Wednesday, September 23, 2009

NordMarkets Morning FX - September 23

Kiwi again took centre stage overnight as the release of stronger than forecast GDP data took Kiwi-dollar from around $0.7190 to $0.7315. Market took advantage of continued Tokyo holiday thinned conditions, targeting stops in euro-yen through Y134.50 that dragged dollar-yen through its stops level at Y90.50 but strong demand emerged below to contain move at Y90.48, the rate then recovering back to settle around Y90.70. Euro-yen recovered off its early lows of Y134.09 as euro-dollar took direction from the Kiwi move, the rate pushing through Tuesday's high at $1.4822 to extend recent gains to $1.4843. Cable also moved higher, initially meeting stiff resistance ahead of $1.6400 before it finally gave way and allowed rate to edge on to $1.6415. Aussie also tracked Kiwi higher, though trailed in its wake, allowing in turn Aussie-Kiwi to drop 140 points to NZ$1.2010 before recovering late on to NZ$2060. Focus this morning on flash PMI data from France, Germany and eurozone, BOE Minutes, with the later release of the FOMC decision hovering in the background.

Euro-dollar opened Asia around $1.4790, initially marking session lows at $1.4784 before bouncing back as rate took its cue again from the Kiwi, as this latter currency gained a further boost on the release of stronger than forecast GDP (action similar to Tuesday after release of NZ current account data and a boost in milk prices). Euro-dollar pushed through Tuesday'#s highs at $1.4822, tripping stops above $1.4825 to take it on to highs of $1.4843. Move met decent supply from an Asian sovereign name, with residual interest said to remain between $1.4835/40, the rate then easing back to $1.4785 before recovering again, meeting resistance around $1.4820 (61.8% $1.4843/1.4784) before settling between $1.4800/20 into early European dealing. Rate currently trades around $1.4810. Bids seen placed to $1.4800, a break to allow for a deeper pullback toward $1.4785/80 ahead of $1.4770 (NY low $1.4769). Talk of demand dotted from this latter level down to $1.4755 with stops placed on a break below. Offers seen at $1.4835/40, more toward $1.4850.

After slipping to a Y90.94 low in the US session, dollar-yen closed around Y91.10, while euro-yen ended steady around Y134.80. Continued absence of Tokyo market led to thin liquidity into the Asian session, stops hit in dollar-yen through Y90.90 and Y90.75 as the break of 76.00 in the dollar-index led to talk of model and system accounts having to sell. Euro-yen also saw an early stop-loss run to the downside, dropping to Y134.09 and moving back into the Ichimoku Cloud in the process. Talk of standing Japanese bids in the Y90.50/45 area limited the fall to Y90.47 in dollar-yen, the rate subsequently recovering back to Y90.90 as the cross bounced back to Y134.60. Balance of the Asian session was well contained after the initial flurry of activity, dollar-yen holding around Y90.70 into the European session as euro-yen sits at Y134.30. Reports of topside stops now through Y91.10, though focus remains on the downside amid reports of large Y90.00 barrier interest rolling off Monday and attracting significant bids ahead, tying in with last week's base at Y90.12.

On the euro-dollar techs, not much resistance noted until $1.4851/62, where the latter is the Sept 2008 high. Also noted is the daily Bollinger band top at $1.4906. However, this is a rising target and likely to climb as price action gains. M/t outlook remains constructive to $1.5163 -- 76.4% of $1.6039 to $1.2329 overall move.

RES 4: $1.4982 2.0% moving average envelope
RES 3: $1.4968 Major high Nov 2007
RES 2: $1.4906/08 Daily Bollinger band top, High Aug 22 2008
RES 1: $1.4851/62 100% projection of the Q4 2008 rally, High 22 Sep

SUP 1: $1.4747 5-day moving average
SUP 2: $1.4611 Low 21 Sep
SUP 3: $1.4517/33 Low 14 Sept, Former resistance line from 3 June
SUP 4: $1.4500 21-day moving average

The dollar remains under pressure against the yen having failed to close above Y91.75 -- the major low seen in July and now puts focus back on the projected 6-month channel base, which is now valued at Y89.56. Support is now at Y90.12/321 recent lows. Initial resistance at Tenkan line of Ichimoku cloud at Y91.33.

RES 4: Y94.74 200-day moving average
RES 3: Y93.96 50% retracement of Aug/Sep decline
RES 2: Y93.06 38.2% retracement of Aug/Sep decline
RES 1: Y92.27/55 21-day moving average, 76.4% of Y93.29-Y90.15

SUP 1: Y90.71 76.4% of Y90.15 to Y92.53
SUP 2: Y90.12/21 Lows Sept 11, 14, 16
SUP 3: Y89.60/67 Proj channel base, 50% proj of the Aug/Dec downmove
SUP 4: Y87.12 Major lows Dec/Jan

A potential hammer reversal candlestick noted Monday and strong white candlestick yesterday, which implies risk of a reversal higher for cable. Initial resistance is at $1.6437 -- 50.0% of $1.6740 to $1.6134 move and break favours trend resistance line at $1.6654. Support is at the 5-day moving average at $1.6341.

RES 4: $1.6740 High 11 Sep
RES 3: $1.6665 Resistance line from July 2008 high
RES 2: $1.6437/54 50.0% of $1.6740 to $1.6134, High 18 Sept
RES 1: $1.6387 21-day moving average

SUP 1: $1.6264 High 21 Sept
SUP 2: $1.6100/15 Base of the dly Bollinger band, Dbl-low from early Sep
SUP 3: $1.6033 Low 13 July
SUP 4: $1.5986 Low 8 July

The biggest item on the calendar Monday comes late in the European day, with the Fed's FOMC announcing the outcome of its two-day policy meet.

Although no change is expected in either rates or current Fed policy actions, traders will be closely scrutinising the statement for renewed hints as to when the Fed will start withdrawing easy money.

The kremlinologists will be further dissecting the words, following comments last week from an East Coast advisory service, noting a couple of Fed members wanted to signal a sooner than currently anticipated end to the accommodative policies.

The European data calendar picks up after the slow session Tuesday, with the release of the flash manufacturing indices.

However, the day starts at 0645GMT, with the release of French Jul/Aug consumer spending. This is followed at 0650GMT, with the release of French manufacturing sentiment.

Flash manufacturing and service PMI releases start at 0657GMT with the French data, followed at 0727GMT with German data and at 0757GMT with the overall EMU flash numbers.

UK data is released at 0830GMT, with the August BBA Loans For House Purchase data. Also at 0830GMT, the Bank of England publishes minutes of September MPC meeting.

Further EMU data is released at 0900GMT, when EMU July industrial orders hit traders screens.

The US calendar kicks off at 1100GMT when the MBA Mortgage Application Index for the Sept 10 week is released.

Back in Europe, at 1200GMT, the Norges Bank announces monetary policy decision, followed at 1245GMT by its regular post decision press conference.

The Bank of England's MPC member Kate Barker speaks in Wales at 1210GMT.

At 1300GMT, the Belgian National Bank's Sept business sentiment survey is released

The US calendar continues at 1330GMT, when Treasury Secretary Timothy Geithner testifies before the House Financial Services Committee on financial regulatory reform in Washington.

At some stage, ahead of the UN General Council meeting, President Barack Obama meets with new Japan Prime Minister Yukio Hatoyama in New York.

Data continues at 1400GMT, when August BLS Mass Layoffs data is out, followed at 1430GMT with the release of the EIA Crude Oil Stocks.

At 1815GMT, the FOMC policy decison and statement are released.

Best Regards,


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