GBP/USD: Under Downward Pressure

GBP/USD trades below $1.6000. Yesterday the pair slid below the 50-day MA and entered the daily Ichimoku Cloud. Cable remains under downward pressure as yesterday the BoE Chief Mervin King signaled the regulator isready to launch the new monetary easing.



“At this stage, it is difficult to know whether some of the recent more positive signs will persist,” King said in a speech in Cardiff, Wales. “Should those signs fade, the MPC does stand ready to inject more money into the economy.”

The Bank of England is in the final weeks of the 50 billion pound ($80 billion) round of QE it put in place in July. The MPC will announce its next policy decision on Nov. 8. The UK economy remains weak, while the inflation is low, so the regulator has enough reasons to extend the asset purchasing program.

Markets wait for the Thursday Q3 GDP release. Figures are expected to show the UK economy grew by 0.6% after three straight quarters of contraction.

We expect cable to gravitate towards $1.5900 (lower boundary of the Cloud, 50% Fib. retracement). Next support lies at $1.5820/05 (200- and 100-day MAs) and to $1.5750 (August 28 low). Resistance lies at $1.6000, $1.6178 (October 17 high), $1.6216 (October 5 high), $1.6271 (September 28 high) and $1.6300 (2012 maximum).

Posted By Low brokerage23:13

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GBP/USD: Under Downward Pressure

GBP/USD trades below $1.6000. Yesterday the pair slid below the 50-day MA and entered the daily Ichimoku Cloud. Cable remains under downward pressure as yesterday the BoE Chief Mervin King signaled the regulator isready to launch the new monetary easing.



“At this stage, it is difficult to know whether some of the recent more positive signs will persist,” King said in a speech in Cardiff, Wales. “Should those signs fade, the MPC does stand ready to inject more money into the economy.”

The Bank of England is in the final weeks of the 50 billion pound ($80 billion) round of QE it put in place in July. The MPC will announce its next policy decision on Nov. 8. The UK economy remains weak, while the inflation is low, so the regulator has enough reasons to extend the asset purchasing program.

Markets wait for the Thursday Q3 GDP release. Figures are expected to show the UK economy grew by 0.6% after three straight quarters of contraction.

We expect cable to gravitate towards $1.5900 (lower boundary of the Cloud, 50% Fib. retracement). Next support lies at $1.5820/05 (200- and 100-day MAs) and to $1.5750 (August 28 low). Resistance lies at $1.6000, $1.6178 (October 17 high), $1.6216 (October 5 high), $1.6271 (September 28 high) and $1.6300 (2012 maximum).

Posted By Low brokerage23:13

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EUR/USD: Outlook Negative

After having spent almost 2 month in the $1.3175/2800 range, EUR/USDmade a break-out to the downside last week.

On fundamentals, the 2 most important problems affecting the euro for now – Spanish reluctance to ask for financial help and Greece’s financing – remain unresolved. The market got tired of waiting and the bears finally succeeded in swinging the market in their favor. 

There are concerns about the US fiscal cliff. The common expectations are that US will be able to avoid the disaster, though probably at the last moment and not for long. Yet, this seems enough for now to make USD-lovers more or less comfortable – USD longs increased in the week to November 6. Of course, we’ll see trouble coming out of the US, but later. 

Greek issues are certainly more urgent, this week at least. That nation’s creditors haven’t reached any solutions yet. German Finance Minister Wolfgang Schaeuble said on Sunday that the Troika of international lenders was unlikely to deliver its full report in time for Monday's meeting. 

On Friday, a Greek finance ministry official said that the country will roll over 5 billion euro of debt, maturing on November 16 because of a likely delay in getting the next tranche of its international bailout. The euro zone’s Q3 GDP release on Thursday may increase the gloom.

If EUR/USD slides below the 2-month low of $1.2689 hit on Friday, it will become vulnerable for a decline to $1.2635 (100-day MA) and $1.2610 (50% retracement of the advance from July minimum to September maximum). On H4 we see bearish convergence on MACD – there’s scope for some correction, though not much. 

Resistance lies at $1.2740 (38.2% retracement), $1.2800/18 (200-day MA). Analysts at TD Securities and BBH give bearish targets of $1.24 and $1.2610/2475 respectively.

Posted By Low brokerage22:44

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EUR/USD: Outlook Negative

After having spent almost 2 month in the $1.3175/2800 range, EUR/USDmade a break-out to the downside last week.

On fundamentals, the 2 most important problems affecting the euro for now – Spanish reluctance to ask for financial help and Greece’s financing – remain unresolved. The market got tired of waiting and the bears finally succeeded in swinging the market in their favor. 

There are concerns about the US fiscal cliff. The common expectations are that US will be able to avoid the disaster, though probably at the last moment and not for long. Yet, this seems enough for now to make USD-lovers more or less comfortable – USD longs increased in the week to November 6. Of course, we’ll see trouble coming out of the US, but later. 

Greek issues are certainly more urgent, this week at least. That nation’s creditors haven’t reached any solutions yet. German Finance Minister Wolfgang Schaeuble said on Sunday that the Troika of international lenders was unlikely to deliver its full report in time for Monday's meeting. 

On Friday, a Greek finance ministry official said that the country will roll over 5 billion euro of debt, maturing on November 16 because of a likely delay in getting the next tranche of its international bailout. The euro zone’s Q3 GDP release on Thursday may increase the gloom.

If EUR/USD slides below the 2-month low of $1.2689 hit on Friday, it will become vulnerable for a decline to $1.2635 (100-day MA) and $1.2610 (50% retracement of the advance from July minimum to September maximum). On H4 we see bearish convergence on MACD – there’s scope for some correction, though not much. 

Resistance lies at $1.2740 (38.2% retracement), $1.2800/18 (200-day MA). Analysts at TD Securities and BBH give bearish targets of $1.24 and $1.2610/2475 respectively.

Posted By Low brokerage22:44

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Breakout Emerging In US Silver, India Silver Futures

Silver prices have stayed range bound for some time although QE3 helped push prices for Comex December silver to $35 levels in September, while India silver prices climbed August-September on weakness in rupee value.

For most of 2012, Silver did not find much favour with investors and latest US CFTC Commitment of Traders (COT) data (for week ended October 30) shows net long positions held by managed funds have fallen by 914 to 34328 while short positions have risen by 1592 to 5218. The market seems to remain in a bearish grip although Comex December charts (at bottom of the article) show an indication of breakout happening at $31.5/Oz levels which could push prices higher to $33-34 levels thanks to Obama effect. But chart breakout signals are not strong and we may have to wait a few more days for a clear picture to emerge.

On the positive side, recent update by ETF Securities Ltd shows assets in silver exchange traded funds witnessed the second largest increase after gold in Q3, 2012 but we have to factor in the Q3 effect into this. Silver is more volatile than gold and allegations of price manipulation is much higher in the white metal than other precious metals.

Coming to the Indian scenario, a few factors are hampering silver’s upward movement- One is the government decision to hike import duty to 6%, weak rupee and South West Monsoon (June to September) that was not so rainy enough to help rural demand for silver to climb up. India imports around 2500-3000 tons of silver annually but this year imports may fall due to the factors mentioned above.

In MCX Silver December Charts (see below), the descending triangle is much sharper than Comex Silver December futures but is exhibiting chances of a similar breakout emerging at Indian Rupee (INR) 58,500 per kg levels but again the signals aren’t that strong. Diwali effect may help create a strong breakout as November is traditionally a good month for precious metals. But again, investors need to keep a close watch to establish the possibility of a bullish trend.

Silver behaves a bit differently from Gold as it doubles up as a major industrial commodity also along with platinum and palladium. On the industrial front, things aren't so rosy due to eurozone debt crisis, slowdown in emerging markets and strength of US dollar. 

Posted By Low brokerage22:39

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Breakout Emerging In US Silver, India Silver Futures

Silver prices have stayed range bound for some time although QE3 helped push prices for Comex December silver to $35 levels in September, while India silver prices climbed August-September on weakness in rupee value.

For most of 2012, Silver did not find much favour with investors and latest US CFTC Commitment of Traders (COT) data (for week ended October 30) shows net long positions held by managed funds have fallen by 914 to 34328 while short positions have risen by 1592 to 5218. The market seems to remain in a bearish grip although Comex December charts (at bottom of the article) show an indication of breakout happening at $31.5/Oz levels which could push prices higher to $33-34 levels thanks to Obama effect. But chart breakout signals are not strong and we may have to wait a few more days for a clear picture to emerge.

On the positive side, recent update by ETF Securities Ltd shows assets in silver exchange traded funds witnessed the second largest increase after gold in Q3, 2012 but we have to factor in the Q3 effect into this. Silver is more volatile than gold and allegations of price manipulation is much higher in the white metal than other precious metals.

Coming to the Indian scenario, a few factors are hampering silver’s upward movement- One is the government decision to hike import duty to 6%, weak rupee and South West Monsoon (June to September) that was not so rainy enough to help rural demand for silver to climb up. India imports around 2500-3000 tons of silver annually but this year imports may fall due to the factors mentioned above.

In MCX Silver December Charts (see below), the descending triangle is much sharper than Comex Silver December futures but is exhibiting chances of a similar breakout emerging at Indian Rupee (INR) 58,500 per kg levels but again the signals aren’t that strong. Diwali effect may help create a strong breakout as November is traditionally a good month for precious metals. But again, investors need to keep a close watch to establish the possibility of a bullish trend.

Silver behaves a bit differently from Gold as it doubles up as a major industrial commodity also along with platinum and palladium. On the industrial front, things aren't so rosy due to eurozone debt crisis, slowdown in emerging markets and strength of US dollar. 

Posted By Low brokerage22:39

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Posted By Low brokerage04:16

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