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Main » 2012 » November » 8 » Forex forecast scenario for 08/11/2012: After selecting the stock market falls
Forex forecast scenario for 08/11/2012: After selecting the stock market falls

One-day loss in the Dow Jones industrial average: 3,8 percent.

The U.S. dollar rose to a two-month high against a basket of other major currencies on Wednesday amid a drop in prices on the U.S. stock market, which lost ground, after initially won a second term by President Barack Obama.

Concerns about Greece also put pressure on the euro.

In addition, trading in all markets reflected the concerns so-called "budget cliff" as the next major challenge to Washington. This combination of significant expenditure reductions and tax increases, which automatically come into force early next year if the White House and Congress can not come to a compromise.

The dollar index, which is an indicator of the value of the U.S. currency against a basket of six other major currencies, rose to 80,811 against 80,606 at the close of North American session on Tuesday.

The euro / dollar fell to 1.2761 against 1.2817 late on Tuesday.

U.S. stocks fell sharply, with the S & P 500 fell by 2%. trading on European markets ended lowering indices.

"This increases the risk that we will get an 'budget precipice', which will put downward pressure on the pair euro / dollar" in light of the fact that investors continue to shun riskier assets, said Jens Nordvig of Nomura Securities."We should take care about the noise, which will be raised" in the coming months, as messages can indicate some probability "grand bargain" on the measures of fiscal policy, which, according to Nomura Securities, will eventually fail, he adds .

The dollar initially weakened amid heightened expectations about the U.S. Federal Reserve will continue its program of monetary stimulus, which is considered a negative factor for the U.S. currency. A candidate for the presidency of the Republican Party, Mitt Romney, who lost to Obama on Tuesday sharply criticized the U.S. central bank.

"Obama's re-election means that the political activity in the U.S. and the Fed will continue to work as usual. But it also means considerable uncertainty surrounding the issue of" fiscal cliff, '"- says John Hardy, a currency strategist at Saxo Bank in London.

Obama won the presidential elections by narrow margins, while the House of Representatives has remained under the control of the Republican Party, and supporters of Obama's Democratic Party retained its majority in the U.S. Senate.

"How ironic that it will be worse than the threat from the 'budget precipice', the better is likely to be performance of the greenback, as it is so strongly associated with the tendency of global investors to the risk, and the risk of recession in the U.S. is likely to lead to the strengthening of the U.S. currency "against the flow of funds into safe-haven assets, says Hardy.

At night the Greek Parliament on Wednesday approved a package of austerity measures (153 votes - "for", 128 - "no"). These steps are considered necessary in order to guarantee the payment of the last tranche of aid to the country by international creditors.

On Thursday, the ECB is unlikely to announce new measures to mitigate credit risk in the region, and we can see a steady decline in the face of rising fundamental risks.

The dollar fell against the Japanese yen. Pair often follows trends in U.S. bond yields, which declined.

The dollar / yen was trading at 79.96 against 80.36.

British pound surrendered won earlier position and traded at 1.5981 dollars against 1.6004.

Australian dollar, frequently followed as an indicator of risk appetite, fell to 1.0408 U.S. dollar 1.0439 against the U.S. dollar.

Event, to be brought to the attention of today:

11:00 MSK. Eurozone: German exports in September (previous value - +2.4% m / m, the forecast - 1.5% m / m)

14:13 MSK. Eurozone: Eurogroup meeting

16:00 MSK. UK: key interest rate of the Bank of England (the previous value - 0.50%, the forecast - 0.50%)

16:45 MSK. Eurozone: ECB's key interest rate (the previous value - 0.75%, the forecast - 0.75%)

17:30 MSK. Eurozone: ECB press conference

17:30 MSK. U.S.: The number of initial claims for unemployment benefits (the previous value - 363 thousand, the forecast - 370 thousand)

The election results in the U.S. have had a positive, but short-term impact on the propensity to take risks, given that the market's attention quickly shifted to the impending U.S. "budget break" and the vulnerability of the situation in Europe. Today, the focus will be on interest rate decisions and purchases the assets of two leading central banks in Europe and reports on U.S. employment. Expected to continue to fall risk assets ...

Euro / dollar 

The euro fell to a two-month low on Wednesday after President Barack Obama's re-election to a second term.  Concerns about slowing growth in key euro zone countries and the forthcoming struggle for raising the debt ceiling in the U.S. led investors to transfer funds to the U.S. dollar, considered a safe-haven asset.

Given the uncertainty as to the outcome of the presidential election in the U.S. was eliminated, investors now face to face with what promises to be a tough battle for higher borrowing ceiling of the U.S. government. This could trigger tax hikes and spending cuts, if the Democrats and Republicans to reach a compromise by January 1.

The growth of certain currencies such as the euro, which occurred after Obama delivered a speech late Tuesday night, "was short on background that the eurozone crisis continues, and the U.S. still faces a fiscal cliff," said Jane Foley , strategist at Rabobank in London.

The euro / dollar fell to 1.2766, the lowest level since September 7, and reached an intraday low of 1.2736.

Threatening the U.S. "budget break" will continue to support the dollar, when will approach the deadline for negotiations on the debt, and the markets will consider the possibility that an agreement is not reached, analysts at Barclays Capital wrote in a note to investors.

In Europe, Germany's industrial production in September fell more than expected. This indicates that the economic slowdown that struck the weaker countries of the region, is now putting pressure on the most powerful members of the eurozone. This factor is likely to put pressure on the euro, says Hugo Lantsioni of Neuberger Berman.

Despite the promise of the ECB to support the euro, "the euro zone economic data worsened, and recent data confirm this," - said Lantsioni. "If you see a slowdown in the economy, such as Germany, it is difficult to buy euros," - he added.

Positive development for the euro / dollar was the fact that the Greek parliament passed austerity measures to secure further financial assistance. According to David Scutt, a currency trader Arab Bank, the result was "mainly considered by the market," and it is a relief. However Scutt added that concerns about Germany and the U.S. will continue to dominate. 

Greek parliament approved a multi-billion package of austerity measures on Thursday morning in an effort to obtain additional funds under the program of financial assistance. However, these measures are also threatening to deepen the severe recession in the country and destabilize the fragile three-party government coalition.

Minimum majority, which emphasized this fragility, the Greek parliament approved austerity measures. The package supported by 153 legislators, 128 voted against it, while 18 MPs abstained from voting.

Immediately after the vote, the conservative New Democracy party expelled one member for refusing to support the measure, while the Socialist Party PASOK expelled six. Lawmakers from the third party in the coalition - the Democratic Left - also did not support the package of measures.

These measures are part of an agreement between the Greek government and the troika of international lenders, and acceptance is an important step to getting the country much-needed funds in the amount of 31.5 billion euros (40.2 billion dollars), which was long delayed.

In the hours leading up to the vote in Greece seen violent clashes between police and protesters. Tens of thousands of people gathered in the square in front of parliament to express their opposition to the austerity measures, while inside the politicians discussed a bill that would lead to a strong reduction in salaries and pensions in the public sector and pave the way for the reduction of thousands of civil servants.

A package of austerity measures amounting to 13.5 billion euros is extremely important, but not the only step needed to secure funding for the cash-strapped government. Greek Parliament must also approve the budget approved by the trio in 2013 in a separate vote, which is scheduled for Sunday.

However, Greek lenders argue among themselves as to whether there should be written off an additional part of the country a huge debt to the rescue plan was successful, and how to cover the funding gap, if Athens will receive an additional two years to reach budget goals.

Technically, EUR / USD  - collapsed after the growth of stock markets after the re-election of Barack Obama for a second term, was followed by decline as investors realized that the newly elected president will solve the problem of the "fiscal cliff" with the Republican-controlled lower house of Congress . 

Support is at 1.2745. Below 1.2680 will to bear. Near term resistance is at lows on Oct. 26 at 1.2880. Stronger - at 1.2960.

Pair may trade in a range 1.2700-1.2840 on Thursday, with the focus of attention will be the ECB meeting and the subsequent press conference, its president Draghi. While the ECB is expected to leave monetary policy unchanged, the euro could come under pressure if Draghi will signal the likelihood of further easing in the backdrop of the recent deterioration of the eurozone economy. Until that is likely to be dominated by the fence.

Below 1.2745 events will develop a negative from a technical point of view, which will open the way to 1.2610.


Thursday: The main event of the day

At 12:00 GMT the market focus will shift to the decision by the Bank of England's discount rate and the asset purchase program. 

ECB decision at the discount rate will be released 12:45 GMT, 13:30 GMT and will be address by the President of the European Central Bank Mario Draghi. 

At 13:30 GMT, the U.S., there are data on the September trade balance and the number of applications for unemployment benefits for the week. 

Technically, GBP / USD 

S3  S2  S1  R1  R2  R3

1.5855  1.5904  1.5943  1.6030  1.6081  1.6120

Price is moving along the bottom of the 4 hour downlink periodically bouncing off him. In the area of ​​1.5960 sformirovlas strong support. Can be rolled back to the 1.6080-1.6100 area, before reaching the top of the channel. Immediate support remains around 1.5960/55 (yesterday's low and a minimum of 5 November). The following support is located at 1.5910 (low of October 23). 

Strong resistance at 1.6040 (38.2% Fibo of the decline from 1.6180 to 1.5960). 

Dollar / yen 

In BNPP remain short the dollar against the Japanese yen

Technically, USD / JPY  Deaver after forming on the daily chart has drawn daily candle is clearly in favor of the bears. May further decrease the pair 50 points lower than the current level to the support line, from most likely to rebound.

It seems that the upward movement of the pair has settled. Probably the pair will trade in a range of 79.50-80.40, while the focus will be data on the number of applications for unemployment benefits in the U.S., which will be released later. 





Vladislav Mityashin
Analyst «FreshForex»
Views: 1118 | Added by: mik | Tags: Forex forecast scenario for 08/11/2 | Rating: 0.0/0
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