Parity A False

Safe haven trades were slightly stronger this morning despite some encouraging US data and an okay Irish debt auction. However, due to the low liquidity in Asia and Middle East, plus the summer & holiday atmosphere still infecting most of the G10 nations, market moves should be taken with a grain of salt. Yesterdays divergence between stock markets and EURUSD performance, highlights in our mind, the fact that traders are still heavily bearish EUR and to a lesser extent broader risk correlated FX trades. Gold fell yesterday after a strong move this week – it failed to reach the highly awaited $1265 historic high – we believe the moves in Gold are most likely due to major players are consolidating in the near term. The move toward Gold by bigger players is the result of sovereign risk ...

Risk sentiment continues to be the core driver of forex pricing and right now it is squarely negative. The market is once again squarely focused on events in Ireland and Greece. The decisions to split Anglo-Irish, while prudent, highlights the enormity of the potential banking problem. It has taken roughly 20% of Ireland’s GDP to bailout domestic banks and investors are concerned that further cash injections will be needed. In addition, there is growing speculation that the EU stress test lacked rigor and it will be a function of the markets to figure out which banks are in trouble. Unfortunately, it was this kind of groping in the dark which shut down credit markets the first time, and which we are witnessing once more. As to be expected, sovereign spreads have blown out and CDS have ...

There was considerable hype leading up to Friday’s US data with many considering the payroll numbers to be the awaited trigger for an upswing in the US. A large surprise to the upside would have further discouraged the Fed from introducing additional QE, which had it happened would have given the USD a strong boost. Private payrolls did surprise to the upside a bit, with August numbers coming in at 67k vs. a 40k expected. Concurrently, the prior reading was revised up to 107k from 71k. The Forex market reacted accordingly creating a short squeeze risk-rally which saw quick selling of the USD, JPY and CHF (safe haven currencies). The numbers were not high enough to trigger an upswing with any legs nor ensure the Fed would stay on the sidelines in the future. The risk rally in FX was ...

Commentary of the USD/JPY parity : A false breakout of 87 occured and we maintain to trade only long positions as far as 86.86 is support. The breakout of 87.50 will give a new buy signal. However, if 86.86 is broken, a sell signal will be given. See the previous analysis of the USD/JPY parity of July 26th, 2010

Commentary of the XAU/USD parity: The gold just found support again on 1190 after a false break out of 1200. We will wait the break out of 1210 to trade only long positions as far as the price is above 1200. Short positions will be advisable if 1190 is broken. See the previous analysis of the XAU/USD parity of July 8th, 2010

Commentary of the USD/JPY parity : A false break out of the slant (dotte black line) occured but the last highest allowed us to draw a bearish bevel. Then, the break out of 92.00 gave us a new sell signal. We maintain to trade only short positions as far as the upper band of the bevel is resistance. The break out of 91.46 (level 50%) will give a new sell signal. However, if the parity get out of its bevel from the top, a buy signal will be given. See the previous analysis of the USD/JPY parity of May 18th, 2010

Commentary of the USD/CAD parity : After a false break out of 1.0165, the parity is currently making a correction towards 1.0080. As far as this level is support, we maintain to trade only long positions. However, if this level is broken, we will stay neutral on the parity between 1.00 and 1.0080.

After make a false break of 0,90, the price is currently testing a break out of 0.9050. The validation of the break out will offer a buy signal. As far as the price is into its range 0.90/0.9050, we will advise to stay flat on the parity.

The parity didn't succeed to break out the support at 132. The price is still below its bearish slant. We maintain our former analysis: To trade only short positions as far as the price is below its slant. A break out of 132 will offer a new sell signal.