Friday November 19, 2010 - 14:21:15 GMT
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China Raises Reserve Requirement; Bernanke Hits Back at Critics
Demand for risky
assets fell overnight after China
raised its bank reserve requirements by 50 basis points. This action sent
worries throughout the market that perhaps the Chinese economy was heating up
too rapidly. The move is expected to keep growth under wraps.
Investors backed out
of risky stocks and commodities on the news, pressuring the Australian, New Zealand and
currencies were under pressure, Euro traders were optimistic that Ireland would
approve the bailout plan proposed by the European Union and International
In a speech before
European Central Bank members, Federal Reserve Chairman Bernanke defended the
Fedâ€™s current quantitative easing plan. In his speech, he said that he was â€śFully
aware of the important role that the dollar plays in the international monetary
and financial system, the [Federal Open Market Committee] believes that the
best way to continue to deliver the strong economic fundamentals that underpin
the value of the dollar, as well as to support the global recovery, is through
policies that lead to a resumption of robust growth in the context of price
stability in the United States,â€ť
Bernankeâ€™s comment had no lingering effect on the Dollar.
Basically, the Euro is up because of optimism over Ireland
and commodity currencies are down because of Chinaâ€™s tightening.
Technically, the EUR USD is poised to continue to move
higher. The first upside objective is 1.3842. Based on the main range of 1.4282
to 1.3446, ultimately this market is likely to test the retracement zone at
1.3864 to 1.3963.
The GBP USD is under pressure. Based on the short-term range
of 1.6299 to 1.5839, look for resistance in the retracement zone at 1.6069 to
1.6123. A downtrending Gann angle at 1.6079 provided resistance overnight.
Support could form inside a retracement zone at 1.5974 to
Bearish news from China is pressuring the AUD USD.
The short-term range is 1.0182 to .9724, making .9953 to 1.0007 key retracement
zone resistance. Additional resistance is at a downtrending Gann angle coming
in at .9982. A quick rally is likely to find selling pressure at a resistance
cluster at .9953 to .9982.
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