GFT Daily Market Commentary
September 29, 2008
Forex Market Commentary for September 30, 2008 by Cornelius Luca
GFT Daily Market Commentary
The appetite for risk imploded on Monday after the House of Representatives unexpectedly rejected the 0 billion TARP and the S&P’s 500 Index tumbled the most since the 1987 crash. The price of oil collapsed amid expected lower demand, but the gold rallied. The US financial catastrophe is spreading and European governments were forced to step in to rescue Belgium’s Fortis – and others. The Congress will revisit the TARP later this week and we can only hop they will improve and then ratify it. The failure to do so could have gigantic negative repercussions at a time when the money market is broken. The dollar exploded higher versus the European and the commodity currencies on Monday and sank versus the yen, as crosses are taking the upper hand. Today is the end of the month, end of quarter and Rosh Hashanah, so trading should take a breather. But volatility could increase. The dollar/Europe is biased higher.
Euro/dollar
The euro/dollar sank to as low as a two-week low and my model went short. The pair is attempting to recover briefly, but the short-term outlook remains bearish.
Immediate support is at 1.4305. The next level is 1.4255. Distant support is at 1.4095.
Initial resistance is seen at 1.4450. The next levels are 1.4495 and 1.4555. Above 1.4695, resistance remains at 1.4810.
Oscillators are mixed.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bearish
Dollar/yen
Dollar/yen collapsed to a three-week low and my model went short. It’s got to stay above 103.55 or risk forming a massive head-and-shoulders formation.
Good support is at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. The next level is 102.50.
Immediate resistance is at 104.50 by a 50-point pivot, which targets 104.00 and 105.00. The next level is 105.60 from a 50-point pivot that targets 105.10 and 106.10.
Oscillators are mixed.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar fell sharply on Monday but my model went short. The downside is favored in the short term, but only a break below 1.7905 confirms this.
Initial support is at 1.7960. Below 1.7905, support is at 1.7805. This is followed by 1.7710.
Initial resistance is at 1.8070. Good resistance follows at 1.8180. Above the strong level at 1.8245, further resistance is at 1.8375.
Oscillators are falling.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bearish
Dollar/Swiss franc
Dollar/Swiss franc rallied sharply but closed flat on Monday. M y model went long. The initial bias is bullish, but not for long.
Initial resistance still comes at 1.0973. The next level is 1.1055. This is followed by 1.1185 and 1.1279.
Immediate support remains at 1.0890. Below 1.0790, support is now pegged at 1.0698.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
U.S. Dollar Gains Strength in Currency Trading
September 29, 2008
Forex trading with the greenbackThe U.S. dollar is gaining strength in currency trading on the FX market today. With the euro dropping in forex trading, the greenback is moving higher.
Right now, there are bank worries in the eurozone, and even though there is some concern about the free market and the 0 billion bailout here in the U.S., the U.S. dollar is still advancing.
Apparently, the bad news in Europe is seen as just beginning, while the U.S. is perceived as on the road to recovery.
See Also
- More on Forex Trading with the Greenback
U.S. dollar in currency trading - U.S. Dollar in Currency Trading
Forex trading with world currencies
Euro Drops in Forex Trading on Bank Worries
September 29, 2008
Bailouts reach the eurozone as wellWhile Americans have been largely focused on the 0 billion bailout for Wall Street in the past few days, it may have escaped them that there are bailouts happening on the other side of the Atlantic as well.
Right now, bailouts are happening in the eurozone, and this is causing trouble for the euro in forex trading. The 15-nation currency is being affected on the FX market by efforts to avoid a collapse in Europe as well.
However, it is worth noting that many European banks are not as exposed to credit derivatives as the large U.S. investment banks, and that should limit some of the problems in the eurozone. CNN Money reports on bailouts in the eurozone:
Germany’s financial regulators and several banks stepped in Monday to throw a line of credit to Hypo Real Estate Holding AG in a multibillion euro move aimed at shielding Germany’s No. 2 commercial property lender from going under.
That came a day after Dutch-Belgian bank and insurance company Fortis NV was given a .4 billion lifeline to avert insolvency as part of a wider bailout plan agreed to by Belgium, the Netherlands and Luxembourg.
See Also
- Euro in Forex Trading
Currency trading on the FX market
South Korean Won Falls in Currency Trading
September 29, 2008
Asian currencies drop in FX tradingThe Korean won is falling in currency trading today. Thanks to the 0 billion bailout, the U.S. dollar is gaining strength in forex trading. As a result, many Asian currencies are struggling in FX trading.
Bloomberg reports on the South Korean won in currency trading:
See Also
- Asian Currencies in FX Trading
Forex trading with world currencies
Australian Dollar Drops in Currency Trading
September 29, 2008
Aussie down against the greenback in forex tradingThe Australian dollar is dropping in currency trading on the FX market, thanks to worries over the world economy. The Aussie is faltering against the greenback in forex trading, since the currency is vulnerable to changes in the global economic scene.
Even though the 0 billion bailout likely to pass Congress this week is supposed to loosen the credit markets, there are still indicators that the world economy is in trouble. Bloomberg reports on the connection between the Aussie in forex trading and the world economy:
See Also
- Aussie in Forex Trading
Currency trading on the FX market
London Session – September 29, 2008 8:26 AM
September 29, 2008
The USD extended gains in London trading as the outlook for financial markets across the pond worsened. This was exacerbated by the bailout of a major financial player by the governments of Belgium, Luxembourg and the Netherlands. Meanwhile, the UK stepped in to nationalize Britain’s biggest lender to landlords. These were ominous signs that the credit market mess threatens to inflict more damage on European financial systems than in the United States. As such, EUR and GBP were crushed. EUR/USD plunged about -150 pips to a close near 1.4350 while GBP/USD fell more than -250 pips into the 1.8010/15 zone. Full text »
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Forex Trading Forecast: U.K. Pound
September 29, 2008
Sterling drops in FX tradingThe forex trading forecast for the U.K. pound once again is looking to the downside. After showing a limited recovery last week, the sterling is dropping again in FX trading on the currency market.
This time, one of the drivers, reports MarketWatch, includes bank worries in Britain:
The developments were "a clear reminder that the problem continues to roll on and most certainly isn’t ring-fenced across the Atlantic," said Gary Thomson, head of sales trading at CMC Markets.
This development only furthers the forex trading forecast for U.K. pound drops in the coming weeks. With these bank worries on top of a dramatically slowing economy, it is little wonder that the sterling is in trouble in FX trading.
See Also
- Forex Trading with the U.K. Pound
FX trading on the currency market
Weekly Forex Market Commentary
September 29, 2008
With the US financial world topsy turvy and with its jewels up for sale at fire prices all eyes on Monday will be on the US Congress and its political games in ratifying the Treasury’s Troubled Asset Relief Program (TARP). This is not the time for games and details are very important. The money market is broken and on this milieu, currencies took a back seat to other asset classes. The dollar is lacking much direction, but given the illiquid trading conditions and the ratification of the TARP, its bias is up.
Asia Session – September 29, 2008 1:31 AM
September 29, 2008
As the 0 Billion Rescue Plan seemed to be a done deal, the US Dollar gained back some ground in the Asia session. While Congressional leaders and the President (who will speak about the plan at 11:35GMT), patted themselves on their backs for finally piecing together a plan that they are confidant will be approved by Congress this week the EUR/USD moved almost a handle on the news from 1.4563 to 1.4482 as the Dollar let out a sigh of relief. How long the Dollar will benefit is anyone’s guess, as US equity futures sank as the day progressed. The Rescue Plan may be voted on as early as Monday or as late as Wednesday…In Europe the crisis was felt as well, with three governments joining to bail out Fortis Bank and in the UK, mortgage lender Bradford & Bingley was a prime target for government nationalization as its retail branches were bought by a Spanish Bank. Full text »
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GFT Daily Market Commentary
September 28, 2008
Forex Market Commentary for September 29, 2008 by Cornelius Luca
GFT Daily Market Commentary
The dollar consolidated on Friday but should advance on Monday on news that the US Congress will ratify the Treasury’s Troubled Asset Relief Program (TARP). The dollar is lacking much direction, but given the illiquid trading conditions and the ratification of the TARP, its bias is up. The US economic agenda will open on Monday with the release of the personal income and spending reports for August.
Euro/dollar
The euro/dollar fell to a one-week low but remained in an inside range and my model remains long. The short term outlook is bearish.
Immediate support is at 1.4486. The next level is 1.4438. Below 1.4370, support is at 1.4255.
Initial resistance is seen at 1.4600. The next level is 1.4685. Above 1.4735, resistance is still seen at 1.4810.
Oscillators are mixed.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bearish
Dollar/yen
Dollar/yen is alternating up and down days. My model remains long, but the pair is in a triangle and the medium-term outlook remains mixed. It’s slightly bullish in the short term.
Immediate resistance is at 106.75 from another 50-point pivot, which targets 106.25 and 107.25. The next level is 107.95 from a 50-point pivot, which targets 107.45 and 108.45.
Good support is at 105.60 from a 50-point pivot that targets 105.10 and 106.10. This is followed at 104.50 by a 50-point pivot, which targets 104.00 and 105.00.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Mixed
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar fell early on Monday but my model remains long. The downside is favored in the short term.
My model remains long but the downside is favored first.
Initial support is at 1.8250. Below this level, strong support now comes at 1.8110. This is followed by 1.7917.
Initial resistance is at 1.8355. Good resistance follows at 1.8475 and 1.8515. Above the strong level at 1.8668, further resistance is at 1.8750.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish
Dollar/Swiss franc
Dollar/Swiss franc climbed to a one-week high, but remains stuck in an inside range and my model remains short. The initial bias is bullish.
Initial resistance now comes at 1.0973. The next level is 1.1055. This is followed by 1.1185 and 1.1279.
Immediate support is at 1.0890. Below 1.0790, support is now pegged at 1.0698.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
