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Yesterday was great for trading events - not over yet

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Yesterday was great for trading events - not over yet

Postby Eurusd Trader » Fri Nov 04, 2011 5:33 am

First the cornering of Panadreou – both by EU leaders requesting a swift approval of the EU agreement by Greece before cash is running out and then the defection from his referendum plan by cabinet ministers and party colleagues – leaving the market with the strong impression that the referendum call could be withdrawn. EURUSD up from 1.3656 – the low of the day - to 1.3830.

Then the ECB rate cut of 0.25% which took the market a bit by surprise, knocking some 75 pips of the EURUSD from its high and a further fall of 100 pips throughout the press conference of its new President Mr. Mario Draghi.

Mr. Draghi - or Super Mario as he is called back home in Italy - gave a reassuring performance in his first press conference. Confident, explaining, intelligent answers to questions – left us with the impression of a man up to his job. The outlook for the Euro-zone region is one of “mild recession” towards the end of this year – justifying the rate cut – despite inflation being above where ECB would like to see price developments.

The inflation outlook is one for lower inflation and one which triggered thoughts for further decreases to come – at least one and possibly soon.

The bond purchasing program will continue but the word “limited” was underlined as a response to the question of whether this could be extended.

Half way through the press conference news out of Greece indicated that Papandreou had given up on his plan for a referendum and today’s second relief rally got on its way – this time to a new daily high of 1.3853.

An almost 200 pips range for EURUSD – and done twice. A great day for intraday trading – but different from earlier sessions – as data and news yesterday supported each step of the move.

It has been an eventful and interesting week – and it is not finished yet. We have the ongoing G20 meeting in Cannes which can add to the news picture and we have jobs day in the US. US non-farm payroll figures and unemployment figures are some of the top events for volatility and possible moves afterwards. And then we have the confidence vote in Athens – which now looks to be the approval of the EU agreement – for later parliament elections to come. Mr. Papandreou’s days at the helmet of Greece looks to be coming to an end.

1.3600-50 now looks to be strong support EURUSD. It held when the Greek saga was at its most boiling point earlier in the week – and it held yesterday – after the ECB rate cut and the bank’s lower projections for economic activity the European area.

The upside for the pair has been driven by relief rallies. They might faint as Greece looks to be approving the agreement of 27 October. I expect G20 to make some statement which could be EURO supportive – but Monday’s high looks to be the high of this week – and while I last night was rather bullish in my thoughts for a finish of the week close to 1.4000 – I am less sure as of this morning.

I would have liked NY to have finished above 1.3825 to maintain that outlook. They failed with a few pips – and as such I am less sure what the end of the week level will be.

A lot of this can be altered by news and US job reports. As such you should trade cautiously.

It’s been a long and eventful week. Have a nice weekend.
Eurusd Trader
 
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Joined: Sat Oct 22, 2011 11:20 am
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