Wednesday, September 16, 2009

NordMarkets Morning FX

European open; Release of stronger than forecast UK RICS housing data (+10.4% vs expected 0.0%) gave sterling a boost, the demand taking cable back above $1.6600, from its opening level around $1.6578, to session highs of $1.6629. Sterling remains firm into early Europe though some suggest this could be tempered ahead of UK inflation data release at 0830GMT, while others point to the report in the FT that legislation to force UK banks to draw up 'living wills' could also weigh if other countries don't follow suit. The move in sterling gave risk on trades an early lift, euro-yen tripping stops through Y133.10 took this rate to Y133.34, in turn moving euro-dollar back to $1.4647 (NY $1.4654) before meeting headwind Asian sales. Dollar-yen attempted to track euro-yen higher but was met by CTA and short term model sales, reversing in line with euro-yen on life co. sales, though pension fund demand cushioned the move lower. RBA Minutes seen balanced, in a 'wait and watch' mode. UK inflation data t 0830GMT, followed by Germany ZEW at 0900GMT the morning's focus ahead of US PPI and key retail sales at 1230GMT.

Opened Asia around $1.4627, off NY highs of $1.4654, and initially edged up to post session highs at $1.4647, as rate tracked cable's push higher on the back of the release of stronger than expected UK RICS data, with the break above Y133.10 in euro-yen also aiding the early move. Reports of Asian sellers placed above $1.4650 discouraged further upside progress, with talk of Asian sovereign book balancing sales also providing supply. Rate sank back to $1.4604 as euro-yen was squeezed off its early highs by life company sales. Euro-dollar drifted higher through the balance of the session, edging back to $1.4634 ahead of the European open, currently trading around $1.4632. Offers remain in place between $1.4650/60, a break above to open a move toward $1.4700 with offers ahead of this level suggested to begin from around $1.4685, with interim interest noted at $1.4672 (1.618% swing of $1.4647/04). Bids remain in place toward $1.4600.

Correction of yen longs continued into early Asian trade Tuesday, the early triggering of stops through Y133.10, from an opening level around Y132.80, providing the impetus to take euro-yen to early highs of Y133.30. The move dragged dollar-yen through Monday's high at Y91.14, triggering stops at Y91.20 to take it on to Y91.23, but rally met decent headwind resistance from CTA and short term model supply. Euro-yen reversed on Japanese life company sales to Y132.88, though move down was tempered by reported buys from a Japanese pension fund, along with importer interest, the rate recovering back ahead of the European open to Y133.34. Dollar-yen eased back, finding support ahead of Y91.00 in Asia, with early Europe seen probing for stops below the figure. Dollar-yen demand seen in place toward Y90.80/70, a break to allow for a deeper move toward Y90.50. Resistance remains in place above Y91.20 through to Y91.30 with reported stops above. If stops triggered expected to meet further sell interest placed between Y91.40/50, with talk of further sell interest dotted toward Y92.00

Dollar-yen downside so far arrested at potential double-day low reversal at Y90.18/21, but downside risks remain whilst below Y91.30/75 -- 5-day moving average and Tenkan line of Ichimoku cloud. The dly studies whilst o/sold, are still well above extreme levels of reversal - thus imply plenty of downside scope. Risk seen to Y89.81 proj channel.

RES 4: Y95.31/33 Base of the Ichimoku cloud, 100-day moving average
RES 3: Y94.75 200-day moving average
RES 2: Y93.17 21-day moving average
RES 1: Y91.53/75 5-day moving average, Tenkan line of Ichimoku cloud

SUP 1: Y90.18/21 Double-day low Sept 11, 14
SUP 2: Y89.67/81 50% proj of the Aug/Dec downmove, Proj channel base
SUP 3: Y87.12 Major lows Dec/Jan
SUP 4: Y86.05 Monthly high June 1995

Euro has hit fresh 2009 highs against the dollar and has broken decisively above $1.4622 -- 61.8% retracement of the 2008 decline. The "shooting star" candlestick on Friday has been negated and very little resistance seen until $1.4708/47, where the former is the 2.00% moving average envelope and latter the spike high on Dec 18. Daily studies are bullish.

RES 4: $1.4968 Major high Nov 2007
RES 3: $1.4908 High Aug 22 2008
RES 2: $1.4851/62 100% projection of the Q4 2008 rally, High 22 Sep
RES 1: $1.4708/21 2.00% moving average envelope, High 18 Dec

SUP 1: $1.4565 5-day moving average
SUP 2: $1.4504 Low 10 Sept
SUP 3: $1.4447 August high
SUP 4: $1.4332 21-day moving average

Cable suffered a minor test of a 9-day support line yesterday, but risks remains skewed lower following failure at $1.6742 and the potential "shooting star" candlestick formation on Friday. The $1.6742 was also the June top and failure to break above here perhaps puts attention back on channel base from early June at $1.6163.

RES 4: $1.7116 50% projection of April/June advance from July base
RES 3: $1.7044/52 High 5 August, November 2005 low
RES 2: $1.6822 76.4% of August pullback
RES 1: $1.6706/16 Daily Bollinger band top, Res line from July 2008 high

SUP 1: $1.6501/33 38.2% of $1.6115 to $1.6740, Support line fm 2 Sept
SUP 2: $1.6414/29 21-day moving average, 50.0% of $1.6117 to $1.6740
SUP 3: $1.6324 Low 4 Sept
SUP 4: $1.6239 Minor low 3 Sep

Euro-yen has suffered a minor test of the daily Bollinger band base at Y131.57 before recovering. However, downside risks persist following break of uptrend from Jan 21 on Friday. Overall, the cross remains below 1-month channel top at Y133.81 and whilst below here, the risk is on weakness towards the 200-DMA & channel base at Y128.58.

RES 4: Y136.08 High 24 August
RES 3: Y134.85 Kijun line of Ichimoku cloud
RES 2: Y133.81/83 Resistance line from 10 Aug, High 11 Sept
RES 1: Y133.12 Ichimoku cloud base

SUP 1: Y131.08/57 Low 2 Sept, Daily Bollinger band base
SUP 2: Y129.05 200-day moving average
SUP 3: Y128.58 Projected channel base from Aug 10 high
SUP 4: Y127.01/03 Low 18 May, 8 July

European data kicks off at 0600GMT, with the release of the ACEA Jul/Aug new car registrations

French data is next up. At 0645GMT, the France Aug HICP, CPI data is released, followed at 0650GMT by the France Jul current account balance.

At 0700GMT, German Economics Minister Karl-Theodor zu Guttenberg, German Industry Association (BDI) managing director, Werner Schnappauf, German Association of Industry and export conference, are slated to speak in Berlin

The calendar continues at 0830GMT, with the release of German Wholesale and Export Association (BGA) releases new wholesale forecasts, in Berlin

The UK calendar kicks off at 0830GMT, with the release of the August CPI data. Annual CPI inflation should fall further below the BoE target for the third consecutive month in August before bottoming out in September. Utility bills are likely to play a key in role in pushing down on prices in August given the rise in gas and electricity bills this time last year will begin to drop out of the annual measure. This favourable base effect should continue in September. The market is looking for a 0.3% m/m rise, up 1.4% y/y in the CPI reading.

At 0845GMT BOE Governor King, along with Dep Governor Bean and MPC members Barker, Dale, Miles are in Parliament at TSC hearing, to be quizzed on the August Inflation reports. Taking centre stage will likley be the decision of King, Besley and Miles to vote for increased QE in August, and the reasons the other MPC members voted them down.

The calendar continues at 0830GMT, with the release of German Wholesale and Export Association (BGA) releases new wholesale forecasts, in Berlin

At 0900GMT, EMU 2Q labour cost data is released, along with the much-watched Germany Sep ZEW. The market is looking for a ZEW read of 60.0, up from 56.1 in August.

Also due Tuesday morning is the annual statement on the eurozone economy from the European Commission Directorate-General for Economic and Financial Affairs.

The US calendar kicks off early, with the release of the ICSC-Goldman Store Sales for the Sept 12 week.

Bundesbank board member Hans-Helmut Kotz speak at conference in Berlin speaks at 1200GMT

The US calendar kicks off early, with the release of the ICSC-Goldman Store Sales for the Sept 12 week. The main US data is due at 1230gmt, with the release of the August Producer Price Index, Retail & Food Sales data and the NY Fed Empire State Survey.

Also due at 1230GMT is the Canadian new motor vehicle sales for July. At 1255GMT, the US Redbook Average for the September 12 week is released.

Back in Canada, at 1330GMT, Bank of Canada Deputy Gov. John Murray is scheduled to give a speech on the crisis and Canada's near-term prospects in Berlin.

The US calendar continues at 1400GMT, when Federal Reserve Chair Ben Bernanke gives a speech on the year of crisis to the Brookings Institution in Washington.

At 1400GMT, the US Business Inventories data for July is released. Alsoa t 1400GMT, the World Bank releases its 2010 World Development Report

Back in Europe, at 1500GMT, the ECB Executive Board member Juergen Stark gives a speech on "Monetary and fiscal policy: criteria and timing for the phasing out of crisis measures", in Berlin

The US calendar ends at 2100GMT, with the release of the ABC News Survey for the week ending Sept 13.

Best Regards,


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