Daily FX Report

Good morning from wonderful Hamburg. There are a lot of hopes for a rate cut by the ECB on fears of bankrupts in the euro zone. Nevertheless we hope you had a successful week and wish you a nice weekend

Markets review

The EUR/USD climbs to a session peak of 1.3871 up nearly a full cent from a low of 1.3772. According to some traders there are some short-covering taking places before the weekend as well as some stop-loss orders. The previous day ECB president Jean-Claude Trichet comments that bolstered market expectations for ECB to cut rates in coming months may have prompted selling by short-term players at the time. The EUR/JPY has touched its 2-year low while the Nikkei hits a 3-year intra-day low on fears the global economy will slow further even if the U.S. Congress passes a $700 bln bank bailout plan. The EUR/JPY now at 145.39, still down slightly on the day but up from a low of 144.56.

According to Kansas City Fed President Hoenig, there is so much uncertainly in the U.S. economy right now and it is hard to offer a clear outlook. The GDP should show very modest increase in Q3, well under its potential growth rate, he says. The economy will need some time to rebound from the current difficulties, it should happen in Q2 or H2 of next year, he adds.

The Reserve bank of Australia adds 1.57 bln AUD in a repo operation to the banking system. That's effectively 375 mln AUD above the estimated daily need and keeps banks' cash cushion around a historically high of 9 bln AUD. Investors are widely expecting a rate cut of 50 bps next week

Technical analysis

USD/CAD

Since the beginning of May the USD/CAD has been trading in a bullish trend channel. After breaking the lower trend line in the middle of September, the market has shown a comeback to the channel and a go trough the 1.0734 resistance level. This might be a clear sign for upward movements

AUD/USD

Since the middle of July the AUD/USD has traded in a downward trend channel. After going trough the upper trend line and touching the 0.852 resistance level, the market recovered and trades now close to the channel. If the pair enters the trend channel we might be able to expect an ongoing bearish development

Pivot Points - Daily FX Support and Resistance Levels

Daily Calendar & Key FX Events

Varengold Bank

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