Thursday, August 25, 2011

Market Afternoon Overview - August 25, 2011

Previous session overview
News that billionaire investor Warren Buffett was buying 50,000 preferred shares of Bank of America Corp. (BAC) boosted sentiment for riskier investments Thursday, sending the euro sharply higher against the dollar and the Swiss franc. 

After dour U.S. jobless claims data depressed higher-yielding currencies, Buffett's decision boosted them anew. The euro vaulted by more than half a cent against the dollar to trade near USD1.4442, and jumped against the Swiss franc to trade near CHF1.1503. 

Earlier, French President Nicolas Sarkozy said that the existence of the euro was not negotiable, and that France and Germany would not retreat on defending the single currency.

Gold futures slumped further and fell below USD1737 an ounce, after CME Group late Wednesday raised margin requirements to trade gold futures for the second time this month. 

The futures have dropped sharply since topping USD1900 during intraday trading Tuesday.

The Canadian dollar gained modestly Thursday after trading in a tight range overnight, as investors chose caution ahead of U.S. Fed Chairman Ben Bernanke's speech on Friday.

The U.S. dollar slipped to CAD0.9861 from CAD0.9872 late Wednesday, despite initial jobless claims in the U.S. showing an increase.

Overnight, the Canadian currency traded in a tight range against its U.S. counterpart, with very little by way of news and caution among investors, with chatter of bold new policy action fading.
Market expectation
For EURCHF immediate resistance lies at CHF1.1515 (day high/Aug 18 high) and above here, CHF1.1555 (Aug 17 high/50-day MA) and CHF1.16.45 (50% Fib retracement of the March - August decline).

On the downside, immediate support lies at CHF1.1435 (day low), and below here, CHF1.1370 (Aug 24 low) and CHF1.1340 (intra-day low), according technical analysts.

Dealers say that as long as the USDCHF holds above CHF0.7900, the outlook is bullish for a rise to 0.8000. Also there are chances of the up move extending further above CHF0.8000 to CHF0.8100-30.

Canadian Dollar breaking below CAD0.9825 support area to reach day lows below CAD0.9800 after Buffet announced. On the downside, immediate support lies at CAD0.9765/75 (Aug 9/17 lows), and below here, CAD0.9740 (Aug 5 low) and CAD0.9700 (50-day SMA). On the upside, the pair might find resistance at CAD0.9725/40 (Aug 22/24 low), and above here, CAD0.9900 (Aug 23/24 highs) and CAD0.9940 (Aug 18 high).