FOREX analysis

EUR/USD

Current level-1.4818

EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.4134 and 1.3523.

With the break above 1.4850 resistance, the downtrend from 1.5063 was confirmed to be completed, so there is no current trend on the 2 and 4 h. charts. Nevertheless, the bottom at 1.4623 was a test of the 50-day SMA on the daily chart and the fact, that this test failed is a signal, that the major uptrend is intact and new highs are to be expected. Intraday bias is slightly negative for 1.4777 and we expect current corrective slide from 1.4910 to be limited above that zone before next leg upwards to 1.5063. Crucial on the downside is 1.4735.

Resistance		Support
intraday	intraweek	intraday	intraweek
1.4856	1.5063	1.4777	1.4623
1.4910	1.6040	1.4735	1.4444

USD/JPY

Current level - 90.33

A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 94.86 and 94.84

Our target at 91.30 was precisely hit and the pair reversed, breaking below 90.56 crucial support. The overall bias here is extremely negative for 89.82, en route to 88.83 with a risk-limit above 90.56.

Resistance		Support
intraday	intraweek	intraday	intraweek
90.56	92.40	89.83	89.17
91.30	97.79	88.83	83.53

GBP/USD

Current level- 1.6501

The pair is in a downtrend after peaking at 1.7042. Trading is situated above the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258.

Yesterday's uptrend broke through 1.6530 dynamic resistance and peaked few pips below 1.6604 high. Current intraday bias is negative, aiming at 1.6438 and a break there will target 1.6250 main support zone. We are rather neutral here, due to the trendless dynamics in the 1.6250-6605 zone. A break above 1.6604 will confirm a bullish set-up on the pair, towards 1.6752 and beyond.

Resistance		Support
intraday	intraweek	intraday	intraweek
1.6545	1.6752	1.6438	1.6250
1.6604	1.7042	1.6250	1.5706

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Gold and Forex Technical Update

Rupee : The Indian Rupee is unable to hold clear strength seems to be in range of 46.80 to 47.80 levels. Please note that dollar is in correction mode in overseas markets only if euro/usd breaks 1.4453 levels / gold breaks 990 dollars and crude breaks 70 dollars and dollar index breaks 78 levels in the global market a scenario of rupee weakness may occur again till then the view remains bullish for rupee. Exporters sell 47.50 plus levels. (USDINR - 47.14).Bullish to rangebound

Euro : Euro took a false break below 1.4650 levels and moved up breaking the crucial resistance of 1.4850 levels. Until we see a close above 1.4850 levels on a closing basis the bias is still neutral to bearish.Selling on upticks is advised around 1.4850 levels for a medium target of 1.4550 levels with stops close to 1.4930 levels.(EurUsd-1.4830).Neutral to Bearish

Sterling : The Sterling also held strong after touching the crucial support of 1.6270 levels benefitting from euro rally yesterday 1.6600 levels still remains crucial for pound.Technically a break of 1.66 in pound would indicate further bullish pressure towards 1.6700 area and may be higher. Immediate support at 1.6520/00 area. Break below that area should lead us again into the bearish territory. On fundamental side, investors focus is now on whether the BoE is going to expand the quantitative easing program. If that happen, Sterling should be under heavy pressure and technical bullishness might fail.(GBPUSD 1.6515) Bearish.

Yen : JPY is facing strong resistance at 91.50 levels.(Trendline resistance and 55 Daily EMA) . Only a break and hold 2-3 trading session above 91.50 levels.would change the bias of Yen to bearish otherwise still bullish to rangebound.Cautious selling around 91.50 - 91.80 levels keeping stoploss 92.30 and target of 89.50.( USDJPY -90.30) Bullish.

Aud : AUD bounced back from the weekly trendline support of 0.8915 levels as expected from the last few days but does not seem to maintain bullishness above 0.9120 despite a rate increase from Australia. It is having a strong falling trendline resistance at 0.9120 .If aud breaks this resistance and closes above then it Aud is bullish in medium term. (AUDUSD- 0.9077) Bullish.

Gold : Gold made yet another record high of $1097 yesterday. The No change in Fed's Rate Decision did bring some momemtum in gold and is now trading at $1086 levels. This shine in Gold can allow it test $1120 levels soon from where correction is expected.(GOLD $1088). Bullish.

Dollar Index :Dollar index came down from 76.80 levels to 75.75 levels currently. This sell off is due to no change in the release of interest rate decision yesterday but the strength of selling is so far mild. Some consolidations would be seen in the greenback and the index could retest 76.50 levels soon as long as 75.56 minor support is held (DI- 75.80).Rangebound

Commodities Change Little Ahead of BOE and ECB Meetings

Crude oil hovers around 80 in European morning after gaining more than +4% in the past 3 days. Others in the energy complex also pull back with RBOB gasoline sliding to 2 and heating oil to 2.07. On the other hand, gold price continues to trade firmly above 1080.

We may not see new high for gold today as price should consolidate for a little while after the 3-day rally. However, the correction should not be deep as supporting forces including central bank diversification, broad-based weakness in USD and rising inflationary expectations remain intact.

According to SPDR Gold Trust, bullion holdings rose to 1108.4 metric tons as of November 3, the biggest increase in a month.

Market's focus has turned to ECB and BOE meetings. USD recovers from yesterday's low as both European central banks are likely to keep interest rates unchanged. The ECB is expected to keep the main refinancing rate unchanged at 1% this month. As the Governing Council will release a new set of staff projections in December, we do not expect much new information to be sent out by policymakers. ECB President Trichet should continue to describe current interest rate as 'appropriate' while growth and inflation risks as 'broadly balanced'. At the press conference, however, investors may pay attention to questions about new 12-month tender operation. It's interesting to know if the central bank will charge a margin over the policy rate.

For BOE, the most important issue is whether the central bank will extend the 175B-pound asset purchase program as keeping the policy rate at 0.5% is widely anticipated. There have been rising bets on the expansion after the UK reported economic contraction of -0.4% qoq in 3Q09. The reading made the nation's economy worrisome as countries such as US, Germany and France have already returned to growth.

UK stocks decline despite better-than-expected industrial production in September. In the Eurozone, retail sales surprisingly contracted -0.7% mom (consensus: +0.2%) in September following a -0.1% decline a month ago. This translated in annual drop of -3.6%. As a result, Germany's DAX and France's CAC 40 slide -0.6% and -0.7% respectively.

Earlier in Asian session, the MSCI Asia Pacific Index dropped -0.4% as New Zealand's unemployment rose to 6.5% in 3Q09 from 6% in the prior month. Moreover, South Korea's Finance Minister said he's uncertain of the nation's economic growth is unsustainable as it remains too dependent on external demand. This diminished investors' risk appetite.

Federal Open Market Committee meeting

Release Date: November 4, 2009

For immediate release

Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.