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Contributors British ASJ: Euro Trend Analysis November 15, 2011

Yesterday (Nov. 14), due to the fading of the market’s optimism towards Italy’s new government, the Euro began to fall back down during Europe and Asia’s trading, and even fell slowly during the American trading hours.  The change in Italy’s leadership was not enough to convince the market that the Eurozone debt crisis can be contained. Yesterday’s release of the euro zone industrial production index revealed a decrease of 2 percent in September, the largest single month decline since February 2009. The decline in Europe’s industrial production caused concern in the market over the economic condition and decreased market risk appetite, further weakening the euro until it fell to its lowest level at 1.3591.

Yesterday, although the Italian 10-year bond yields fell to 6.35%, the 5-year bonds that were auctioned hit record high rates at 6.29%, while mid-October’s auction of 5-year bond yields hit 5.32%.

Although the transition governments in Italy and Greece are expected to succeed, the market still needs clear guidance about the further control of and solutions to the European debt problems.  The EFSF needs to clarify the current position and operation of its program, with the European Central Bank’s degree of participation in the debt settlement likely to be the focus of the market from here on out.

There is a large amount of economic data being released today concerning the European and U.S. markets, with Germany’s third quarter GDP at 07:00 and the Eurozone’s third quarter GDP at 10:00.  The euro zone’s third quarter GDP and Germany’s third-quarter GDP data will give clearer guidance to the market.  At 13:30 we have the United States’ October 30 core retail sales and the year-over-year U.S. October producer price index, and at 21:30 the U.S. October month-over-month producer Price Index.  With this data we will have a clear understanding of current US inflation levels.  One should conduct market operations according to the quality of indicators being released, and pay attention to strict stop losses.

Euro short-term resistances:

1.  1.3665

2.  1.3691

3.  1.3725

Strong resistance at 1.3780

Euro short-term supports:

1.  1.3600

2.  1.3549

3.  1.3506

Strong support at 1.3450

Special Note: Major involvement in the U.S. market is picking up again, as the initial optimism triggered by the formation of new governments and Prime Ministers in Italy and Greece is fading. The market is once again concerned about the huge Euro zone sovereign debt problem, so pay close attention to any news and be cautious in your operations.

Important data being released today:
06:30 France third-quarter GDP
Previous value: 0.0% / quarter, 1.7% / year;
Market Impact ★

07:00 Germany third-quarter GDP
Previous Value: 0.1% / quarter

09:30 UK Retail Price Index in October
Previous Value: 0.8% / month, 5.6% / year

09:30 UK Consumer Price Index in October
Previous value of 0.6% / month, 5.2% / year;
Market Impact ★

09:30 UK Core Consumer Price Index in October
Previous Value: 3.3% / year

10:00 German ZEW Economic Sentiment Survey in November
Previous Value: -48.3;
Market Impact ★

10:00 Eurozone ZEW Economic Sentiment Survey in November;
Market Impact ★

10:00 Eurozone Trade Balance in September
Previous Value: -34 million euros;
Market Impact ★

10:00 Eurozone third-quarter GDP
Previous value of 0.2% / quarter, 1.6% / year;
Market impact ★ ★


13:30 Canadian Manufacturing Sales in September;
Market Impact ★

13:30 U.S. October Retail Sales
Previous Value: of 1.1%; Market Impact ★

13:30 U.S. Core Retail Sales in October
Previous value 0.5%

13:30 U.S. Producer Price Index in October
Previous Value: 0.8% / month, 6.9% / year;
Market Impact ★

13:30 U.S. Producer Price Index (Ex Food & Energy) in October
Previous value 0.2% / month, 2.5% / year

15:00 U.S. Business Inventories in September
Previous value 0.5%;
Market Impact ★


The above information is given for reference purposes only.  Currency trading involves significant investment risk.  Careful analysis and selection is required.



British ASJ Financial Services Ltd

Yang, Chief Analyst


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