Technical Analysis: EUR/USD, GBP/USD, USD/JPY, and USD/CAD
ICM Brokers | Nov 28, 2011 09:25AM ET
The euro rose after Italian daily La Stampa said the International Monetary Fund is preparing a 600-billion euro ($794 billion) loan for Italy in case the debt crisis worsens, without saying where it got the information. The 17-nation currency also advanced against the yen as Germany Finance Minister Wolfgang Schaeuble urged fast-track treaty changes to tighten budget discipline. The Australian dollar advanced as optimism a solution may be found for the euro-area’s debt woes boosted demand for higher-yielding currencies. New Zealand’s dollar, also known as the kiwi, climbed after Prime Minister John Key was re-elected with his party’s biggest mandate in 60 years.“It does appear that these sort of noises would give the European Central Bank the cover it needs to implement a policy where it is essentially able to be a lender of last resort via IMF packaging, and in conjunction with a stability pact in Europe,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The spike will come in currencies like the Aussie dollar if there’s some credence in it, and the euro can rally somewhat as well.”The euro rose 0.6 percent to $1.3322 as of 6:31 a.m. in Tokyo from $1.3239 on Nov. 25, when it completed a 2.1 percent weekly decline. The shared currency climbed 0.4 percent to 103.35 yen. The greenback fetched 77.57 yen from 77.73 yen.
GBP/USD
The pound rose against the euro as investors sought the relative safety of the U.K. currency on concern euro-area leaders will struggle to prevent their economies worsening amid the region’s sovereign-debt crisis. Sterling appreciated versus a majority of its 16 major peers tracked by Bloomberg, gaining most against the Swiss franc. It headed for a second weekly decline against the dollar, falling to a seven-week low. U.K. stocks advanced for the first time in 10 days, damping demand for fixed-income assets. The FTSE 100 Index climbed 0.7 percent, while 10-year gilts dropped the most in four weeks.“It’s likely that sterling will outperform the euro near-term, even though cable is likely to see further downside pressure,” said Jane Foley , a senior currency strategist at Rabobank International in London, referring to the pound-dollar exchange rate. “The foreign-exchange market is failing to produce many alternative safe-haven currencies” to the dollar, she said. The pound gained 0.6 percent to 85.64 pence per euro at 4:42 p.m. London time, little changed over the week. Sterling traded at $1.5478 after falling to $1.5423, the weakest since Oct. 6. It has dropped 2.1 percent against the greenback since Nov. 18, the most since the five-day period ended Sept. 23. The pound may strengthen against the euro toward 84.85 pence, according to Foley. That’s the Nov. 10 low and the pound’s strongest level against the 17-nation common currency since March 3. Sterling may slip toward $1.54 by the end of the year, she said.
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USD/JPY
Toyota Motor Corp. Introduced its new 86 coupe yesterday, betting that the 200-horsepower sports car will widen the Japanese automaker’s appeal beyond its best-selling Camry sedan and Prius hybrid. The rear-wheel-drive 86 will be available in the northern hemisphere spring next year, according to the Toyota City, Japan-based company. Pricing details will be released closer to the sale date. Toyota, poised to lose the title of world’s largest automaker to General Motors Co., is renewing a push for sports cars under Akio Toyoda, who became president in June 2009. The carmaker is hoping the new model will burnish its image that’s been battered by recalls and production interrupted by the nation’s record earthquake and flooding in Thailand. “Toyota’s cars are traditionally seen as not fun,” said Takayuki Kinoshita, a racing enthusiast and author of ‘Akio Toyoda’s Character: The Rebirth of Toyota.’ “It’s good that Toyota could introduce this car under Akio’s direction. It may change Toyota’s image among drivers.” The 86 derives its name from the AE86 Corolla Levin sports car it was based on and aims to be a car that “evolves with its owner,” the automaker said in an e-mailed release. The model features Toyota’s smallest steering wheel at 365 millimeters (14.4 inches) in diameter, a front design that evokes a “predator about to pounce” and fuel efficiency to match that of a 2-liter-engine sedan, according to the company. It was co-developed with Subaru-brand owner Fuji Heavy Industries Ltd.
USD/CAD
Canada’s dollar dropped for a second week as rising borrowing costs in the largest euro-region countries signaled the region’s debt crisis is getting harder to contain, weakening the appeal of assets linked to growth. The Canadian currency touched the lowest level versus the U.S. dollar in almost two months after crude oil, the country’s biggest export, posted its first back-to-back weekly declines since September. Canada’s economy expanded in the third quarter after contracting in the previous three months, Statistics Canada is likely to say next week.“The window for Europe to fix itself is rapidly shutting,” Camilla Sutton, chief foreign-exchange strategist at Bank of Nova Scotia’s Scotia Capital in Toronto, said in a telephone interview. “It seems like things are escalating, “she said, predicting for the Canadian dollar “further near-term softness.”The loonie, as the currency is also known for the image of the aquatic bird on the C$1 coin, depreciated 1.8 percent to C$1.0468 per U.S. dollar in Toronto. It slid yesterday to C$1.0524, the weakest level since Oct. 5, before advancing. The currency, the seventh-most-traded, is headed for a 4.4 percent loss in November. One Canadian dollar buys 95.53 U.S. cents. The Standard & Poor’s 500 Index, which was closed Nov. 24 for a U.S. holiday, dropped 4.7 percent this week, after a 3.8 percent decline last week, while the S&P/TSX Composite Index slid 3.6 percent, its fourth straight loss. Futures on crude oil decreased 0.1 percent to $97.32 a barrel and touched $94.99
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