Forexpros.com Daily Analysis - 25/11/2009

Forexpros Daily Analysis Nov 25, 2009

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Fundamental Insight

NZD traders await tomorrow’s announcement by the Reserve Bank of New Zealand, on the quarterly Inflation Expectations Report (Nov 26).
The report predicts the percentage change in prices of goods and services over the next 2 years (The future inflation expected by business managers).
A higher than expected reading should be taken as positive/bullish for the NZD (as the common way to fight inflation is raising rates, which may attract foreign investment), while a lower than expected reading should be taken as negative/bearish for the NZD.

For technical analysis on the NZD/USD and other currency pairs see Forexpros.

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Euro Dollar

The Euro broke the resistance 1.4951 and touched 1.50 this morning, but it stopped before 1.5018. This will be the “resistance of the day” and breaking it will give way to reach 1.5082 for the first time this year, and may be later a jump to 1.5144. But, exhaustion is starting to appear on the RSI indicator on many timeframes, including the hourly chart, which could weaken the Euro, and lead it to drop without breaking 1.5018.In this case, we will head towards short –term support at 1.4981, and if broken, the targets will be Fibonacci 38.2% for the whole rise from 1.4800 at 1.4925 first, and may be then 1.4878, which is Fibonacci 61.8% and the most important support for the short-term at the moment.

Support:
• 1.4981: short-term support.
• 1.4925: Fibonacci 38.2% for the last upward leg from 1.4800.
• 1.4786: Fibonacci 61.8% for the last upward leg from 1.4800, the most important support for the short-term.

Resistance:
• 1.5018: Nov 9th & 10th high.
• 1.5082: previous resistance from 2008.
• 1.5144: previous resistance from 2008.

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USD/JPY

Dollar-Yen broke the support 88.56, and came close to the suggested target 88.13 (the low until this moment is 88.19). That is why this support will be our “support of the day”, and we believe it is the last significant support before the last 15 years low 87.10. Breaking 88.13 will be a signal that the price is heading to a test of Jan 12th bottom, and this year’s & the last 15 years’ low 87.10, and may be later to levels that have not been seen on the screens since 1995, like 86.40. Short-term resistance is 88.46, and breaking it would give this pair the needed strength to go back to 89, and specifically to 89.07 first, and may be 89.60 later. The outlook for the medium-term is still negative, and approaching 88.13 only added to the negativity.

Support:
• 88.13: Oct 13th low.
• 87.10: Jan 12th low.
• 86.40: support area from 1995.

Resistance:
• 88.46: short-term resistance.
• 89.07: intraday top.
• 89.60: Nov 7th low.

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Forex Trading Analysis by Forexpros - Written by Munther Marji.

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Disclaimer
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Bankruptcies spike 33%
Number of bankruptcy filings in third quarter of 2009 soars to highest level since 2005. Business bankruptcies filed this year top 2008 total.
NEW YORK (CNNMoney.com) -- The total number of bankruptcies filed in the third quarter surged 33% in 2009 and is at the highest level since 2005, according to data released Wednesday.

The American Bankruptcy Institute, an industry research firm, said 388,485 bankruptcies were filed during the last quarter, compared to 292,291 filed during the same period in 2008, according to data released by the Administrative Office of the U.S. Courts.

Filings for the first nine months of the year climbed 35% to 1,100,035, compared to 841,496 filings during the same period in 2008. A total of 1,117,771 bankruptcies were filed last year.

"The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today's weak economy," said ABI ****utive director Samuel Gerdano in a statement. "With unemployment surpassing 10% and credit to businesses remaining tight, consumers and businesses are increasingly turning to the financial relief of bankruptcy."

Bankruptcies are at the highest level since 2005, when 2,078,415 were filed before Congress passed amendments to the Bankruptcy Code, said ABI.

In October 2005, Congress implemented legislation making it more difficult for filers to prove they should be allowed to clear their debts in a Chapter 7 bankruptcy, forcing more to file under Chapter 13. The law triggered more Americans to rush to file for bankruptcy in the months before the law went into affect.

The ABI report said business bankruptcy filings rose 32% in the third quarter of 2009 to 15,177, and filings for the first nine months of the year totaled 45,510, topping the total 43,546 business bankruptcies filed in 2008.

Personal bankruptcies increased 33% to 373,308 during the last quarter, led by a 42% hike in Chapter 7 filings, which totaled 265,721. The number of consumers filing Chapter 13 bankruptcies rose 15% to 107,142 filings in the third quarter, according to ABI.

During a twelve-month period ending Sept. 30 2009, the report said total filings increased more than 34% to 1,402,816, compared to 1,042,993 in the same period of 2008.

Nevada had the highest rate per capita filings in the country, with 10.49 residents per thousand filing for bankruptcy in the year ended Sept. 30. The state also had the highest rate of filings for chapter 7 bankruptcies at 7.53.

Tennessee had the highest rate of filings for Chapter 13 bankruptcies in the 12-month period with 4.36 people per thousand.

Jobless claims plummet to 14-month low
Number of initial filers for unemployment insurance sinks to 466,000, the lowest since Sept. 13, 2008.
NEW YORK (CNNMoney.com) -- The number of first-time filers for unemployment insurance fell to 466,000, the lowest level in 14 months, according to a government report released Wednesday.

That's the lowest number in the Labor Department figures since the week ended Sept. 13, 2008, and a decrease of 35,000 from the previous week's 501,000.

A consensus estimate of economists surveyed by Briefing.com expected 500,000 new claims in the week ended Nov. 21.

The 4-week moving average of initial claims was 496,500, down 16,500 from the previous week's average of 513,500.

The report is usually released on Thursdays, but it was posted a day early this week because of the Thanksgiving holiday.

"It seems to be a statistical pop," said Tim Quinlan, economist at Wells Fargo. "As much as I'd like it to continue, I don't see claims continuing to fall at this pace."

Still, Quinlan said he expects a gradual decline in initial claims throughout the coming months.

"If you told the average person that we're five or six months into a recovery, they'd probably want to shoot you because it doesn't feel that way to them," Quinlan said. "But we are seeing more encouraging signs overall, and unemployment claims will be part of that."

Continuing claims: The government said 5,423,000 people filed continuing claims in the week ended Nov. 14, the most recent data available. That's down 190,000 from the preceding week.

The 4-week moving average for ongoing claims fell by 98,500 to 5,712,250.

But the slide in continuing claims may signal that more filers are falling off those rolls and into extended benefits.

Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, nor people who have exhausted their benefits.

Administration efforts. Earlier this month, the Labor Department reported that the nation's unemployment rate rose above 10% for the first time since 1983.

A separate government report said 1 million people could lose their unemployment benefits in January if they don't receive further extended federal aid. President Obama signed a bill to extend government-provided unemployment insurance by up to 20 weeks, but the law applies only to those whose benefits will expire by the end of 2009.

The Obama administration said earlier this month that it will hold a jobs forum on Dec. 3. Obama will meet with labor representatives, financial experts and other business leaders to discuss the continued problems with unemployment.

State-by-state data: Only one state reported an initial claims increase of more than 1,000 for the week ended Nov. 14, the most recent data available.

Claims in Florida rose by 1,313, which a state-supplied comment attributed to layoffs in the construction, trade, service and manufacturing sectors.

Twenty-two states said that claims fell by more than 1,000. California reported that claims declined by 7,987; Texas had 4,710 fewer claims; Pennsylvania saw a dip of 4,321; Wisconsin had 2,716 fewer claims; and Ohio claims shrank by 2,486.

Gold hits record on talk of Indian buying
Weaker dollar also helps push the precious metal to fresh highs.
LONDON (Reuters) -- Gold prices hit record highs above $1,180 an ounce in Europe on Wednesday, boosted by the euro's move through $1.50 against the dollar and by a report that India may consider buying more bullion from the IMF.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $21.20 and settled at a record $1,187.00 an ounce.

The dollar fell to a 15-month low against the euro due to views that U.S. rates would stay low and as Russia said it would diversify currency reserves, though it pared losses after a mixed batch of U.S. data.

Meanwhile India's Financial Chronicle newspaper said on Wednesday that India is open to buying more gold from the International Monetary Fund, which has around another 200 tonnes to sell. The IMF said it had no comment to make on the report.

Standard Chartered analyst Daniel Smith said further Indian buying could be "potentially very bullish" for gold.

"Most commodities are rallying on the back of the weaker dollar, and that move is potentially quite significant," he said. "Gold has been outperforming on the back of this general rally in commodities, and that tells us that there is more to this than just the dollar story."

"My feeling is that we are going to keep going higher for the time being," he added.

The market is sensitive to speculation of further official sector buying after news in early November, that India's central bank had bought 200 tonnes of gold from the IMF, sparked a rally.

Russia, Sri Lanka and Mauritius have since also announced gold acquisitions, and traders speculate that more central banks, particularly in Asia, could be open to gold acquisitions to diversify their foreign exchange reserves.
Diversification

"We have had relatively supportive news from the central banks, particularly in Asia, confirming that there is demand for gold as a means of diversifying their large foreign exchange reserves," RBS Global Banking & Markets analyst Daniel Major said.

"There is plenty more potential for central banks to buy either IMF gold or other gold in the market to try and boost their reserves," he added.

Expectations for further reserve diversification, as well as prospects for further dollar weakness and fears over inflation in 2010 have all fueled investment demand for the precious metal, and could lead to further sharp prices gains.

"Central bank and other investor demand could see gold move to $1,500/oz in the next 3-6 months," Fairfax said in a note.

Dollar weakness helped lift other commodities, with oil prices ticking up half a percent in early trade and industrial metals prices climbing.

Elsewhere, holdings of the world's largest gold exchange-traded fund, the SPDR Gold Trust, rose nearly 1 tonne on Tuesday to their highest since late June.

Indian gold traders meanwhile continued to stock up for weddings in anticipation of a further price rise, but the flow of scrap sales eased.

Silver was bid at $18.63 an ounce versus $18.49. Holdings of the world's main silver ETF rose 136 tonnes to a record 9,252 tonnes on Tuesday, while ETF Securities' silver exchange-traded product also hit record levels.

Platinum was at $1,466 an ounce against $1,444.50, while palladium was at $369.70 against $366.35. Holdings of ETF Securities' palladium-backed ETP rose to a record 620,359 ounces on Tuesday, and are up 11% month-on-month.

Dollar slides to a 15-month low
Upbeat data bolsters economic outlook and pressures the greenback.
NEW YORK (Reuters) -- The dollar slid to a fresh 15-month low against a basket of currencies Wednesday as upbeat data on weekly jobless claims, personal consumption, and new home sales bolstered the outlook for the U.S. economy.

Traders also pushed the dollar to a 10-month low against the yen, encouraged by Federal Reserve minutes released on Tuesday which showed policymakers saw the U.S. currency's recent decline as "orderly." The minutes also affirmed expectations U.S. interest rates will stay essentially at zero until around mid-2010.

The U.S. reports along with the Fed stance emboldened investors to seek riskier investments elsewhere for higher returns, boosting higher-yielding currencies such as the Australian dollar.

"The big thing today is dollar weakness against virtually every currency and that's a reflection in part of the FOMC's seeming comfort with the dollar's decline being relatively orderly," said Nick Bennenbroek, chief currency strategist at Wells Fargo in New York.

The generally positive U.S. data also stoked the market's risk appetite, prompting a dollar sell-off, said Kathy Lien, director of FX research at GFT in New York.

For most of the year, the dollar, which is typically viewed as a safe haven, has tended to fall on upbeat economic news.

Lien specifically cited the decline in jobless claims. "Jobs are the most important thing, so they're latching on to the fact that jobless claims were below 500,000, which means we could see a better non-farm payrolls report going forward," she said.

Also enhancing U.S. economic prospects were an increase in new home sales and consumer confidence.

The euro hit a 15-month high at $1.5096 according to Reuters data, and was last up 0.6% at $1.5052.

The ICE Futures dollar index, which measures its performance against a basket of six currencies, fell to 74.399, a 15-month low. It last traded at 74.653, down 0.6%.

The dollar fell 1.0% to 87.69 yen according to Reuters data, after falling as low as 87.40, its lowest since January.

However, news the International Monetary Fund will likely tell euro zone finance ministers next week that the euro is undervalued versus the dollar has halted the dollar's slide, traders said.

In addition, a report saying the government of Dubai will ask creditors of its two flagship firms, Dubai World and property group Nakheel, to a debt standstill, partly dented risk sentiment.

"The Dubai news was a surprise and helped halt the rally in the euro against the dollar, as traders took some of their risky assets off the table," said Steven Butler, director of FX trading at Scotia Capital in Toronto.