“The euro may fall to its weakest level since August, Brown Brothers Harriman & Co. said, citing an M-shaped trading pattern known as a double-top formation.

The 17-nation euro is trading near $1.28, where the neck line of the double top comprising the Sept. 17 high of $1.3172 and the Oct. 17 high of $1.3140 lies, said Marc Chandler, the global head of currency strategy at Brown Brothers in New York.

“The minimum objective of the pattern is around $1.2450, which is just beyond the 61.8% retracement of the euro’s Q3 rally,” Chandler wrote in an emailed-note yesterday, also citing a chart based on the Fibonacci sequence of numbers. He is “cautiously bearish,” Chandler said.

The euro fell 0.3 percent to $1.2782 as of 10:03 a.m. in Tokyo from the close yesterday in New York. The $1.2450 level was last seen on Aug. 22. The currency had advanced from a low of $1.2043 on July 24 to a high of $1.3172 on Sept. 17.”

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“The Australian dollar rose against most of its major peers after President Barack Obamaexpressed confidence that the U.S. can avoid the so-called fiscal cliff, boosting stocks and buoying demand for higher-yielding assets.

The so-called Aussie reached its strongest level in more than six months against the yen as theBank of Japan (8301) meets today and tomorrow with political pressure mounting for more monetary stimulus. New Zealand’s dollar, known as the kiwi, maintained an advance after data showed its services industry expanded at the fastest pace in almost five years.

“The Australian and New Zealand dollars are being bought as risk assets, so they tend to be correlated with stock moves,” said Hideki Shibata, a senior strategist for rates and currencies at Tokai Tokyo Research Center Co. “Amid the broader sell-off of the yen, the Aussie and kiwi are being chosen as higher-yielding currencies.” ”

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“The foreign-exchange market is signaling to Citigroup Inc. (C) that it isn’t yet convinced theFederal Reserve will fulfill its pledge to keep pumping record amounts of cash into the U.S. economy through 2015.

The U.S. Dollar Index has gained 2.5 percent since the central bank said Sept. 13 it would keep interest rates at record lows through mid-2015 and print $40 billion a month to buy bonds, a policy that debases the currency. Higher-yielding currencies from the Czech koruna to Poland’s zloty that benefited from such actions in the past are weakening.

While the Fed said it will keep the stimulus going even after data show the economy is improving, the foreign exchange market indicates that gains in U.S. employment, housing andconsumer confidence may prompt changes in policy sooner. The dollar will rally next year versus the euro and yen, based on the median estimate of more than 50 strategists from Barclays Plc to Nomura Holdings Inc. surveyed by Bloomberg.

“Does the market really believe that the 2015 Fed is going to be constrained by the 2012 Fed?” Steven Englander, Citigroup’s New York-based global head of G-10 strategy, said in a telephone interview from New York. “The answer is ‘no.’” ”

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“Australia’s dollar was 0.1 percent from a three-week low as risk appetite waned after stocks fell globally yesterday amid mounting geopolitical tension over the Gaza strip and signs of economic slowdown worldwide.

The so-called Aussie held two days of losses after the International Monetary Fund said in a statement yesterday there is scope for the Reserve Bank of Australia to ease more if warranted by the economy. The RBA held its benchmark interest rate unchanged at 3.25 percent on Nov. 6. The Australian and New Zealand dollars headed for weekly gains against the yen on speculation Japanese elections next month will hand power to an opposition party that advocates more monetary stimulus.

“The pressure is still on the downside for the Aussie,” said Lee Wai Tuck, currency strategist at Forecast Pte in Singapore. “There are concerns about the global economy slowing and euro zone risks. The RBA is likely to open the door for more easing, if not in December, maybe next year in February.””

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“Australia’s dollar declined against most of its major peers after the nation’s Reserve Bank said it increased sales of the currency last month to a category of buyers that includes foreign central banks.

Demand for the so-called Aussie was limited after an Israeli air strike on the Gaza strip and signs of a global slowdown reduced demand for riskier assets. Australian bonds rose, sending the benchmark 10-year yield to the lowest level in almost one month. The Australian and New Zealand dollars rallied versus the yen after Japan’s opposition leader Shinzo Abe called for unlimited central bank easing until deflation is defeated in the world’s third-largest economy.

“There will likely be more chatter that the RBA is perhaps conducting off-market, central bank-to-central bank transactions,” said Emma Lawson, a Sydney-based foreign- exchange strategist at National Australia Bank Ltd. “The Aussie is considered to have been strong due to these market transactions for investors buying our government debt. If it’s being conducted off-market, then perhaps that takes some pressure off the upside for the currency.” ”

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“Australia’s dollar touched a two- month high against its New Zealand counterpart after retail sales in the smaller nation unexpectedly fell.

The so-called Aussie reached the strongest level in a week against the U.S. dollar after reports showed Australia’s consumer confidence rose to a 19-month high. Demand for both South Pacific currencies was limited amid signs that Europe’s debt crisis is hampering the region’s recovery.

“New Zealand’s economy isn’t showing robust growth at present, and the retail sales didn’t help that,” said Hans Kunnen, the chief economist at St. George Bank Ltd. in Sydney. “The pace of economic growth in Australia is firmer, and we expect that to be reflected in the currency market.”

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“The yen weakened on speculation Japan will pursue more aggressive monetary easing to support its economy. European stocks slid while U.S. stock index futures climbed and Treasuries fell for the first time in five days.

The yen dropped against all 16 major counterparts and declined 1.1 percent to 101.99 per euro at 7 a.m. in New York. Futures on the Standard & Poor’s 500 Index rose 0.5 percent while the Stoxx Europe 600 Index slipped 0.4 percent as ICAP Plc sank 6.4 percent after reporting declining profit. Germany sold two-year notes at a negative yield for the second time on record. U.S. natural gas rose to a two-week high.”

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“The Mexican peso trade has been a clear favorite of currency traders in recent months, owing to the country’s strong growth fundamentals, the Mexican economy’s apparent decoupling from the global economy, and the perception that the peso has been undervalued relative to other currencies and thus represents a good buy.

Recently, Societe Generale currency strategist Sebastian Galy wrote after returning from an investor trip, “If there as a ‘favourite currency’ amongst the investors I spoke with in North America, it was the Mexican peso.”

However, that interest may be waning.

The chart below shows the non-commercial long positions in the peso netted against short positions, per data from the CFTC’s weekly Commitment of Traders report.”

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“The foreign-exchange market is signaling more pain ahead for currencies that benefit from a sustained global recovery, five years after the onset of the worst financial crisis since the Great Depression.

HSBC Holdings Plc’s Global Hazard Indicator, which combines implied volatility readings in options for the dollar, euro and yen, shows wider price swings in currencies over the next year than in the coming three months. If history is any guide, that means the dollar and yen will strengthen and higher-yielding, higher-risk currencies such as the Brazilian real and South African rand will depreciate.”

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“Australia’s dollar declined, trimming a gain from yesterday, as concern Europe’s debt crisis is weighing on global growth reduced demand for riskier assets.

The so-called Aussie fell against most of its major peers after data showed business confidence weakened in Australia and before a report on German economic sentiment. Demand for the New Zealand dollar was limited as Asian stocks dropped.

“Europe looks like it’s heading towards recession, if not already in recession, which is having a drag on the global economy,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk-management company. “Commodity prices are well off their highs from earlier on in the year and last year. The Aussie is vulnerable to the downside.”

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“Industrial metals advanced with the Australian and New Zealand currencies as China’s exports topped forecasts. European stocks swung between gains and losses before the region’s finance chiefs meet to discuss Greek aid.

Copper jumped 1 percent at 7:20 a.m. in New York. The yuan climbed to a 19-year high and the so-called Aussie gained against its 16 major peers. The Stoxx Europe 600 Index increased 0.1 percent, with trading volume 12 percent below the 30-day average. Standard & Poor’s 500 Index futures added 0.3 percent, indicating the benchmark gauge will rebound from its worst week in five months. Spain’s 10-year note yield rose four basis points. U.S. bond markets were closed for a holiday.”

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“The so-called Aussie and kiwi reversed earlier declines versus their U.S. counterpart. China’s central bank governor and statistics chief signaled October data to be published from today will show growth improving this quarter in the world’s second-largest economy. Australia’s currency weakened earlier after the Reserve Bank reduced its 2013 growth forecast.”

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“Australian employers boosted payrolls more than economists forecast in October and theunemployment rate unexpectedly held as the nation weathered a global slowdown, sending the local currency higher.

The number of people employed rose by 10,700 after a 15,500 gain in September, the statistics bureau said in Sydney today. That compares with the median estimate for an increase of 500 last month in a Bloomberg News survey of 26 economists. The jobless rate was unchanged at 5.4 percent, compared with expectations for a rise to 5.5 percent.”

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“U.S. Treasuries advanced for a second day and the dollar strengthened on speculation the so-called fiscal cliff and Federal Reserve bond purchases will boost demand for debt. European stocks gained, while Spanish bonds fell after a debt sale.

The yield on five-year Treasuries fell two basis points to 0.66 percent at 7:20 a.m. in New York. The dollar advanced against 11 of its 16 major peers. The Stoxx Europe 600 Index (SXXP) rose 0.4 percent. Standard & Poor’s 500 Index futures added 0.2 percent after yesterday decreasing 2.4 percent. The yield on Spain’s 10-year rose 13 basis points to 5.82 percent. Oil climbed 1 percent and the S&P GSCI gauge of 24 commodities advanced 0.5 percent.”

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RISK ON FOLKS!

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After Obama’s win for a second term the dollar continued yesterday’s slide in expectation the new normal will be the old normal which is the way of Japan.

There shall be more QE and stimulus to come.

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“The euro is likely to extend its 1.3 percent drop in the past three sessions against the U.S. dollarthis week, according to IG Markets Securities Ltd., which cited trading patterns.

The 17-nation currency has fallen below its 200-day moving average and continues to trade below it, according to Junichi Ishikawa, a Tokyo-based analyst at IG Markets. “The euro has broken the $1.28 level after falling below its 200-day moving average and technical indicators are suggesting further declines,” he said.

The $1.2755 level, which the euro failed to break below on Sept. 10 and Sept. 11, will act as an initial support, Ishikawa said. Should the euro fall below that level, it could test $1.2739, near the 38.2 percent retracement from its rise from the July 24 low of $1.2043 to the Sept. 17 high of $1.3172 on the Fibonacci chart, he said. The euro last touched $1.2739 on Sept. 7.”

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“Australia’s central bank kept its benchmark interest rate unchanged at a developed-world high as the global economy stabilizes and domestic inflation picks up, driving the local currency to a five-week high.

Governor Glenn Stevens and his board left the overnight cash-rate target at 3.25 percent, theReserve Bank of Australia said in a statement today in Sydney. The move surprised most economists, with 20 of 27 surveyed by Bloomberg News having predicted a cut to 3 percent. Traders were split 50-50 on whether Stevens would stand pat or cut.”

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The Euro is down 0.004 @ 1.277

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“The dollar rose for a third day against the yen before a U.S. report that economists said will show employers stepped up hiring last month, pointing to a recovery in the world’s biggest economy.

The euro weakened versus 13 of its 16 major counterparts after a report confirmed the region’s manufacturing sector contracted in October. The yen headed for a third weekly decline against the U.S. currency as economic weakness and disappointing corporate earnings spurred speculation the Bank of Japan (8301) will expand monetary easing. The pound climbed to the strongest in a month against the euro.”

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