Fundamental market overview
EUR
The Euro Zone economy grew 0.2 percent in the third quarter compared to the previous three months fuelling concerns the bloc may slide into recession in forthcoming months, according to the figures released by the Eurostat agency on Tuesday.
USD
U.S. retail sales increased in October, compared to September, easing concerns the largest economy in the world may slide into recession. Total retail sales advanced 0.5 percent, after increasing 1.1 percent in September, said the Census Bureau on Tuesday. Economists expected the reading to advance 0.3 percent.
GBP
U.K. inflation eased more than expected in October amid faltering global economic growth, leaving the door open for more stimulus. Consumer price index rose 5%, said the Office for National Statistics on Tuesday.
CHF
Swiss stocks closed mixed on Tuesday, as disappointing economic growth in Europe was partly offset by better than expected retail sales in U.S. The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, gained 0.06%, or 3.20 points, to 5,664.91. The broader Swiss Performance Index declined 0.08%, or 4.03 points, to 5,147.00.
JPY
Japanese stocks declined on Tuesday amid higher borrowing costs for Italy. The Nikkei 225 decreased 0.72%, or 61.77 points, to 8,541.93, while the broader Topix lost 0.67%, or 4.94 points, to 730.91.
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Market expectations
EUR/USD
EUR/USD had pierced through a support at 1.3484 and is now approaching a lower level located at 1.3380/60. Should this line be penetrated as well, 1.3145 will come into play. Long-term target remains at 1.20.
EUR/JPY
Since a tough support at 104.75 was breached, subsequent levels will be tested in the near-term – 103.08 and 100.77. From above the price is capped by a key resistance levels situated at 106.60/80 and 108.50.
GBP/USD
GBP/USD has tumbled below 1.5824 and may continue to fall down until it reaches 1.5632 or even 1.5272. Within the next three months though the price is expected to contract to 1.50. Rallies should be limited by 1.5872 and 1.6059.
USD/JPY
The currency couple stays near 76.91 for the moment, the level from which it is expected to commence recovery. To confirm reversal USD/JPY will have to overcome key resistances at 79.44 and 80.44.
USD/CHF
The pair has climbed over a resistance at 0.9157 and is on its way towards 0.9317. Although 0.9341/99 might trigger trade off. Nevertheless, dips should be stopped by supports located at 0.8936 and 0.8555/50.
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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.
Papademos Seeks Vote of Confidence on Euro
Greek Prime Minister Lucas Papademos faces a vote of confidence in his six-day old government today as he races to secure financing designed to avert a collapse of the economy and keep Greece in the euro.
USA
Barack Obama hosted a forum of 21 Asian-Pacific nations in Hawaii over the weekend with a long term goal to expand U.S. influence in the region. He visited Australia on Wednesday in order to deepen alliance – more US troops will be deployed in Australia.
Barack Obama hails strong Australia ties
US President Barack Obama has hailed ties with Australia at he began a visit during which PM Julia Gillard said more US troops would be deployed there. Mr Obama said he would give details for a “deepening of the alliance” in a speech before parliament on Thursday.
Asia & Pacific
Chinese trade balance widened less than expected to 17B in October; outlook looks grim. Foreign direct investment remains at a satisfactory level, but experts are worried about growth of export in future.
China FDI remains strong, export outlook darkens
Foreign direct investment (FDI) into China climbed nearly 16 percent in the first 10 months of 2011 from a year earlier as foreign investors continued to flock to the world’s fastest-growing major economy despite the global economic malaise.
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