Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | Nov 18 08 08:12 GMT |

Good morning from Hamburg. The weather is getting cooler as well as the markets. Yesterday the equity market realised massive losses. US Treasury Secretary Paulson says solid progress has been made in stabilizing the US financial system but it will take considerable time to restore it to health. Markets review The RBA decided to cut interest rates aggressively this month. The step becomes necessary after an unexpected fall in household wealth could drag the economy down more percent points than expected just a few weeks earlier. The minutes show the board was increasingly worried about consumer and business sentiment and felt a larger-than-expected cut of 75 bps to 5.25 %. Investors await that the RBA will cut rates by a further 100 bps to 4.25 % in December. The GBP is 1.8 % advance against the USD. Yesterday the currency experienced the biggest one day gain since Oct 29th. The EUR/GBP even realized with 1.7 % its biggest decline since 8 years, while the GBP/USD three month implied options volatility reached an all time high of 24 %. The USD dipped versus the EUR and JPY on Monday as weak US manufacturing data deepened worries about the global economy. Also many investors were disappointed that world leaders ended the weekend meeting with only few concrete proposals for dealing with global recession. The JPY remains underpinned by risk aversion as Japanese stocks are expected to face selling pressure following a fall in market. Weaknesses in stocks may prompt further unwinding of carry trades financed by the low yielding JPY. The JPY has gained about 14 % versus the USD, more than 30 % against the EUR and more than 50 % against the AUD in the last three months Technical analysis AUD/USD Since the beginning of October, the AUD/USD seems to stop its downward trend. The currency pair trades in a side range between 0.635 and 0.7 with a exception of the breakout at the end of October. If the market doesn't cross the 0.635 support line we could expect a return on the way toward the 0.7 resistance level USD/CHF The CHF made high losses in October and traded in a clear range in November against the USD. But in the last three days there seems to be a resistance level at 1.2. This might be a sign for a turn around in the trend, but if the currency pair breaks through this, we can expect further gains Pivot Points - Daily FX Support and Resistance Levels Daily Calendar & Key FX Events Varengold Bank IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.