Daily Outlook - Italy PM Berlusconi Set to Resign

By @ibtimes on

U.S. Dollar Trading (USD) the USD lost ground as global stock markets rallied on reports that the Italian PM would resign after new austerity measures are passed. Light economic data releases this week are letting the European headlines set market direction with Italy Bonds now closely watch as they hit fresh all time highs above 6.743%. In US stocks, DJIA +101 points closing at 12170, S&P +14 points closing at 1274 and NASDAQ +32 points closing at 2727. Looking ahead, FED Chairman Bernanke speaks.

The Euro (EUR) the EUR/USD fell into Europe before rebounding and rallying above 1.3800 on news taken positively by the markets that the Italian PM would resign to help austerity measures pass. The EUR/GBP rallied to test 0.8600 in a rare rally. EUR/CHF fell back on talk that further intervention from the SNB not likely.

The Japanese Yen (JPY) USD/JPY finally moved using the Dollar weakness to pull back late in the US session to Y77.50. Market will be closely watching if the BOJ come back into the market to help the Yen weaken or if instead they allow the USD/JPY to gradual fall back to recent lows near Y75.

The Sterling (GBP) The GBP/USD grinded higher breaking above 1.6100 as the recovery rally continued. September Industrial output came in at 0.0% vs. 0.1% forecast. The outlook it linked to whether the EU debt crisis can ease and Italian bond yields lower over coming days. Looking ahead, September Trade Balance forecast at -8bn vs. -7.77bn previously.

The Australian Dollar (AUD) the AUD/USD was under pressure in Asia but once again found support under 1.0300 and surged back to 1.0400. AUD/JPY struggled to break above Y81 as USD/JPY fell back. Today's Chinese data is expected to set the tone in the Asian session released at 1.30GMT. Looking ahead, October Chinese Retail Sales forecast at 17.4% vs. 17.7% previously y/y. October CPI forecast at 5.7% vs. 6.5%.

Oil & Gold (XAU) Gold broke above $1800 before collapsing on heavy profit taking sales back to $1780. The outlook is still bullish as investors flood back into the precious metal. Oil pressed higher as global middle eastern tension begin to rise on Iran Nuclear claims.

Pairs to watch

EUR/USD to rally to 1.4000?

OIL/USD to test $100 a Barrel

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3609

1.3657

1.3845

1.3871

1.4003

USD/JPY

76.95

77.54

77.65

78.42

78.98

GBP/USD

1.5825

1.5877

1.6110

1.6167

1.6203

AUD/USD

1.0148

1.0203

1.0390

1.0447

1.0567

XAU/USD

1714.00

1748

1790

1800

1816

OIL/USD

94.00

95.00

97.15

98.00

100.00

Euro - 1.3845

Initial support at 1.3657 (Nov 3 low) followed by 1.3609 (Nov 1 low). Initial resistance is now located at 1.3871 (Nov 1 high) followed by 1.4003 (61.8% retrace of 1.4247-1.3609)

Yen - 77.65

Initial support is located at 77.54 (50% retrace of 75.57-79.50) followed by 76.95 (61.8% retrace of 75.35-79.53). Initial resistance is now at 78.42 (Nov 2 high) followed by 78.98 (Nov 1  high).

Pound - 1.6110

Initial support at 1.5877 (Nov 3 low) followed by 1.5825 (38.2% retrace of 1.5272-1.6167). Initial resistance is now at 1.6167 (Oct 31 high) followed by 1.6203 (Sep 5 high).

Australian Dollar - 1.0390

Initial support at 1.0203 (Oct 21 low) followed by the 1.0148 (Oct 20 low). Initial resistance is now at 1.0447 (Nov 3 high) followed by 1.0567 (Nov 1 high).

Gold - 1790

Initial support at 1748 (Nov 4 high) followed by 1714 (Nov 2 low). Initial resistance is now at 1800 (Big Figure) followed by 1816 (Sep 21 high).

Oil - 97.15

Initial support at 95.00 (Intraday Support) followed by 94.00 (Intraday Support). Initial resistance is now at  98.00 (Intraday resistance) followed by 100.00 (Intraday Resistance).

Written by Anthony Darvall

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