Friday October 29, 2010 - 12:16:50 GMT
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FX Thoughts for the Day - www.fxthoughts.com
FX Thoughts for the day : 29-Oct-2010 - 1214 GMT
EURO, JAP YEN and EURO-YEN
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Our comments on Dollar-Swiss, Sterling Pound and Australian Dollar are given below
USD/CHF @ 0.9886/89... Ranged
S: 0.98/ 0.9730-40/0.9650
The monthly gauge of Swiss leading economic indicators by the KOF research institute, which aims to predict the economy's direction about six months ahead, slumped to 2.17 from 2.21, a fourth monthly decline. Inspite of an intra-day recovery in euro and resilience in cable, swiss has underperformed the dollar. We believe swiss is encountering strong selling in the pairs viz., EUR-CHF and GBP-CHF and both the charts indicate further strength. Therefore, we could be in a scenario where inspite of dollar weakness, Dollar-swiss remains bid and drift higher towards its resistance around 0.9920. We believe probability of some more consolidation between 0.98-0.99 is possible before a rally above parity occurs. Trend reversal support is at 0.9730, break below shall shift focus to 0.95 handle.
GBP-USD @ 1.5951/57... Bullish
R: 1.5880-1.59/ 1.6020.
S: 1.5750/ 1.5720.
Housing prices are still soft underbelly of the UK economy. Mortage approvals and mortage lending data out of UK adds credence to the belief. As expected, cable is being bid on the euro-cable crosses as both chart related selling as well as fundamental repositioning is helping the pair.
We are holding Longs with a trailed stop at 1.5855. Cable is expected to target 1.6070-1.61 and support is offered around 1.5870-80. Trend becomes bearish below 1.58.
Long GBP 10K at 1.5813 SL 1.5855, raised from 1.5813, TP Open.
Once GDP-USD touches 1.6020 raise the stop from 1.5855 to 1.5905.
AUD-USD @ 0.9749/52...Resistance at 0.9800 holding
R: 0.9800-20 / 0.9850-70 / 0.9930
S: 0.9700 / 0.9664 / 0.9600
Aussie is oscillating between 0.9700 and 0.9800. With no significant movement seen on either side during the day, our view remains the same as mentioned in the Morning comments and it is given below.
The Resistance at 0.9800 is holding as of now. A strong break above 0.9800 might see further rise towards 0.9850. On the downside the 8-Week-MA (currently at 0.9664) is a very important Support level to watch for which is expected to hold. A dip towards the 8-Week-MA can be considered for taking long positions. However, we need to be very cautious as a strong break below 0.9650 would confirm the Double-Top on the daily chart.
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