EurAnalysis

That speech was cancelled because this is ECB rate decision week and therefore, no ECB governing council member is allowed to make any public speeches.

Good morning all and welcome back to a glorious Monday

September is when the real fun begins. Most traders / Investors are back from holidays and ready to get back into the action, and action they will get. This month is full of key events that may well determine the mid and long term fate of our favorite pair... not just from a Euro perspective, but also from one as it pertains to the USD.

Today is a national holiday in the US and Canada, so after European close, we likely will not see much action. Therefore don't expect too much. Just thought I would mention that just in case you didn't know.

So, where are the key risk events for this fresh week? Here you go...

Tue 4th Sept @ 14:00GMT - US ISM Manufacturing PMI
Wed 5th Sep @ 09:30 GMT - German Eur 5.0bn Sep 2022 Bund auction
Thu 6th Sept @ 08:30 GMT - Spanish Bono Auction
Thu 6th Sept @ 11:45 GMT - ECB Interest Rate Decision
Thu 6th Sept @ 12:15 GMT - US ADP Non-Farm Private Employment
Thu 6th Sept @ 12:30 GMT - ECB Press Conference starring (Super) Mario Draghi
Thu 6th Sept @ 12:30 GMT - US Jobless Claims Report
Thu 6th Sept @ 14:00 GMT - US ISM Non-Manufacturing PMI
Fri 7th Sept @ 12:30 GMT - US Official Non-Farm Employment & Unemployment rate

Also this week, we should expect much noise coming from the talking heads in the Euro Zone... One minute talking up the anticipated ECB bond buying program, and the next, bashing it. This should make for some nice volatility... a scalper's wet dream. Of course, extreme caution should be used at all times, but those with an excellent scalping strategy should be able to rake in the big bucks without issue.

The other bunch of talking heads to watch for will be the Fed Voting council members spewing their QE3 verbal diarrhea. I have maintained for a long time now that we shall not see any outright unsterilized US Gov bond purchases, but the market seems to disagree with me. However I will not concede defeat on my view (and what makes sense) until such time as Benny hits that print button.

Certainly all of the above will be more than sufficient to move the markets this week, albeit in a more volatile fashion.

From a technical perspective, on Friday price did not manage to form a candle 4H close above the key 38.2% fibo level (1.3485 - 1.2041) at 1.2595 and as such closed the day, week and month below the said key level. Note that this is an area of confluence with the shorter term 78.6% fibo level (1.2745 - 1.2041) also falling at the same price level.

Should we get a break to the upside, we enter a zone of heavy supply between 1.2690 (21st June High) and 1.2745 (17th June High). I am anticipating that we will get one last push to the upside before we see any significant resumption of the underlying mid-long term bear trend, so the above levels are certainly key to watch and will serve as perfect short entry points for me.

In addition to the above, we have a MacD bearish divergence on the daily chart as the momentum behind the corrective rally has seriously diminished. Furthermore, the daily chart is also exhibiting a rising wedge formation which usually indicates a bearish reversal signal.

Best of luck today. Trade safe.

E/U Daily

French PMI is 46 Highest in 4 months

Morning.

Not only Draghi speaks, but there are those Holidays.

Just for fun, take a look at US Veteran day 2011. Those were holidays which made 200 pips spike. Imo ECB intervened back then.

T

Looks like everybody went back to bed

Nah, I am just playing computer games from X:15 - X:45, so I can watch H1 close and first m15 close .

T

I'm about, but my analysis hasn't changed much, we haven't touched 2690 or the upper trend-line yet, so I still see room north, but enough data/talking this week combined with hitting the upper T/L might give us a reversal.

Basically you already said it so I cbf

That's too bad. Didn't know you were such a prude

ADD: T.O.P.

It's this damn chastity belt I'm wearing

What is T.O.P?

I'd probably say up.. but that's just what I think.. got no chart to look at.. though I have pending sell @2670 last friday..

PT and Gofer try to get their posts on the TOP of each page... LOL

Closed out 6 positions (EUR/AUD, GBP/AUD, AUD/USD) today for a total of 744 pips!

Will wait a few days before closing out most of my other positions. Hopefully most (if not all) of my trades will reach their TP targets before the 6th. Probably going to be a lot of volatility from the 6th-14th.

Oh haha, must be a slow day then.

Haha, yep!

Where is everybody? I see a few lurkers down there at the bottom...

I wish - its just bloody hard work picking up ~ a dozen pips a time out of this 20 pip range.......

SNB Jordan: To Enforce Minimum FX Rate With Determination
Posted: 03 Sep 2012 12:10 AM PDT

FRANKFURT (MNI) – The Swiss National Bank will continue to enforce
the minimum exchange rate with the utmost determination, SNB Chairman
Thomas Jordan said Monday in a speech text prepared for delivery at the
NZZ Capital Markets Forum in Zurich.

“In the current situation, a further appreciation of the Swiss
franc would constitute a very substantial threat to the Swiss economy,
and would carry with it the risk of deflationary developments. With this
in mind, we will continue to enforce the minimum exchange rate with the
utmost determination, in line with our mandate,” Jordan said.

Jordan said that the “economic uncertainty in the euro area, in
particular, is of great concern to Switzerland and the SNB.” While the
Swiss central bank cannot influence developments in the euro area, it
can “act in a resolute and timely manner to dampen the negative
implications for our country,” Jordan stressed.

The head of the SNB underlined the importance of a stable financial
system and banking sector particularly for Switzerland and welcomed the
recent reform push aimed at ensuring greater stability.
In this context, Jordan pointed to the new instrument of
countercyclical capital buffers and said that the SNB’s decision not to
propose activating them thus far should not be interpreted as easing
concern over emerging imbalances especially for the real estate market.
“This is far from an all-clear for the real estate market. I want
to underline again that the risk of a further build-up of imbalances
followed by a significant price correction is still present. The
countercyclical capital buffer is a key element in the package of
measures recently approved by the Federal Council,” Jordan said.
–Frankfurt bureau tel.: +49-69-720142. Email: [email protected]

Congratz!!

If the ECB had this much monetary policy power within their mandate, the Euro could very well be trading around 1.40 against the USD. However, the fact is that the ECB is impotent and unless the EZ works towards a full fiscal union, this will not change. Hail the can-kicking efforts for they keep this currency alive and kicking till the can-kicking works no more.

Thought this was an interesting bit of information from Danske Bank today.

/----
Unwinding of long dollar positions in its final phase: A key driver of the FX
market this summer has been the unwinding of long dollar positions from stretched levels. The unwinding period that began in June has run far and investors are now net short the dollar for the first time in almost a year. This raises the question: will investors stop here or turn more fully short the dollar?
The answer to this question probably lies with the Fed, the ECB and European
policymakers. However, we doubt that even in a scenario where Spain asks for aid, the ECB restarts its bond purchase programme and the Fed delivers QE3, would investors turn significantly short the dollar. Global growth is simply too weak and it would probably require a turnaround in the emerging markets, and not least China, for sentiment to turn truly dollar bearish.

Investors are still short the euro: While investors are no longer net long the dollar, they are still net short EUR/USD (see page 2). By Tuesday last week, when the IMM data was collected, investors had reduced net short euro positions to 33% of open interest and it is likely that the spike in EUR/USD towards the end of the week has seen further repositioning. As can be seen from Chart 3, the reduction in euro shorts over recent months equals the reduction seen after the ECB LTROs in Q1. Hence, most of the move higher in EUR/USD is probably over, as reflected in our 1.27 3M forecast (see FX Trends, 15 August).
----/

Link: http://www-2.danskebank.com/Corporate - click research / latest research (pdf)

Thanks Tom!