Dukascopy Afternoon Forex Overview

Dukascopy Fundamental Analysis

EUR

USD
US stock futures decreased on the worries about spreading debt crisis in Europe. Futures on the Dow Jones Industrial Average lost 71 points to 11,163 while futures on the Standard & Poor’s stock index decreased by 9.19 points to 1,150.8. Nasdaq futures lost 17 points to 2,144. The drop occurred after Italy’s bill auction on Friday.

GBP
The outlook for UK’s housing market has worsened in last months as unemployment rises and economic growth fades. Centre for Economics and Business Research (CEBR) lowered price growth predictions and currently its analysts claim that housing prices may decline by 1% this year and climb in 2012. The CEBR has cut its forecast for home value growth in 2012 from 2.4% to 1.6%.

CHF
Official SNB exchange rate for EUR/CHF is at CHF 1.2288 today; 3-month LIBOR CHF remains at 0.05% (within target range of 0.00-0.25). Yields for 10-year Swiss Confederation bonds declined to 0.91% today. SMI stock index has gained 1.11% since opening bell, and is currently fluctuating aro und 5413 points.

JPY
Japan’s seasonally adjusted unemployment rate is projected to remain at 4.1% in October, the same as a month earlier. Meanwhile, the proportion of job offers to seekers improved to 0.68 in October as compared to September 0.67, according to survey of Market News International. However, the experts claim the decrease in jobless rate does not necessarily imply better economic situation in the country.

Dukascopy Technical Analysis

EUR/USD
Daily maximum: 1.3332
Daily minimum: 1.3212

The Euro moved lower today as the German m/m import prices and Italian m/m retail sales inched lower as the European debt crisis worsens, breaching the market mean at 1.3354. None of the resistance (1.3388; 1.3448; 1.3543) levels has been breached yet while a cross of support 1 and 2 at 1.3292 and 1.3256 exposes the last barrier at 1.3160 for Friday. The daily stance remains bearish.

EUR/JPY
Daily maximum: 103.24
Daily minimum: 102.49

As the European debt woes worsen, investors continue purchasing the Japanese yen versus the single European currency, piercing the market mean at 102.98.Investors should consider resistance lines at 103.32, 103.76 and 104.51, and closely watch the last support levels at 102.25 and 101.50. The daily trading signals point at a continuation of the bearish trend up front.

GBP/USD
Daily maximum: 1.5517
Daily minimum: 1.5424

The British Pound moved lower today as the European economic conditions deteriorated, spooking confidence among investors the debt problems will be solved any time soon. Hence, the market mean at 1.5507 has been breached. None of the resistance (1.5537/99; 1.5695) levels has been tested so far, though investors might be aiming at support 2 (1.5407) and 3 (1.5312) as the daily outlook remains strongly bearish.

USD/JPY
Daily maximum: 77.23
Daily minimum: 77.18

The Japanese Yen depreciated against the American Dollar as at the moment investors are in favour of USD as a safe-haven currency, leaving the market mean behind at 77.14. All three resistance levels (77.30/42/68) have been breached while none of the support (77.03; 76.88/62) lines remained intact today. The daily outlook stays neutral for the rest of the trading day.

USD/CHF
Daily maximum: 0.9309
Daily minimum: 0.9206

The pair pursued its latest rally as investors continued buying the US treasuries as the European debt crisis is getting worse. Forex traders should be aware of resistance 3 at 0.9316 and support levels at 0.9167, 0.9129 and 0.9067 respectively. The daily market bias is strongly bullish.

Expert commentary

“The level of private debt is too high to be isolated from what is happening in the debt markets around the world”
As the Eurozone countries are still struggling with the debt crisis, Dukascopy is persisting to interview the experts in finance to learn information from the inside. Today we talked to José García-Montalvo, Professor of Economics at the University Pompeu Fabra, Spain, who shared his opinion on the  recent news from Spain. Spain still has the highest  unemployment rate of 25% in the EU and the newly elected government has promised to rectify the problem.

“I think that Portuguese government should stop following the advice of the European Commission, ECB and IMF”
The contagion from Greek sovereign debt is spreading to other troubled  Eurozone countries, such as Italy, Spain and Portugal. Dukascopy has conducted a string of interviews to disclose the situation from the inside and bring you the recent news and experts’ opinions on the matter. Today Professor Ricardo Cabral has put Portugal under scrutiny and unpicked the recent economic developments for Dukascopy clients.

What To Read Today

Europe
Italian bond yields back in the danger zone
In yet another sign of Europe’s deepening crisis, two Italian debt auctions drew weak demand Friday, sending bond yields soaring and keeping investors on edge.

USA
Wall Street rebounds after six losing sessions
Moody’s Investors Service on Wednesday warned that its top credit rating for the United States could be in jeopardy if lawmakers backtrack on $1.2 trillion in deficit cuts planned over 10 years.

Asia & Pacific
Japan’s October CPI signals deflation
Japan’s core consumer price index fell in October, signaling the return of deflation after four months of price gains, and raising fresh doubts about the Bank of Japan’s claim of a trend change in the price environment.