Nov 13th Nov 19th 2011

Volume 1, Issue 28

Elite Global Trading

Forex Weekly Commentary

Fundamental Outlook
downgrade of French debt on their website which was quickly removed and declared a mistake by the S&P leadership. Markets quickly reacted punishing French 10 Year bonds by dumping in the wake of this release. French bonds yields reached record highs on the already stressed country. Big question here is why did S&P have that type of announcement ready to be released and was it a preview of whats to come for the country? A French downgrade would severely undermine the EFSF and its ability to leverage up to meet EURO-Zone obligations. If French 10 Year bonds continue to rise we will see more requirements on the EFSF to increase its 20% guarantee in order to seek additional leverage for the fund. Spanish 10 year bond yield spread over German 10 Year bond yields are above the Aug 2011 highs where ECB had to step in to bring the yield back within acceptable limits. While the Spanish 10 year bond yield is still below the Aug 2011 highs keep an eye out for the ECB to step in and relieve some pressure for the Spanish bond markets also in the coming weeks. Last week we saw US Jobless claims fall below the significant 400K level to 390K which is significant for the US labor markets. Keep an eye out for this weeks retail sales numbers as markets look for more reasons to increase risk appetite. EURO is scheduled to have a GDP number release which is not expected to impress the markets that are being described as one negative headline away form tumbling. Expect market volatility on headlines out of the EU and pay close attention to the 10 year bond markets as there are far reaching impacts to many EU member states as the 10 year yields continue to rise and questions surround the EFSF and ECBs ability to stabilize the EuroZone. The ECBs balance sheet is already

In this issue: Fundamental Outlook GBPUSD USDCAD 1 2

EURUSD AUDUSD EURCAD Event Risk

Contact Info Disclaimer

Last week we began the week trading in a tight range with small swings until Wednesday when the bottom fell out of the market on European headlines. Contrary to market expectations the markets broke out of their ranges to the downside sharply, surprising many traders. Continuing the surprise, markets quickly reversed losses and closed back into the range they began the week at leaving many traders wondering which way the market is going. One thing for sure these both were purely risk on/off plays which have been leading the markets. We saw the massive sell off in risk appetite due to widening bond yields. Markets are actively watching the yields of both French & Italian yields in over the next week and movement sovereign debt markets will continue to tip the risk appetite. Last week we saw ECB step in to purchase Italian debt once the yields extended above 7%. This is the dangerous level markets have seen previously with Greek debt yields that quickly gave way to rapidly increasing yields as the country struggled to sell additional debt to keep the country going. Italy has a significantly larger issuance of debt above a trillion Euros placing it out of reach of the EFSF rescue. The ECB quickly stepped in to purchase the Italian debts to bring the yield back under 7% to prevent a major Euro problem. Last week we also saw S&P rating agency post a

Nov 13th Nov 19th 2011

Volume 1, Issue 28

Elite Global Trading

member banks continuing to decrease deposits held with the ECB and 7.7 Bln Euros in emergency funding requested by banks from the ECB over the weekend. EuroZone banks have a 9% capital requirement imposed on them which forces them to liquidate holdings in order to shore up their balance sheets. Under normal conditions this is very reasonable in order to protect the banks however with the Euro-Zone implementing this capital increase at this stage of the game has an undesired consequence. Banks are liquidating riskier holdings in sovereign debt causing 10 year yields to increase making it harder for Euro-Zone member states to raise the capital required to run their nations. This weeks trends will be heavily intertwined with a risk on / risk off mentality and extremely volatile on headlines out of Europe. Keep close watch on the Italian, Spanish & French 10 Year bond yields as the ECB is forced to keep up purchases to contain the yields. The IMF looming in the background as markets look for the organization to step up activity to stabilize the Euro-Zone. Expect to see headlines from Italy as the country races to formalize their coalition government.

UK Pound Sterling / United States Dollar

GBPUSD: With a strong move off lows from last Wednesday at 1.5868 up to 1.6093, this pair holds a range that has been in place for a few weeks now. A move to the lower part of the range to start the week out is likely, down to 1.5900. We see that this pair still has potential for a move to 1.6200 range in the weeks to come, with current range in play respect that and look for a break in the weeks to come. Outlook: Neutral, range high stands at 1.6166, and low sits at 1.5868. With the probable move lower to start the week look for levels on the way down at, 1.6040, 1.6007, 1.5980, 1.5955, 1.5900, and low at 1.5868.

United States Dollar / Canadian Dollar

USDCAD: The dollar last week made a strong rally and gave up most gains to close the week, not giving the USDCAD enough of a boost to break range high at 1.0265. With range still in play we look to respect that and watch for breaks above or below in the weeks to come. A break to new lows in the weeks to come, with the daily and weekly looking heavy for another move lower. Either way we are currently in a range and needs to be respected. Outlook: Neutral, range high stands at 1.0265 and low sits at 1.0055. Currently trading at bottom of range, with a probability of moving to the top over the beginning of this week near 1.0200. Levels to watch for on way up, 1.0136, 1.0154. 1.0172, 1.0200.

Nov 13th Nov 19th 2011

Volume 1, Issue 28

Elite Global Trading

Euro / United States Dollar

EURUSD: After the move we have just had down to 1.3484 from 1.4246, over the past few weeks, looks like a move back to the upside may be on tap. We closed the month of October reversing from the highs at 1.4246 area and have had a nice 2day reversal pattern closing out last week, with a possible short term bottom at 1.3484. Still many shaky events to come in Europe, which is important when taking longs in the Euro pairs, getting to bullish can be risky, but taking the swings that are clear with nominal risk is certainly viable. If we continue to get positive outcomes in Europe we will see this pair trade back around 1.4000 in the weeks to come, but be careful of the news out of Europe that could easily drop this pair to lower levels with negative events to continue to unravel. Outlook: Neutral, we are currently in a range, high at 1.4246 and low at 1.3484. With this range in play we are currently in the center which gives way for a continued move higher in the med term, in short term we may start this week out with a pullback to a lower level test around the 1.3680 area. Levels to watch for, 1.3566, 1.3600, 1.3650, 1.3700, 1.3715, and levels on way up, 1.3860, 1.3955, 1.3988, 1.4050, 1.4170, 1.4246. With the daily looking to make a move higher, ahead of that we may see the 240 come back down to create higher bottoms, which may occur to start the week off, keep an eye on the levels.

Australian Dollar / United States Dollar

AUDUSD: This pair is purely a risk pair moving very nicely with the risk trends. With risk reversing at a short term bottom on Thursday, this pair has placed it's short term bottom at 1.0052. We look for direction from here, we are dead center of top formed in October at 1.0753 and bottomed formed last week at 1.0052. The daily wants to push higher with eye's on 1.0500 in the week to come, a move lower is likely around 1.0150 a possible target for a higher bottom before the move to the 1.0500 region. Outlook: Neutral, looking for a pullback off the high of 1.0345 that the week opened at to the 1.0200 area. With some basing action to occur in their we will look for a move higher towards the 1.0500 area. Levels to watch 1.0255, 1.0200, 1.0160 and 1.0134 on downside, and on the way up look out for, 1.0370, 1.0400, 1.0432, 1.0446, 1.0500, 1.0567.

Euro / Canadian Dollar

EURCAD: Stands strong in the range that has been ongoing for the past several weeks with high standing at 1.4175 and low sitting at 1.3800. Currently moving off bottom of range looking to make a move higher in the days to come. Congestion zone to watch for is 1.3900 -1.4000. Outlook: Range Bound, High of range is 1.4175, and low is 1.3800, respecting the range we see a move to the top of the range to happen this week. Keep eye on break of this range, when it happens will likely be a strong break, for this range is going strong for 6 weeks now.

Nov 13th Nov 19th 2011

Volume 1, Issue 28

Elite Global Trading

Weeks Event Risk

Monday: EUR: Industrial Production 5am GBP: Nationwide Consumer Confidence AUD: Monetary Policy Meeting Min 7:30pm Thursday: GBP: Retail Sales 4:30am USD: Building Permits 8:30am USD: Unemployment Claims 8:30am USD: Philly Fed Manufacturing 10am Tuesday: EUR: French Prelim GDP 1:30am EUR: German Prelim GDP 2am GBP: CPI 4:30am EUR: German ZEW Economic Sentiment 5am USD: Core Retail Sales 8:30am USD: PPI 8:30am USD: Retail Sales 8:30am JPY: Monetary Policy Statement Friday: EUR: German PPI 2am CAD: Core CPI 7am USD: Treasury Currency Report

Wednesday: GBP: Claimant Count Change 4:30am EUR: CPI 5am GBP: Inflation Report 5:30am USD: Core CPI 8:30am USD: TIC Long Term Purchases 9am NZD: PPI Output 4:45pm

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News letter Authors: Anthony Rousseau

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extended to levels that may EUROZone leaders uncomfortable considering the