13th September 2013 THE BIG PICTURE • The - TopicsExpress



          

13th September 2013 THE BIG PICTURE • The dollar remained in a narrow range as the market looked for new sources of inspiration. EUR moved lower from the beginning of the European day and remained lower after Eurozone industrial production turned out much worse than expected. There was a momentary flurry when the weekly jobless claims came out much lower than expected, but that turned out to be due to computer problems in two states. Some Syria risk crept back as Syrian President Assad started to put preconditions on his participation in the chemical arms deal and stock markets moved lower, but gold also moved lower nonetheless. • NOK was the biggest winner of the day; the country’s economic indicators are beating consensus by the most of any country, according to the Citi economic surprise index. The country’s surprisingly good economic performance recently probably has some investors thinking that Norges Bank will be the next central bank after New Zealand to change to a tightening bias when it meets next Thursday, Sep. 19th. To repeat a frequent theme of ours, the Bank of Japan will probably be the last central bank to change policy, so long NOK/JPY could be a profitable play (probably through long USD/JPY and short USD/NOK). • As next week’s FOMC meeting gets closer and the market starts to think about what comes after tapering begins, there may be a focus on the possibility that the US government has to shut down. (Sound familiar?) According to the New York Times, much of the government will shut down as of Oct. 1st unless Congress approves new spending bills to replace expiring ones, and by mid-October the Treasury Dept. will lose the borrowing authority to finance the government and pay its debts. To make matters worse, the Republicans in the House of Representatives can’t even agree among themselves on a bargaining position. A large bloc of Republicans are demanding the delay of President Obama’s health care law for a year as the price of going along with raising the debt limit, a demand that President Obama has made clear he will not even discuss. So far this stalemate does not even seem to be on the market’s radar screen, probably because of the “boy who cried wolf” phenomenon – we’ve been here several times before and always managed to reach a last-minute compromise. But it could start to be a market factor – a dollar-negative market factor – if the end of September approaches without a solution. • The Eurozone finance ministers’ meeting in Lithuania is the only thing on the calendar today for Europe. The main items on their agenda will be growth and financial stability in the Eurozone as well as the financial situation of Greece and the status of the bailout program for Cyprus. In US, the focus will be on retail sales for August. Market expectations for the headline figure are for a rise of 0.5% mom, showing an acceleration from +0.2% mom in July. On the other hand, the closely followed retail sales excluding autos and gasoline are expected to decelerate to +0.3% mom from +0.4% mom previously. Shortly afterwards, University of Michigan consumer sentiment for September is expected to fall slightly by 0.1 point to 82.0. Weakness in these two important indicators could cause some investors to question US growth prospects and thereby weaken USD a bit. • THE MARKET EUR/USD • EUR/USD moved lower during yesterday’s session after finding resistance at the 1.3322 (R1) level, which coincides with the 61.8% Fibonacci retracement level of the previous downward wave. A clear break above that strong hurdle should target the next psychological resistance at 1.3400 (R2). On the other hand, if the rate fails to do so, bearish extensions should be triggered towards 1.3234 (S1) and 1.3188 (S2) next. • Support: Support is found at the 1.3234 (S1) level, followed by 1.3188 (S2) and 1.3103 (S3) • Resistance: Resistance levels are at 1.3322 (R1) (61.8%), followed by the psychological level of 1.3400 (R2) and the 1.3448 (R3) level found from the daily chart. Click here to view the full analysis ________________________________________ Prepared by: Marshall Gittler Published: 13/09/2013 Disclaimer: This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research. 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Posted on: Fri, 13 Sep 2013 09:16:15 +0000

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