Vlad Demochko
GBPUSD started last trading week with the low of the previous week. At first the currency pair managed to stay above the low. But then the British Pound collapsed, thus breaking below 3 option barriers (1.5474, 1.5388 and 1.5297) and reaching the week’s low 1.5271. Instantly after that GBPUSD rebounded and started a sound rally up to 1.5635.
In general, GBPUSD dropped down to the low of Sept 2010. However, during the last 2 days of the trading week it managed to recover to the week’s opening price. The UK’s QE program affected the British national currency, thus making it lose 200 points against the US dollar. However, the UK’s PMIs slightly reassured the market.
The 4th quarter started with pretty high volatility. Let’s see what this week has in store for us in terms of news:
Oct 11th (GMT)
07:30 EUR ECB President Trichet Speaks
08:30 GBP Manufacturing Production
Oct 12th (GMT)
08:30 GBP Сlaimant Сount Сhange
18:00 USD FOMC Meеting Minutes
Oct 13th (GMT)
12:30 USD Trаde Balаnce
12:30 USD Unemploуment Clаims
Oct 14th (GMT)
12:30 USD Сore Retаil Sаles
12:30 USD Rеtail Salеs
13:55 USD Preliм UoM Consuмer Sentimеnt
Сlaimant Сount Сhange is expected to be the UK’s major news release for the week. The UK labor market is seeing difficulties. So the amount of claims is going to increase from 20.3K (a month ago) up to 24.4K. Manufacturing Production is another major report. Last time the indicator gained 0.1%. This time analysts expect it to lose 0.1%.
During the last ECB meeting Jean-Claude Tricet, ECB President, focused on European bank’s liquidity rather than interest rates. The Greek debt “drama” that electrifies the currency traders (in particular, those trading EUR) has weakened a little, thus giving a time out for the eurozone and its currency. However, the problems are far from being solved. Analysts say the markets are tired of waiting. That is why Jean-Claude Trichet’s speech is worth paying attention to. It may well influence the USD exchange rate, thus having an indirect impact on GBPUSD.
As for the US, all the US reports expected during the week are significant for the market. Last week Ben Bernanke underlined that the money-and-credit policy was not a cure-all for the US economy, thus hinting that the US government should also participate in economic improvement by stimulating the labor market, changing the taxation system etc.
In terms of volatility trading, September’s FOMC Meеting Minutes will be a major report. This is when the FOMC approved Operation Twist.
The USA’s Trade Balance deficit was reduced to $44.8B in July (against the forecast of $50.6B and June’s $51.6B), which indicates some improvement in the US external trade. This time the deficit is expected to grow up to $46.2B.
Once again, don’t forget that the US companies start publishing their quarterly reports and that on Oct 7th Fitch Ratings downgraded the rating of Italian and Spanish banks (АА- to А+ and АА+ to АА- correspondingly).
The closest option levels of resistance are 1.5635 and 1.5721 while the closest levels of support are 1.5474 and 1.5388.
Provided by the Department of Options,
Vlad Demochko
