Dollar slipping -----

The Dollar slipped on Tuesday, a day after its strongest rally against the Euro in more than a year, as rebounding global stock markets rekindled investors' appetite for risky assets.
Market attention is also focused on Wednesday's US Existing Home Sales report amid fears the data would point to a further deterioration in the housing market and increase the chances of more Federal Reserve interest rate cuts this year.
At yesterday close, the Euro was up 0.59% against the Dollar at 1.4257. While the data will not on their own prompt the central bank to ease, the prospect of problems in the broader economy will force the Fed's hand to promote growth, analysts say. US interest rate futures are pricing in a roughly 86% implied chance of a 0.25% cut in the federal funds target rate to 4.50% at the end of their Oct. 30-31 policy meeting. Such a step, coming after September's 0.5% cut, would further reduce the appeal of dollar-denominated assets and undermine the Dollar.
GbpUsd rose 0.84% to 2.0496. UsdChf fell 0.33% 1.1736. UsdJpy rose 0.44% to 114.91 after having hit 113.26 low the day before. Firmer equity markets prompted some investors to move back into carry trades, hitting the Yen and boosting high-yielding currencies such as the Australian, New Zealand and Canadian dollars. EurJpy was up 1.03% to 163.83, its biggest one-day percentage gain in a month. GbpJpy went up 1.28% at 235.53 recovering from previous day 232.55 low. The high-yielding Australian Dollar and New Zealand Dollar gained respectively 1.24% and 1.1%. Both currencies also rose against the Yen. The Canadian Dollar touched a 33-year high against the Dollar after Canadian retail sales data for August beat expectations. UsdCad was last trading down 1.25% at 0.9663.

Forex-Chart


Today's Key Issues (time in GMT):

New Zealand Market Holiday

24-26 Oct GBP Oct Nation Wide House price 0.3% vs 0.7% (MoM)
24-26 Oct GBP Oct Nation Wide House price 8.7% vs 9% (YoY)

08:00 EUR August Euro zone Current Account previously €3.3B
08:00 EUR Oct Euro PMI Services 54.5 vs 54.2
08:00 EUR Oct Euro PMI Composite 54.6 vs 54.7

11:00 USD Oct.19th MBA mortgage Applications previously 0.7%

14:00 USD Sept Existing Home Sales 5250k vs 5500k
14:00 USD Sept Existing Home Sales -4.5% vs -4.3%

20:00 NZD Reserve Bank of Zew Zealand interest rates 8.25% vs 8.25%

The Risk Today:

EurUsd hit new high 1.4349 on Monday. Last week break up 1.4280 opened the way through 1.4333 strong resistance. Next resistance holds 1.4400. On the downside, a return below 1.4280 former resistance and break down 1.4165 support may open the way down to 1.4000 nearby support and 1.3927 where a lower development would threaten the up-trend. On a long term view, it would need a return below 1.3719 to confirm trend change. Initial support holds 1.4165.

GbpUsd hit earlier Monday a new 3-month 2.0539 high. Initial resistance still hold 2.0500 key level. On the downside, it would need renewed pressure below 2.0200 and further weakness toward 2.0000 psychological level and 1.9880 support to confirm trend change. Beyond that point, 1.9821 marks strong support (76.4% retracement of 1.9652 to 2.0366 advance).

UsdJpy looks negative following Monday 113.26 low test. Further drop might follow toward 112.61 and retest of ultimate 111.60 (August 17 low). On the upside, it still need a confirmation over 117.63 resistance to open the way for further extend toward 119.06 (61.8% retracement of 123.67 to 111.60 decline).

UsdChf dropped down to 1.1602 on Monday. Initial resistance holds 1.1790 (23.6% retracement of 1.2477 to 1.1577 decline) and strong resistance 1.1923 (38.2%). However, recent downtrend development below 1.1680 key level may reopen the way toward 1.1500 psychological support and possibly 1.1484 (2005 March 14 low).

Resistance and Support:

EURUSD GBPUSD USDJPY USDCHF
1.4400 S 2.0539 M 123.67 T 1.2000 S
1.4333 S 2.0512 S 119.06 T 1.1923 S
1.4319 M 2.0500 K 117.79 M 1.1790 M
1.4260 2.0495 114.70 1.1730
1.4280 M 2.0477 M 113.39 S 1.1680 M
1.4165 S 2.0200 S 112.61 M 1.1500 P
1.4000 S 2.0000 P 111.60 T 1.1484 S
S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

daily updates

Asian Session - Fed Adjustment

October 25, 2007 9:11 AM CEST

G10 Advancers and Decliners vs USD
NZD 0.67
AUD 0.51
CAD 0.34
NOK 0.30
SEK 0.26
EUR 0.19
DKK 0.19
CHF 0.14
GBP 0.05
JPY -0.07

Global Indexes Current Level % Change
Nikkei 225 Index 16,284.17 - 0.45
Hang Seng Index 29,383.86 + 0.17
Shanghai Index 5,649.97 - 3.30
FTSE futures 6,523.00 - 0.28
DAX futures 7,935.00 + 0.67
CAC futures 5,720.00 + 0.87
DJIA futures 13,696.00 - 0.07

World Markets Current Level % Change
Gold 763.97 + 0.94
Silver 13.64 + 0.48
VIX 22.01 + 2.08
Crude wti 87.94 + 0.96
USD Index 77.52 - 0.03

Todays Calender Estimates Previous Country / GMT
PPI (sep) mom 0.4% -0.4% SW / 7:30
IFO Business Climate ( oct) 103.7 104.2 GE / 8:00
Durable Goods Orders (sep) 1.5% -4.9 US / 12:30
Initial Jobless Claims 320k 337k US / 12:30
New Home Sales (sep) 770k 795k US / 14:00
Help Wanted Index 23 23 US/ 14:00


Currency Tech

AUDUSD
R 3: 0.9118
R 2: 0.9078
R 1: 0.9050
CURRENT: 0.9029
S 1: 0.8856
S 2: 0.8749
S 3: 0.8611

EURJPY
R 3: 166.10
R 2: 165.27
R 1: 163.97
CURRENT: 233.54
S 1: 160.48
S 2: 158.51
S 3: 156.33

USDSGD
R 3: 1.4758
R 2: 1.4698
R 1: 1.4676
CURRENT: 1.4585
S 1: 1.4577
S 2: 1.4530
S 3: 1.4500

Market Brief

The Usd stayed weak in Asian Session despite the markets best efforts to move things around. Usd was trading in a 1.4250-1.4275 range against the Eur and in a 113.88-114.25 range against the Jpy. A weak US equity session and a poor housing data spoiled the risk appetite rally and the consequent drop in yields were the sources of the slide of the Usd.

The greater then expected drop in US existing home sales, reaching a 9-year low in Sep., has cemented market expectations that the Fed will have to cut interest rates again next week.

Indeed, there is growing speculation in Fed Funds and yields that the Fed will need to deliver more than 25pb cut. This pressure on the Fed will increase if today’s durable goods orders and new home sales data are also weak. Those will be the key figures today. Currently we are wary of ruling anything out. However, we believe 25bp has the highest probability.

The RBNZ left rates unchanged this morning at 8.25%, with a neutral statement that listed a number of upside and downside risks to the economic and inflation outlook.

fOREX STATS TODAY (GCI TRADING .COM)

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4190 level and was capped around the $1.4265 level. Technically, today’s intraday high and low were right around the 23.6% and 50% retracement of the move from $1.4015 to $1.4395. The common currency moved lower after U.S. financial giant Merrill Lynch wrote down US$ 7.9 billion from earnings on account of subprime mortgage problems and said the conditions remain “uncertain.” This reflects the troubled liquidity conditions faced by global financial firms this summer and to the extent that other U.S. financial institutions are forced to write down earnings, profits will be reduced in upcoming quarters and that will zap demand for U.S. assets and the U.S. dollar. Data released in the U.S. today saw September existing home sales off 8% m/m to 5.04 million annualized units, and were off 19% y/y. Continued dislocations in the U.S. housing sector could result in a rate cut by the FOMC on 31 October. In eurozone news, the EMU-13 manufacturing PMI survey fell to 51.5 in October from 53.2 in September while the services PMI survey improved 55.6. Also, it was reported that the eurozone August current account surplus was unchanged at €3.8 billion. Euro bids are cited around the US$ 1.4045 level.

¥/ CNY

The yen moved higher vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥114.10 level and was capped around the ¥114.95 level. Traders moved back into yen overnight as growing risk aversion reduced demand for higher yielding currencies. Data released in Japan overnight saw the September merchandise trade surplus rise a stronger-than-expected 62.7% y/y to a record ¥1.638 trillion. Notably, imports declined for the first time in more than 3.5 years. U.S. automakers complained overnight that the yen is being artificially devalued by the Japanese government. The Nikkei 225 stock index lost 0.56% to close at ¥16,358.39. Dollar bids are cited around the ¥113.85/ 112.60 levels. The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥162.15 level and was capped around the ¥163.90 level. The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥233.40 and ¥97.05 levels, respectively. The Chinese yuan appreciated via-a-vis the U.S. dollar as the greenback closed at CNY 7.4930 in the over-the-counter market, down from CNY 7.5068. This represents the first time the pair has traded with a CNY 7.4 handle since the yuan was revalued in July 2005.

₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0425 level and was capped around the $2.0515 level. Technically, today’s intraday low was right around the 76.4% retracement of the move from $2.0655 to $1.9650. Cable bids are cited around the US$ 2.0270 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.6935 level and was capped around the ₤0.6960 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1710 level and was capped around the CHF 1.1775 level. September producer and import prices will be released on Friday. Dollar offers are cited around the CHF 1.1835/ 1.1910 levels. The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6690 and CHF 2.3990 levels, respectively.

A$/ NZ$

The Australian dollar appreciated vis-à-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.9045 level and was supported around the $0.8935 level. The pair moved within 30 pips of establishing a new multi-decade high. Traders bought A$ on increased expectations that Reserve Bank of Australia will lift its official cash rate by 25bps to 6.75% at its 6 November rate-setting meeting. Q3 headline CPI was up 0.7% q/q, stronger-than-expected, and up 1.9% y/y. Other data released in Australia today saw October skilled vacancies off 0.9% m/m. Australian dollar bids are cited around the US$ 0.8745 level. The New Zealand dollar weakened vis-à-vis the U.S. dollar as kiwi tested bids around the US$ 0.7465 level and was capped around the $0.7600 figure. New Zealand dollar bids are cited around the US$ 0.7465 level.

C$

The Canadian dollar depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the C$ 0.9720 level and was supported around the C$ 0.9645 level. The loonie established a new multi-decade high yesterday. U.S. dollar offers are cited around the C$ 0.9860 level.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.4250 1.4266, 1.4188

USD/ JPY 114.26 114.95, 114.12

GBP/ USD 2.0487 2.0516, 2.0426

USD/ CHF 1.1729 1.1774, 1.1717

AUD/ USD 0.9007 0.9047, 0.8935

USD/CAD 0.9675 0.9721, 0.9643

NZD/USD 0.7532 0.7601, 0.7476

EUR/ JPY 162.83 163.89, 162.14

EUR/ GBP 0.6955 0.6960, 0.6936

EUR/ CHF 1.6715 1.6735, 1.6692

GBP/ JPY 234.15 235.70, 233.40

CHF/ JPY 97.43 97.59, 97.03

Support Resistance Support Resistance

L1. 1.3515 1.4200 114.55 116.55

L2. 1.3415 1.4270 112.55 117.85
L3. 1.3245 1.4365 111.60 119.35

GBP/ USD USD/ CHF

L1. 1.9915 2.0340 1.1800 1.1640

L2. 1.9805 2.0460 1.1740 1.1560

L3. 1.9530 2.0655 1.1650 1.1430

AUD/ USD USD/ CAD

L1. 0.8270 0.8765 0.9850 1.0340

L2. 0.8160 0.8850 0.9760 1.0485

L3. 0.7940 0.8990 0.9640 1.0550

NZD/ USD EUR/ JPY

L1. 0.6985 0.7545 157.25 161.70

L2. 0.6760 0.7630 154.50 164.45

L3. 0.6640 0.7730 149.25 168.95

EUR/ GBP EUR/ CHF

L1. 0.6855 0.7010 1.6400 1.6685

L2. 0.6790 0.7070 1.6325 1.6790

L3. 0.6705 0.7140 1.6240 1.6900

GBP/ JPY CHF/ JPY

L1. 228.15 235.20 95.90 99.55

L2. 226.80 238.95 94.50 100.25

L3. 221.05 239.60 92.20 101.85

SCHEDULE

Wednesday, 24 October 2007
all times GMT
(last release in parentheses)

0100 Australia October DEWR skilled vacancies (0.1% m/m)

0130 Australia Q3 consumer prices (1.2% q/q)

0130 Australia Q3 consumer prices (2.1% y/y)

0700 Eurozone European Central Bank member Gonzalez-Paramo speaks

0800 Eurozone August current account (€1.7 billion)

0800 Eurozone October PMI, manufacturing (53.2)

0800 Eurozone October PMI, services (54.2)

1100 US MBA mortgage applications

1400 US September existing home sales (5.50 million)

1400 US September existing home sales (-4.3%)

2000 NZ Reserve Bank of New Zealand official cash rate

2200 Italy European Central Bank official Draghi speaks

2350 Japan Net foreign equities investment

2350 Japan Net foreign bonds investment

2350 Japan September corporate services price index (1.0% y/y)

Thursday, 25 October 2007
all times GMT
(last release in parentheses)

0645 France October business confidence (110)

0800 Germany October Ifo, business climate (104.2)

0800 Germany October Ifo, current assessment (109.0)

0800 Germany October Ifo, expectations (98.7)

0830 UK September BBA house purchase loans

1230 US Weekly initial jobless claims

1230 US Continuing jobless claims

1230 US September durable goods orders (-4.9%)

1230 US September durable goods orders, ex-transportation (-1.8%)

1400 US September new home sales (795,000)

1400 US September new home sales (-8.3% m/m)

2330 Japan October Tokyo-area CPI (-0.2% y/y)

2330 Japan October Tokyo-area CPI, core (-0.3% y/y)

2330 Japan September nationwide CPI (-0.2% y/y)

2330 Japan September nationwide CPI, core (-0.1% y/y)\

2350 Japan September industrial production (3.5% m/m)

2350 Japan September industrial production (4.4% y/y)

Friday, 26 October 2007
all times GMT
(last release in parentheses)

0000 Australia August leading index (0.3%)

0610 Germany November GfK consumer confidence survey (6.8)

0715 CH September producer and import prices (0.3% m/m)

0715 CH September producer and import prices (2.7% y/y)

0800 Eurozone September M3 money supply (11.6% y/y)

1230 Canada October business conditions orders (6)

1400 US October University of Michigan consumer sentiment (82.0)

Forex Tips(part 4)

1. Measure your success by the profit made in a day, not on a trade. It’s even better to measure it over two or three days. A successful trader’s goal is to make money, not to win on every trade.



2. Scalpers reduce the number of variables affecting market risk by being in a position only for a few seconds. Day traders reduce market risk by being in trades for minutes. If you convert a scalp or day trade into a position trade, you probably didn’t analyze the risks of the trade properly.



3. There is no secret to understanding the market. You can spend much of your valuable time and money looking for these kinds of secrets. It’s better to take the time to create a solid trading system, and realize that the secret to success is hard work.



4. Never ask for someone else's opinion, they probably didn’t do as much homework as you did anyways.



5. When the market is going up, say it out loud. When the market is going down, say that out loud too. You’ll be amazed at how hard it is to say what is going on right in front of you when you want it the market to be doing something else.

Forex Tips(part3 )

1. Don’t worry about missing out on an opportunity to trade. There will always be another good one just around the corner. If the trade you are considering doesn’t meet all your entry signals but it seems to good to pass up, remember, you’re never going to run out of trades you can make.



2. Don’t get too confident. No one can predict the market with 100% accuracy. You need to always expect the unexpected. If you become uneasy, or the market becomes choppy, exit your trades.



3. Don't turn three losing trades in a row into six. When you’re off, turn off the screen, do something else. Often the best way to break a streak of consecutive loses is to not trade for a day.



4. But, don't stop trading when you’re on a winning streak.

Forex Tips(part 2)

1. During the blowout stage of the market, either up or down, the risk managers are usually issuing margin call position liquidation orders. They don't generally check the screen to see what’s overbought or oversold; they just keep issuing liquidation orders. Make sure you stay out of their way.



2. Trust your instincts. If something feels wrong about a trade, don’t make it. It’s better to be superstitious than to loose money.



3. Rumour is king. Buy when you hear the rumour, sell when you hear the news.



4. The first and last ticks are always the most expensive. Get in the market late, and out early. And never trade in the direction of a gap, either opening or closing.



5. When everyone else is in, it's time for you to get out. If a stock or currency is overbought, it’s time to exit your position.

forex tips (part1)

1. Pay attention to the market. Exit and enter trades based on market information. Don’t wait for a price you think the currency should hit when the market has changed direction on you.



2. There are times when, due to a lack of liquidity or excessive volatility, you should not trade at all. On a similar note, never trade when you are sick. You can’t count on yourself to be alert to the shifts of the markets, and make good decisions.



3. Trading systems that work in an up market may not work in a down market, and a system that works for trending markets, or for range bound markets may not work in other markets. Have a system for each type of market.



4. Up market and down market patterns are ALWAYS there, but you have to look for the dominant trends. Always select trades that move with the trends