Economist Shayne Hefernan takes a look at the FX Action from Asia

Euro Trades Near Three-Week Low Before Retail Sales, ECB Meeting

The euro traded 0.7 % from its lowest level in three weeks amid signs that Europe’s economy is worsening as its debt concerns remains unresolved. Demand for the 17-nation euro was limited before data forecast to show retail sales in the currency bloc decreased for a second month and ahead of an Oct. 4 meeting of ECB .

Break above the nearest resistance and yesterday’s top at 1.2939 may trigger further strengthening of the Euro. Going bellow yesterday’s bottom and first support at 1.2803, however, would confirm continuation of the bearish trend, towards next objective downwards 1.2690.

Today’s focus is on EU17 PPI, and US Redbook, at 9, and 12:55 GMT respectively.

Quotes are moving in line with the 20 and just bellow 50 EMA on the 1 hour chart, indicating short term neutral and medium term slim bearish pressure. The value of the RSI indicator is neutral and calm, MACD is negative and quiet, while CCI is in line with the 100 line on the 1 hour chart, giving over all neutral signals.

Technical resistance levels: 1.2939 1.3055 1.3480
Technical support levels: 1.2803 1.2690 1.2564

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Bernanke Spurns Slump Prospect in Bond-Buy Defense as ISM Rises

Fed Chairman Ben S. Bernanke defended the Federal Reserve’s unprecedented bond buying in his first comments since the Fed renewed the purchases last month, saying the program will spur growth, cut unemployment, help savers and support the dollar. The central bank will sustain record stimulus even after the expansion gains strength, and policy makers don’t expect the economy to remain weak through 2015, Bernanke said today in a speech

Canadian Dollar Advances on U.S. Factory Data, Growth Revision

The Canadian dollar advanced against most of its major peers as unexpected manufacturing gains for the U.S., Canada’s largest trading partner, spurred an advance in stocks and positive risk sentiment.

In fact, USD/CAD and EUR/GBP were the most variable relatively to normal levels, as their measures of volatility attained 2.4 and 2.3, accordingly. These two pairs along with GBP/USD were also the most consistent in their volatility, being turbulent (respective index >1) for 40 or even more per cent of the time. This implies that market participants are seeking different currency pairs to trade in light of uncertainty surrounding the impact of a third round of quantitative easing by the Federal Reserve and, most importantly, when eurozone is going to demonstrate long-awaited robust recovery.

Volcker Says Latest Fed Bond-Buying Has No Effect on Inflation

Paul Volcker, former chairman of the Federal Reserve, said the U.S. central bank’s latest bond-buying program isn’t creating inflationary pressure. “It’s not going to have a profound effect on the economy and it’s not going to have any effect on inflation in the short run,” Volcker said today at a forum .

Pound Falls Most in 2 Weeks Versus Euro as Manufacturing Shrinks

The pound dropped the most in two weeks against the euro after an index of U.K. manufacturing declined more in September than economists forecast. Sterling weakened versus all except two of its 16 major peers after the Bank of England said net lending for homes dropped the most in almost three years. Sterling also weakened against the euro after stress-test results bolstered confidence in Spain’s banking system and spurred demand for safe haven GBP.

The pair is expected to find support at 1.6105, and a fall through could take it to the next support level of 1.6076. The pair is expected to find its first resistance at 1.6169, and a rise through could take it to the next resistance level of 1.6204.

Trading trends in the pair today are expected to be determined by the release of construction PMI data in the UK.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

Spain Said to Be Ready to Seek Euro-Zone Help, Reuters Says

Spain is ready to seek a help for its public finances, Reuters reported, citing four unidentified European officials. Germany has indicated that Spain should hold off, Reuters said. German Finance Minister Wolfgang Schaeuble said in September that Spain was on the right track and may need less support than previously thought.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service

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