Technical Analysis: EUR/USD, GBP/USD, USD/JPY, and USD/CAD

The euro weakened for a third day against the dollar, touching the lowest in almost three weeks, as concern the currency region’s rescue plan will crumble and the European Central Bank will cut interest rates damped demand. The 17-nation currency fell the most in two weeks versus the yen after Greek Prime Minister George Papandreou pledged to put the European Union’s latest crisis accord to a referendum, risking a default if it’s rejected by voters. The euro trimmed losses after a report that a Greek political official said later the vote was “basically dead.” The dollar and yen rose as stocks slid and Chinese manufacturing slowed. “The motivation for this referendum is anyone’s guess, but it definitely raises the level of uncertainty going forward,”said Brian Kim, a currency strategist in Stamford, Connecticut,at Royal Bank of Scotland Group Plc. “Uncertainty is not good at this point. The dollar has been a beneficiary, since you’re seeing risk off across the board.” The euro  dropped 1.1 percent to $1.3703 at 5 p.m. in New York after falling 1.8 percent earlier to $1.3609, the weakest level since Oct. 12. It declined 0.9 percent to 107.39 yen,after losing as much as 1.7 percent, the biggest intraday drop since Oct. 17. The dollar  rose 0.3 percent to 78.37 yen after touching 79.53 yesterday, the strongest since Aug. 4.The Dollar Index, which Intercontinental Exchange Inc. uses to track the U.S. currency against those of six trading partners, gained for a third day, rising 1.1 percent to 77.337.



GBP/USD

Options traders are driving the cost of FTSE 100 Index puts to record highs versus Euro Stoxx 50 Index contracts, concerned U.K. Prime Minister David Cameron ’s plan for fiscal austerity will curtail economic growth. FTSE options trading 10 percent below the index cost 1.63 times more than contracts 10 percent above, according to data compiled by Bloomberg. The value, known as skew, for the Euro Stoxx 50 Index was 1.38 yesterday. The ratio between the numbers surged to a record high on Oct. 28, the data show.     While British stocks have performed better than 20 out of 24 developed markets this year amid the European financial crisis, traders are betting equities will fall after Cameron pledged to eliminate the nation’s deficit by 2015. The FTSE has surged 57 percent since global equities bottomed in 2009, almost twice the gain for the European measure. “The rally may have burnt itself out,” Max King , London- based investment strategist at Investec Asset Management, which oversees about $55 billion, said in a phone interview yesterday. “The market’s had a great run, but everyone was and is very skeptical about the debt crisis. We are more inclined to take money off the table.” The FTSE 100, a gauge of the largest companies traded on the London Stock Exchange, lost 6 percent this year through yesterday. Only the Standard & Poor’s 500 Index, the New Zealand Exchange Limited 50 Free Float Total Return Index and Ireland’s ISEQ Overall Index have done better. The Euro Stoxx 50 retreated 15 percent. 



USD/JPY

Toyota Motor Corp. and Honda Motor Co. reported U.S. sales declines for October, when they pledged to record their first increases since April. General Motors Co. and Ford Motor Co. said their deliveries rose less than analysts’ estimates. Toyota said sales slid 7.9 percent to 134,046, while Honda deliveries slipped 0.5 percent to 98,333, according to separate e-mailed statements. GM sales rose 1.7 percent to 186,895 and Ford light-vehicle deliveries gained 6.2 percent to 167,502, falling short of estimates by analysts who projected at least 6.6 percent increases for each. October light-vehicle sales, released today, may have risen to a seasonally adjusted annual rate of 13.2 million, the average estimate of 14 analysts surveyed by Bloomberg. The pace, which dipped below 12 million in May and June after Japan’s tsunami disrupted Toyota and Honda output, may now be challenged as Thailand’s floods limit production.“ The industry is not taking its share of the pocketbook that it should,” Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio, said today in a phone interview. “This is consistent with a recovery that’s moving forward but at a hesitant, choppy rate, and what we should be expecting given that Honda and Toyota are still really restrained.” Toyota sales were expected to drop 9.1 percent, the average estimate of five analysts surveyed by Bloomberg. Tokyo-based Honda’s decline was less than the 2.5 percent decrease that was the average of five analysts’ estimates.    



USD/CAD

Canada’s dollar  depreciated the most in five weeks as renewed concern the European rescue plan will unravel discouraged demand for higher-yielding assets. The Canadian currency’s appeal dimmed as a measure of implied volatility jumped after Greek Prime Minister George Papandreou pledged to put an agreement reached last week by the European Union to a referendum. Canada’s government bonds rallied, pushing benchmark 10-year yields to the lowest level in almost a month. “There’s a violent move away from risk,” said Stewart Hall, a currency strategist at Royal Bank of Canada’s RBC Capital Markets in Toronto, in a telephone interview. “A lot of the euphoria that was built up on the back of the agreement to restructure the EFSF is being unwound,” he said, referring to leaders’ plans agreed to last week to enlarge the European Financial Stability Facility.Canada’s currency  decreased 1.9 percent, the most since Sept. 22, to C$1.0204 per U.S. dollar at 5 p.m. in Toronto. One Canadian dollar buys 98 U.S. cents. The loonie  earlier reduced its loss, tracking equities,after Dow Jones Newswires reported that a Greek Socialist Party official said the call for a referendum is “basically dead.”Papandreou will proceed with plans for a referendum, a government spokesman said in statements on state-run NET TV.