| Market Overview | Written by ActionForex.com | Nov 18 08 06:46 GMT | | |
| The forex markets remain bounded in tight range today even though the greenback is mildly firmer on risk aversion. More noticeable movements are found in GBP/USD's recovery as well as USD/CHF's strength. Though, both are cross driven as sterling continues to recover after hitting record low of 0.8660 against Euro last week. Swissy also continues to retreat in EUR/CHF and GBP/CHF crosses after both hit record low earlier this quarter. Note that since Sterling's recovery is corrective in nature, recent down trend is still expected in respective pairs. Swissy, only other hand, will likely remain the weaker one among European majors until it's pullback in crosses completes. Elsewhere, crude oil is set to retest 55 level again while gold remains directionless in tight range. Main focus in the European session will be consumer inflation data from UK. CPI is expected to moderate from 5.2% peak in Sep to 4.8% yoy in Oct. Core CPI is expected to be unchanged at 2.2%. RPI is expected to slow from 5.0% to 4.6% while RPI-X is expected to slow from 5.5% to 5.2%. BoE has noted that inflation risk has 'shifted decisively to the downside' and justified the much larger than expected 150bps cut earlier this month. Today's data might mark the turn of trend in inflation that support BoE's cut. Also, any sign of steeper than expected fall in inflation will give room to BoE for carrying on the steep path of policy easing. Other data from Europe include Swiss retail sales. US Treasury Paulson said overnight that financial markets distress will remain for "a number of months" even though fears of bank collapse subside. He also said that he's not looking to start new lending program unless it's absolutely necessary. The reserves, which are in excess of $400b, will be preserved for Obama administration. Markets focus will turn to TARP testimony of Fed Bernanke, Treasury Paulson and FDIC Bair. data from US is expected to show steeper moderation in PPI by -1.8% mom in Cot, brining yoy rate down from 8.7% to 6.2%. Though, core PPI is expected to be unchanged at 4.00% yoy. NAHB housing markets index is expected to be unchanged at 15 in Nov. USD/CHF Daily OutlookDaily Pivots: (S1) 1.1914; (P) 1.1959; (R1) 1.2029; More USD/CHF edges higher to 1.2020 today and remains firm. Intraday bias is still on the upside as long as 1.1885 minor support holds. Recent rally is expected to extend to next target of 100% projection of 1.0693 to 1.1746 from 1.1208 at 1.2261. On the downside,below 1.1885 will flip intraday bias to the downside and argue that a short term top is possibly in place with bearish divergence condition in 4 hours MACD. In the bigger picture, medium term rise from 0.9634 is still in progress and has taken out 1.1878 (61.8% retracement of 1.3283 to 0.9634 at 1.1889). Sustained trading above there will encourage further medium term rally to test 1.3283 high. On the downside, break of 1.1208 support is needed to indicate that such medium term rally has completed. Otherwise, medium term outlook will remain bullish even in case of deep pull back.
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Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:30 | USD | US Treaury Paulson Speaks | ||||
| 0:30 | AUD | RBA Monetary Policy Meeting Minutes | ||||
| 5:00 | Japan | Japan Leading indicators Sep | 89.4 | N/A | 89.2 | |
| 8:15 | Swiss | Swiss Retail sales M/M Sep | 0.00% | 0.00% | ||
| 9:30 | U.K. | U.K. CPI M/M Oct | 0.10% | 0.50% | ||
| 9:30 | U.K. | U.K. CPI Y/Y Oct | 4.80% | 5.20% | ||
| 9:30 | U.K. | U.K. CPI core Y/Y Oct | 2.20% | 2.20% | ||
| 9:30 | U.K. | U.K. RPI M/M Oct | 0.10% | 0.60% | ||
| 9:30 | U.K. | U.K. RPI Y/Y Oct | 4.60% | 5.00% | ||
| 9:30 | U.K. | U.K. RPI - X M/M Oct | N/A | 0.60% | ||
| 9:30 | U.K. | U.K. RPI - X Y/Y Oct | 5.20% | 5.50% | ||
| 13:30 | U.S. | U.S. PPI M/M Oct | -1.80% | -0.40% | ||
| 13:30 | U.S. | U.S. PPI Y/Y Oct | 6.20% | 8.70% | ||
| 13:30 | U.S. | U.S. PPI core M/M Oct | 0.10% | 0.40% | ||
| 13:30 | U.S. | U.S. PPI core Y/Y Oct | 4.00% | 4.00% | ||
| 14:00 | U.S. | U.S. Foreign treasury buys Sep | N/A | 34.82B | ||
| 14:00 | U.S. | U.S. Net LT TIC flows Sep | 17.5B | 14.0B | ||
| 14:30 | U.S. | Paulson & Bernanke testify | ||||
| 18:00 | U.S. | U.S. NAHB housing mrkt index Nov | 14 | 14 |
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