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Oct 9th Oct 15th 2011

Volume 1, Issue 23

Elite Global Trading

Forex Weekly Commentary


Fundamental Outlook
1.50 percent, which if market participants were forecasting a cut should have boosted the Euro, it was President Trichets commentary that weighed on the regions common currency during his final press conference. He sated risks to economic growth remain on the downside. The European Central Bank announced that it would resume its covered-bond purchases and reintroduce year-long loans for banks, as a way to free up liquidity. Another liquidity crisis onset by a Greek default would destroy the market, just as what happened when Lehman Brothers Holdings Inc. collapsed in September 2008. We await the solution for the crisis in Greece, and will likely get some volatile news releases until the solution is provided by the EU. Look for continued market uncertainty in the weeks to come. The U.K. central bank last week raised the ceiling for its asset purchases, or so-called quantitative easing, to 275 billion pounds ($428 billion) from 200 billion pounds. Britains economy grew less than initially estimated in the second quarter, with gross domestic product rising 0.1 percent rather than the initial estimate of 0.2 percent, data last week showed. With the UK having flexibility to continue to raise it's asset purchase gives more reason for why in the medium to longer term GBPUSD trade is likely to reach the 1.4000s and maybe further. A deeper rally could be on tap prior to the next major move down in the GBPUSD, but don't be fooled in an long term moves to the upside in this pair, we have too much evidence pointing towards a weaker pound.

In this issue: Fundamental Outlook EURUSD AUDUSD EURAUD 2 1

EURCAD EURUSD Event Risk

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The risk aversion drive that has gained since July slowed significantly last week, the $DXY dollar index made highs at 79.84. The greenback is not the typical safety asset. Rather, the benchmark requires a nearextreme level of fear to leverage its universal appeal: liquidity. If one is looking for liquidity then the US Dollar is where they go. Without an absolute shift in capital away from leverage and risky positions, there is little that the dollar can do to draw capital in. What we need to ask, is this a key reversal to further gains in the near future for the world reserve currency or are we going to be looking at a reversal from this rally back down for further declines? Well it is difficult to tell at the moment, we have the FOMC meeting minutes this week which will give key indication if the Fed will be taking further QE measures to help void a recession. If we do get more QE measures then we will likely see the US Dollar continue to pullback to further levels from this current move up from record lows. Also the Fed's release of Operation Twist will have some updates come Wednesday during minutes release. The EURO lost it's gains to highs from last week after the downgrades that occurred Friday. Although rates remained on hold at

Oct 9th Oct 15th 2011

Volume 1, Issue 23

Elite Global Trading

Australian Dollar / United States Dollar


AUDUSD: The Australian dollar struggled to hold its ground on Friday and the pullback from 0.9877 may gather pace over the following week as the Reserve Bank of Australia shows an increased willingness to reduce interest rate from 4.75 percent. After keeping the cash rate unchanged in October, the central bank reiterated that the economic recovery is weaker than initially expected, and talked down the risk for inflation, stating that medium-term price growth is expected to be consistent with the 2 to 3 percent target range. As the AUD/USD fails to push back above the 38.2% Fibonacci retracement from the 2010 low to the 2011 high around 0.9930-50, the pair appears to have placed a lower high last week, and the exchange rate may trend lower over the near-term as the fundamental outlook for Australia deteriorates. Moreover, should market sentiment continue to taper off over the following week, the flight to safety is likely to sap demands for the high-yielding currency, and we may see the aussie-dollar may a run to test lows near .9400. A break of this would extend this move down to .9200. Outlook: Remains bearish, a rally or consolidation may be the present state we are still in prior to the next major move down. Price being capped at .9880, shorting the rally's is still favored, a break above .9880 exposes parity at 1.0000.

Euro / Australian Dollar


EURAUD: This pair is positioned for another move towards the 1.3400. A reversal of last weeks high positrons this weeks move bearish. We will look for a rally for a better entry from where it is currently trading. A rally to 1.3750 could be expected prior to the move down to 1.3400. Outlook: Bearish Bias, a rally to 1.37501.3826. Short play around 1.3800, with a stop at 1.4000, and a target of 1.3400.

Oct 9th Oct 15th 2011

Volume 1, Issue 23

Elite Global Trading

Euro / Canadian Dollar


EURCAD: This pair has been trading in a range of over 1000pips and gives great swings. Currently trading near the break down point of 1.3850 area. A close below this area we will likely get momentum to lower prices. Outlook: Bearish Bias, targeting 1.3680 area. A rally up to the 1.3950 area would be preferred to take this short, with entry at 1.3950, stop above 1.4130, and targeting 1.3680.

Euro / United States Dollar


EURUSD: Continued weakness following through lower from last week, further weakness can be expected. As the same time we are carving out a short term bottom for a deeper recover back up towards the 1.3800 area. Ahead of that recovery further lows is certainly probable, such a case, the 1.3300 level will be targeted at first ahead of the 1.3245 level, its Jan 172011 low and then its bigger support standing at 1.2874 level, its Jan2011 low. Looking up the 1.3799 level, its Sept2011 high will have to be taken out to reduce its present weakness and possibly bring further strength towards the 1.3835 level. Further out, resistance resides at the 1.3936 level, its Sept 092011 high. Outlook: Bearish Bias Remains, starting this week out we see a test of 1.3300-1.3245, a recovery up towards 1.3600 area and a break above 1.3700 will bring the 1.3800 in perspective of a testing. We like this pair short below 1.3936 level, we look for shorts on the rallies, ideal shorts are around 1.3800. We are targeting 1.2900 area in the weeks to come.

Oct 9th Oct 15th 2011

Volume 1, Issue 23

Elite Global Trading

Weeks Event Risk


USD: Prelim UoM Consumer Sentiment 9:55am

Monday: EUR: French Industrial Production 2:45am EUR: Sentix Investor Confidence 4:30am AUD: NAB Business Confidence 8:30pm

Tuesday: EUR: ECB President Trichet Speaks 3:30am GBP: Manufacturing Production 4:30am CAD: Housing Starts 8:15am AUD: Home Loans 8:30am

Wednesday: GBP: Claimant Count Change 4:30am EUR: Industrial Production 5am USD: FOMC Meeting Minutes 2pm EUR: ECB President Trichet Speaks 2:30pm AUD: Employment Change 8:30pm AUD: Unemployment Rate 8:30pm

Thursday: CNY: Trade Balance EUR: ECB Monthly Bulletin 4am CAD: Trade Balance 8:30am USD: Trade Balance 8:30am CNY: CPI 10pm

Friday: G20 Meeting EUR: CPI 5am USD: Core Retail Sales 8:30am

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News letter Authors: Anthony Rousseau


arousseau@eliteglobaltrader.com

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