Eur/usd

[Eric Alyea]

US Troops = Debt factor

How will more troops going to Afghanistan affect this. The decision to send more troops is stalled right now. Oil, gold, industry, and National debt, are you just factoring them in by the changes each week.?

 

[Nancy Cheah]

As of now, the gold is hovering at around USD 1, 065 nett and the oil is hovering at around USD 82 nett.

Thus, I see the pair should be at a low of 1.4975 nett and at a high of 1.513 nett within this calendar week.

Regards.

 

[Tiger21]

Citigroup issued a report saying that the euro will depreciate against the dollar after breaking through the key support level at $1.4845. It expects a move down to the 55 day moving average at $1.4578. Citi is advising clients to sell euro at $1.4815 level and should take off the trade if the euro rises above $1.4890.

 

[Tiger21]

Inflation in Germany could be back as it reports its estimate for CPI. Although throughout much of the euro zone retail sales are low, unemployment is high, home sales are weak and banks are reluctant to lend, Germany is experiencing better times. German unemployment has stabilized and corporate confidence is improving. With Germany being the largest economy in the euro zone, an increase in inflation there or expectations for an increase in inflation could be thoughts about an increase in rates to the forefront sooner rather than later.

 

[Tiger21]

Interesting facts from today’s GDP report:
Fully 2.2 percentage points of the third quarter's 3.5% growth figure related to vehicle purchases and residential construction, both juiced by government support. Federal spending added 0.6%. What’s going to happen when all the stimulus spending is taken away? It won’t be good for the US economy and in that case the dollar will rally. Starting to worry about the longevity of the long euro trade.

 

[Tiger21]

With interest rates so low investors have been using the dollar as a funding currency for riskier investments. The bearish case against the dollar is that interest rates are so low and that the US will increase interest rates far after other major countries. The bullish case for the dollar is that the US and global economy is still not out of the woods and will experience further pain and declines in GDP. It is starting to look as if the US equity rally has gone too far too fast – over 80% of S&P companies having reported have beaten earnings by the S&P is down from its highs during this period. With the decline in the S&P, foreign exchange investors are becoming increasingly worried about risk and are starting to move back into the dollar. I’ve taken off my long euro vs. the dollar trade. Waiting for further data points until I go long the dollar against the euro.

 

[Tiger21]

Cit is saying that the euro will climb relative to the dollar as it is finding support at its 55-day moving average. Recent declines in the euro stalled Nov. 3 at the 76.4% Fibonacci retracement of the rally from its Oct. 2 low of $1.4481 to its Oct 26 high of $1.5063. The euro may now gain to $1.5064 with a firm break of that level creating an opportunity up to $1.5285.

 

[Tiger21]

Morgan Stanley is recommending that investors buy a 3-month at the money call option at a strike of $1.4946 and simultaneously sell a call with a strike at $1.55. Clear evidence that MS expects continued weakness of the dollar.

 

[Tiger21]

Going through economic data points, the calendar for Tuesday and Wednesday data coming out of the US is light, but Thursday should be a busy day after New Zealand and Australia report retail sales and unemployment numbers late Wednesday.

 

[Tiger21]

Geithner said that a strong dollar is in the nation's best interest and that the government understands the importance it plays in the global economy. Regardless the dollar fell to a 15-month low vs many of its major pairs on dovish comments by Fed governors.