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Daily Report: Sterling Recovers ahead of Q3 GDP, but VulnerableSterling recovers mildly as markets await the highly anticipated Q3 GDP data from UK. Growth is expected to slow considerably from Q2's 1.2% qoq to 0.4% qoq in Q3. The pound has been one of the weakest currency recently, just next to dollar, on speculation that BoE will eventually follow Fed to expand is quantitative easing program. BoE Governor King noted last week that inflationary pressure remain subdued when looking at a range of indicators other than the CPI itself and hinted he's open to more QE. While the MPC is split on the issue, it's believed that more members are starting to lean towards additional easing. Disappointing GDP figure today will intensify the speculation of QE announcement at next meeting on November 4 and should trigger another round of selloff in sterling. Otherwise, BoE would probably wait for Inflation Report on November 10 before making a decision. |
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| Featured Technical Report | |
GBP/JPY Daily OutlookDaily Pivots: (S1) 126.41; (P) 127.07; (R1) 127.72; More GBP/JPY recovers after breaching 126.73 support briefly to as low as 126.42 and some sideway trading might be seen first. But after all, near term outlook remains bearish as long as 129.09 resistance holds and we'd expect current decline to continue. Sustained trading below 126.73 will confirm that whole medium term fall from 153.05 has resumed and should target 120 psychological level first and then 118.18 low. |
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| Special Reports |
Net Shorts In USD Stayed At Exceptionally Low LevelsCompared with 4 weeks ago, net shorts in USD soared $46.84B, or +81.54%, to $30.20B in the week ended October 19, driven by additions of net lengths in JPY, EUR, GBP and CAD. Yet, panic selling in USD is temporarily behind us as net shorts in the currency reduced for a second week after reaching a peak of 35.16B on October 5. As USD's downtrend should continue in the near- to medium- term, speculators should remain net sellers of the dollar futures. Multilateral Coordinations Impractical As G-20 Leaders Unlikely To Subordinate Self Interest To Global BalancesG-20 finance ministers and central bank governors agreed to 'move towards more market determined exchange rate systems that reflect underlying economic fundamentals' and 'refrain from competitive devaluation of currencies'. Member countries also pledged to strengthen 'multilateral cooperation to promote external sustainability', reduce 'excessive imbalances' and maintain 'current account imbalances at sustainable levels'. Although the language used in the communiqué was stronger than that in the previous meeting in Toronto, finance leaders failed to agree on a more concrete proposal to resolve currency tensions as it's hard for member countries to alter domestic policies to achieve external balance. Renewed selling interests were seen in USD as the market focus on the upcoming FOMC meeting. While the Fed is widely expected to announce new easing measures, the question now is how much the program will be as a kick start. |
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| Candlesticks and Ichimoku Intraday Trade Ideas | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: GBP/USD – Long entered at 1.5720 met target at 1.5800 and buy again at 1.5740Despite this morning's brief fall to 1.5691, as cable has rebounded after holding above indicated support at 1.5690, retaining our near term bullishness and upside target at 1.5800 has just been met (Long entered at 1.5720 met target at 1.5800), adding credence to our view that choppy trading within 1.5650-1.5878 range would take place. Trade Idea: EUR/USD –Hold long entered at 1.3935Despite falling to 1.3907 earlier this morning, as renewed buying interest emerged there and price has rebounded, retaining our bullishness for gain to 1.4015/20, however, above there is needed to signal the retreat from 1.4080 has ended and bring further rise to 1.4050/55 but reckon said resistance at 1.4080 would hold from here. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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