Monday November 1, 2010 - 12:22:42 GMT
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FX Thoughts for the Day - www.fxthoughts.com
FX Thoughts for the day : 01-Nov10-2010 - 1220 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 @ 0.9879/81.. Heading back to the upper end of the range
S: 0.98/ 0.9740-50/0.9650
Manufacturing numbers have been in line with estimates. The range of 0.98-0.99 is back in play with offers drying up below 0.98 and bids becoming thinner above 0.99 handle. We advised limit buy in the pair, but have missed the price by a whisker. We would look to long the pair if USD-CHF breaks above 0.9930, when it can target levels above parity. Key support is at 0.98, break below this will flip the bias to bearish.
GBP-USD @ 1.6073/75... Book profit on longs
R: 1.6105/ 1.6150/1.64.
October manufacturing numbers showed improvement in UK economy. Though services sector PMI holds much more importance for UK than manufacturing, but right now any good news on economic front which helps to allay fear of QE2 from BOE, is cheered by the cable bulls. Cable made a run for 1.61 handle and has encountered selling. Euro face strong resistance around 1.40, if euro were to eclipse the resistance then we can see cable making a run for 1.6150. However,as euro has indeed sold off from the 1.4 handle today, we would recommend cable longs to take profit and wait in the sidelines. Market is happy to oscillate within a range till the Fed meet on Wednesday. Support is expected around 1.60 and then at 1.5950-60.
AUD-USD @ 0.9990/92... Chinese data propels Aussie higher
R: 0.9950/ 0.9980 / 1.0150.
S: 0.9800 / 0.9750 / 0.9650
Aussie stopped well short of its resistance cluster between 0.9950-80, made an intra-day high of 0.9915. Market seems reluctant to drive Aussie towards any breakout just ahead of RBA tomorrow morning. There is a 25% chance of a hike in rates by 25 bps by RBA. Though any suprise would encourage a breakout/breakdown move in Aussie but we believe only post US fed decision will the market be willing to sustainably wager on such an outcome. Support is expected around 0.98 handle.
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