I’m looking at a 5-wave downmove which started at 134.10 and has probably bottomed out for the moment at least at 105.60. The 38.2% retracement of this move is at 116.50 which is also approximately where the next bearish trendline comes in. Longer-term bears can consider selling a failure at this level. Support should now be firm around 108.50 which is where the most recent daily trendline was broken.
The Kospi in Korea has opened +0.65%. The FX market is still very quiet with USD/JPY hanging on close to recent highs.
Heavy corporate offers eyed towards 86.50 and support should now be firm around 85.00.
Dealers report decent sized stops in EUR/GBP above .8410 and there is also un-substantiated conjecture of a barrier around 1.5650 in the cable. Both of these items combined are encouraging cable dealers to start their trading day with a bearish bias.
The US President and the Japanese PM will speak next Thursday and the recent FX intervention will be on the agenda according to Japanese media reports.
EUR/USD has had a 5 pip range over the last 2 hours which doesn’t bode well for a busy session.
Gold is back in the news headlines again. Futures and currency traders are starting to refer to action in the gold market and the big banks are putting out technical and fundamental reports on the glittery stuff. All bullish of course.
The charts do look a bit overbought on a medium term perspective but I certainly wouldn’t be trying to pick a top in this strong trend. Central banks are buying and George Soros is trying to talk it down so it must be going a lot higher.
- EUR/GBP: Stop-loss buy orders above .8410
- AUD/USD: Large one-touch option at .9475 expiring September 30th
- EUR/USD: Light stops below 1.3035; Sell orders 1.3125; Heavy stops reported above 1.3170 and 1.3185
- Cable: Heavy sell orders towards 1.5700 and stops above 1.5720; solid buying interest 1.5550 and at regular intervals through 1.5500
- USD/CHF: Sell orders reported close by at 1.0175
- Gold buffs: Talk of central bank buying interest today
The ruling party’s policy chief has become the new national strategy minister and there is also a new economics minister.
The upcoming “Sayonara Deflation” bill and reshuffles like this indicate that Japan is about to get very serious about taking measures to fight deflation and if this means that the BoJ lose more independence, then so be it. We have already seen the beginnings of a spat between Brussels and Tokyo over the unilateral intervention and any further loss of independence for the BoJ could only increase the liklihood of dis-harmony.
Politicians are much more likely to ignore international opposition than central banks are, meaning that the intervention could continue for a considerable period of time.
The CHF crosses have now started to follow the JPY crosses higher and this looks to me like the beginning of a serious short-covering exercise. Whilst we may see some minor profit-taking or the usual consolidation in Asia, these moves look like the ‘real’ variety and dips are for buying in my opinion.
I wouldn’t be surprised if the BoJ are a bit more active today as Friday markets are more easily moved.
Good luck today and TGIF.
–Makes No Comments of Current, Future BOE Monetary Policy
By Heather Scott
WASHINGTON (MNI) – With quantitative easing on hold for now, the
Bank of England’s next policy move, should it become necessary, could be
“heavy credit easing,” purchasing private rather than just government
debt, BOE External Member Adam Posen said Thursday.
Speaking in a wide-ranging discussion of his year at the BOE, with
former Federal Reserve governor Laurence H. Meyer, the U.S. economist
told a conference that credit easing is likely to prove to be more
effective on the overall economy than just quantitative easing.
“My feeling was credit easing would be more effective than
quantitative easing, because it would give you two or three bites at the
apple,” by allowing policymakers to affect risk in a particular market
in addition to adding liquidity, Posen said.
The downside is that when the time comes to discuss exit
strategies, the Fed will have more concerns about offloading
mortgage-backed securities than the BOE will selling off GILTs, he said.
Even so, Posen said, the right kind of research is likely to show
that “what the Fed did was more bang for given buck.”
“In the U.S. with more channels of finanacing there are more ways
in which quantitative and credit easing could work than in the UK,” he
Because the BOE has only done quantitative easing up until now the
next page of the policy playbook “would be to shift into heavy duty
credit easing,” Posen said.
However, he cautioned that the would only become necessary if
things take a dramatic turn for the worse.
And despite the more difficult exit costs for the Fed, if things
were so bad that monetary policymakers were considering further steps,
Posen said, “It is difficult to think of what would be a large enough
cost to weigh against genuine macro factors. There is an order of
magnitude issue here.”
Posen declined to comment specifically on any current or future BOE
** Market News International Washington Bureau: 202-371-2121 **
Founded in 2008, ForexLive.com is the premier forex trading news site offering interesting commentary, opinion and analysis for true FX trading professionals. Get the latest breaking foreign exchange trade news and current updates from active traders daily. ForexLive.com blog posts feature leading edge technical analysis charting tips, forex analysis, and currency pair trading tutorials. Find out how to take advantage of swings in global foreign exchange markets and see our real-time forex news analysis and reactions to central bank news, economic indicators and world events.
Our authors have years of experience in financial markets and provide diverse, thought-provoking updates relating to news about global macro events and the worldwide forex economic calendar, with frequently updated content that is educational for traders at all levels from beginner to novice that can help traders make better decisions about forex trading. Our forex news focuses on G10 events, macroeconomic indicators, major equities indexes, treasury and bond yields from around the world, politics as it relates to forex trading and news from the FOMC as well as global central banks in, Europe and Asia.