Forex Trading Daily Analysis

Overnight Asia/Europe
• USD mixed in early trade
• Volumes lighter, technical trade mostly
• Traders watching Interest Rate announcements

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 12:00pm USD FOMC Member Mishkin Speaks
• 2:30pm USD Treasury Sec Paulson Speaks
Slow start to the week likely, possible technical trading.

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 10:00am USD ISM Non-Manufacturing Composite
• 2:15pm USD FOMC Statement
• 2:15pm USD Federal Funds Rate

Summary
The USD is mixed to start the week, higher against GBP, CAD; flat to lower against EURO, Yen and Swissy. The market is trading very technically traders say with early stops positioned just outside of recent weekly ranges as expected. Economic news is light to start the week with most traders choosing to focus on the rounds of interest rate decisions coming from several central banks. Foremost on the minds of traders is the US Fed FOMC meeting tomorrow; no interest rate change is expected but traders believe a rate hike is coming near the first of the year. Tomorrow’s statement will be closely watched as well for clues moving forward; most traders expect no hint of a change in rates until possibly Oct/Nov. Although the USD is mixed to start, the GBP is lower for a new weekly low at 1.9666 and is near the monthly low for July making for a near-term double bottom on the charts. Technical traders appear to be in control of the market this morning and more news of option barriers under the market is likely around the 1.9650 area. EURO is flat to slightly higher staying inside Friday’s ranges with a low print at 1.5562 overnight Asia; rate is holding near the 1.5600 handle to start New York. CFTC data released Friday suggests a potential bottom is in and the toolbox has placed an exponential reversal at today’s action. Aggressive traders can buy EURO/USD anytime today and look for a solid bounce to test resistance at last week’s highs around 1.5750/60 area. USD/JPY is flat to higher; high prints around the previous 108.00 area are keeping the lid on; Forex traders report exporters on the offer above the 108.00 area as expected. USD/CHF is flat to lower holding highs under the 1.0500 handle at 1.0499. If the USD should rally this week expect the 1.0520/30 area to hold as resistance making a weekly double-top; if the highs are in for the week already then the USD could make a large move against the Swissy to end the week as technical traders have defended the 1.0500 handle very aggressively the past few months. USD/CAD has traded to the 1.0310 high print of rumored option barrier; not much upside seen in the rate but whipsaw might be on the table should the USD rally a bit elsewhere. Look for the USD/CAD to fall back from here soon. On the day, expect lighter volumes and current conditions to hold the majors where they are. We need to see the FOMC results as well as other banks before the USD makes a move I think.


GBP/USD Daily

Resistance 3: 1.9850
Resistance 2: 1.9820/30
Resistance 1: 1.9780
Latest New York: 1.9672
Support 1: 1.9650/60
Support 2: 1.9620/30
Support 3: 1.9600

Comments
Rate drops further on follow-on selling; fails to hold early gains on very light volumes. Nothing really happening; some cross trading likely but not a lot of chatter about sterling crosses overnight. Traders report some reserve-manager buying on the dips but also offers capping. Rate is two-way in sympathy with EURO. Possible buying from semi-official names so watch the news. Offers above the market mixed with stops from late shorts so be ready for whipsaw the next few days. Traders expect GBP to track EURO through this week. Continue to expect a lot of cross-trading.

Data due Tuesday: All times EASTERN (-5 GMT)

Tentative GBP Halifax HPI m/m

4:30am GBP Manufacturing Production m/m
4:30am GBP Services PMI
4:30am GBP Industrial Production m/m
7:01pm GBP Nationwide Consumer Confidence
7:01pm GBP NIESR GDP Estimate


EUR/USD Daily

Resistance 3: 1.5750
Resistance 2: 1.5700/10
Resistance 1: 1.5620
Latest New York: 1.5575
Support 1: 1.5540/50
Support 2: 1.5520/30
Support 3: 1.5500

Comments
Rate remains in tight range but toolbox gives a buy signal. Low prints again at MAJOR support. Hard and fast break from US data last week meets with no follow-on selling; likely to encourage a round of short covering next day or two. Look to re-short later; rate feels like it wants to rally off these lows. Aggressive traders can buy this dip for a return to resistance. Continued trade under the 1.5700 area pressures buying signals; “dead cat bounce” is likely today but if volume are there, need to hold a bit. Rate continues to track Cable and vice-versa. Stops above the 1.5820 area likely back out of range for today after the drop this week. Now that stops are cleared a rotation higher is coming.

Data due Tuesday: All times EASTERN (-5 GMT)

4:00am EUR Services PMI (r)
5:00am EUR Retail Sales m/m


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

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