Category — Dukascopy Forex Overview

The Euro Zone will experience refinancing problems in February, reported Ewald Nowotny, Governing Council member of the ECB. Refinancing eliminating deficit financing will reach about EUR1.3 trillion next year coupled with EUR1 trillion for refinancing of banking industry. It is crucial to work out short-and long-term measures to solve financial difficulties and further fine-tuning in the policies is necessary, he stressed.

In November US consumer price level was flat, mainly due to dropping energy costs, said the Labor Department on Friday. Core prices excluding energy and food costs added 0.2%. The real readings mostly match with analysts’ expectations. Inflation adjusted hourly salary declined 0.1%. Unadjusted Consumer prices rose 3.4% on yearly basis.

EU leaders may abandon UK derivative legislation after PM Cameron’s attempt to protect country’s financial sector almost ruined EU summit, said 4 officials familiar with matter. Analysts suggest that possible crumbling of UK’s derivatives could be a notice from EU officials that British veto alone cannot strengthen its financial system.

Switzerland’s economic expansion is likely to halt in 2012 as franc is appreciating and diminishing global demand harms exports, said KOF Economic Institute. Researchers expect economy to grow 0.2% in 2012 and 1.9% in 2013. Yesterday Swiss National Bank maintained the boundary at 1.20 francs per one euro to avoid deflation and support exporters.

Citigroup Inc. was forced to cease its financial product retail sales in Japan for 30 days for not providing adequate disclosure about risks in one of the retail units. The suspension will come in force since January 10, according to FSA. Citigroup Inc. also needs to submit plan of business enhancement till January.

Daily maximum: 1.3084
Daily minimum: 1.3004
The daily forecast mean at 1.3009 has been touched, though the pair recovered its intraday losses after Mario Draghi, the ECB chairman, stated the euro zone is on the right track.
Daily Resistance: 1.3057; 1.3099; 1.31500.
Daily Support: 1.2963; 1.2913; 1.2871.
Daily Bias: Strongly bearish.

Daily maximum: 101.79
Daily minimum: 101.35
The single European currency is trading within 101.-102 price range on further uncertainty with EZ, though level 101.32 – the daily forecast consensus – was not tested today after the Euro pared intraday losses on the ECB chief statement.
Daily Resistance: 101.60; 101.89; 102.17.
Daily Support: 101.03; 100.75; 100.46.
Daily Bias: Bearish.

Daily maximum: 1.5557
Daily minimum: 1.5494
The British pound continued trading in a flat trend today on uncertainty over the UK economy and the prospects of the Eurozone, causing the market mean at 1.5496 to breach.
Daily Resistance: 1.5548; 1.5587; 1.5644.
Daily Support: 1.5452; 1.5395; 1.5356.
Daily Bias: Strongly bearish.

Daily maximum: 77.96
Daily minimum: 77.77
The American dollar inched today as investors were selling yens against USD after the US economy posted 0.2 Core CPI versus expected 0.1%. As a result, the daily target at 77.80 has been crossed.
Daily Resistance: 78.08; 78.32; 78.49.
Daily Support: 77.67; 77.50; 77.26.
Daily Bias: Neutral.

Daily maximum: 0.9414
Daily minimum: 0.9352
USD/CHF is showing a bullish bias after the US economy posted 0.2% Core CPI, indicating the US economy is gaining strength, though the daily target at 0.9432 has not been reached yet.
Daily Resistance: 0.9502; 0.9604; 0.9661.
Daily Support: 0.9343; 0.9286; 0.9184.
Daily Bias: Bullish.

Ties That Bound Europe Now Fraying
A common currency drove investors to Europe’s outer reaches, then scared them away.

Consumer Prices in U.S. Stagnate as Gasoline Costs Decrease
The cost of living in the U.S. stagnated in November as gasoline prices dropped, supporting the Federal Reserve’s view that inflation remains in check.

Yuan Jumps on Signs of Central Bank Intervention
The Yuan jumped to a record high on Friday against the dollar on suspected intervention orchestrated by the central bank, its most explicit action in three months to deter speculators from betting on a fall in the currency.

“Spain is considered a far more attractive credit than Italy”
- Michael Leister, rate strategist at WestLB
Spain sold €6.03 billion of debt on Thursday, more than initially expected and at a lower rate compared to Italy, easing concerns the country may lose access to financial markets next year.

“We’re seeing improvement in labor-market conditions”
- Julia Coronado, chief economist at BNP Paribas
The number of Americans claiming for unemployment benefits tumbled to 366 thousand last week from 385 thousand the week before, said the Department of Labor on Thursday. Economists expected the reading to increase to 389 thousand.

“All in all, the picture for U.K. household consumption is not very encouraging”
- Annalisa Piazza, an economist at Newedge Group in London
U.K. month on month retail sales dropped in November, said the Office for National Statistics on Thursday. Sales fell 0.4 per cent the previous month after increasing 0.6 per cent in October. Economists expected the reading to decline 0.3 per cent.

CHF
“The improvement in sentiment in the industry is to be seen as positive”
- Viola Stork, an analyst at Helaba Landesbank Hessen-Thueringen
Swiss stocks edged higher on Thursday after better-than-expected reports on U.S. initial jobless claims and manuf acturing.

JPY
“The data are the latest showcase of Japanese companies getting hammered by the strong yen and weakening overseas economic growth”
- Norio Miyagawa, a senior economist at Mizuho Research and Consulting
Japan’s largest manufacturers became less optimistic on the outlook of the country’s economy amid crisis in Europe and after foreign investment in China slid for the first time since 2009.

“I do not anticipate further efforts by the Fed to address the potential spillover effects of Europe on the US, we will continue to monitor the situation closely”
- William C. Dudley (based on Bloomberg)
Currency pair’s bearish movement seems to be decelerating while approaching 1.2860. Test of this support might result in a near-term rally, although the longer-term study suggests continuation of a downtrend, down to 1.2089.

“S&P’s negative credit watch continues to hang over the euro zone bond market and negotiations on the Greek PSI are far from reaching a positive conclusion”
- BNP Paribas (based on CNBC)
While being capped by resistances at 102.49, 103.53 and 104.76 EUR/JPY is heading toward 100.77. In case the latter level does not hold the bearish pressure, current dip might extend down to 100.00. The initial support, however, is presently at 101.10.

“The weaker export performance reflects ongoing instability in the euro area, our [UK] biggest export market”
- CBI (based on WSJ)
Since a support located at 1.5415 has managed to repel GBP/USD’s attack, the pair is likely to recover for now. To maintain its upward direction the price will have to overcome resistance at 1.5746. Dips are not expected to wander far below 1.5415.

“It looks like we [US] have just hit a clear patch on the road to recovery, where things are going to speed up a little bit”
- Wells Fargo Securities (based on Reuters)
While being supported by a number of closely situated lines, at 77.29, 77.26/12 and 76.22, the currency pair is unlikely to show any weakness for the time being. It is anticipated to focus on resistances instead. The immediate one is at 78.27/29, while subsequent levels may be found at 78.18, 78.66 and 79.10.

“Even at the current rate, the Swiss franc is still high and should continue to weaken over time”
- Philipp Hildebrand (based on Bloomberg)
USD/CHF has rebounded from 0.9550 and now is likely to contract down to 0.9280 which should be able to reignite bullish momentum, while additional support will be provided by 0.9176. The long-term goal lies at 0.9776/84, ahead of 0.9950.

Monti Faces Confidence Vote to Approve Emergency Budget
Prime Minister Mario Monti will face a confidence vote in Parliament to speed passage of a 30 billion-euro ($39 billion) emergency budget plan aimed at spurring growth and convincing investors he can cut Europe’s second-biggest debt.

Deal reached to avert government shutdown
Lawmakers on Thursday reached a tentative deal to fund an array of government agencies through September 30 and avert shutting down many of Washington’s operations starting this weekend.

China likely to set 10% export-growth goal: report
China is likely to set its export growth target at 10% for next year, the 21st Century Business Herald reported Friday, citing a person familiar with the matter.