day. Experts from Experian research agency claim that the post-crisis year has not been tremendous for the retailers.

CHF

Swiss UBS consumption indicator decreased in November, falling for the first time in the last three months. The indicator eased down by 0.09 points to 0.81 last month from 0.90 in October. Analysts claim the indicator was affected by lower prices and increased number of purchases made abroad. After the data release, the Swiss Franc appreciated against the USD with the pair USD/CHF edging down 0.1% to 0.9352.

JPY

India and Japan are expected to announce new currency swap agreement with the purpose to ease problems with liquidity. The agreement will allow two countries to swap currencies for the USD and use each other’s foreign-exchange reserves. The pact followed the growing volatility in currencies of both countries. The deal is likely to be concluded during Yoshihiko Noda’s, Japan’s PM, next visit to India due next week.

Dukascopy Technical Analysis
EUR/USD

Daily maximum: 1.3083
Daily minimum: 1.3043
EUR/USD pierced the daily forecast mean at 1.3053 as the US home prices felt more than expected. Daily Resistance: 1.3087; 1.3127; 1.3158. Daily Support: 1.3016; 1.2985; 1.2945. Daily Bias: Neutral.

EUR/JPY

Daily maximum: 101.90
Daily minimum: 101.66
The shared European currency continued its recovery versus the Yen as investors expect the Christmas rally will make the European retailers benefit from it; thus, the daily forecast mean at 101.90 has been hit. Daily Resistance: 102.13; 102.40; 102.61. Daily Support: 101.65; 101.44; 101.17. Daily Bias: Bearish.

GBP/USD

Daily maximum: 1.5697
Daily minimum: 1.5596
The British pound slumped today, crossing the market participants’ target at 1.5612 as investors consider the UK economic prospects gloomy for the next quarter. Daily Resistance: 1.5665; 1.5749; 1.5790. Daily Support: 1.5540; 1.5499; 1.5415. Daily Bias: Neutral.

USD/JPY

Daily maximum: 78.02
Daily minimum: 77.80
USD advanced today as investors continued acquiring the US dollars against the yen on strong US consumer confidence. Daily Resistance: 78.17; 78.30; 78.39. Daily Support: 77.95; 77.86; 77.73. Daily Bias: Neutral.

USD/CHF

Daily maximum: 0.9385
Daily minimum: 0.9333
The daily market forecast mean for USD/CHF (0.9360) has been breached as the American dollar advanced on sound US consumer confidence. Daily Resistance: 0.9387; 0.9415; 0.9441. Daily Support: 0.9333; 0.9307; 0.9279. Daily Bias: Neutral.

What To Read Today
Europe

Italy to Kick the Cash Habit as Monti Cracks Down
The government on Dec. 4 reduced the maximum allowed cash payment to 1,000 euros from 2,500 euros.

USA

US Republicans in climbdown on payroll tax deal
House of Representatives Republican Speaker John Boehner has agreed to accept a bipartisan deal to extend a payroll tax cut, in an abrupt Uturn.

Asia & Pacific

China CIC sovereign fund to get $50 billion boost
China’s $410 billion sovereign wealth fund China Investment Corp. CIC.UL is set to receive additional funding of up to $50 billion, two sources with knowledge of the matter told Reuters on Friday.

Dukascopy Morning Forex Overview

Dukascopy Fundamental Analysis
EUR

“We have got an informal signal from Standard & Poor’s that they [European ratings] will come only in January”
– Anonymous government source
Standard & Poor’s is expected to release its verdict on credit ratings for 15 euro zone countries in January, after putting them on credit watch December 6 for a possible cut in the absence of decisive action from European leaders.

USD

“We’ll continue to see [house] prices drop”
– Mark Vitner, a senior economist at Wells Fargo Securities LLC
Economists expect home prices to decline at a slower pace in forthcoming months with prices reaching a bottom in the middle of 2012. Property prices declined 3.2 per cent in October, compared to the same period last year.

GBP

“U.S. data is providing what markets have been looking for in terms of a wider economic improvement and rising employment”
– Witold Bahrke, a senior strategist at PFA Pension A/S
U.K. stocks rose on Friday amid better-than-expected economic data from the world’s largest economy. The benchmark FTSE 100 index gained 1.02%, or 55.73 points, to 5,512.70. The FTSE All-Share Index edged higher 0.98%, or 27.48 points, to 2,827.09.

CHF
“Recent positive economic data out of the U.S. have helped revive the markets”
– Manish Singh, head of investment at Crossbridge Capital
Swiss stocks closed higher on Friday amid hopes the U.S. economy is g aining steam. The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, rose 0.97%, or 56.83 points, to 5,893.89. The broader Swiss Performance Index edged higher 0.90%, or 47.13 points, to 5,308.95.

JPY
“The U.S. economic data is not bad on the whole”
– Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co.
Japanese stocks edged higher on Monday after the U.S. Congress passed payroll tax extension. The Nikkei 225 gained 1.00%, or 84.18 points, to 8,479.34, while the broader Topix advanced 0.46%, or 3.32, to 726.44.

Dukascopy Technical Analysis
EUR/USD

“The ECB will surely have to launch QE at some point. I suspect it might be sooner, rather than later”
– Jefferies (based on CNBC)
From above the currency pair is capped by resistances located at 1.3118, 1.3160/96 and 1.3281, the latter being a key one. Since the outlook remains bearish for the price, the focus is on supports at 1.3053, 1.2947 and 1.2873.

EUR/JPY

“Japan’s economy is still reliant on exports, so the yen’s appreciation has direct impact over employment, too”
– Institute for International Monetary Affairs (based on Bloomberg)
Even though the current bias for EUR/JPY is rather bearish, a close above 102.48 could invoke a bullish movement that may extend up to 104.00/95, while a tough support area situated at 100.74/00 should prevent the pair from going lower.

GBP/USD

“Don’t count on another round of BoE QE in February”
– WSJ
For the moment the pair is directionless, while its movement is being restrained by the boundaries of a 1.5778 – 1.5407 corridor. The initial resistance and support lines are at 1.5650 and at 1.5580, respectively.

USD/JPY

“The greenback often trades in volatile way against the yen during the last three business days of the year”
– CNBC
The short term support is at 77.50, ahead of 77.12, while resistances may be found at 78.20/50 and 79.52. In case USD/JPY reaches a record low at 75.56 it is likely to rebound from this level and recover.

USD/CHF

“The dollar tends to be sold in the risk-on environment”
– IG Markets Securities Ltd. (based on Bloomberg)
In order to reignite bullish momentum and surge up to 0.9500/46 the currency pair has to penetrate resistance at 0.9400. Dips, however, should be limited by support lines located at 0.9320, 0.9200 and 0.9170.

What To Read Today
Europe

The euro: Still in casualty
It is a measure of the depth of the eurozone crisis that it is now identified as one of the defining stories of 2011, taking its place next to the Arab Spring.

USA

U.S. stores hope “Mega Monday” led to brisk sales
Shoppers found a mixed bag of bargains and so-so deals on Monday, as a day off for many Americans lured some out for what was likely to be the third-busiest shopping day of the holiday season.

Asia & Pacific

China to ease bank reserves soon, analysts say
Speculation is mounting that Beijing will further cut bank reserve requirement ratios, as inflationary pressure is easing while overall growth in the economy is slowing.

Dukascopy Morning Forex Overview

Dukascopy Fundamental Analysis
EUR

“The move [by the ECB] in itself will not lead to any improvement in [banks’] credit ratings”
– Scott Bugie, S&P’s Managing Director
S&P top official warned Friday that record 489 billion euros allotted between 523 European banks by the ECB will not protect them from threatened rating downgrades.

USD

“All of the housing numbers have looked a lot better recently”
– Mark Vitner, a senior economist at Wells Fargo Securities LLC
Sales of new U.S. homes advanced to a seven month high in November, according to the data published by the Census Bureau. The number of new houses sold rose 1.6 per cent to an annualized rate of 315 thousand from 310 thousand in October.

GBP

“Households and businesses lack the confidence needed to seek credit for spending or investment”
– David Dooks, BBA statistics director
Number of approved mortgages increased to 34.7 thousand in November down by 0.5 thousand from the previous month, according to the data published by the British Banker’s Association. Analysts expected the reading to increase to 36.3 thousand.

CHF
“Recent positive economic data out of the U.S. have helped revive the markets”
– Manish Singh, head of investment at Crossbridge Capital
Swiss stocks rose for a fifth consecutive day on Friday after reports on new home sales and durable goods showed the world&r squo;s largest economy is recovering.

JPY
“The ECB doesn’t seem to have stepped up to the plate for bond buying, which I think is negative”
– Shane Oliver, head of investment strategy at AMP Capital Investors Ltd.
Japanese banks were closed on Friday in observance of the Emperor’s Birthday.

Dukascopy Technical Analysis
EUR/USD

“We have got an informal signal from Standard & Poor’s that they [verdicts on Eurozone countries] will come only in January”
– CNBC
Resistance level at 1.3059 has successfully repelled EUR/USD currency pair, therefore the price is likely to dip down to a support located at 1.3041/38. In case the latter level is breached, the next target will be situated at 1.2950.

EUR/JPY

“Excessive pessimism has receded at the end of the year, and what we’re seeing is some unwinding of safe-haven buying of currencies like the dollar and yen”
– Mizuho Securities Co. (based on Bloomberg)
While being capped by a cluster of resistances at 101.84 (22 hour ma and a downtrend), the pair is unlikely to show extensive rallies. On the contrary, it is expected to fall down to 101.76 first and then breach this level before stepping lower.

GBP/USD

“The view is that we will likely see the UK dip into a recession in H1. Economic weakness will be a constant reminder that the UK’s AAA status is not guaranteed by any means”
– Investec (based on Reuters)
The Cable has quickly sold off from 22 hour ma and is now heading toward 1.5596, which is likely to hold for some time. Although in the longer term this should be breached. A key resistance is situated at 1.5665.

USD/JPY

“Japan’s fiscal situation is worsening”
– Nomura Securities Co. (based on Bloomberg)
The price remains below a downtrend at 78.04, implying that the bearish impetus might strengthen, even though USD/JPY is currently underpinned by 77.96. Should the initial support be broken, 77.83 will be reached next.

USD/CHF

“Although the introduction of the minimum exchange rate for the franc against the euro eased the situation for companies, the exchange rate situation remained a focal point of attention”
– SNB (based on Bloomberg)
The American Dollar – Swiss Franc currency pair hovers just above an immediate support line at 0.9356, while a subsequent level is at 0.9318 (22 day ma). In case USD/CHF surges, it will encounter resistances at 0.9381, while a key level is at 0.9545.

What To Read Today
Europe

Germany Will Help Europe Overcome Crisis, Wulff to Say in Christmas Speech
Germany will help the rest of Europe stem the debt crisis because taking an anti-European stance is “wrong,” said President Christian Wulff, a party ally of Chancellor Angela Merkel.

USA

Consumer, business spending point to slower growth
Consumer spending was tepid in November and a gauge of business investment fell for a second straight month, suggesting the economy lost some of its recent momentum.

Asia & Pacific

China, Japan strengthen financial, currency ties
Chinese and Japanese leaders pledged to strengthen bilateral financial cooperation, and the two countries will facilitate the use of their currencies in cross-border trade settlements, China’s central bank said Sunday.

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Dukascopy Afternoon Forex Overview

Dukascopy Fundamental Analysis
EUR

France’s economy expanded by 0.3% in Q3 as compared to 0.4% previously estimated. The disposable income also decelerated, reported France’s Insee statistics. Moreover, the country’s credit rating was placed on a pessimistic outlook by Fitch agency signaling probable downgrade in the next 12-18 months.

USD

After struggling for several months Congress is ready to approve payroll tax reduction. Lawmakers agreed to extend payroll tax of 4.2% for two months. Obama praised the decision, emphasizing tax cut extension is crucial for US economy. Obama predicts every employed American to save around $1000 a year due to tax cut.

GBP

UK services output dropped to 6-month low in October. Services that account for about 75% of the nation’s economy tumbled 0.7% compared to September. Transport, communications and storage were down 2.5% whereas distribution, restaurants and hotels edged down 0.2%. Finance and business services lost 0.7%.

CHF

Official SNB exchange rate for EUR/CHF is at CHF 1.2229 today; 3-month LIBOR CHF remains at 0.05% (within target range of 0.00-0.25). Yields for 10-year Swiss Confederation bonds slid to 0.78% today. SMI stock index has gained 0.80% since opening bell, and is currently fluctuating around 5881 points.

JPY
BoJ reported of a pause in Japanese economic activity in December because of worsening economic situation overseas. However, the future outlook is optimistic, as fixed business investment is on an upward trend after March disasters, BoJ added on their monthly economic development report.
Dukascopy Technical Analysis
EUR/USD

Daily maximum: 1.3095
Daily minimum: 1.3052
The market forecast mean at 1.3049 was not reached today as investors positively perceived the Italian vote on austerity measures.
Daily Resistance: 1.3106; 1.3164; 1.3208. Daily Support: 1.3004; 1.2960; 1.2902. Daily Bias: Neutral.

EUR/JPY

Daily maximum: 102.20
Daily minimum: 101.91
The common European currency inched lower today on announcement the ECB might launch QE if the inflation risk occurs. The daily mean target at 101.99 has been pierced.
Daily Resistance: 102.32; 102.65; 102.95. Daily Support: 101.69; 101.39; 101.06. Daily Bias: Neutral.

GBP/USD

Daily maximum: 1.5707
Daily minimum: 1.5664
The British pound slightly slumped on less than expected Mortgage Approvals; this indication of a weak property market caused the price to cross the daily forecast mean 1.5682.
Daily Resistance: 1.5720; 1.5764; 1.5799. Daily Support: 1.5641; 1.5606; 1.5562. Daily Bias: Bullish.

USD/JPY

Daily maximum: 78.22
Daily minimum: 78.00
The American dollar traded above the 78.00 level as investors remain confident the US economy is on the right of recovery, therefore the daily forecast mean at 78.13 has been approached.
Daily Resistance: 78.24; 78.32; 78.44. Daily Support: 78.04; 77.92; 77.84. Daily Bias: Strongly bullish.

USD/CHF
Daily maximum: 0.9284
Daily minimum: 0.9182
USD/CHF is trading higher after the US durable goods sales rose by 3.8% in November versus expected 2.2%, causing the market participants’ forecast consensus at 0.9360 to breach.
Daily Resistance: 0.9404; 0.9448; 0.9497. Daily Support: 0.9311; 0.9262; 0.9218. Daily Bias: Neutral.
What To Read Today
Europe

Italy to Kick the Cash Habit as Monti Cracks Down
The government on Dec. 4 reduced the maximum allowed cash payment to 1,000 euros from 2,500 euros.

USA

US Republicans in climbdown on payroll tax deal
House of Representatives Republican Speaker John Boehner has agreed to accept a bipartisan deal to extend a payroll tax cut, in an abrupt Uturn.

Asia & Pacific

China CIC sovereign fund to get $50 billion boost
China’s $410 billion sovereign wealth fund China Investment Corp. CIC.UL is set to receive additional funding of up to $50 billion, two sources with knowledge of the matter told Reuters on Friday.

Dukascopy Morning Forex Overview

Dukascopy Fundamental Analysis
EUR

“The austerity package will be sufficient to bring [Italy’s] deficit-to-GDP ratio down to zero”
– Chiara Corsa and Loredana Federico, economists at UniCredit SpA
Italy’s senate passed a vote of confidence 257 to 41 on Prime Minister Mario Monti’s emergency budget plan on Thursday as the government struggles to restore investor confidence in the euro zone’s third largest economy.

USD

“The employment situation continues to show strong signs of a recovery”
– Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
The number of Americans claiming for unemployment benefits dropped to 364 thousand in the week ended December 17, the lowest level since April 2008, said the Department of Labor on Thursday. Economists expected the reading to increase to 376 thousand.

GBP
“We are looking at flat growth in the current quarter, maybe a slight contraction of 0.1%”
– James Knightley, an economist at ING Bank
U.K. gross domestic product grew revised 0.6 per cent in the third quarter of 2011, faster than previous estimates of 0.5 per cent, said the Office for National Statistics on Thursday. The Bank of England expects the economy to stagnate in the fourth quarter and in the beginning of 2012.

CHF
“European stocks are very cheap and in the absence of bad news, they should rise”
– Thomas Haerter, chief strategist at Swisscanto Asset Management AG
Swiss stocks rose for a fourth consecutive day on Thursday after a report showed U.S. jobless applications decreased and consumer sentiment improved, a sign that the world’s largest economy is recovering.

JPY
“The ECB doesn’t seem to have stepped up to the plate for bond buying, which I think is negative”
– Shane Oliver, head of investment strategy at AMP Capital Investors Ltd.
Japanese stocks fell on Thursday as record borrowing from the European Central Bank showed how deeply the debt crisis has affected the financial system. The Nikkei 225 shed 0.77%, or 64.82 points, to 8,395.16, while the broader Topix lost 0.35%, or 2.56, to 723.12.

Dukascopy Technical Analysis
EUR/USD

“This [Eurozone] crisis is not even near to being resolved”
– Commerzbank (based on Reuters)
EUR/USD’s outlook is still negative, as the pair is likely to carry on falling from 1.4246. Resistance should prevent the price from advancing, while a breach of the immediate support at 1.2946 would indicate a further selloff down to 1.2873.

EUR/JPY

“The market continues to wait for political leaders to make political decisions on the future of the euro zone”
– BNY Mellon (based on CNBC)
While a key resistance located at 102.98 is intact, the bias will remain bearish for the currency pair. At the moment EUR/JPY is heading toward 101.04, a break of which will imply the possibility of decline down to 99.92.

GBP/USD

“There is a growing likelihood of a slide [for UK] back into recession in the New Year”
– Markit (based on WSJ)
The British Pound – American Dollar currency pair is anticipated to act calmly on Friday. The initial resistance is situated at 1.5779, while support at 1.5557 is likely to halt downward movement.

USD/JPY

“There is a growing likelihood of a slide [for UK] back into recession in the New Year”
– Markit (based on WSJ)
The British Pound – American Dollar currency pair is anticipated to act calmly on Friday. The initial resistance is situated at 1.5779, while support at 1.5557 is likely to halt downward movement.

USD/CHF
“The yen is finally starting to respond to positive U.S. economic data”
– GFT Forex (based on Bloomberg)
USD/JPY is likely to continue trading within a corridor formed by a support at 77.49 and by a resistance at 78.28, therefore the outlook is neutral. In case the latter level is violated, the price might target 78.84 next.
What To Read Today
Europe

Italy to Kick the Cash Habit as Monti Cracks Down
The government on Dec. 4 reduced the maximum allowed cash payment to 1,000 euros from 2,500 euros.

USA

US Republicans in climbdown on payroll tax deal
House of Representatives Republican Speaker John Boehner has agreed to accept a bipartisan deal to extend a payroll tax cut, in an abrupt U-turn.

Asia & Pacific

Asia markets rebound after U.S. gains
”Stocks are rebounding, but sentiment is still very wait-and-see because of the long holiday,” said Conita Hung, head of equity markets at Delta Asia Financial Markets in Hong Kong, where markets were also slated to shut Monday and Tuesday.