Forex Holy Grail

A trading system can also be know as an edge. An edge allows us to trade without fear and uncertainty because it has a higher probability of a decision taken actually happening over the other but within a series of trades. The question now is what happens when you have found your edge like price action trading and you still unable to profit from trading? This article hopefully will give you some insight in how to fine tune your edge.

Over trading could be causing you to fail. Normally over trading can be linked to trading in lower time frames due to the fact we have more entry signals appearing. However trading lower time frames has much more noise and randomness in the market and sometimes may be difficult to identify key support and resistance levels. By changing to a daily time frame is smooths out the noise, giving you a more accurate picture of the market. Another benefit in trading the daily time frame is due to the fact your edge will appear when the daily candlestick pattern closes and this is when most traders are watching charts planing their next trading day. It's true that you will find less signals on a daily time frame but when they appear it will become a higher probability trade.

As mentioned above I stated that when we identify our edge we should execute our edge without fear and uncertainty. So what are the reasons causing you to doubt your edge? It comes down to how much success you had in executing it. The more we continually execute our edge successfully the more confidence we gain in it, therefor by mastering your edge such as price action trading on a daily timeframe it will help you eliminate confusion and limiting the number of variables in making that essential trading decision.  

Another key area is to keep your trading simple by avoiding hours in analyzing fundamental data, technical data on the erroneously belief it will give you more insight into the future track of the markets. The problem with this thinking is that ALL variables are ultimately reflected via the simple and natural price movement of a price chart.

A good risk / reward ratio is of the utmost importance and should be part of your trading plan. Having this in place allows you to survive and saving you the heart ache of blowing your trading account. One way in achieving this is by making sure your winners are larger than your losers, therefor when your edge appears always try aim for a risk reward of 1:2. In the following diagram we can see that there were 14 trades placed where 8 trades failed and only 6 were winners, however if you add the winners it will be larger than your losers.

Patience and discipline are other tools which must be added to your trading plan. Wait for your edge to appear, dont be in a trade just to be in one. Once again if you trade the daily charts it will allow you to train this mind set due to the fact you will see less signals appearing in comparison to the lower time frames. Please note that I'm not saying that you shouldn't trade lower time frames but you should only look at these once you have the experience and reading the market. I currently trade daily, 4H and H1.

Apologies for using the heading Forex Holy Grail because there are none, but I believe if you use some of my suggestions it can contribute toward your trading success. The internet has made the FX community a lot smaller giving us access to many resources and trading ideas and by learning from one another it may just help your edge to be a little more effective than before.

Happy Pippping!!

Daily FX & Market Commentary

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX Commentary: (Morning Report)

EUR/USD

The Euro remains under pressure at the beginning of the week, following last Friday’s acceleration lower that tested the upper boundary of strong 1.2830/00 support zone, denting 200 day MA at 1.2829. Overall bearish tone keeps further weakness favored, with test of 1.2800 platform seen likely. Break below 1.2800, 5-week congestion floor, to signal major correction and open 1.2740 zone, mid-June highs / Fib 38.2% of 1.2042/1.3170 rally. Corrective rallies see good barrier at 1.2880/1.2900, previous supports, where gains would be likely capped.

Res: 1.2841, 1.2862, 1.2880, 1.2900
Sup: 1.2813, 1.2800, 1.2740, 1.2700

GBP/USD

Negative sentiment continues to dominate on the near-term outlook, as last Friday’s bearish acceleration fully retraced 1.6005/1.6174 upleg, as the price posted fresh session low at 1.6006. Brief corrective action on oversold hourlies did not give many results, with near-term focus at 1.6000 support, also Fib 61.8% of larger 1.5911/1.6174 rally, seen as a trigger for fresh weakness and possible retest of key near-term support at 1.5900. Any bounce is expected to be limited at 20/55 EMA’s bearish crossover at 1.6075 and only break here would provide temporary relief.

Res: 1.6038, 1.6066, 1.6075, 1.6100
Sup: 1.6005, 1.6000, 1.5974, 1.5935

USD/JPY

Corrective pullback off last Friday’s fresh high at 80.67, when the price reached our initial target, weakened hourly structure, with bulls giving way after lower top was posted at 80.55. Also, indicators on 4h chart are starting to descend off overbought territory. However, bullish daily studies remain intact for now, with the latest reversal seen as corrective, as long as 80.15, Fib 38.2% of 79.27/80.67 upleg, reinforced by 20 day EMA and psychological 80.00 level, stay intact. Otherwise, confirmation of failure swing would be a trigger for stronger correction. On the upside, break above 80.67 to open 81.00 next.

Res: 80.37, 80.55, 80.67, 81.00
Sup: 80.26, 80.15, 80.00, 79.90

USD/CHF

Near-term bulls continue to drive the price higher, after the pair found ground at 0.9275 last week and acceleration through 0.9385/0.9400, previous peaks / 200 day MA, and weekly close above here, now testing 0.9430/36 double bottom. Break here is seen as a trigger for stronger correction of 0.9970/0.9213 descend and confirmation of base at 0.9200 zone. With fresh momentum emerging on a daily chart, upside remains favored, however, overextended conditions of hourly studies, may signal pause in current rally. Previous barriers at 0.9400/0.9385, now offer good support.

Res: 0.9436, 0.9461, 0.9500, 0.9523
Sup: 0.9414, 0.9400, 0.9385, 0.9374 

====================================================================

Daily Market Commentary: (Evening Report)

London Market Report

London close: Stocks taken down by global uncertainty
Market Movers

• techMARK 2,095.70 -0.42%
• FTSE 100 5,839.06 -0.50%
• FTSE 250 12,030.46 -0.75%

- All eyes turn to the US elections
- Greece attempts to agree on austerity
- UK and US services PMI disappoint

After a sharp fall early on, the FTSE 100 traded broadly sideways for the remainder of Monday's session as investors refrained from building positions ahead of a busy week for the global economy, with the US presidential elections firmly at the front of everyone's minds.

Nevertheless, market analyst Michael Hewson from CMC Markets highlighted a number of reasons why markets were on the back foot today: "increasing uncertainty against a backdrop of concerns about Greece getting its budget through parliament later this week; another sharp increase in Spanish unemployment; while the outcome of tomorrow's US presidential poll promises to be as close as everyone expected it would be."

What's more, economic data from home and away failed to lift sentiment today in London: the UK services purchasing managers' index (PMI) fell from 52.2 to 50.6 in October, well below the consensus esteem of 52.0 and the long-run average of 54.9. In the US, the ISM services PMI for the month of October came in at 54.2, compared with 55.1 for the month before and the consensus estimate of 54.5.

Meanwhile, monthly policy meetings scheduled for later this week also kept investors on their toes today, with decisions due from the Bank of England, European Central bank and Reserve Bank of Australia.

In Spain, unemployment rose by 2.7% month-on-month to 4,833,521 in October, as 128,242 more Spanish residents were without a job during the month.

Nerves over Greece remain on edge as the coalition government brings the austerity package before the Athenian Parliament today. The smallest party in the coalition government - Democratic Left- has already pledged to vote against the €13.5bn in cuts due to its opposition to labour reforms. Even some members of the leading New Democracy party have announced plans to vote against the package.

Europe Market Report 

Europe midday: Equities hit new lows ahead of US open

-USD index hits 2 month high on haven flows
-Banks deposit 261.4bn euros overnight at ECB

FTSE-100: -0.58%
Dax-30: -0.66%
Cac-40: -0.99%
FTSE Mibtel 30: -1.50%
Ibex 35: -1.72%
Stoxx 600: -0.67%

Investors are watching events in Greece -the country faces two critical votes this week- and the change of leadership in the United States and China with both also expected for this week. Furthermore, the latest Chinese service sector PMI data out over the weekend has led some to expect fewer new easing measures in the Asian giant.

As regards events in Greece, eKathimerini says that the ruling coalition will manage to muster sufficient support for the approval of the necessary new austerity measures, although only just. Furthermore, the Financial Times reports that the country´s creditors may have already agreed on a new schedule of debt repayments to allow the country to return to debt sustainability by 2022.

However, investors´ worries seem to persist.

Of interest in this regard, German daily Handelsblatt writes that the European Central Bank´s (ECB) so-called Shadow Council does not believe that Greece will be able to pay back its debts.

From a sector stand-point the wortt performance is now to be seen in shares of the following industrial groups: Banks (-1.22%), Oil&Gas (-1.13%) and Automobiles (-1.13%). 

Spanish unemployment rises again

Spanish unemployment increased by 128,200 in October, versus a consensus expectation for 110,000.

The Eurozone Sentix survey of investor confidence fell to 18.8 points in November, after -22.2 in the month before (Consensus: -18.8).

Irish service sector purchasing managers´ index for the month of October has come in at 56.1, versus 53.9 for the previous month.

Haven flows weaken single currency

The euro/dollar is now falling by 0.37% to the 1.278 dollar level.

Front month Brent crude futures are currently off by -0.142 dollars to the 105.51 dollar mark on the ICE.

US Market Report

Stocks continue to turn in a lackluster performance in mid-day trading on Monday, with traders reluctant to make any significant moves ahead of tomorrow's elections. The choppy trading comes after the markets ended last week's trading roughly flat.

The major averages are currently turning in a mixed performance, although they are all nearly unchanged. While the Nasdaq is up 5.34 points or 0.2 percent at 2,987.47, the Dow is down 13.98 points or 0.1 percent at 13,079.18 and the S&P 500 is down 1.66 points or 0.1 percent at 1,412.54.

Many traders seem to be staying on the sidelines amid uncertainty about the outcome of Tuesday's presidential race between President Barack Obama and Republican challenger Mitt Romney.

In the short-term, investors will be looking for a definitive outcome from the election, as a race that is still too close to call or requires a recount will add to insecurity on Wall Street.

Looking further ahead, a win for Obama is expected to be good news for the alternative energy, telecom, and housing sectors, while a win for Romney could benefit the defense, resource, and financial sectors.

Along with the outcome of the presidential race, traders are also likely to keep an eye on which party controls the House and the Senate following the elections.

On the economic front, the Institute for Supply Management released a report showing a modest slowdown in the pace of growth by the U.S. service sector.

The ISM said its non-manufacturing index dipped to 54.2 in October from 55.1 in September, although a reading above 50 indicates continued growth in the service sector. Economists had expected the index to edge down to a reading of 54.9.

Other Markets  In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both ended the day down by 0.5 percent, while China's Shanghai Composite Index edged down by 0.1 percent. The major European markets also moved to the downside on the day. While the French CAC 40 Index tumbled by 1.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index both fell by 0.5 percent. In the bond market, treasuries have moved higher amid the uncertainty about the election results. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.5 basis points at 1.681 percent.

Daily Market Commentary

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily Market Commentary: (Evening Report)

London Market Report

London close: Footsie struggles to hold on to gains after jobs data
Market Movers

• techMARK 2,104.52 -0.28%
• FTSE 100 5,868.55 +0.11%
• FTSE 250 12,120.83 +0.24%

- US jobs provide temporary boost, but gains trimmed
- Data unlikely to change Fed's stance, says analyst
- Financials Admiral and RBS disappoint

While the closely-watched US jobs report provided a bit of a bounce in early afternoon trade, the Footsie had pared gains to finish flat by the close as the initial euphoria surrounding the figures died away.

US non-farm payrolls rose by 171,000 last month, well above the 125,000 expected by the market consensus. The unemployment rate did increase, by 10 basis points to 7.9%, but this was expected.

What's more, upwards revisions were made to previous months' figures which added "more lustre to an already-solid report", said analyst Michael Gapen from Barclays Research.

The Footsie jumped to an intraday high of 5,888 shortly after the data was released, but quickly came pulling back to its starting point after US stock markets opened. "Despite the better numbers the initial gains proved to be somewhat short-lived as markets fizzled out like a damp firework ahead of the weekend and the outcome of next week's US elections," said market analyst Michael Hewson from CMC Markets.

Barclays Research's Gapen said that the labour market is exhibiting good momentum heading into Q4, "although we would not be surprised to see some volatility in upcoming jobless claims and payrolls as a result of Hurricane Sandy. We do not see the momentum in hiring and decline in the unemployment rate in recent months as changing the calculus for the Fed at this stage."

In domestic, the UK economy is not expected to contract this year, but ill-timed fiscal consolidation in Europe and other external risks continue to pose risks, the National Institute of Economic and Social Research (NIESR) said in its latest quarterly forecasts.

The British economy is now expected to grow by 0.1% in 2012, which marks a slight upwards revision on its previous forecasts. Next year however the external environment is no longer being forecast to make a contribution to aggregate demand, leading the NIESR to reduce its forecast for gross domestic product (GDP) downwards, to 1.1%, as net trade will not make any positive contribution.

Europe Market Report 

Europe midday: Europe stands pat while waiting for US Employment Report
-Investors waiting on US employment report
-Eurozone manufacturing sectors slightly above consensus, but in contration
-Alcatel plunges after reporting Q3 losses
-Beiersdorf lifts revenue outlook
-Rumors that Deutsche Telekom to cut dividend

FTSE-100: -0.09%
Dax-30: -0.14%
Cac-40: -0.02%
FTSE Mibtel 30: -0.60%
Ibex 35: +0.50%
Stoxx 600: +0.16%

After yesterday's 1 per cent rise, European equities on the average decide to take a breather and trade flat with a mixed balance while waiting for the latest monthly employment report Stateside to come out at 12:30 London time.

Yesterday's better-than-expected US labor market data (weekly initial claims and the ADP employment change) already gave the European benchmarks a leg up, but it seems even the bulls prefer to wait for a confirmation from the "official" data before making another move.

Also of interest, in today's Financial Times James Mackintosh tells readers that recent market moves –gains led by cyclicals- show that there is quite a bit of optimism regarding economic growth. In his opinion, however, that is only justified if one believes that central banks have more ammunition left in their armouries –or not- as Governor King has recently suggested.

Other considerations to be taken into account by the shortest-term investors and traders are that the last two months of the year are usually amongst the best for equities and the still relatively "bearish" sentiment (as a contrarian indicator) of small investors, according to the latest weekly survey data out from AAII.
Eurozone PMI slightly ahead of forecasts


While waiting for the US macro data (apart from the Employment Report, we'll also see the New York ISM and factory orders), we've had a barrage of manufacturing sector come out from the Eurozone. In general terms, both the individual countries and the sector as a whole narrowly beat forecasts. However, it should be noted that all of the readings remained below 50, implying a contraction in the sector.

The Markit Eurozone purchasing managers index for the month of October
has come in 45.4, versus last month´s reading of 46.1 (Consensus: 45.3).

The Markit German purchasing managers index for the month of October
has come in 46, versus last month´s reading of 47.4 (Consensus: 45.7).

The Markit French purchasing managers index for the month of October
has come in 43.7, versus last month´s reading of 42.7 (Consensus: 43.5).

Single currency dropping towards technical support ahead of data


The euro/dollar is now down by 0.48% to 1.2885.

Brent crude futures are off by 0.14% to $109.40.

US Market Report

US open: Traders bank profits ahead of election Market movers Dow Jones: -40 at 13,193 S&P 500: -3 at 1,425 NASDAQ Composite: -9 at 3,011 After initially opening firmer after better than expected non -farm payrolls data for October, stocks have turned back, with some traders closing positions ahead of next Tuesday's presidential election. October data showed 171,000 jobs were added in the month, ahead of the 120,000 additions expected by the market. The unemployment rate, however, edged up to 7.9% in October from 7.8% in September.

Daily Market Commentary

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily Market Commentary: (Morning Report)

London Market Report

London open: Stocks fall ahead of key US jobs data
Market Movers

• techMARK 2,105.42 -0.23%
• FTSE 100 5,852.66 -0.16%
• FTSE 250 12,104.81 +0.11%

The FTSE 100 opened slightly lower on Friday morning following a strong rise the day before, as investors showed caution ahead of some pivotal economic data due out across the Pond later today.

Financial trader Shavaz Dhalla from Spreadex said that investors are nervous about taking on too much risk ahead of the "market-moving US non-farm report" due out at 13:30 London time.

Dhalla said: "The current US president as well as candidate for the presidential position will also be keenly eyeing the jobs figure.  The consensus for the change in the number of employed people is 123,000. 

"However, a figure which comes in below expectations will not only prove damaging for investors' confidence in the global recovery but could act as sufficient ammunition for the leading presidential candidate to launch an offensive on the failures of the current US president's measures to stimulate growth."

Europe Market Report 

Europe open: Investors waiting on critical employment report
-Investors waiting on US employment report

FTSE-100: -0.12%
Dax-30: -0.18%
Cac-40: -0.31%
FTSE Mibtel 30: -0.52%
Ibex 35: -0.48%
Stoxx 600: -0.03%

European equities have started the day slightly lower, as traders pull in their horns –especially following yesterday´s gains- and ahead of the release, this afternoon, of the latest monthly employment report Stateside.

For some any effect from Sandy will only show up in next month´s data, so by itself that should not be a factor in next week´s Presidential elections. However, the bad weather –should it persist- could yet play a role. In any case, today´s data is the last before Americans head to the polls, so even more is in play today than usual.

Acting as a backdrop, some reports are calling attention to the recent improvement in the Baltic Dry Freight index, usually a good indicator for global commerce and growth.

Also of interest, in today´s Financial Times James Mackintosh tells readers that recent market moves –rises led by cyclicals- show that there is quite some optimism as regards economic growth. In his opinion, however, that is only justified if one believes that central banks have more ammunition left in their armouries –or not- as Governor King has recently suggested.

Other considerations to be taken into account by the shortest-term investors and traders are that the last two months of the year are usually amongst the best for equities and the still relatively ´bearish´ sentiment of small investors, according to the latest weekly survey data out from AAII.

Eurozone PMI slightly ahead of forecasts

The Markit Eurozone purchasing managers index for the month of October
has come in 45.4, versus last month´s reading of 46.1 (Consensus: 45.3).

The Markit German purchasing managers index for the month of October
has come in 46, versus last month´s reading of 47.4 (Consensus: 45.7).

The Markit French purchasing managers index for the month of October
has come in 43.7, versus last month´s reading of 42.7 (Consensus: 43.5).

Single currency dropping towards technical support ahead of data

The euro/dollar is now down by 0.53% to the 1.2878 dollar level.

Front month Brent crude futures are off by 0.399 dollars to the 107.74 dollar mark in ICE trading.

US Market Report

US close: Stocks rise on positive economic indicators Dow 13,233 +137 Nasdaq 3,020 +43 S&P 500 1,428 +16 US stocks moved firmly on Thursday, getting November off to a positive start following a set of broadly positive economic indicators ahead of Friday's monthly employment report. As an aside, and as regards the impact of Sandy, Credit Suisse today told clients that: "While the event is certainly traumatic for those living through it, we think the overall impact on economic activity is likely to be small. After Katrina, which was a much bigger disaster, the stock market actually rose by 2% in the two weeks after the event. US reinsurers have typically outperformed in the 12-month period after major natural disasters on the back of improvements in pricing - however, given that natural catastrophe losses overall this year have been mild, this might not happen this time." All of the above ahead of tomorrow´s all important monthly employment report. Ironically, if Sandy does have an effect on the recollection of data for the same it should not be evident until the following month -and after the elections- some are saying. The October ISM manufacturing sector purchasing managers index (PMI) came in at 51.7 points, versus the 51 expected by the consensus. The new orders sub-index rose to 54.2 from 52.3. Even so, the Chair of the relevant survey Committee, Bradley J.Holcomb, has said that the rise seen in new orders is deceitful. The Conference Board´s consumer confidence index for October came in at 72.2, below the 73 forecast. However, the previous month´s estimate has been revised down to 68.4 from 70.3. Also worth noting was that the bulk of the rise came from the current situation sub-index, which is a moderately negative aspect of the report. The ADP employment report showed 158,000 jobs were created in October (Consensus: 135,000). Markit´s US manufacturing sector purchasing managers´ index (PMI) came in at 51 for October, after 51.3 for the month before (Consensus: 51.3). This release is not to be confused with the much better known PMI from the Institute for Supply Management (PMI). And the data storm continued... Unemployment claims fell by 9,000 to 363,000 (Consensus: 370,000). Nevertheless, and as a possible note of caution, data from New Jersey and Washington DC had to be estimated due to Sandy. The number of job cut announcements reached 47,724 in October, versus 33,800 for the month before, according to consultancy Challenger. Unit labour costs dropped by 0.1% in the third quarter (Consensus: 0.8%). Construction spending increased by 0.6% month-on-month (Consensus: 0.7%) in September, while the previous month´s reading has been revised notably higher. Notable rise in crude futures as well Front month West Texas crude futures settled 0.99% higher at $87.09 on the NYMEX. 10-year US Treasuries were falling by 10/32 dollars, with yields at 1.73% at the close.

Daily FX Commentary

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX Commentary: (Morning Report)

EUR/USD

The pair comes under increased pressure at the beginning of European session, after narrow-range consolidative trading during the Asian session. Extension of weakness from yesterday’s upside rejection at 1.3020 and break below 1.2945, completes hourly head and shoulders pattern, opening prospect for further easing, as price broke below 1.2936, Fib 61.8% of 1.2881/1.3020 upleg / broken channel resistance off 1.3170. As near-term indicators dip into negative territory, bears see immediate target at 1.2900 base, previous lows / daily Ichimoku cloud top, loss of which to confirm double-top at 1.3020 and risk return to very strong support zone at 1.2830/00, also 7-week range floor. Initial resistance lies at 1.2945/50 zone, while only lift above 1.2970/80 would ease bear-pressure.

Res: 1.2945, 1.2950, 1.2969, 1.2982
Sup: 1.2920, 1.2900, 1.2881, 1.2840

GBP/USD

Near-term rally from 1.6005 higher low, has nearly fully retraced 1.6142/1.6005 reversal, as gains reached 1.6138 so far. Near-term bullish structure and positive sentiment, keep the upside favored for now, as price broke above main bear-trendline and emerges above daily Ichimoku cloud. Clearance of 1.6142 is required to resume rally and open next upside targets at 1.6178 and 1.6200. Corrective dips would face good support at 1.6100, Fib 23.6% and ascending 55 day EMA / broken bear-trendline, with possible further easing to be contained at 1.6080 zone, Fib 38.2% / bull-trendline off 1.5911, to keep near-term bulls intact.

Res: 1.6138, 1.6142, 1.6178, 1.6200
Sup: 1.6119, 1.6100, 1.6085, 1.6075

USD/JPY

The pair continues to move higher, after finding ground at 79.27, with steady recovery, moving above important 80.00 barrier, to hit fresh session high at 80.12. Corrective easing is seen on extended hourlies, should ideally be contained at 79.80/70, Fibonacci supports and 55 day EMA, before bulls re-assert for fresh attempt towards initial barrier at 80.37, 26 Oct high. Loss of 79.70, however, would put near-term bulls on hold and risk stronger reversal.

Res: 80.00, 80.13, 80.37, 80.65
Sup: 79.90, 79.80, 79.70, 79.50

USD/CHF

The pair extends near-term recovery off 92.75, yesterday’s fresh low, where temporary footstep has been found. Bounce off overnight’s consolidation range top at 0.9320, attempts to complete inverted head and shoulders-like shape, with bullish extension retracing so far 61.8% of 0.9380/0.9275 downleg. Hourly studies are in the positive territory, while 4h chart indicators started to point higher, with regain of very important 0.9385, 200 day MA / daily Ichimoku cloud base, seen as a trigger for possible test of 0.9430/36 double-top. Previous resistances at 0.9320/00, now offer initial supports, with potential loss of the latter to revive bears.

Res: 0.9339, 0.9350, 0.9373, 0.9385
Sup: 0.9320, 0.9311, 0.9300, 0.9275

Daily Market Commentary

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily Market Commentary: (Evening Report)

London Market Report

London close: Sandy aftermath and Eurozone concerns sink stocks
Market Movers

• techMARK 2,082.56 -0.96%
• FTSE 100 5,782.70 -1.15%
• FTSE 250 11,934.95 -0.16%

The resumption of trading on Wall Street after a two-day closure and a meeting of Eurozone finance ministers was enough to weigh on London's stock market on Wednesday, not to mention some sharp falls from heavy hitters BG Group and Barclays.

US benchmarks re-opened in the red today after Hurricane Sandy left millions without power and killed dozens on the American East Coast. This was the first time since 1888 that the weather has halted trading for two consecutive days.

Market analyst Craig Erlam from Alpari said this afternoon: "There are no real surprises to what we have seen since the markets opened in the US. Insurance companies are trading lower following the devastating effects of Hurricane Sandy. It is too early to tell at this point what the cost of the damage will be to insurance companies, but early estimates suggest it could be up to $15 billion, severely damaging fourth-quarter profits."

On this side of the Atlantic, Eurozone finance ministers today urged Greek leaders "to solve remaining issues so as to swiftly finalise the negotiations [with the Troika]," according to Eurogroup head and Luxembourg Prime Minister Jean-Claude Juncker.

German Finance Minister Wolfgang Schaeuble reportedly said that it is unlikely that the Troika will receive the final report on Greece before the next Eurogroup meeting of finance ministers on November 11-12th. That means that traders will have to wait a little bit longer for any possible solution to the current impasse in Greece.

Meanwhile, in perhaps the most specific reference to the timing of a full bailout request, Spanish government sources have told local radio station SER that a request for international aid should not be expected this year.

Europe Market Report 

Europe midday: Stocks waiting on Eurozone finance ministers

-Spanish central government budget deficit falls to 4.39 per cent
-Eurogroup teleconference now in progress
-Eurozone banks tightened lending standards in third quarter -ECB

FTSE-100: -0.14%
Dax-30: 0.60%
Cac-40: 0.31%
FTSE Mibtel 30: 0.98%
Ibex 35: 0.74%
Stoxx 600: 0.20%

For the most part the major European equity benchmarks are now trading moderately higher.

That ahead of what may turn out to be a somewhat haphazard re-start to trading Stateside, a few observers are worrying. In a more positive vein, investors seem to be concentrating on the positive macroeconomic data out today in Germany, which has come alongside some better than expected company results.

Acting as a backdrop we have this afternoon´s result of the conference-call between Eurozone finance ministers to discuss the situation in Greece, which is now in progress. No firm new decisions are expected but the news flow could conceivably influence markets.

Also of interest, according to the European Central Bank´s (ECB) latest bank lending survey a net 15% of the Eurozone´s banks which took part in the survey tightened their criteria for firms to borrow in the third quarter, up from 10% in the second quarter.

Eurozone unemployment at new record
Spain´s current account surplus increased to €1.2bn in August, above the previous month´s reading of €0.5bn.

The Eurozone´s unemployment rate rose by a tenth of a percentage point in September, to 11.6%, from a revised 11.5% in the month before (Consensus: 11.5%).

The Eurozone´s consumer price index for the month of October dropped to 2.5% year-on-year from 2.6% in the previous month.

German retail sales grew by 1.5% month-on-month in September (Consensus: 0.3%), versus last month´s reading of 0.3%.

French producer prices increased at a 0.3% month-on-month pace in September (Consensus: 0.2%).

French consumer spending rose by 0.1% month-on-month in September (Consensus: 0.2%), after a fall of 0.8% in August.

Spanish housing permits dropped by 37.2 month-on-month in August, after an increase of 10.6% in July.

Capital flight from Spain slowed down somewhat in August, by -34.7%, to €247.2bn.

Slight rise in crude futures

The euro/dollar is now up by 0.29% to the 1.3010 mark.

Front month Brent crude futures are rising by 0.493 dollars to the 109.62 dollar level on the ICE.

US Market Report

US open: Stocks off on last day of the year for mutual funds

-Last day of the year today for many mutual funds
-Apple at 200 day moving average support
-Lock-up expiry today on Facebook
-Eurozone news weighing on stocks

Dow Jones Industrial: -0.09%
Nasdaq Comp.: -0.70%
S&P 500: -0.21%

Wall Street has fallen into the red, weighed down by the negative news-flow coming out of the Eurozone and weakness in shares of Apple.

Germany´s Finance Minister has reportedly said that it is unlikely that the Troika of international lenders will receive the final report on Greece before the next Eurogroup meeting of finance ministers on November 11th to 12th. That means that traders will have to wait a little bit longer for any possible solution to the current impasse in Greece.

In parallel, the Aegean nation´s two main labour unions have just called for a nation-wide strike.

While it will take time to return to normality in Big Apple a modicum of it is expected to be achieved today on the trading floors. Nevertheless, and as NYSE-Euronext´s Chief Executive signaled overnight, it would not be realistic to expect a completely normal day. 

NAPM Chicago below 50

The employment cost index for the third quarter showed a 0.4% quarter-on-quarterly gain in the three months to September, slightly below the 0.5% economists had foreseen.

The Chicago NAPM regional manufacturing sector purchasing managers´ index for the month of October has come in at 49.9 (just below the contractionary level of 50), versus last month´s reading of 49.7 (Consensus: 51). The new orders sub-index however actually moved up, to 50.6 from 47.4 in September.

For economists at Barclays Research: "(…) In our view, current levels of correlation are not consistent with recessionary conditions, and we believe that local trends will play a more prominent role in these regional indices over the medium term." 

Little movement in other asset classes

10 year US Treasuries are falling by 4/32 dollars this morning, with yields left standing at 1.70%.

Front month West Texas crude futures are rising by 0.72% to the 86.30 dollar level on the NYMEX.

Daily FX & Market Commentary

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Daily FX Commentary: (Morning Report)

EUR/USD

Near-term price action remains supported at 1.2885, lows of yesterday / 29/26 Oct. Fresh strength 1.2900 and regain of 1.2936, Fib 38.2% of 1.3021/1.2885 downleg / hourly 20 day EMA, signals basing attempt, however, despite improving hourly studies, the picture on 4h chart still holds bearish tone. Upside extension through 1.2969/78, Fib 61.8% / bear-channel resistance, is required to avert downside risk and open way towards 1.3000/20 breakpoint zone. Otherwise, upside rejection risks lower top and fresh attempt towards 1.2900/1.2885 supports, loss of which to attract very strong support zone at 1.2830/00.

Res: 1.2935, 1.2955, 1.2980, 1.3000
Sup: 1.2881, 1.2843, 1.2833, 1.2825

GBP/USD

The pair extended pullback from 1.6142 high, to test psychological and Fib 61.8% support at 1.6000, reinforced by ascending daily 55 day MA that contained dips for now. Fresh momentum, developing on hourly chart, requires break above 1.6060, 38.2% of 1.6142/1.6005 downleg and 1.6100, main bear-trendline off 1.6308 peak, to confirm recovery and expose 1.6142, 25/26 Oct double top, break of which would be an initial signal of higher low at 1.5911, with regain of 1.6178/1.6200, required to confirm. Conversely, failure under trendline resistance, sees risk of lower top and fresh extension lower.

Res: 1.6090, 1.6100, 1.6142, 1.6178
Sup: 1.6020, 1.6000, 1.5989, 1.5974

USD/JPY

Near-term bears remain in play, as the pair failed to sustain recovery above 80.00 barrier and subsequent weakness breaks below 79.50 base. Increased risk of re-visiting important 79.00 support, also near 61.8% of 77.94/80.37 upleg is seen, as near-term indicators slide into negative territory. To avert immediate downside risk, clear break above 80.00 is required.

Res: 79.50, 79.75, 80.00, 80.13
Sup: 79.27, 79.15, 79.00, 78.60

USD/CHF

Near-term tone softens, as the price slides to initial support at 0.9330 zone, unable to clear 200 day MA and psychological 0.9400 barrier. With 4h studies losing traction, immediate risk is seen on retest of 0.9320/00, 38.2% / 50% of 0.9213/0.9385 rally that would weaken near-term structure. On the other side, break through 0.9400, to confirm near-term bullish stance and re-open important 0.9430/36 barriers.

Res: 0.9379, 0.9385, 0.9400, 0.9430
Sup: 0.9340, 0.9320, 0.9300, 0.9289

====================================================================

Daily Market Commentary: (Evening Report)

London Market Report

London close: Markets rebound on low volumes
Market Movers

• techMARK 2,102.68 +0.54%
• FTSE 100 5,849.90 +0.95%
• FTSE 250 11,954.25 +0.28%

With US stock markets remaining closed for a second straight day as Hurricane Sandy continues to batter the shores of America's East Coast, equities across the Pond rebounded as investors celebrated decent results from a number of heavy hitters across Europe.

"Trading remained thin today as the NYSE's decision to keep shut, the first time weather has halted trading for two straight days since 1888, put off many investors from engaging in risk-on assets and instead many investors opted to await news regarding the impact of Hurricane Sandy," said financial trader Shavaz Dhalla from Spreadex.

"However, the few investors still willing to trade the markets were clearly bullish as the remaining open markets traded positively. Thus, it seems these scarce investors have preferred to build on positive news from European stocks, including BP which has today announced a big dividend increase, instead of focusing on the potential financial consequences of Hurricane Sandy," Dhalla said. Heavyweights including ENI, Deutsche Bank, Bayer and Imperial Tobacco also lifted sentiment today.

Markets were also focusing on some key macroeconomic indicators in the Eurozone today: Spanish gross domestic product (GDP) figures showed that the country remained in recession in the third quarter, contracting by 0.3% quarter-on-quarter but better than the 0.4% decline expected; meanwhile German unemployment gained for a seventh consecutive month in September despite the jobless rate remaining stable at 6.9% - unemployment increased by 20,000, double the 10,000 gain expected.

In other news, Greek Prime Minister Antonis Samaras has announced that a deal has been reached for a €13.5bn austerity package and negotiations with the 'Troika' have concluded. The austerity deal was a necessary step so that Greece can receive its next tranche from its bailout programme with international creditors.

The Bank of Japan has expanded its asset-purchase programme for the second consecutive month. Markus Huber, the head of German HNW trading at ETX Capital, said this morning that the news was "less well-received as many had hoped for much more aggressive easing to counteract renewed weakness seen in the Japanese economy." 

Europe Market Report 

Europe midday: Germany and Greece working on Greek solution

-Moscovici: Greece to be discussed tomorrow
-Italian DMO head says current bond yield levels manageable
-PIMCO (Balls) says Spain will ask for aid relatively shortly -Bbg
-PIMCO (Balls) says no longer underweight Spanish debt

FTSE-100: 0.86%
Dax-30: 1.06%
Cac-40: 1.40%
FTSE Mibtel 30: 0.98%
Ibex 35: 1.31%
Stoxx 600: 0.81%

The main European equity benchmarks are now registering a strong bounce-back, more than reversing yesterday´s price action. That as New York equity futures resumed trading overnight, and actually turned positive.

More important, of course, millions have been left without power in the Mid-Atlantic and North-Eastern United States, but the floodwaters have receded from the streets of New York City. Nevertheless, the New York City Metropolitan Transit System may take weeks to return to normalcy and remains flooded, according to some reports. Even so, insurers are now amongst the best performers on the Continent, in apparent relief. As an aside, but worth monitoring, some of the first estimates available are putting the cost of the storm at approximately $20bn.

Acting as a back-drop, overnight the Bank of Japan approved a ninth consecutive increase in the size of its asset repurchase program. That following the release of very weak data on industrial production, consumer spending and the labour market.

Markets, however, had apparently been expecting firmer actions analysts say. Hence today´s fall in the benchmark Nikkei-225 and rise in the Yen.

According to the French Finance Minister, Pierre Moscovici, his country and Germany are working towards a complete solution of the Greek situation with November´s Eurogroup meeting in mind as the target date, although Greece´s plight will also be discussed at tomorrow´s summit. 

German unemployment rises for first time in 3 years

German unemployment increased by 20,000 in October, ahead of consensus forecasts for a rise of 10,000. The unemployment rate came in at 6.9%, as expected, but the previous month´s level was revised up by a tenth of a percentage point. Last month´s increase was the first in three years.

Spanish gross domestic product contracted at a 0.3% quarter-on-quarter rate in the third quarter, less than the 0.4% contraction that had been foreseen.

The European Commission´s economic sentiment indicator for the Eurozone in the month of October fell to a three year low, at 84.5 points, after 85.2 for September (Consensus: 84.4). Single currency holding above 1.29

The euro/dollar is now is now rising by 0.40% to the 1.2960 dollar mark.

Front month Brent crude futures are down by 0.45 dollars to the 108.95 dollar level.

US Market Report

NYSE Euronext has announced that it will close all its trading venues on Tuesday, in coordination with all US equities, bonds, options and derivatives markets. The above comes as 85 mile-per-hour winds from Hurricane Sandy hone in on New York city, thus paralysing capital markets, with flooding expected in lower Manhattan, precisely where the financial district is concentrated. Nevertheless, NYSE has indicated that it intends to reopen on Wednesday, October 31st, conditions permitting.

Weekly FX Commentary

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Weekly FX Commentary:

There has been a slightly more optimistic tone surrounding the US and Chinese economies with greater confidence that a hard landing can be averted. There will still be an important element of caution, especially with important fears surrounding the Euro-zone economy as peripheral recession continues. In this environment, risk appetite could deteriorate rapidly which would provide defensive dollar support.

Key events for the forthcoming week

Date	Time (GMT)	Data release/event
Tuesday October 30th		Bank of Japan interest rate decision
Thursday November 1st	09.30	UK PMI index (manufacturing)
Friday November 2nd	12.30	US unemployment report

Dollar:

The US economic releases have maintained a generally mixed tone with slightly more optimistic consumer spending data still offset by investment doubts. The Federal Reserve remains committed to a highly-expansionary monetary policy with continued mortgage-backed securities buying and this will limit US dollar support on yield grounds even though Treasury bond yields are at a five-week high. There will also be caution ahead of the presidential election given uncertainties surrounding trade and fiscal polices. The global growth outlook will remain extremely important and the dollar should still be able to secure some support on defensive grounds. 

The dollar was able to find support during the second half of the week as the Euro failed to hold gains. US corporate earnings reports were generally weaker than expected which had a significant impact in curbing risk appetite and provided some defensive dollar support while Euro-zone uncertainties persisted.

The Federal Reserve left policy unchanged at the latest FOMC meeting with a continuing pledge to buy mortgage-backed securities until the labour-market improves substantially. There was a slightly more optimistic tone surrounding consumer spending and the housing sector, but there were still concerns surrounding unemployment. There was an 11-1 vote as Lacker dissented as the Fed still expected rate to be kept at exceptionally low levels until at least 2015.

The latest US jobless clams data was better than expected with a decline to 369,000 from a revised 391,000 the previous week which maintained expectations that the labour market was broadly stable.

The headline durable goods orders data was also stronger than expected with a 9.9% increase for September following a revised 13.1% decline the previous month while there was a 2.0% core increase. Excluding transport and defence distortions, the evidence suggested no significant improvement in orders.

There were some rumours surrounding a US rating downgrade by Fitch, but the agency was quick to remind markets that it was not expecting any change this year.

Euro

Economic and political headlines remain slightly calmer which has help ease underlying selling pressure on the Euro with a stabilisation for example in bank deposits. There are still major concerns surrounding the economic outlook given fresh deterioration in PMI indicators and the underlying situation remains extremely tense as conditions within peripheral economies continue to deteriorate. There will be some relief if Spain does decide to request a bailout, but the underlying economic trends are unlikely to support the Euro for long and much more serious destabilisation remains an important risk, especially with the intractable Greek debt situation. After initial gains, the Euro was hampered by a lack of definitive progress and retreated over the second half of the week and it failed to hold above 1.30. There was further initial relief surrounding the election in Spanish region Galicia as the PP held a majority. The victory bolstered sentiment surrounding the party at a national level and there was also some speculation over increased support for austerity measures.  There were also expectations that the election outcome would move Spain closer to requesting a bailout, although there were no moves by the government. Moody’s downgraded five Spanish regions which did not have a major impact. There were further concerns surrounding the economy which reinforced the urgency of the situation as the Bank of Spain stated that GDP probably fell 0.4% for the third quarter, the same contraction as for the previous three months. There were also further concerns that 2012 budget targets would be missed due to the impact of recession and benchmark bond yields rose during the week. There was a renewed downturn in the German PMI indices with the manufacturing index weakening to 45.7 from 47.4 and the overall Euro-zone index fell to 45.3 from 46.1 which offset a marginal improvement in the services sector and pushed the composite index to a 40-month low. There was also a weaker than expected reading for the German IFO index with a slide to 100 for October from 101.4 which was the sixth successive decline. Although the readings are not extreme in historic terms, there were concerns that dark clouds were gathering in the Germany economy. There were also fears that weakness in Germany would make it even more difficult for the peripheral economies to secure any recovery which would certainly increase pressure on the Spanish economy. There was further uncertainty Greece following announcements and denials on Wednesday. The Greek government confirmed that it had not secured a two-year extension for the budget programme and there was still resistance to required troika labour-market demands by the Democratic Left coalition party. There will be fears that an agreement could still prove to be elusive and there will also be fears that the Greek government will effectively attempt to blackmail the Euro-zone and IMF into providing additional support even if the government fails to agree reform measures. There were also reports that Greece could need additional funding of around EUR30bn which would cause major friction within the core Euro-zone countries and uncertainty will tend to undermine sentiment. Yen: The dollar will gain initial support from higher US Treasury yields. There will be pressure on the Bank of Japan to announce additional stimulus measures at the forthcoming monetary meeting and, even if they resist this time, the underlying pressures will continue. There will also be speculation that any new government will also announce additional measures to underpin growth and weaken the Japanese currency. The fundamental outlook remains weak, but if risk appetite deteriorates, the yen will still gain some degree of defensive support.  The dollar pushed higher against the yen with four-month highs above the 80 level as the yen was generally on the defensive. There was a battle between speculative dollar buying by hedge funds and selling by Japanese exporters with the dollar buyers generally gaining the upper hand. There was further speculation that the Bank of Japan would introduce further monetary easing measures at next week’s policy meeting as the government maintained pressure on the central bank for further action. The dollar hit resistance in the 80.30 area against the yen on Thursday and dipped to lows just below the 80 level early in the US session with the economic releases providing no significant support. Despite mixed data, US Treasury yields did hit a five-week high which helped cushion the dollar.

Sterling

The stronger than expected UK third-quarter GDP data will underpin near-term sentiment and will also dampen expectations that the Bank of England will announce further quantitative easing at the November monetary meeting.  There will still be concerns over the underlying outlook given that there was an artificial boost from the Olympics and there will also be concerns over the impact of a weak Euro-zone economy.  In this context, confidence could deteriorate rapidly. Sterling trends will also be influenced by underlying trends in risk appetite and weaker confidence would be a negative factor. Sterling recovered from a low below the 1.60 level against the US dollar during the week and gained some support from greater confidence in the economy in choppy trading with gains towards 0.8000 against the Euro.   The third-quarter GDP reading was stronger than expected with a 1.0% gain which was the strongest figure for five years. There was a recovery following the second-quarter holiday-related dip and there was also a boost from Olympic ticket sales with expectations that underlying growth was below 0.5%. The data did, however, dampen expectations that the Bank of England would move to sanction additional quantitative easing at the November MPC meeting which had an important impact in supporting the UK currency. The latest CBI industrial orders data was weaker than expected with a slide to -23 from -8 previously which maintained concerns over the impact of weak Euro-zone demand, although the underlying components were more favourable Swiss franc: There has been some underlying reduction in defensive flows into the Swiss currency as expectations of a Spanish aid request have eased immediate fears surrounding the Euro-zone. There are still very important stresses within the Euro area and there is still demand for Swiss bills at negative interest rates which indicates a high degree of market caution and pressure on the minimum Euro level could intensify again quickly. The dollar found support in the 0.92 area against the franc during the week and pushed back to the 0.9350 area as the Euro stabilised around the 1.21 area. The weaker than expected Euro-zone economic data increased fears that there would be further economic stresses surrounding the Euro while political tensions surrounding Greece also increased. This combination could also trigger a fresh flow of funds into the Swiss currency.

Australian dollar

The Australian dollar found support in the 1.0250 area and pushed higher later in the week, although gains were still relatively modest with resistance near 1.04 against the US currency. There was a stronger than expected headline inflation reading of 1.4% for the third quarter which served to dampen expectations of a further Reserve Bank interest rate cut at the November meeting. There was also some revival in optimism towards the Chinese economic outlook which also helped support the Australian currency. There was still a generally cautious outlook given stresses within the Euro-zone. Although there has been a slightly more optimistic tone towards the global economy, the Australian dollar will find it very hard to make much headway Canadian dollar: The Canadian dollar was subjected to net selling pressure during the week and did retreat to lows beyond 0.9950 against the US currency. Oil prices were generally weaker which curbed buying support for the local currency. The Bank of Canada left interest rates on hold at 1.0% and, although there was a more hawkish than expected statement, the central bank monetary policy outlook overall suggested that the possibility of an interest rate increase had declined which sapped support, although the impact was measured given very loose policy elsewhere. It will be difficult for the Canadian dollar to make significant gains given persistent global growth doubts, especially with a slightly more cautious central bank tone.