| ifcmarkets INTRADAY SNAPSHOT |
The pair is pulling back on its new support ahead of a rebound, the RSI is supported by a rising trend line. Suggest long positions above 1.4385 with targets at 1.4475 and 1.454. The downside penetration of 1.4375 will call for 1.4325 and 1.4275. |
| The RSI is supported by a rising trend line, the pair should post a rebound on its new support. Suggest long positions above 1.6335 with 1.641 and 1.645 as next targets. The downside breakout of 1.6325 will open the way to 1.6265 and 1.6235. |
| The pair stands below its resistance and remains under pressure. Suggest short positions below 77.15 with 76.5 and 76.3 as next targets. The upside penetration of 77.2 will call for a rebound towards 77.5 and 77.75. |
| The pair remains supported by a medium-term rising line and is challenging its resistance, the RSI is mixed to bullish. Suggest long positions above 1.039 with targets at 1.053 and 1.063 in extension. Below 1.039 look for further downside with 1.025 and 1.011 as targets. |
| To paraphrase the aphorism: "Market intervention will not a global recession stop." That seems to be the only message coming through as policymakers around the world watch global growth slow but show little appetite for doing more than trying to stop financial markets from reacting as they should. Instead of addressing growth issues, with the aim of avoiding another recession, all they are trying to do is intervene. Of course, there is nothing new with market manipulation. China has been doing it for years. Japan has had to resort to it recently and many other Asian nations have also been selling their currencies against the dollar for many months. But, over the last few weeks as evidence of the global slowdown has increased and the international investment community has taken fright, the level of market intervention has intensified. Now, it is not only currencies that are coming under fire. So are bond and equity markets. In an effort to prevent the funding costs of the euro-zone peripheral debtors from reaching new record highs and pushing them into default, the European Central Bank has been forced to spend billion of euros buying their bonds. Not only does this essentially mean that the ECB has been forced to foray well into the area of fiscal policy, well beyond its monetary remit, but it suggests that the central bank is having to take action to save the euro in the absence of any policy progress on the part of politicians. The only proposal on the table at the moment, the creation of a euro-zone bond that would bring the 17 euro members closer to fiscal union, is hardly popular in Germany, where borrowers would have to pay more. Also, a euro-zone bond probably wouldn't reduce the threat of peripheral default on existing debt even if it was introduced. |
| The euro reversed some of its overnight gains against the dollar in European hours Tuesday as weaker-than-expected economic data spurred investors into cutting their exposure to the single currency ahead of a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel. The Swiss franc was steady against both the dollar and euro ahead of an announcement Wednesday from the Swiss National Bank, after the super-strong currency had recoiled sharply in previous sessions amid talks of an imminent peg. Data showed economic growth in Germany slowed to just 0.1% in the second quarter, missing economists' expectations and adding to worries about the euro zone's capacity to find a solution to its mounting debt problems. Subsequent euro zone-wide data showing the 17-member bloc grew by 0.2% in the same three-month period didn't help either. "The data confirm that the region's core economies are in no position to support the periphery, adding to the already significant risk of an eventual euro-zone break-up," Jennifer McKeown of Capital Economics said. All eyes are now on the Merkel-Sarkozy press conference at 1630 GMT, following a meeting where the two are expected to discuss the region's recent turmoil and closer fiscal integration. Sebastien Galy, currency strategist at Societe Generale, said expectations for the meeting aren't overdone and are already being scaled back. But one currency trader said the meeting--much like the SNB announcement--is "heavily skewed to disappointment." |
| The euro eased slightly against the dollar in Asia Tuesday and traders expect the single currency to fall further later in the global day as a meeting between French and German leaders is unlikely to produce any surprises and concerns about the European debt concerns could persist. French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet on Tuesday to discuss "euro-zone issues." Speculation that they may talk about euro-zone bonds boosted the euro overnight. "There's strong expectations for the meeting, but I think the euro will be sold" after the meeting fails to come up with something surprising, said Yuji Saito, foreign-exchange market director at Credit Agricole in Tokyo. "From a technical standpoint as well, the euro needs a lot of energy to break $1.4500," Saito added. At 0500 GMT, the euro was at $1.4428 from $1.4445 late Monday in New York, according to EBS via CQG. The dollar was unchanged at Y76.85, while the euro was at Y110.85 from Y111.00. The U.K. pound was at $1.6366 from $1.6391. The dollar was at CHF0.7816 from CHF0.7844. A senior member of Chancellor Angela Merkel's Christian Democrats said Monday introduction of euro-zone wide bonds wouldn't receive majority approval from German government lawmakers. "The meeting won't be able to sweep away concerns over peripheral countries in Europe," Osao Iizuka, head of FX trading at Sumitomo Trust and Banking Co. said. Iizuka added the euro's rough ride should continue for a while, with the single currency likely to move in a $1.4250 to $1.4600 range. |
| The euro soared against the Swiss franc and its other rivals Monday, as speculation about more aggressive measures from the Swiss National Bank to curb the franc's gains sent investors into the euro, helping it to gain across the board. Ongoing speculation that the SNB might introduce a floor level or a peg for euro-Swiss franc kept the classic safe-haven currency down against its rivals. The euro climbed more than 2.5% intraday against the Swiss franc to its highest levels since the beginning of the month. Against the dollar, the Swiss franc fell to its weakest levels since late July. Against the dollar, the euro rose more than 1%, holding above $1.44 in late New York trading, helped by speculation about the SNB's moves and a return to risk sentiment. According to a weekend report, a plan of action may be adopted as early as Wednesday, when a Swiss cabinet meeting is expected to decide on how best to support the Swiss National Bank's efforts to stabilize the franc. But many analysts say that pegging the franc to the euro would likely be a last resort for the SNB, and that the bank would likely inject further liquidity into the market first. "A peg is going to be difficult," said Aroop Chatterjee, chief foreign exchange quantitative strategist at Barclays Capital in New York. "The level at which you peg is tricky. If it is stronger than fundamentals imply, you're tightening monetary policy over and above what you need. If it is too weak, it can generate inflation. Given how open the Swiss economy is, if the peg was improperly set, it would lead to macro issues." The euro also advanced against its other main rivals, taking a cue from its gains against the Swiss franc. It was also encouraged by rising U.S. stocks and the European Central Bank's bout of bond buying last week. The ECB announced Monday that it settled EUR22 billion in bond purchases last week--the highest weekly settlement total since it began buying euro-zone government bonds on the secondary market in May 2010--signaling its commitment to contain the sovereign debt crisis. |
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