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Pound Sterling Garners Top Interest
Technically Speaking
The British major looks to rebound off of the 1.7623 intrasession low
following the considerable break of the textbook head and shoulders
formation while breaching counter fib levels from the weekly move and
nascent channel resistance. Now consolidating above the 50 percent fib
at 1.7754, further upside potential remains. However, considerations of
a near term retracement to the 38.2 percent confluence at 1.7719/26
should be noted prior to such directional bias.
USDCHF
Profit Takers
Simple profit taking fueled the decline in the currency pair as traders
witnessed some major resistance at the 1.2900 figure. Rising from the
1.2700 bottom established last week, traders have pared back 200 pips in
profit gains as stops below 1.2800 triggered an even sharper decline.
Roth Contribution
Sparking the selloff, Swiss National Bank Chairman Roth suggested near
term rate hikes as the Swiss economy continues to grow and expand.
Stating that the current rate is inappropriate given the level of
expansion, traders took the most recent statements to anticipate a rise
as early as December. Additionally contributing to the notion has been
a steady and consistent rise in the Swiss SMI index. The benchmark
index has risen 13 years in a row and 82 percent of the time since
1987.
Technically Speaking
Forming a double top in early morning action, the major currency pair
has broken through most fib lines and ultimately has found a temporary
bottom at the 61.8 percent fib at 1.2780. Further downside, however,
looks in store for the pair as selling momentum continues with the 78.6
percent fib at 1.2780 the next imminent test. If penetrated, support at
1.2696 may prove stronger, creating a double bottom last week.
GBPJPY
Fundamental Push
Lending to continued yen weakness, two policy officials released
statements expressing favoritism of further monetary easing by the Bank
of Japan. Both Finance Minister Sadakazu Tanigaki and Chief Cabinet
Secretary Shinzo Abe expressed that deflationary conditions continue to
linger in the economy and as such the central bank should continue to
remain in easing mode rather than consider premature hike interests. As
a result, domestic investors look to continue their search for higher
rates of return abroad, passing over their 1.5 percent domestic rates.
With further investment outflows expected, and thus more yen selling
interests, the comments look to extend the currency's loss in the near
future.
Interest Watch
With economic reports, namely CIPS and CBI surveys, relatively positive
given the dreary results, sentiment is now mounting further that
interest rate cut considerations by central bankers may soon be an
afterthought. Previously based on sluggish consumer consumption and
sector activity, it seems that both may be establishing a bottom. As a
result, unless fundamentals dip to the negative side or the region
witnesses a prolonged period of stagnation, market sentiment may be
justified in retaining high hopes of left alone rates.
Technically Speaking
Continuing on the medium term bullish wave, the cross bounced off of
the channel floor before proceeding to the intrasession high. At this
point, given the matching topside resistance, any further gains look to
be capped at the current figure. Subsequently, a retracement would see
a test of the 23.6 percent fib from the weekly move at 206.62. Any
downside potential, given the range holds, will be tested a near term
confluence of the 38.2 percent fib at 205.97 and channel support.
Sending money abroad? Converting currency? 
