Eur/Usd: Ecb Sees No Problem With Buying Bonds}

Submitted by: Growth Aces

http://GROWTHACES.COM Trading Positions

EUR/USD: short 1.2470, target 1.2330, stop-loss 1.2540

GBP/USD: short 1.5910, target 1.5600, stop-loss 1.5770

USD/JPY: long at 115.00, target 117.70, stop-loss 115.00

USD/CHF: long 0.9640, target 0.9760, stop-loss 0.9590

NZD/USD: short 0.7860, target 0.7670, stop-loss 0.7930

EUR/CHF: long 1.2025, target 1.2095, stop-loss 1.1995

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EUR/USD: ECB Sees No Problem With Buying Bonds

(short, the target is 1.2330)

The provisional Euro zone GDP figures showed GDP growth in the third quarter amounted to 0.2% qoq, slightly stronger than the consensus forecast (0.1%). GDP growth for the second quarter was revised from flat to a 0.1% rise.

The upside surprise came mainly from 0.3% growth in France. In Germany GDP rose 0.1% qoq. No breakdown is published at this stage, but the press release of the statistics office said that consumer spending and net exports both boosted GDP. We already knew that Spain had expanded by a solid 0.5% qoq.

Final Euro zone inflation for October was confirmed at 0.4% yoy but the core rate (excluding food and energy) was actually lower at 0.7% yoy compared to 0.8% yoy.

Despite slightly better than expected GDP figures for the third quarter the pressure remains on the ECB to deliver further easing and expand its balance sheet. European Central Bank Governing Council member Christian Noyer said he saw no problem with buying government bonds if interest rates rose or if the European economy suffered new shocks that derailed inflation forecasts. He added that the ECB could also consider intervening on the corporate bond market if conditions did not require purchases of government debt. Noyer had previously said that the purchase of government bonds was warranted in “extreme circumstances”. His shift toward buying government bonds is significant and may call for the ECB delivering further stimulus.

The EUR/USD went down today after rebounding to 1.2492 during US session yesterday. We keep our short position with the target at 1.2330.

Significant technical analysis’ levels:

Resistance: 1.2499 (high Nov 11), 1.2509 (high Nov 10), 1.2533 (high Nov 6)

Support: 1.2419 (low Nov 12), 1.2394 (low Nov 11), 1.2358 (low Nov 7)

GBP/USD: Looking For A Retest Of 1.5600

(we lowered the target to 1.5600)

Construction output increased by 1.8% mom in September after dropping by 3.0% mom in August. Monthly construction data are very volatile, so let us take a look at the third quarter as a whole – the output was up by 0.8% qoq. House building remained robust, expanding by 5.1% in the third quarter from the second quarter.

We should be less optimistic about the future in the construction sector. PMI index for construction fell to a 5-month low in October from an 8-month high in September. British house prices were rising by more than 10% yoy earlier this year, but have since slowed. According to mortgage lender Halifax prices in the three months to October grew by the slowest rate since late 2012.

The GBP continues to suffer on the back of Wednesday’s BOE inflation report. The GBP/USD has erased 1.5750 and 1.5700 option barriers and fell to a fresh 14-month low at 1.5655. At Growth Aces we keep our short position taken at 1.5910, but have lowered the target to 1.5600 (near the low on Sep 13, 2013) and the stop-loss to 1.5770.

Significant technical analysis’ levels:

Resistance: 116.70 (high Oct 18, 2007), 117.00 (psychological level), 117.20 (high Oct 17, 2007)

Support: 115.72 (session low Nov 14), 115.31 (low Nov 13), 115.02 (10-dma)

USD/JPY: Focus On Politics

(we keep our long position and have raised the stop-loss to 115.00)

Director of the International Monetary Fund’s Regional Office for Asia and the Pacific said Odd Per Brekk said: “An aggressive pace of the BOJ’s monetary easing may need to be maintained for an extended period”. In his opinion monetary stimulus needs to be accompanied by more forceful structural reforms. He added that raising sales tax rate to 10% in October 2015 is necessary to bring sown Japan’s fiscal deficit in a steady durable manner.

Japanese Economics Minister Akira Amari said on Friday that Prime Minister Shinzo Abe cannot delay a sales tax increase indefinitely, suggesting that Tokyo will not loosen its commitment to reducing public debt and balancing its budget. Finance Minister Taro Aso said that it would be hard to halve Japan’s primary budget deficit in the next fiscal year as planned if the government foregoes a planned sales tax hike next year.

Investors are waiting to see if Prime Minister Shinzo Abe calls an early election to postpone a tax hike. A senior ruling party lawmaker said on Thursday Abe had decided to do this. Abe has said he will decide on whether to proceed with the planned October 2015 tax increase after seeing preliminary figures on GDP growth for the third quarter, due on Monday.

The USD/JPY hit new 7-year highs above 116.11. The overall bias remain on the upside and the target is 117.70, just below 117.95 (October 2007 high). We have raised the stop-loss level to 115.00 (near the 10-dma).

Significant technical analysis’ levels:

Resistance: 116.70 (high Oct 18, 2007), 117.00 (psychological level), 117.20 (high Oct 17, 2007)

Support: 115.72 (session low Nov 14), 115.31 (low Nov 13), 115.02 (10-dma)

GrowthAces.com is an independent macroeconomic research consultancy for traders. We offer you daily forex analysis with forex trading signals. The service covers forex forecasts and signals for following currencies: EUR, USD, GBP, JPY, CAD, CHF, AUD, NZD as well as emerging markets. Our subscribers should expect to receive: forex trading strategies, latest price changes, support and resistance levels, buy and sell forex signals and early heads-up about the potential fx trading opportunities. GrowthAces.com offers also daily macroeconomic fundamental analysis that enables you to see fundamental changes on forex market. We provide in-depth analysis of economic indicators resulting from knowledge, experience, advanced statistics and cutting-edge quantitative tools.

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