Oct 30th Nov 5th 2011

Volume 1, Issue 26

Elite Global Trading

Forex Weekly Commentary

Fundamental Outlook
The aftermath of the EU summit on how to rescue Europe we saw the markets take out much of their pent up risk appetite driving the pairs and markets higher than many of us expected with the EURUSD reaching a high of 1.4246 halting at the top created 11/4/2010. Risk appetite drove S&P to close +3.78% for the week and we watched as the AUDUSD catapulted to 107.52 falling short of the 68% retracement on the daily move down from 110.64. Looking ahead this is a big week for the currency markets as RBA, ECB & Fed release November interest rate statements and market outlooks. Monday markets will focus on RBA as they release their interest rate statement. Analysts are mixed on what the statement will contain, markets are calling for .25 (some forecasts indicate .50 with others at no change) basis point reduction on the heels of lack lust economic data from the Aussie. This is an important release for the AUDUSD which will be preceded by Chinas PMI number. Markets will undoubtly pour over the statements by the RBA for dovish or hawkish statements for indications of this risk rally continuation. All eyes are will shift and focus on the two gorillas in the room the ECB and the Federal Reserve which will likely overshadow the RBA. There is lots of chatter about how Draghi will kick off his ECB presidency. Questions remain around weather Draghi will make the much needed rate cuts to relieve pressure from the euro or will he hold the line of his predecessor and keep rates unchanged. One this is for sure it is highly unlikely we will see a rate hike from the ECB anytime soon. Markets will be very critical of Draghi first statement and will look to characterize his tenure in office by his initial actions. Anticipate volatility around this statement and lots of speculation on the ECB outlook. Draghi will be followed by Fed Chairmen Bernanke who will grab the markets attention once again as the federal reserve releases their statement and outlook of the us economy. Last week we heard from Fed members discussion QE and their willingness to issue another round. These are likely feelers for the committee to gauge market reaction. With the Feds commitment to keeping rates low through 2013 we do not expect rate changes, however the markets will dissect every word Bernanke says alongside each detail in the statement. In the days leading up to the Wednesdays statement expect to hear markets, addicted to free money, cry out for QE3. Do not be confused by this rhetoric Bernanke will likely keep the options open and discuss the evaluation of operation twist conducted by the Fed in September. In closing this week is expected to be a pivotal week for the markets with lingering uncertainty from the Euro-zone as Draghi is put to his first test. The bulls will likely drive the markets up Monday to close out October and start September with a bang. These risk on moves are not fundamentally supported and can quickly reverse as the markets are brought back to reality of the economic climate. That being said the markets closed clearly bullish last week so be careful not to get trampled by the bull excitement.

In this issue: Fundamental Outlook AUDUSD GBPUSD EURCAD EURUSD NZDUSD 3 1 2

Yen Crosses Event Risk Contact Info Disclaimer

Oct 30th Nov 5th 2011

Volume 1, Issue 26

Elite Global Trading

Australian Dollar / United States Dollar

AUDUSD: The Aussie has enjoyed a strong bounce off it's bottoms over the past 4 weeks. This pair specifically has made a move up of over 1300 pips this month. A pullback from this move is most likely on tap over the days to come. With RBA giving their rate decision Monday night, a likely dovish Stevens will weigh heavy on it's currency. This pair looks for support to hold before it's next move higher. With a possibility of a Risk move to continue in November, this pair would be driving towards 1.0900 area and higher. Outlook: Neutral, An expected move to support off it's high of 1.0754 is expected to start the week off. Support sits at 1.0600, 1.0540, 1.0500 and 1.0486, 1.0370 1.0320. With Risk on having the possibility to go to new highs in November, this pair may go touch the 1.1000 area and higher. We do not rule this out after this pullback.

UK Pound Sterling / United States Dollar

GBPUSD: The BOE has given clear direction with their policy by adding to their QE program which was their latest move, with amazement it has not diminished the move up to 1.6100 on the GBPUSD at all. With not much to change in the BOE policy over the rest of the year, a move to some higher levels can be expected in the GBPUSD. We look to see 1.6400 area to be touched before the next major move below 1.5000. Outlook: Neutral, we see a pullback to support to start this week off before the next push higher over the weeks to come. Look for support at 1.6090, 1.6052, 1.6021, 1.5990, 1.5945 and 1.5890. When we look higher for the next move up we see resistance at 1.6191, 1.6206, 1.6262, 1.6339, 1.6380, 1.6450.

Euro / Canadian Dollar

EURCAD: The Canadian Dollar has gained over the past several weeks and looks for further gains, in the near future we see a move to the mid 1.3000s to most probable for the EURCAD. We have been in a very tight range from 1.3900-1.4200 over the past few weeks with only wicks above or below this range. Lot's of indication to lower prices for this pair are occurring and we like this pair to the short side once it breaks it's current range. One thing to consider when trading a range bound pair is, a range needs to be respected until a confirmed break occurs. Outlook: Neutral, current range has held for sometime now and a break is coming near, we favor to the short-side below 1.3800 targeting the 1.3500 area. Support sits at 1.3950 area, 1.3878 area, and 1.3823, a break of these zones gives a clean move to the 1.3720, then to 1.3579. This move will occur along side of the USDCAD move lower over the weeks to come. Careful of the EURUSD volatility giving this pair some wide swings.

Oct 30th Nov 5th 2011

Volume 1, Issue 26

Elite Global Trading

Euro / United States Dollar

EURUSD: The Euro has overall enjoyed a nice rally off it's lows of 1.3145 area starting the month of October. This month has been a giant month of risk rallies. Will this EURUSD move continue for the months to come is a big question all are asking. We have reached some very important levels that may hold for the short-term 1.4250-80. The EU Summits have given the markets temporary confidence, will this hold up for larger gains for the EURUSD? If so we will see the EURUSD go back to the 1.4400 over the next few weeks. Ahead of any moves higher we do expect some headwinds that will move the pair back down to 1.3950-1.3850 area. A break below 1.3800 will expose the 1.37001.3660 zone. We expect a move down to be capped for the short term, and a move to test the 1.4280 level to be likely over the next week. Outlook: Neutral, with so many traders looking to short the EURUSD, the pair continues to gain, and we will likely see more gains before the next major move down to the 1.2000s. A move down towards 1.3900-1.3850 can be expected before next major move to test 1.4280. The instability in the Euro zone does not give much confidence in longs, but as most are still shorting the EURUSD rising to higher levels is not far fetched. Look for 1.4400 to be hit in the month of November. Support 1.4080, 1.4022, 1.3988, 1.3950, 1.3848.

New Zealand Dollar (Kiwi) / United States Dollar

NZDUSD: Has the similar look as the Aussie for the near term outlook, a move to support after hitting highs of the month last week. The Kiwi Dollar has a strong possibility to gain over the weeks to come with the RBNZ giving a strong economic outlook last week. This pair has potential to reach the mid .8000s in the month of November. If risk rallies die out and do not continue in the month of November, this pair will likely struggle to reach higher levels, for this pair is highly correlated with the risk on move that we have been seeing over the last four weeks. Outlook: Bullish Bias, a move to support starting the week off is expected. Levels to watch for. .8164, .8116, .8078, .8039, and .8009. A move to higher levels over the weeks to come is expected, levels to watch on the upside are, .8339, .8400, .8426, .8470, and .8572.

Euro / Australian Dollar

EURAUD: The Aussie is looking to make a pullback in the days to come which will likely boost this crosspair up to some higher levels at the same time. With the RBA looking to give a dovish outlook tomorrow, this pair will move to some key levels on the upside. Outlook: Neutral, this pair has made a strong decline over the past few weeks and a move towards 1.3500 is most probable over this next week. Levels to watch for on the way up, 1.3338, 1.3394, 1.3467, and 1.3535. Support sits at 1.3192, 1.3180,1.3130, and 1.3101.

Oct 30th Nov 5th 2011

Volume 1, Issue 26

Elite Global Trading

Japanese Yen Crosses

Yen crosses look to higher levels over the next month. EURJPY is likely to trade at 109.80 and a break of the downward trend-line from April 2011 will bring this pair higher towards 112.00 over the next month. The GBPJPY is expected to rise as well towards the 130.00s before the end of the year. A pullback for both these pairs is expected to start this week off.

Weeks Event Risk

Monday: EUR: German Retail Sales 3am EUR: CPI Flash Estimate 6am EUR: Unemployment 6am CAD: GDP 8:30am USD: Chicago PMI 9:45am NZD: Labor Costs 5:45pm JPY: Monetary Policy Meeting Min 7:50pm CNY: HSBC Final Manufacturing PMI 10:30pm AUD: RBA Rate Statement 11:30pm Thursday: G20 Meeting GBP: Services PMI 5:30am USD: Unemployment Claims 8:30am EUR: Min Bid Rate 8:45am EUR: ECB Press Conference 9:45am Tuesday: GBP: Nationwide HPI 3:30am CHF: Retail Sales 4:15am GBP: Manufacturing PMI 5:30am GBP: Prelim GDP 5:30am USD: ISM Manufacturing PMI 10am AUD: Building Approvals Friday: G20 Meeting CAD: Employment Change 7am CAD: Unemployment Rate 7am EUR: German Factory Orders 7am Wednesday: EUR: German Unemployment Change 4:55am GBP: Construction PMI 5:30am USD: ADP Non-Farm Employment Change 8:15am USD: Non-Farm Employment Change 8:30am USD: Unemployment Rate 8:30am CAD: Ivey PMI 10am USD: ISM Non-Manufacturing PMI 10am AUD: RBA Monetary Policy Statement USD: FOMC Statement 12:30pm USD: FOMC Press Conference 2:15pm NZD: Unemployment Rate 5:45pm AUD: Retail Sales 8:30pm

Elite Glob al Trading

News letter Authors: Anthony Rousseau

arousseau@eliteglobaltrader.com

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