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Morning Forex Review : Eventful Week Starts with ISM Index
Written by article default Monday, 01 November 2010 10:37
EURUSDFriday, the US Department of Commerce announced that GDP grew at a 2.0% annual rate in the third quarter of 2010, up from the 1.7% recorded in the second quarter. This figure showed that the risk of deflation should be avoided but failed to convince investors that the recovery is self-sustaining. In reaction, speculations that the Federal Reserve will launch a second round of quantitative easing at its Nov. 2-3 FOMC meeting pushed the dollar lower against the euro, from $1.3820 to $1.3990. Today, market participants will watch the ISM Manufacturing PMI to gauge manufacturers' confidence. The consensus forecast is 54.2 in October (down from 0.2 in September).
Support/Resistance: 1.3860/1.4080
GBPUSD
After a week marked by the resilience of GDP figures, the pound has strengthened against the dollar and crossed the $1.6000 key level. This move has been supported by expectations that the Bank of England will avoid any additional easing at its Monetary Policy Committee scheduled for Nov. 4. However, this sharp move from pessimism to optimism should be watched cautiously, as the British economy continues to face strong headwinds due to the fiscal consolidation and the sluggish housing market.
Support/Resistance: 1.6000/1.6100
USDYEN
In early trading, the pair touched a fresh low of 80.22 before reverting violently to 81.43, fueling rumors of central bank’s intervention. So far, this move hasn’t been confirmed by the Japanese authorities. However, as a decisive week for global monetary policy is just beginning to unfold, traders can be sure that the BoJ will closely monitor any excessive appreciation in its currency.
Support/Resistance: 80.22/81.50