NordMarkets Morning FX - September 25

MORNING FX
BRIEFING
Risk positions continued to be pared back into early Asian trade Friday, the overnight jump in the VIX, along with disappointing US housing data, reported to have kept the pressure on. Negative close on Wall street rolled over into Asian equity markets providing the dollar and yen an added boost in early trade. Sterling remained under pressure, triggered stops through $1.6000, Y146.00 and above stg0.9160 provided the impetus to take cable to lows of $1.5917 after further stops were triggered below $1.5985. Japanese margin houses were noted strong sellers of sterling-yen through the move. Euro-dollar was supported early on by the demand for euro-sterling, but as the cross stalled so pressure dropped the rate down to lows of $1.4614 before meeting reported French demand between $1.4620/00, prompting suggestions of sovereign interest. Dollar-yen pushed down to early lows of Y90.56 but strong gamma related demand between Y90.50/00 continues to cushion. Equities back in positive territory ease risk pressure into early Europe, aided by G20 comments on stimulus withdrawal.

EURO
Strong demand for euro-sterling in early Asian trade tempered dollar demand pressure on euro-dollar with the rate managing to hold around $1.4660 in early trade before the cross rise faltered. Model and hedge fund sales then took over to take rate to an initial low of $1.4622, a brief recovery to $1.4664 soon met renewed sell interest that took rate to session lows of $1.4614. French demand interest cushioned the move, with bid interest said to extend to $1.4600, with recovery off this low strengthened after stops were triggered above $1.4670, the rate edging to $1.4700 ahead of the European open. Rate settled into a $1.4675/95 range into the early Europe, currently around $1.4682. Offers remain in place at $1.4700, more toward $1.4720 with stops placed above. Bids remain between $1.4620/00 with stops below (suggestion area holds sovereign interest and draws front running demand with stops placed under the figure). A break to open potential for a move down to $1.4515 with area between $1.4560/45 to provide interim support.

YEN
Dollar-yen moved back up to a Y91.59 high in the NY session Thursday, closing back around opening Asian levels at Y91.35, while euro-yen ended at Y133.85. Yen pairs made brief highs into the overnight session before sterling-yen weakness triggered a move lower as stops were hit on the break of Y146.00. Models were euro-yen sellers as CTA stops were taken out, this pair slipping from Y133.86 and making a show under the Ichimoku Cloud base at Y132.86 as dollar-yen dropped back under Y90.80. Subsequent bounces were shallow, euro-yen topping at Y133.20 as dollar-yen stalled back around Y91.00, fresh lows then notched at Y90.56 and Y132.52 later in the session. Euro-yen did manage to bounce back to Y133.40 from here, while dollar-yen has struggled to get back above Y90.80. Traders say dollar-yen continues to be pulled between Japanese corporate repatriation into fiscal half-year end, exporter offers, barrier options and importer bids. Japanese bids noted under Y90.50, ahead of reported large barrier interest at Y90.00 with stops below the latter level.

EURUSD - TECHNICALS
The euro is still looking corrective having almost reached its 100% projection of the Q4 2008 rally and Sept 2008 peak at $1.4851/62. Risk is seen to $1.4533/40, which is the 21-day moving average and the former resistance from June 3. Initial resistance is at $1.4712/27, where the latter is the 50.0% of fall from 1.4844 to $1.4616.

USDYEN - TECHNICALS
Dollar-yen downside risks persist and break below Y90.12/21 seen extending weakness weakness to a projected 6-month channel base, which is now valued at Y89.48. Key topside level remains at Y91.75 level, which was the major low seen in July and failure to close above here is seen leaving bears in control.

GBPUSD - TECHNICALS
Sterling bears remain firmly in control following recent break below channel base from June 8 and confirmation of "Gravestone doji" candlestick pattern yesterday with long black body. Risk is now seen to $1.5721 -- the Dec 2008 high and 50% of April to August rally.

DAILY CALENDAR
Friday sees the second day of the Pittsburgh G20 summit, with leaders laying out their communique, the details of which are already seeping into the public domain.

The European calendar kicks off at 0600GMT, with the release of the July construction orders data. At 0610GMT, the October GfK consumer sentiment index is out.

French data is expected at 0645GMT, when September consumer sentiment hits screens, followed at 0650GMT with the released of the detailed Q2 GDP data. This is followed at 0700GMT with the release of Spanish August PPI data.

The calendar continues at 0715GMT, when ECB Governing Council member Yves Mersch is slated to speak at the Capital Market Forum, in Luxembourg. Norges Bank Governor Svein Gjedrem gives speech, in Oslo, although no time is slated.

At 0800GMT, ECB Aug M3 data is released, along with Italian July retail sales data

UK August car production data is expected around 0800GMT.

The only other item on the UK calendar is Q2 Total Business Investment, due out at 0830GMT.

SNB Board member Thomas Jordan to speak at the Capital Market Forum, in Luxembourg AT 0900GMT.

The US calendar starts at 1230GMT, with the release o Aug durable goods orders. Durables new orders are expected to rise only 1.0% in August after the revised 5.1% surge in July. Boeing reported 32 aircraft orders in August, down from 44 in July.

The Reuters/University of Michigan Consumer Sentiment Index is due at 1355GMT and is expected to be unrevised at a reading of 70.2 in late-September

At 1430GMT, US August New Home Sales data is released. New home sales are expected to rise to a 445,000 annual rate in August after the 9.6% jump in July. As with existing home sales, new home sales have shown indications of improvement in recent months, although the latest existing home sales were a surprise on the downside.



Best Regards,

NordMarkets.com