• Share this:

Top Stories

• Market remains cautious ahead of EU Summit
• German consumer data mixed
• Nikkei off -0.92% Europe down -0.15%
• Oil at $92/bbl
• Gold at $1660/oz.

Overnight Eco

• AUD Conference Board Leading Index (AUG) -0.1% vs. 0.0%
• NZD Consumer Prices Index (QoQ) (3Q) 0.4% vs. 0.7%
• CHF UBS Consumption Indicator (SEP) 5.2 vs.5.1
• EUR German GfK Consumer Confidence Survey (NOV) 5.3 vs.5.2
• GBP BBA Loans for House Purchase (SEP) 33.1K vs. 36.3K
• GBP Current Account (Pounds) (2Q) -2B vs. -9.2B

Event Risk on Tap

• USD S&P/CS 20 City s.a. (MoM) (AUG) expected at 0.4%
• USD Consumer Confidence (OCT) expected at 46.3
• USD House Price Index (MoM) (AUG)
• USD Richmond Fed Manufacturing Index (OCT)
• CAD Retail Sales (MoM) (AUG)
• CAD Retail Sales Less Autos (MoM) (AUG)

Price Action

• USD/JPY remains near 76.00
• AUD/USD capped just below 1.0500
• GBP/USD 1.6000 finds resistance
• EUR/USD rangebound at 1.3850 to 1.3950

A night of consolidation and profit taking in the FX market as traders remained cautious ahead of the EU summit tomorrow with many key issues still unresolved. The latest newsflow from the region only added to the confusion with FDP General Secretary Linder saying that proposals for leveraging the EFSF are acceptable to the party, seemingly paving the way for approval of the accord in Bundestag tomorrow, but Austrian Finance Minister stating that they do not want to invest fresh money into the Greek bailout.

The issue of Greek haircuts remains another point of contention with EZ finance officials pressing for discounts of upwards of 60% while many private investors stating that anything above 50% would be tantamount to a default. We continue to believe that unless EU officials produce a dramatic agreement that would result in massive debt forgiveness for Greece and create a pan-European debt buying entity with scale and size, the markets are likely to be disappointed and EUR/USD climb will not be sustainable above the 1.4000 level.

On the economic front German GFK Consumer sentiment reading rose in October on strong labor market conditions but the underlying sub components deteriorated confirming  the slowdown in other economic data from  the region. The GFK index rose to 5.3 from 5.2 the month prior as German's income growth and propensity to spend rose as labor demand remained robust. 

However economic expectations declined further with the index swinging into negative territory to -6.2 points from 4.8 in September. The regions’ debt crisis continues to weigh on the minds of the consumers   and curtail spending into the key Christmas season especially if the current round of negations amongst EU finance ministers fails to pacify the markets. 

In UK the Current Account data surprised to the upside with the deficit shrinking  to its smallest rate in 3 years. The CA narrowed to -2B from a revised -4.1B although all of the improvement came from capital account side as the trade deficit actually widened.  The news provided a positive backdrop for today’s testimony by BOE Governor Mervyn King but the UK central bank still decidedly dovish on the issue of QE cable is likely to have a difficult time breaking above the 1.6000 barrier unless risk flows accelerate markedly.

With only  a smattering of housing and consumer confidence data on the docket in North American trade the eco  calendar is unlikely to have much impact on trade as all eyes remain on Europe. Trading could turn volatile on any leaks from Brussels but with most of the  broad points now known the risk appears to be skewed to the downside as any failure to reach a comprehensive settlement could trigger a quick selloff in risk FX.

FX Upcoming

Currency	GMT	EST	Release	Expected	Prior
USD	13:00	9:00	S&P/CS 20 City s.a. (MoM) (AUG)	0.4%	0.1%
USD	14:00	10:00	Consumer Confidence (OCT)	46.3	45.4
USD	14:00	10:00	House Price Index (MoM) (AUG)		0.8%
USD	14:00	10:00	Richmond Fed Manufacturing Index (OCT)		-6
CAD	12:30	8:30	Retail Sales (MoM) (AUG)		-0.6%
CAD	12:30	8:30	Retail Sales Less Autos (MoM) (AUG)		0%

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.