Printing currency seems to be once again the best solution

Less than 6 weeks to the fiscal cliff

The advance of a possible deflationary scenario has been confirmed by the producer and consumer prices data of October. The minutes of the Fed revealed this fear with the will of the central bank to implement new unconventional measures of monetary policy in 2013. No particular reactions anyway on EUR / USD which is more concerned about the Greek and Spanish situation.

The coming week is stingy with the macroeconomic data from the United States, but great attention has to be devoted to the political negotiations between Republicans and Democrats in relation to the fiscal cliff and the debt ceiling.

Among the principal results: on November 19th the sale of houses, on November 21st the weekly requests of unemployment aids and finally November 21st the consumer confidence and leading indicator.

Euro-zone, elections in Catalonia and the German IFO

The data on the German business confidence turned out to be worse than expected last week, preventing one of the cross currency more related to its tendency, or EUR / JPY, to try the assault at 105.

Looking at the coming week, the main catalyst of the European market will be the Spanish political and the German confidence data.

In fact, on November 22nd it will be very interesting to see whether the confidence of the European entrepreneurs will be able to reverse a downward trend that, from January 2012 until today, has not allowed the composite PMI to rise above 50. On November 23rd, Germany will announce the third quarter GDP, but especially the IFO index, standard sentiment measure of the expectations of the German business men in the coming months.

The last data in October was 100, the lowest since February 2010. Finally, in Spain on November 25th, the regional elections in Catalonia will be held (Catalonia is one of the states with greater push for independence and its choices might influence the central government request for aid).

Eyes on the Bank of Japan meeting

After the bad data on the Japanese GDP contraction of 0.9% in the third quarter, the market will look very carefully at the meeting of the Bank of Japan on November 20th. This meeting will be crucial due to the new trade deficit context nearly consolidated (the October data will be released on November 21st) in Japan.

The announcement of new non-conventional measures of liquidity could fuel new force for NZD / JPY, as already occurred at the end of last week.

The uptrend positioning between 64.30 and 64.60 in place by June as well as the 200 days moving average have favored the rebound, but it is mainly the seasonality to enhance the positive view for NZD / JPY.

Over the past 20 years NZD / JPY has risen in 16 occasions in the last month of the year, a frequency of 80% that should not be overlooked.

Trade: long NZD / JPY

Trading : Long NZD / JPY

Inflation and interest rates: a crucial week for USD / ZAR

The coming week could be decisive to define the USD / ZAR trend. The inflation data (5.5% previously) will be published on November 21st while the announcement of any change in interest rates (currently at 5%) will be announced on November 22nd. The decreasing inflation might realize a cut in the interest rates encouraging a further uptrend of USD / ZAR. After breaking the 8.80, the minimum target of this movement is 9.10 and thus a return to area 8.80 will be exploited to open long positions.

Trade: long USD / ZAR at 8.80

Trading : Long USD / ZAR

TRADE OF LAST WEEK

Long EUR / HUF : the bad data concerning the Hungarian GDP favors the breaking of 284.40 and at the moment the minimum target of this upward movement are represented by 287.90 and 291.10

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