Fundamental market overview
EUR
Chancellor Angela Merkel claimed it is essential to comprise political coalition in Europe to ensure bondholders that euro-region officials are sober about tackling debt turmoil. Merkel emphasized that all 17 euro zone countries should stick to common currency, though serious changes in current policy should be implemented. Chancellor also suggested EU and euro region should grow simultaneously in order to regain bondholders’ confidence.
USD
In view of the global economic problems participants of the APEC summit agreed that further liberalization of trade is of critical importance for sustainable growth in future. At summit US president discussed US enlargement plans in Asia-Pacific region and his free-trade agreement, called Trans Pacific Partnership. Other North American countries as Canada and Mexico also are interested in joining Asian-Pacific free-trade zone.
GBP
A slow and painful contraction is forecasted for the UK jobs market, as firms are likely to postpone new recruitment activities, a report released today says. UK employers mostly apply “watch and wait” strategy regarding the economy. On the other hands, CIPD report claimed that fewer companies are planning to relocate from UK or to start lay-offs.
JPY
Japanese economy experienced growth for the first time since earthquake in March 11. Recovery was mainly boosted by increase in exports. According to Cabinet Office in Tokyo, Gross Domestic Product added annualized 6% from July 1 to September 30. Economic output of ¥543 trillion reached pre-earthquake level. Nevertheless, Kiichi Murashima, Citigroup Global Markets chief economist in Japan, predicts GDP to slow down in the 4th quarter amid weakening global demand and appreciation of yen.
CHF
Official SNB exchange rate for EUR/CHF is at CHF 1.2375 today; 3-month LIBOR CHF increased to 0.05% (within target range of 0.00-0.25). Yields for 10-year Swiss Confederation bonds rose to 0.94% today. SMI stock index has lost 0.04% since, and is currently fluctuating around 5647 points.
Read the morning report here.
Market expectations
EUR/USD
Daily maximum: 1.3788
Daily minimum: 1.3615
The euro moved lower today against the American dollar, after the German Chancellor Angela Merkel stated the European Union has to be integrated closer to survive the ‘toughest hours since World War II’, causing the pair to cross the market mean at 1.3717.
As a result, support 1 at 1.3618 has been breached, exposing the next support levels at 1.3489 and 1.3273 to be tested by bearish forex traders, while all resistance levels at 1.3835, 1.3923 and 1.4140 remained untapped today. The daily trading signals remain bearish.
EUR/JPY
Daily maximum: 106.39
Daily minimum: 104.85
The pair commenced a downward correction after the German Chancellor Angela Merkel said Europe is facing the toughest challenges since World War II, pushing the single European currency lower versus the Japanese yen, breaching the market mean at 105.94.
Resistance (106.47; 106.92; 107.93) levels stood firmly today amidst bearish investors’ test of support 1 at 105.46 and support 2 at 104.90; the third support at 103.89 is expected to be next in line if the bearish bias continues. Meanwhile the daily market stance is neutral.
GBP/USD
Daily maximum: 1.6091
Daily minimum: 1.5906
The British pound moved higher today against the American dollar after the European stocks rebounded after new Prime Ministers in Greece and Italy have been elected, piercing the market mean at 1.6037.
All resistance (1.6138; 1.6213; 1.6411) lines held firmly today whereas a breached support 1 at 1.5940 suggests support 2 at 1.5819 and support 3 at 1.5622 might be the next targets for the bears. Meanwhile, the daily market trend remains flat.
USD/JPY
Daily maximum: 77.24
Daily minimum: 76.82
After touching the market mean at 77.23, the Japanese yen erased its earlier gains on fresh hopes that Europe will face tough times combatting with its financial problems.
None of the resistance (77.51; 77.89; 78.51) levels has been touched, whereas a breach of support 1 at 76.89 paves the way to the last remaining support lines at 76.66 and 76.04, respectively. The daily trading signals point at a bearish momentum.
USD/CHF
Daily maximum: 0.9077
Daily minimum: 0.8962
The American dollar moved south today versus the Swiss Franc as investors turned nervous after the German Chancellor Angela Merkel said Europe is going through the toughest times since World War 2.
All support (0.8939; 0.8880; 0.8750) levels remained untapped today, whereas after resistance 1 has been left behind, the path to last levels at 0.9141 and 0.9272 is clear. The daily market trend is neutral.
Daily highs and lows are calculated till 16:00 GMT.
Read the morning report here.
Most important events of the day
New Prime Ministers in Greece and Italy are currently forming new governments in their countries; investors hope that newly elected top officials will bring their national economies back to shape.
Mario Monti nominated to replace Berlusconi
Economist Mario Monti was nominated Sunday to replace Silvio Berlusconi as Italy’s prime minister, presidential spokesman Donato Marra said.
USA
The US economy indicates it is getting steam again: with accelerating CPI, inflation rate, purchases of durable goods and industrial orders, the labour market started gradually taking off, reducing the unemployment rate to 9.0%. The Fed expects it to reach 8.6% by the end of 2012.
Shrinking Treasury Bills Means 0% Rates Persist Even With Record Deficits
The market for U.S. Treasury bills is poised to shrink the most since early 2010, creating a shortage in the debt and helping keep government borrowing costs near record lows.
Asia & Pacific
Japan’s economy grew 1.5% in the third quarter 2011, in line with estimates.
N.Z. Retail Sales Rise Most Since 2006 on Rugby Fan Spending
New Zealand retail sales increased the most in 4 1/2 years last quarter, boosted by spending from tourists visiting the Rugby World Cup. The currency climbed against all 16 major counterparts.
Read full report here.