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Mid-Day Report: Dollar Weakens against Yen ahead of FOMC, EUR/CHF Jumped after SNBDollar is steady in range against European majors but is notably against the Japanese yen as traders are awaiting FOMC rate decision. We'd like to point out that even though some volatility could be seen in the greenback, the medium term trend is getting quite bearish recently. the question of whether European majors or commodity currencies would gain most against dollar would depend on stocks, which bluishness is a bit unconvincing in our view. Meanwhile, much volatility was seen in EUR/CHF due to SNB rate decision. SNB did basically nothing but pledged to continue the EUR/CHF floor at 1.2. EUR/CHF, though, soared after the announcement and is back above 1.21 level. As we pointed out before, the surge in EUR/CHF is seen as an important sign of dramatically reduced need for safe haven. And today's response affirmed this view. |
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| Featured Technical Report | |
EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.2831; (P) 1.2883 (R1) 1.2952; More..... With 4 hours MACD crossed below signal line, intraday bias in EUR/USD is turned neutral for the moment and some consolidations could be seen/ But downside of retreat should be contained by 1.2637 resistance turned support and bring another rise. Above 1.2936 will send EUR/USD through 1.3 psychological level to 38.2% retracement of 1.4939 to 1.2042 at 1.3149 next. |
| Special Report |
SNB Left Policy Rate Unchanged, Pledged To Keep EURCHF Floor At 1.20The September SNB statement was uninspiring as policymakers decided to leave the 3-month Libor target at 0% and the minimum exchange rate unchanged at CHF 1.20 per euro. The central bank continued to pledge that it is committed to buying foreign currency in unlimited quantities in order to keep EURCHF at the above-mentioned level. Concerning the inflation outlook, the SNB revised lower its growth and inflation forecasts. With inflation at negative territory this year before recovering to mildly positive territory in 2013, there is virtually no inflationary pressure in the country in the near to medium term. RBNZ Left OCT Unchanged, First Rate Hike DelayedThe final RBNZ statement from Governor Alan Bollard was largely unchanged from July’s. Yet, after looking into details, this one delivered a more dovish message than the previous one. The central bank left the OCR unchanged at 2.5% but pushed backward the timing of the first rate hike to end of 2013, from mid-2013. Global economic headwinds would eventually affect domestic developments while monetary easing from other major central banks has sent the NZD higher and higher. The market has now priced in a 50% of rate cut from current level next year. Fed to Announce QE3, Downgrade Economic Projections and Extend Low Rate PolicyWe expect the FOMC will make a number of adjustments in its monetary stance, economic assessment and statement language in the September meeting. Chairman Ben Bernanke's comments at the Jackson Hole Symposium raised hopes of further Fed easing. Disappointments in the August employment report due last Friday intensified speculations that the Fed would announce QE3 in as soon as the upcoming meeting. Our bottom-line is that the Fed would push backward the earliest data of the first rate hike, deliver a more dovish tone in the statement and lower economic projections. We tend to expect announcement of QE3 at this meeting. Otherwise, the Chairman should likely state that further quantitative easing would be implemented soon. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Session: Orders and Options WatchEUR: The single currency has continued to trade within relatively narrow range in part due to large option expires today (including 1.2900, 1.2875, 1.2850 and 1.2800 all NY cut), price just dropped below 1.2900 after the release of higher-than-expected U.S. data, however, bids from various parties are still seen from 1.2880 down to 1.2850 with light stops placed below 1.2845 and 1.2815 (large), fresh demand from Asian and Middle East names are expected at 1.2800 and further out at 1.2760-70 with bigger stops building up below 1.2750-55. On the upside, offers from SNB are reported at 1.2910-15 and also from 1.2930 up to 1.2950 (related to 1.2950 barrier), buy stop orders are tipped above 1.2950 and fresh offers should emerge from 1.2970 up to 1.2990 (related to next barrier at 1.3000). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea Update: GBP/USD – Buy at 1.6030As cable has maintained a firm undertone after surging to 1.6132 yesterday, suggesting recent upmove is still in progress and further gain to 1.6150 and possibly 1.6170-75 would be seen, however, near term overbought condition should limit upside and price should falter below 1.6200-10, risk from there is seen for another retreat later. Trade Idea: AUD/USD – Sell at 1.0540Although aussie has retreated after rising to 1.0507, reckon 1.0400 would limit downside and near term upside risk remains for the rise from 1.0165 (last week’s low) to extend gain to 1.0520-30, however, loss of near term momentum should prevent sharp move beyond previous resistance at 1.0546 and bring retreat later, below 1.0400 would suggest top is possibly formed and bring weakness to 1.0340-50 but reckon support at 1.0323 (this week’s low) would hold from here, bring another rise later. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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