FX Weekly Commentary - Nov 13 - Nov 19 2011

8/3/2019 FX Weekly Commentary - Nov 13 - Nov 19 2011

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Last week we began the week trading in a tight

range with small swings until Wednesday when

the bottom fell out of the market on European

headlines. Contrary to market expectations the

markets broke out of their ranges to the downside

sharply, surprising many traders. Continuing the

surprise, markets quickly reversed losses and

closed back into the range they began the week at

leaving many traders wondering which way the

market is going. One thing for sure these both

were purely risk on/off plays which have been

leading the markets.

We saw the massive sell off in risk appetite due to

widening bond yields. Markets are actively

watching the yields of both French & Italian yields

in over the next week and movement sovereign

debt markets will continue to tip the risk appetite.

Last week we saw ECB step in to purchase Italian

debt once the yields extended above 7%. This is

the dangerous level markets have seen previously

with Greek debt yields that quickly gave way to

rapidly increasing yields as the country struggled

to sell additional debt to keep the country going.

Italy has a significantly larger issuance of debtabove a trillion Euros placing it out of reach of the

EFSF rescue. The ECB quickly stepped in to

purchase the Italian debts to bring the yield back

under 7% to prevent a major Euro problem.

Last week we also saw S&P rating agency post a

downgrade of French debt on their website which

was quickly removed and declared a mistake by

the S&P leadership. Markets quickly reacted

punishing French 10 Year bonds by dumping in

the wake of this release. French bonds yields

reached record highs on the already stressed

country. Big question here is why did S&P have

that type of announcement ready to be released

and was it a preview of whats to come for the

country? A French downgrade would severely

undermine the EFSF and its ability to leverage up

to meet EURO-Zone obligations. If French 10 Year

bonds continue to rise we will see more

requirements on the EFSF to increase its 20%

guarantee in order to seek additional leverage for

the fund.

Spanish 10 year bond yield spread over German

10 Year bond yields are above the Aug 2011 highs

where ECB had to step in to bring the yield back

within acceptable limits. While the Spanish 10

year bond yield is still below the Aug 2011 highs

keep an eye out for the ECB to step in and relieve

some pressure for the Spanish bond markets also

in the coming weeks.

Last week we saw US Jobless claims fall below the

significant 400K level to 390K which is significant

for the US labor markets. Keep an eye out for this

weeks retail sales numbers as markets look for

more reasons to increase risk appetite.

EURO is scheduled to have a GDP number release

which is not expected to impress the markets that

are being described as one negative headline

away form tumbling. Expect market volatility on

headlines out of the EU and pay close attention tothe 10 year bond markets as there are far

reaching impacts to many EU member states as

the 10 year yields continue to rise and questions

surround the EFSF and ECBs ability to stabilize

the EuroZone. The ECBs balance sheet is already

Fundamental Outlook

Elite Global

Trading Forex Weekly CommentaryNov 13th Nov 19th 2011 Volume 1, Issue 28

In this issue:

Fundamental

Outlook

1

GBPUSD

USDCAD2

EURUSD

AUDUSD

EURCAD

3

Event Risk 4

Contact Info

Disclaimer5
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2/5

Elite Global

Trading

Nov 13th Nov 19th 2011 Volume 1, Issue 28

GBPUSD: With a strong move off lows fromlast Wednesday at 1.5868 up to 1.6093, this

pair holds a range that has been in place for a

few weeks now. A move to the lower part of

the range to start the week out is likely, down

to 1.5900. We see that this pair still has

potential for a move to 1.6200 range in the

weeks to come, with current range in play

respect that and look for a break in the weeks

to come.

Outlook: Neutral, range high stands at1.6166, and low sits at 1.5868. With the

probable move lower to start the week look

for levels on the way down at, 1.6040,

1.6007, 1.5980, 1.5955, 1.5900, and low at

1.5868.

UK Pound Sterling / United States Dollar

USDCAD: The dollar last week made a strongrally and gave up most gains to close the

week, not giving the USDCAD enough of a

boost to break range high at 1.0265. With

range still in play we look to respect that and

watch for breaks above or below in the weeks

to come. A break to new lows in the weeks to

come, with the daily and weekly looking heavy

for another move lower. Either way we are

currently in a range and needs to be

respected.

Outlook: Neutral, range high stands at 1.0265and low sits at 1.0055. Currently trading at

bottom of range, with a probability of moving

to the top over the beginning of this week

near 1.0200. Levels to watch for on way up,

1.0136, 1.0154. 1.0172, 1.0200.

United States Dollar / Canadian Dollar

member banks continuing to decrease deposits held with the ECB and 7.7 Bln Euros in emergency

funding requested by banks from the ECB over the weekend.

EuroZone banks have a 9% capital requirement imposed on them which forces them to liquidate

holdings in order to shore up their balance sheets. Under normal conditions this is very reasonable in

order to protect the banks however with the Euro-Zone implementing this capital increase at this stage

of the game has an undesired consequence. Banks are liquidating riskier holdings in sovereign debt

causing 10 year yields to increase making it harder for Euro-Zone member states to raise the capital

required to run their nations.

This weeks trends will be heavily intertwined with a risk on / risk off mentality and extremely volatile

on headlines out of Europe. Keep close watch on the Italian, Spanish & French 10 Year bond yields as

the ECB is forced to keep up purchases to contain the yields. The IMF looming in the background as

markets look for the organization to step up activity to stabilize the Euro-Zone. Expect to see headlines

from Italy as the country races to formalize their coalition government.


3/5

AUDUSD: This pair is purely a risk pair movingvery nicely with the risk trends. With risk

reversing at a short term bottom on Thursday,this pair has placed it's short term bottom at

1.0052. We look for direction from here, we

are dead center of top formed in October at

1.0753 and bottomed formed last week at

1.0052. The daily wants to push higher with

eye's on 1.0500 in the week to come, a move

lower is likely around 1.0150 a possible target

for a higher bottom before the move to the

1.0500 region.

Outlook: Neutral, looking for a pullback off the

high of 1.0345 that the week opened at to the

1.0200 area. With some basing action to

occur in their we will look for a move highertowards the 1.0500 area. Levels to watch

1.0255, 1.0200, 1.0160 and 1.0134 on

downside, and on the way up look out for,

1.0370, 1.0400, 1.0432, 1.0446, 1.0500,

1.0567.

Australian Dollar / United States Dollar

Elite Global

Trading


EURUSD: After the move we have just haddown to 1.3484 from 1.4246, over the past

few weeks, looks like a move back to the

upside may be on tap. We closed the month

of October reversing from the highs at 1.4246

area and have had a nice 2day reversal

pattern closing out last week, with a possible

short term bottom at 1.3484. Still many shaky

events to come in Europe, which is important

when taking longs in the Euro pairs, getting to

bullish can be risky, but taking the swings that

are clear with nominal risk is certainly viable.

If we continue to get positive outcomes inEurope we will see this pair trade back around

1.4000 in the weeks to come, but be careful

of the news out of Europe that could easily

drop this pair to lower levels with negative

events to continue to unravel.

Outlook: Neutral, we are currently in a range,high at 1.4246 and low at 1.3484. With this

range in play we are currently in the center

which gives way for a continued move higher

in the med term, in short term we may start

this week out with a pullback to a lower level

test around the 1.3680 area. Levels to watch

for, 1.3566, 1.3600, 1.3650, 1.3700,

1.3715, and levels on way up, 1.3860,

1.3955, 1.3988, 1.4050, 1.4170, 1.4246.

With the daily looking to make a move higher,

ahead of that we may see the 240 come back

down to create higher bottoms, which may

occur to start the week off, keep an eye on

the levels.

Euro / United States Dollar

EURCAD: Stands strong in the range that hasbeen ongoing for the past several weeks with

high standing at 1.4175 and low sitting at

1.3800. Currently moving off bottom of range

looking to make a move higher in the days to

come. Congestion zone to watch for is 1.3900

-1.4000.

Outlook: Range Bound, High of range is1.4175, and low is 1.3800, respecting the

range we see a move to the top of the range

to happen this week. Keep eye on break of

this range, when it happens will likely be a

strong break, for this range is going strong for

6 weeks now.

Euro / Canadian Dollar


4/5

Elite Global

Trading


Monday:EUR: Industrial Production 5am

GBP: Nationwide Consumer Confidence

AUD: Monetary Policy Meeting Min 7:30pm

Tuesday:EUR: French Prelim GDP 1:30am

EUR: German Prelim GDP 2am

GBP: CPI 4:30am

EUR: German ZEW Economic Sentiment 5am

USD: Core Retail Sales 8:30am

USD: PPI 8:30am

USD: Retail Sales 8:30am

JPY: Monetary Policy Statement

Wednesday:GBP: Claimant Count Change 4:30am

EUR: CPI 5am

GBP: Inflation Report 5:30am

USD: Core CPI 8:30am

USD: TIC Long Term Purchases 9am

NZD: PPI Output 4:45pm

Thursday:GBP: Retail Sales 4:30am

USD: Building Permits 8:30am

USD: Unemployment Claims 8:30am

USD: Philly Fed Manufacturing 10am

Friday:EUR: German PPI 2am

CAD: Core CPI 7am

USD: Treasury Currency Report

Weeks Event Risk


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purposes only. The information is

provided by Elite Global Trading and

while we endeavor to keep the

information up to date and correct,

we make no representations or

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newsletter for any purpose.

News letter Authors:

Anthony [email protected]

James [email protected]

Tel: 786-759-0348

E-mail:

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FX Weekly Commentary - Nov 13 - Nov 19 2011