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Forex Trading StrategiesJPY stronger overnight on report showing growing foreign appetite for Japanese assets. Key US Housing reports up today.
GBP decline may continue - UK Retail Sales up today.
MAJOR HEADLINES – PREVIOUS SESSION
• Australia Average Weekly Wages rose 1.3% in Q3 and 6.3% Year-on-year
• Japan MoF report shows increased foreign appetite for Japanese assets
• Rumors circulated of an emergency meeting of Chinese Premier Wen Jiabao with FX advisors ahead of Bush's visit to China Nov. 19-21.
JPY moved stronger overnight across the boards and USD/JPY fell toward 118.80 support and EUR/JPY fell below 139.00
THEMES TO WATCH – UPCOMING SESSION
Interesting developments in the market - as the USD/JPY overnight probably proved that the market is getting over-positioned on the JPY weakness theme. Still, those hoping for some kind of immediate development from the Bush trip may be disappointed, as it China may not want to give the world the impression that Bush "forced" them to move. But the powers that be in China have proven themselves unpredictable before - so all prediction on timing is futile. Something may be cooking on an "expansion of the band" or a "move to more flexibility" very soon.
EUR/USD is really starting to look ugly - sliding back persistently, but with no momentum. USD/JPY is also starting to lose momentum - should we look for a bout of USD weakness today? If so, USD/JPY lower may be the way to play it - or EUR/JPY short may be the choice if the focus is on the JPY rather than the USD.
US Housing Data will be the focus of the day from the US - as there has been a lot of chatter lately about a weakening housing market - though these two numbers have yet to show any signs of weakness. Also up are Industrial Production / Capacity Utilization and the Philadelphia Fed later in the session.
GBP was absolutely hammered yesterday, and this may be the beginning of a new uptrend - we would look to sell any strength in GBP before or after the UK Retail Sales release today. A break of the 0.6900 and then 0.7000 areas in EUR/GBP are further confirmation of a new trend in the making - as it's early days just now.
Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
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