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Main » 2012 » November » 14 » FreshForex Forex forecast scenario currency market on 11/14/2012: The euro fell to a new two-month low 1.2661
FreshForex Forex forecast scenario currency market on 11/14/2012: The euro fell to a new two-month low 1.2661

"I expect a slow decline in the euro to 1.25 dollars and 1.24 dollars against the fact that market participants are awaiting a decision on Greece - said Franulovich. - Now the ball on the three". 

In addition to the situation in Europe, investors are paying close attention to the confrontation between Republicans and Democrats in the U.S. Congress because of "fiscal cliff." If prior to January 1, Congress can not come to agreement on reducing the budget deficit by 1.2 trillion dollars over the next 10 years, it will work automatically reduce spending and raise taxes, which is likely to face the U.S. economy into recession. 

"Until there is some visible progress in the negotiations on the 'budget precipice', investors will not want to take positions in large volumes," - commented Brian Kim, a currency strategist at RBS. 

The dollar / yen fell to 79.39 against 79.48 late Monday. 

The Australian dollar was trading volatility against the U.S. dollar and ended the session at 1.0436 against 1.0429. AUD / USD fell below 01.04 earlier in the session after data pointed to a sharp drop in business confidence in Australia in October compared with September. 

On Wednesday, the Federal Reserve System (FRS) the USA to publish the minutes of October meeting, which was the first meeting of the central bank since he announced the third round of quantitative easing in September. 

The Dollar Index The Wall Street Journal, which tracks the value of American currency against a basket of currencies, was 70,694 against 70,689. 

Event, to be brought to the attention of today:

13:30 MSK. United Kingdom: Unemployment rate according to ILO in September (previous value - 7.9%, forecast - 7.9%)

14:00 MSK. Eurozone: Industrial production in September (previous value - +0.6% m / m, the forecast - 1.9% m / m)

14:30 MSK. United Kingdom: Report of the Bank of England's inflation

17:30 MSK. USA: Basic producer price index for October (previous value - 0.0% m / m, - 0.1% m / m)

23:00 MSK. U.S.: Fed Minutes

Euro traded near a two-month low before the data on industrial production

Industrial production fell in the currency bloc, adding evidence that the region's debt crisis hampers growth.

Demand for the dollar was limited before the Federal Reserve will publish the minutes of its October meeting, which can show whether the central bank intends to add to the Treasuries purchases of mortgage bonds. U.S. President Barack Obama will meet with congressional leaders of both Democrats and Republicans this week to discuss ways to prevent the so-called financial precipice.

"The euro is likely to be under pressure until the end of the week," said Peter Dragicevich, currency economist in Sydney at Commonwealth Bank of Australia, the country's largest lender. "The economic data in Europe have continued to deteriorate. Economic prospects are still quite weak."

Euro traded at $ 1.2709 at 9:51 am in Tokyo from $ 1.2704 at the close yesterday, and touched $ 1.2662, the weakest level since Sept. 7. common currency took revenge - 101.05 yen from 100.84, after declining for five days. The yen fell 0.2 percent to 79.51.

14-day relative strength index for the euro against the dollar was 34.2, about 30 level that some traders see as a sign that the price of an asset can change course. A similar scale for the single currency against the yen - 40.

Industrial production

The industrial output of 17 members of the euro area declined by 2 percent in September from August, when it increased by 0.6 percent, according to the median forecast of economists, data out today.

Euro zone finance ministers will meet again next week on "emergency meeting" to discuss the financing needs of Greece, said in a statement read out by the Prime Minister of Luxembourg Jean-Claude Juncker after a meeting in Brussels this week. Managing Director of the International Monetary Fund Christine Lagarde said after a meeting of creditors of Greece, "had a different opinion."

Finance ministers postponed until November 20 a decision on how to meet the additional requirements in Greece 32.6 billion euros ($ 41 billion). Lagarde does not agree with the decision of the officials to postpone the decision to reduce Greece's debt to 120 percent of gross domestic product for two years, until 2022.

"Putting aside the financial target in Greece for two years, they create a funding hole" - said Dragicevich of CBA."This is money that they need to get somewhere. As soon as the focus once again, we believe that the euro will be under some pressure."

The euro has lost 6.3 percent over the past 12 months, the worst performance among 10 major currencies tracked by the correlation-weighted index. The yen fell 2.2 percent, while the dollar rose 1.3 percent.

In the U.S., Obama is scheduled to meet with Republican and Democratic leaders on November 16 for talks on a deal to reduce budget deficits and to prevent $ 607 billion in automatic spending cuts and tax increases that will take effect on January 1. The Congressional Budget Office predicts that the financial precipice push the economy into recession next year.

U.S. central bank can not act as a substitute for the Congress, the Federal Reserve Bank of Dallas President Richard Fisher in an interview with CNBC late yesterday. Economic growth in the U.S. is "positive, not anemic," said Fisher, who does not vote on policy this year.

Euro / dollar 

FOREX - Euro traded near 2-month low

Euro licks wounds near a two-month low on Wednesday, hit by uncertainty in Greece and weak German business confidence data, which highlighted the growing alarm in the strong European economy.

Euro traded at $ 1.2702, down on weak data German ZEW sentiment survey to $ 1.2661 on Tuesday, its lowest level in more than two months.

However, hopes that international creditors are close to paying by affinity helped the single currency found support.

German newspaper reported that Germany wants Greece to provide assistance to a single payment by more than 44 billion euros, and German Finance Minister Wolfgang Schaeuble, later said that the idea is being considered.

However, this can not happen until its creditors reached a broad agreement and the International Monetary Fund and euro zone policymakers are differences over the long-term program of Greek debt and the adoption of further losses on Greek debt.

"At the moment, the focus of the market - whether they decide to deal on Greece next week," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.

Another meeting of Eurogroup to take place on November 20, but officials said that could take a week after the approval of the new deal.

The dollar, whose huge liquidity makes it a safe haven asset for investors, has also been supported by concerns about the U.S. financial cliff - the impending budget cuts and tax increases that threaten the U.S. economy sliding into recession, if Congress can not agree on a deal by year's end .

The dollar was trapped against the yen in the well-worn range, trading at 79.48 yen.

Technically, EUR / USD  EUR / USD is likely to trade in a narrow range against the fact that investors expect greater clarity about the program of aid to Greece. The pair is expected to trade in the range of 1.2680-1.2740.It is unlikely to stray too far from these levels, unless there are no major news. Support for the pair is at 1.2660, and resistance - at 1.2730. Although there are some talk of extending the period of repayment for Greece, the fact that the debt-laden country avoid default in the short term by attracting 4.063 billion euros - that's good news for the market. 

Euro has a strong technical support near the bottom of the Ichimoku cloud at $ 1.2652.

But a breakthrough could serve as the main signal bears, which can lead to testing 50 percent retracement rally in July-September at $ 1.2608.


GBP / USD in anticipation of weak data from the labor market. 

For GBP / USD will have saturated the news day: the labor market and the quarterly inflation report the Bank of England. Central bank often uses the latter to outline their plans for the monetary policy. The more pessimistic forecasts are, the more pressure will experience GBP / USD. 

Technically, GBP / USD 

S3 - 1.5787

S2 - 1.5822

S1 - 1.5845

R1 - 1.5903

R2 - 1.5938

R3 - 1.5961

The immediate goal for reducing to 1.5850 with further progress in the area of ​​1.58.

Dollar / yen 

Japanese lawmakers agree to avoid "financial cliff"

The ruling and opposition parties in Japan agreed on Tuesday to quickly adopt a bill about the lack of funding to keep the country from falling their version of "financial cliff" since the election of the Prime Minister in the next month.

The bill addresses the need to borrow $ 480 billion and to fund approximately 40 percent of the budget in the current fiscal year. Without it, the government may not have enough money by the end of this month and possibly stop the auction of debt in the next month, as the economy is on the brink of recession. Until recently, the opposition used its control of the upper house to account suspension in an attempt to pressure on Prime Minister Yoshihiko Noda. Noda pledged in August that the elections "soon" in order to win support for an unpopular sales tax plan. However, the head of the opposition Liberal Democratic Party (LDP) and former ally New Komeito coalition changed tactics and are ready to pass a bill deficit as a condition for calling elections. "I am delighted that we have demonstrated the wisdom of parliament, overcoming differences between the ruling and opposition parties", - told reporters Goshi Hosono, the chief policy of the ruling Democratic Party of Japan (DPJ). "We were able to show people, even at the last minute that the Parliament works," he said, after a deal with two colleagues from the opposition parties. The bill is expected to pass in the House on Thursday and is likely to be passed in the upper house with the support of the two opposition parties in the current session of Parliament, which ends on November 30.

In the achievement of the transaction, the Democrats made concessions to the opposition, promise to review the costs intended for the current fiscal year, and to curb the deficit issue bonds. The three parties agreed to allow the issuance of deficit bonds in the fiscal year that begins in April 2015, which means the passage of bills of deficit bonds will be secured without account being taken as a political hostage in the next few years.

Technically, USD / JPY 

Support and Resistance

S3: 78.74 

S2: 78.97 

S1: 79.17

R1: 79.60 

R2: 79.83 

R3: 80.03

 Pair may trade in a range 79.00-79.80, and its growth is likely to be difficult amid risk aversion due to the uncertainty around the deferral to help Greece and the debate in the U.S. Congress over the "budget cliff", unless there is a positive development developments with respect to these issues. later the focus will stream U.S. economic indicators, including data on retail sales in October, and the U.S. stock market. 




Vladislav Mityashin
Analyst «FreshForex»
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