Daily Report: Eurozone Data Dominates on Thanksgiving Holiday

Market Overview | Written by ActionForex.com | Nov 27 08 07:08 GMT |

It's a rather quiet pre-Thanksgiving Asian session. Major pairs and crosses in the forex markets are basically staying in tight range today. Dollar gives back some of yesterday's gain as Asian stocks are sent higher by China's rate cut. Main focus will be on Eurozone data but trading activities will likely be subdued. Germany will report employment data for November. Market expects unemployment rate to be unchanged at 7.5% while unemployment declined by -4k in November. The release of the latest unemployment figures comes against the backdrop of weakening outlook of Germany. However, unemployment is a lagging indicator which has not reflected recent slowdown in corporate activities and announcements of workforce reduction yet. Therefore, in coming months, we do not expect unemployment to decline much further. The Euro zone will report M3 money supply for October which is expected to slow from 8.6% yoy to 8.1% yoy in October. M3 is often used to predict future inflation. Slowing growth in M3 indicates lower inflation and this gives more room for ECB to cut interest rates. The Euro-zone will also release a series of November confidence indices which include business climate (-1.5 vs -1.34), economic sentiment (78.5 vs 80.4) and consumer confidence (-25 vs -24). All of them should have deteriorated from last month. BoJ minutes of the Oct meeting revealed that members are divided on monetary policy response to the global economic crisis. Four members voted for 20bps cut, three preferred 25bps cut while Mizuno voted for no change. Governor Shirakawa cast the deciding vote. New Zealand's recorded a trade deficit of NZ$942M in October, slightly lower than consensus of NZ$1000M. This is the second largest October deficit ever. Exports rose 13.8% yoy to NZ$4.78B and was supported by dairy, meat and logs. Imports were up 15.3% on year to NZ$4.8 billion, led by petroleum products while growth in consumption and capital goods eased. Also, passenger car imports fell to an eight-year low of NZ$221 million. Outlook for NZ's trade deficit remains uncertain as it's determined by the relative pace of exports and imports. Risk to exports come from weak economic outlook worldwide. While a weaker NZD may help, the extent is not known yet. At the same time, domestic recession should limit import demand further. USD/CHF Daily Outlook Daily Pivots: (S1) 1.1886; (P) 1.1981; (R1) 1.2130; More USD/CHF rebounded to as high as 1.2077 before retreating mildly. Fall from 1.2296 should have completed at 1.1828 with 4 hours MACD crossed above signal line. Intraday bias is flipped back to the upside for retesting 1.2296 high first. Sustained break will encourage rally to next target of 161.8% projection of 1.0693 to 1.1746 from 1.1208 at 1.2912. On the downside, however, below 1.1887 will argue that another fall could be seen before completing the correction from 1.2296. Though, in such case, we'd still expect downside to be contained by 1.1746 cluster support (50% retracement of 1.1208 to 1.2296 at 1.1752) and bring strong rebound. However, break of 1.1746 will be the first alert that a top is already formed after meeting 100% projection of 1.0693 to 1.1746 from 1.1208. Focus will then be back to 1.1208 support. In the bigger picture, medium term rise from 0.9634 is still in progress and should be targeting long term resistance zone of 38.2% retracement of 1.8305 to 0.9634 at 1.2946 and 1.3283 resistance (05 high). While some interim pull back might be seen, a break below 1.1208 is needed to indicate that a medium term top is formed. Otherwise, outlook will remain bullish.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
21:45	NZD	New Zealand Trade balance (nzd) Oct	-972M	-1000M	-1183M
21:45	NZD	New Zealand Imports Oct	4.78B	4.37B	4.35B
21:45	NZD	New Zealand Exports Oct	3.83B	3.42B	3.17B
23:50	JPY	BOJ minutes Oct
09:00	EUR	Germany Unemployment change Nov		-4.0K	-26.0K
09:00	EUR	Germany Unemployment rate Nov		7.50%	7.50%
09:00	EUR	Eurozone M3 Money Supply Y/Y Oct		8.10%	8.60%
10:00	EUR	Eurozone Business climate Nov		-1.5	-1.34
10:00	EUR	Eurozone Economic sentiment Nov		78.5	80.4
10:00	EUR	Eurozone Consumer Confidence Nov		-25	-24
		U.S. Market holiday