Tuesday, September 22, 2009

NordMarkets Morning FX


A quiet Asian session to start the week with Japan closed Monday through Wednesday and several other centres closed for religious holidays. The only action of note was in sterling where the pound came under further pressure in early trade, stops below $1.6220 triggered to take it to $1.6212 before able to make a recovery to $1.6265 on reaction to stronger than expected Rightmove housing data. Release of BOE Quarterly Bulletin reversed the recovery attempt with rate falling under $1.6200 to $1.6185. Euro was buoyed by demand for euro-sterling, euro-dollar trade contained within a range of $1.4665/1.4713 though under pressure into early Europe on generally firmer dollar. Yen traded with a slight softer tone as equity markets eased, dollar-yen triggering stops above Y91.60 to take rate on to Y92.01. Very light data calendar for today, with main focus for the week on the FOMC statement Tuesday and G20 FinMin meeting Thursday/Friday. BOE Minutes from the Sep meeting are published Wednesday. Speeches from SNB Hildebrand and Jordan are set for Friday.

Euro-dollar opened Asia around $1.4685 and edged to session highs of $1.4713 in relatively subdued trade due to the holiday in Japan (closed through to Wednesday). Pressure on sterling provided the euro with some buoyancy, via demand for euro-sterling, but general dollar buys eventually weighed against further gains and saw rate pullback to $1.4680. Demand for euro-yen provided a lift back to $1.4706 but again rate met decent headwind selling above $1.4700 that saw rate drift lower through the balance of the session to $1.4665 into early Europe. Further sales have taken the rate to extended lows of $1.4655, but seen meeting decent demand interest in the area ahead of $1.4650, with talk emerging of stops below. Decent technical support noted down to $1.4640 expected to provide a cushion below, a break here to allow for a deeper move toward $1.4625/20 ahead of $1.4600. Offers seen placed between $1.4680/85 ahead of $1.4695/05, stronger toward $1.4720.

Elsewhere, speculative accounts increased their net euro long positions and pared their net yen long positions as per September 15, according to CFTC data released Friday. The net position in non-commercial futures (ex-options) showed that speculators increased their net euro long to +37,772 contracts from last week's net long of +18,033 contracts, the CFTC said. In the yen, as per Sept 15, speculative accounts had a net yen long of +37,107 contracts versus last week's net yen long of +40,799 contracts, which was the largest net long since February. Y Spec accounts have had a net euro long position since May 5 and maintained a net yen long since July 7. The euro closed at $1.4659 Sept 15, versus the levels seen late Friday near $1.4700. Dollar-yen closed at Y91.03 Sept 15 vs. Friday's closing levels near Y91.45.

Dollar-yen closed the week in NY around Y91.28, with euro-yen ending back around opening Asian levels at Y134.25. Traders reported a quiet Asian session Monday with Tokyo out until Wednesday, dollar-yen moving up from the Y91.30 area, while the cross found a base at Y134.20. Subsequent bounce was sufficient to push dollar-yen through Friday's Y91.55 high, though gains were initially capped ahead of Y91.60 as euro-yen topped out in the Y134.60 area. Majority of the Asian session was then subdued within the early ranges before a late spike in both pairs saw dollar-yen making a show above Y92.00 after stops were hit through Y91.65/80, as the cross moved towards Y135.00, so far stalling at Y134.97. Traders noting reports of stops now from various names on a break of Y135.10, system accounts in particular said to have left orders in that area. Techs meanwhile note the move back above the Ichimoku Cloud at Y134.84, a close above there today required for fresh upside momentum. Offers in dollar-yen are noted in the Y92.20/25 area, ahead of tech resistance at Y92.44 (21-day moving average).

Turning to the technical picture, initial resistance is still seen at $1.4768 as euro-dollar trades within the $1.4830 Bollinger band. Daily studies remain firm but are now well in overbought territory, highlighting the risks of a pullback.

RES 4: $1.4908 High Aug 22 2008
RES 3: $1.4851/62 100% projection of the Q4 2008 rally, High 22 Sep
RES 2: $1.4830 Current top of the daily Bollinger band
RES 1: $1.4768 High 17 Sep


SUP 1: $1.4648 Low 18 Sep
SUP 2: $1.4517/30 Low 14 Sept, Former resistance line from 3 June
SUP 3: $1.4447 August high
SUP 4: $1.4440 21-day moving average

Dollar-yen is trying to break back above the major low seen in July at Y91.75, helped by an upturn in momentum and the daily Stochastic study. Initial support is the 5-DMA at Y91.30. Euro-yen is focused on breaking above Ichimoku cloud top at Y135. Daily studies are mixed with the stochastic clearly bullish but momentum struggling to make ground.

RES 4: Y93.96 50% retracement of Aug/Sep decline
RES 3: Y93.06 38.2% retracement of Aug/Sep decline
RES 2: Y92.40/80 21-day moving average, Kijun line
RES 1: Y91.75 Major low July


SUP 1: Y91.30/50 5-DMA & Tenkan line
SUP 2: Y90.12/21 Lows Sept 11, 14, 16
SUP 3: Y89.62/67 Proj channel base, 50% proj of the Aug/Dec downmove
SUP 4: Y87.12 Major lows Dec/Jan

Cable's recent head-&-shoulders break target has been filled, although studies remain weak keeping bears focused on channel base at $1.6182 and the $1.6115 double-low. Initial resistance is the 5-day moving average at $1.6380.

RES 4: $1.6822 76.4% of August pullback
RES 3: $1.6740 High 11 Sep
RES 2: $1.6672 Resistance line from July 2008 high
RES 1: $1.6380 5-day moving average


SUP 1: $1.6210 Hourly low
SUP 2: $1.6182 Channel base from June 8
SUP 3: $1.6115 Double-low from early Sep
SUP 4: $1.6080 Base of the daily Bollinger band

European events for Monday start at 0700GMT, when ECB Executive Board member Gertrude Tumpel-Gugerell is due to give the opening address at a conference on "Business Models in Banking: Is There A Best Practice?", in Milan.

0800GMT sees the Bundesbank publish it's latest Monthly Bulletin, while at 0900GMT, the ECB releases a survey on "Access to finance of small- and medium sized enterprises"

There is no major UK data remaining for Monday, but at 1005GMT, the Bank of England's Sentance speaks in London.

At 1100GMT, German Finance Minister Peer Steinbrueck, Chancellor Angela Merkel and former ECB chief economist Ottmar Issing are due to hold a press conference on financial market regulation proposals, in Berlin.

At 1215GMT, Riksbank Deputy Governor Lars Svensson is due to give a speech "Flexible inflation targeting and the crisis", at an event in Amsterdam.

US data starts at 1330GMT with the MNI Capital Goods Index, followed at 1400GMT by the leading indicators index, which is expected to rise 0.7% in August on positive contributions from slower vendor performance, rising stock prices, in increase in building permits, and rising consumer expectations. These were offset by negative contributions from the falling money supply and rising jobless claims.

At 1430GMT, the IMF releases analytic chapters of the annual Global Financial Stability Report, at the same time as the release of the weekly MNI Retail Trade Index.

At 1630GMT, ECB Governing Council member Ewald Nowotny participates in a panel discussion of "One Year After The Crisis", in Salzburg.

Best Regards,



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