Forexpros Daily Analysis - 26/11/2009

Forexpros Daily Analysis Nov 26, 2009


Special Event: Strategic & Tactical FOREX Trading

Hosted by: Wayne McDonell, founder of FXBootcamp
Thu, Dec 3, 2009, 11:00 EST/ 16:00 GMT

Forexpros is proud to host Wayne McDonell, world renowned Forex trading expert, in a unique webinar which will be held next week.
In this educational presentation Wayne will teach how to use technical analysis to align market and price forces for better trading opportunities with potentially less risk.
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Fundamental Events:

The Swiss KOF Economic Research Agency will publish its "Leading Indicators Index" Tomorrow (Nov 27), which determines the overall economic health of the country's economy.
The Index is comprised of 12 indicators related to consumer confidence, banking confidence, production, new orders and housing- and sheds light on the economic trend and the movement of GDP growth in Switzerland.
A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.
Analysts predict Tomorrow's Index to stand at 1.85, rapidly climbing since last May's slump of -1.86.
For Further reading, visit the Forexpros Economic Calendar

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The Euro broke the resistance 1.5018, and reached both suggested targets 1.5082 & 1.5144 successfully and with an unbelievable accuracy (yesterday’s high in some companies was 1.5143 and in others 1.5144). It looks like reaching 1.5144 will provide a chance to correct the last up-move from 1.4887. such a correction will typically target the area 1.5015-1.4985. the importance of the lower limit of this area is that it combines the rising trendline on the hourly chart, with short-term Fibonacci 61.8%, which makes it a very important support for setting the direction for what is left of the week. But, before considering this scenario the favorite one, we should see a break of 1.5077, then a visit to 1.5015-1.4985 will be highly anticipated. And if 1.4985 is taken, the Euro will fall under considerable pressure, that will initially lead to 1.4919, on the way to lower targets. Short-term resistance is 1.5138 and only breaking it would improve the technical outlook, and target 1.5200 & 1.5260.

Support:
• 1.5077: Fibonacci 61.8% for the micro-term.
• 1.4985-1.5015: a support area combining Fibonacci 50% & 61.8% for the short-term, with the rising trendline from 1.4800 on the hourly chart.
• 1.4919: previous important intraday support.

Resistance:
• 1.5138: previous resistance from 2008.
• 1.5200: previous resistance from 2008.
• 1.5260: previous resistance from 2008.

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As expected, and in harmony with the trend, Dollar-Yen broke the support 88.13 , and successfully reached the two suggested targets 87.10 & 86.40. This move has brought us prices that have not been seen for 15 years. It is only expected (and logical), that reaching 86.40 would provide us with a correction for the down leg that started at 89.17, and reached here without any significant correction. Such a correction will typically target the area 87.73-88.07 where there is Fibonacci 50% & 61.8% resistance levels (for the short-term). But before jumping on board we should see a break of the resistance 87.01. On the other hand, the support 86.40 will be support of the day, and breaking it would mean a continuation of the downtrend that showed a lot of strength yesterday, and a continuation of the drop towards new levels that have not been seen for a decade and a half, at 85.90, and may be later the calculated target for the broken wedge formation at 85.33.

Support:
• 86.40: support area from 1995.
• 85.90: support area from 1995.
• 85.33: the calculated target for the broken wedge formation.

Resistance:
• 87.01: Fibonacci 61.8% for the micro-term.
• 87.73: Fibonacci 50% for the short-term.
• 88.33: the bottom of the broken wedge formation.

Forex Trading Analysis Written By Forexpros

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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.

Fending off empty holiday shelves
Tight credit and slow sales are putting retailers in a crunch on financing their inventory.
NEW YORK (CNNMoney.com) -- With sales slow and credit tight, small merchants are scrambling to stock their shelves for the year's biggest shopping season.

Retailers traditionally borrow money to buy holiday inventory. But credit for small businesses has dried up this year, and with the recession slowing sales, few merchants have cash on hand. The crunch is forcing business owners to find new ways to keep running.

For a handful of New York City retailers in one hard-hit stretch of Brooklyn, a small community lender is playing the role of Santa Claus. Lesia Bates Moss, president of Seedco Financial Services, noticed an ever-increasing number of vacant storefronts along Atlantic Avenue. In response, she hosted a meeting with a dozen area retailers to find out how her organization could help.

One common problem the merchants cited was getting enough credit to buy sufficient holiday inventory. So Seedco Financial, a nonprofit that specializes in financing for underserved communities, launched a streamlined holiday program: Retailers who could provide a marketing plan for spending the money and driving foot traffic would get fast loans.

On Monday, Seedco staffers started delivering checks. A typical loan request is for around $20,000, to be repaid over the next year at interest rates of 6% to 10%.

"It doesn't take a lot in the way of capital access to help these businesses," Moss said. "We really needed to get money into the hands of these merchants before Black Friday, so they could stock their stores."

Toys and beer glasses: Karen Zebulon, the owner of toy and clothing retailer Gumbo on Atlantic Ave., is one of Seedco Financial's borrowers.

"Especially this year, because we have had such hard times, we really need a boost," she said. "If I can really strategize and plan and buy the right merchandise, I think it can be a turning point for me."

Zebulon plans to ramp up her inventory of toys, because even in tight times, customers continue to spend on kids. She's impressed at how quickly Seedco Financial got cash into her hands.

"This was -- you could say -- a godsend," she said. "It is saving me and saving a lot of other merchants that are receiving the loans." Without the financing, she would have been pulling a string of all-nighters trying to handcraft toys to stock her shelves.

Artez'n Gift and Gallery, which sells products made by local Brooklyn artisans, also got a loan from Seedco. Owner Jessica Furst got her check on Monday and "ran to the bank." She plans to use the cash to stock up on one of her best-selling items: pint glasses with illustrations of Brooklyn landmarks on them. They're a proven customer lure, drawing in tourists and others who make a special trip to Artez'n for the glasses.

With sales slow this year, Furst wouldn't have been able to afford to produce the Brooklyn beer glasses without the last-minute loan. "I would have been without them again, which would have been a loss of income for me, and possibly a loss of customer base," she said.

She will also use some of the loan money to fix the high-end printer she uses for her graphic design business. The small loan will make a big difference for Furst: "It will enable me to get back on my feet."

The big challenge for merchants will come over the next month. The National Retail Federation forecasts that this year's holiday sales will decline 1%, to $437.6 billion.

"The real concern is, can you sell stuff?" said Bill Dunkelberg, chief economist of the National Federation of Independent Businesses. "I am sure inventory accumulation has been cautious. It doesn't look like it is going to be much better than last year, which was terrible."

Squeezing by: Not every retailer is lucky enough to have a community lending program to turn to.

Clark Kepler's dad opened Kepler's Books in 1955. Like so many other independent bookstores, Kepler's Books is fighting for sales in an industry now dominated by Big Box discount retailers and Internet book sellers. Four years ago, with the shop on the brink of closure, 25 members of the Silicon Valley community voluntarily donated $1 million to save the neighborhood bookstore.

The recession has further ravaged the business, which saw a double-digit sales decline. "We had the most difficult time this last several months with the cash-flow issues," Kepler said. "We managed to get through it, but we were robbing Peter to pay Paul every step of the way."

One way the shop is coping is by churning inventory faster than it typically would. Bookstores can return unsold goods to publishers, and Kepler is shuffling fast to fine-tune his holiday lineup.

"It is a mad scramble much of the time," he said. "We have needed to scrutinize our inventory more and more to be sure that we have books that are selling." A book that languishes is "like money sitting on the shelf that we are not utilizing."

Kepler could use additional financing to give his bookstore more breathing room, but he's had little luck with the banks. He talked with one lender about a Small Business Administration-backed loan, but pulled out after deciding that the loan available for his shop wouldn't be big enough to justify all the effort involved in the application process.

Kevin Stein, co-owner of the Montana Fish Company in Bozeman, Mont., is also frustrated with the banks. "We have been to every bank in town," he said. "If we could expand into a bigger facility, we could take on more business, we could hire more people -- it is a win-win."

But so far, with no expansion loan yet available, Stein's seafood and wine market isn't doing its usual seasonal hiring. "We didn't lay anyone off, but it was a combination of not rehiring and not hiring for the holiday season," Stein said. To make up for the staffing decrease, Stein and his co-owner have upped their own hours.

"As employees filtered out, we just simply didn't rehire, which means I spent a lot less time at home," he said.

Like the merchants that borrowed from Seedco Financial, Stein is now looking outside the banking industry for help. He's trying to get a loan directly from the Small Business Administration, through its disaster lending program. A natural glass explosion one block away from Montana Fish may make the company eligible.

Stein and his business partner, Travis Byerly, have been pulling together mountains of documentation.

"It is a little mind-boggling," Stein said of application process. "But it is a great loan if we can get it. It could be a game changer."

Gold hits record on talk of Indian buying
Weaker dollar also helps push the precious metal to fresh highs.
$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.
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.