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MORNING FX
BRIEFING
The dollar traded narrow ranges in Asian trade Wednesday, with the Aussie dollar the main mover as it lost ground following dovish comments from Dep.Governor Battellino (usual hawk) and release of weaker than expected Australian GDP data. The Aussie found support ahead of an option barrier at $0.9000 eventually breaking down to $0.8966. Market awaits the FOMC outcome later in the day, with the result of the take up in the ECB's last 12 mth LTRO in focus for any prompting of SNB intervention. Dollar-yen was last at Y89.48, having traded a Y89.43 to Y89.72 range.

Euro-dollar was contained within $1.4521/48, edging to $1.4560 into early European dealing. The much reported barrier at $1.4500 (end year expiry) survived Tuesday's session with rate basing out at $1.4503. Cable was contained within $1.6240/80, currently holding around $1.6260. Eurozone flash PMI data due for release from 0758GMT through to 0858GMT, along with EMU inflation data at 1000GMT. UK employment data due at 0930GMT. US inflation data due at 1330GMT.

EURO
Euro-dollar opened Asia around $1.4537, off NY session lows of $1.4503 with the much reported option barrier at $1.4500 ($1.45/1.53 dnt structure, expires year end) remaining intact. Rate dropped back to mark session lows at $1.4521 as it tracked the Aussie dollar react fall following dovish comments from Dep.Gov. Battellino.

Rate settled into a $1.4525/45 range for most of the session, with focus turned to today's result in the ECB LTRO with the possible prompting of another round of SNB intervention (buying euros and dollars vs Chf), before marking highs at $1.4548 into early Europe. Demand into the European session lifted the rate on to $1.4560, currently trading around $1.4550. Resistance seen at $1.4570/80 ahead of $1.4595/00. Support remains at $1.4525/20, with stronger interest remaining in place on approach to the mentioned barrier at $1.4500. A break here exposes next strong support at $1.4480, with talk of Asian sovereign demand placed from here and extending toward $1.4460. Large stops noted below $1.4450.


RES 4: $1.5163 76.4% of decline from July 2008 high
RES 3: $1.5144 High 25 Nov
RES 2: $1.4855/70 55, 21-day moving average
RES 1: $1.4620 5-day moving average

CURRENT LEVEL: $1.4536

SUP 1: $1.4500/03 Bollinger band, Low 15 Dec 23.6% of March/Dec rally
SUP 2: $1.4472 First bear-flag level
SUP 3: $1.4447 50% retracement of the June/Dec advance
SUP 4: $1.4282 38.2% retracement of April-Dec & 61.8% of June-Dec rally


YEN
Dollar-yen rallied to Y89.95 in the NY session, closing still buoyed around Y89.60, while euro-yen ended mid-range at Y130.30. Traders noted light activity in the Asian session as the market consolidated ahead of tonight's FOMC minutes, dollar-yen initially easing back to Y89.45 from the early Y89.73 highs, remaining contained into the afternoon session ahead of an extension of the lows down to Y89.39.

Euro-yen followed a similar path, notching early highs at Y130.45 before a quick dip down to the day's lows at Y129.94. Some demand seen at the Tokyo fix, allowing for a bounce back to Y130.30, with the cross holding this level into the European open. Exporter offers still seen into Y90.00 with stops above, ahead of further supply in the Y90.30/35 area.


RES 4: Y92.32 High 27 Oct
RES 3: Y91.31 100-DMA, High 4 Nov, 50% of Aug/Nov decl
RES 2: Y90.75 Ichimoku top, High 4 Dec
RES 1: Y90.30 Base of the Ichimoku cloud

CURRENT LEVEL: Y89.52

SUP 1: Y88.25 21-day moving average
SUP 2: Y87.79 50% retracement of 26 Nov rally, Kijun line
SUP 3: Y87.36 Low 9 Dec
SUP 4: Y87.09 61.8% retracement of 26 Nov rally


CABLE
Opened Asia around $1.6267 and was bought up to mark session highs at $1.6280 in early trade before dropping back as it tracked the react fall in the Aussie dollar following dovish comments from the RBA Dep.Gov. Battellino and weaker than expected Australian GDP data. Cable found support at $1.6240 with rate settling into a $1.6240/50 range for a good part of the session before lifting above $1.6270 ($1.6271 76.4% $1.6280/40) into early European dealing.

Rate was knocked back to $1.6255/50 as early Europe again sold into a late Asian rally, though not as aggressively as has been seen in recent sessions. Rate currently trades around $1.6265. Resistance remains in place between $1.6270/80, a break above $1.6285 to allow for a move on toward $1.6295/00. Support $1.6240, stronger between $1.6205/00 ahead of $1.6195/90. A break here to open a deeper move toward $1.6165/55. UK employment and wage cost data due at 0930GMT.

Wednesday, December 9, 2009

MORNING FX
BRIEFING
The dollar was again mixed in Asian trade Weds, lower against the euro and little changed against the yen, although off early highs. Euro-dollar fell to a $1.4680 low in NY last night and extended that to $1.4665 in Asia. Euro-dollar bounced back above $1.4700 as short positions were covered. The pair eventually touched a $1.4735 in late morning trade. Dollar-yen rose to a Y88.70 high after the Cabinet Office released its revised GDP estimates for Q3, backing off soon after it hit the high as yen crosses slid on higher risk aversion, eventually hitting a Y88.29 session low, before bouncing modestly.

Cable was under pressure from the start of Asian trade, gapping down 60 pips to $1.6228 and had noticeable trouble tracking euro-dollar's recovery. Fresh selling into Europe has allowed rate to make a brief show under $1.6200. Sterling in focus ahead of today's Pre Budget Report (1230GMT). Ahead of this we have Germany CPI and trade at 0700GMT, France trade at 0745GMT as well as UK trade at 0930GMT. Light calendar again for the US. Risk aversion plays in thin conditions expected to make for volatile conditions.

EURO
Euro-dollar opened Asia around $1.4705 with the early pre Tokyo market taking advantage of thin markets to target stops below the NY low at $1.4680 taking it to an early low of $1.4665. Asian sovereign demand (book balancing mentioned) provided the main recovery drive, the rate recovering to an initial high of $1.4734. Rate consolidated the recovery by holding above $1.4725/20, eventually extending the topside to $1.4736.

Downside pressure returned just ahead of the European open with strong sell pressure taking the rate through $1.4720, pulling back to $1.4692 (61.8% $1.4665/1.4736). Rate currently trades around $1.4695. A break lower and decent support seen in place again toward $1.4680 ($1.4682 76.45) ahead of the overnight low at $1.4665. Further support/demand seen at $1.4650 ahead of stronger area between $1.4625/20 ($1.4626 Nov 3 lows). Resistance seen toward $1.4720 ahead of the overnight high at $1.4736. Above here and the stronger area between $1.4750/60 moves into view.

RES 4: $1.5163 76.4% of decline from July 2008 high
RES 3: $1.5144 High 25 Nov
RES 2: $1.4945 21-day moving average
RES 1: $1.4850/60 5, 55-day moving average

CURRENT LEVEL: $1.4732

SUP 1: $1.4673 Low 8 Dec
SUP 2: $1.4612/25 23.6% of Apr/Dec & 38.2% Jun/Dec advance, 100-DMA
SUP 3: $1.4595 50% retracement of the advance from August 2009
SUP 4: $1.4510 23.6% of March/Dec 2009 rally


YEN
Dollar-yen closed the US session mid-range in the Y88.40 area, with euro-yen ending around Y130.00. The final Q3 GDP growth estimate Wednesday was heavily revised down to +0.3% q/q from the initial estimate of +0.7% q/q. The large revision was caused by the earlier over-estimation of capital spending by corporates. Traders said there was little reaction to the data release, with the early rally coming at the open and led by a Japanese trust bank.

Highs were notched at Y88.70 before a Japanese car company came in to sell euro-yen ahead of Y130.50, knocking the cross back towards Y130.00 and dollar-yen down to Y88.29. Balance of the Asian session was a muted affair, as dollar-yen held a tight range under Y88.50 and euro-yen faltered ahead of Y130.35. Risk sentiment still seen precariously balanced into the European open after a down day for Asian stocks, with euro-yen extending the lows down to Y129.18 at writing. Dollar-yen also on the backfoot as widespread cross-yen sales drive the rate down to Y87.80 at writing.

RES 4: Y92.32 High 27 Oct
RES 3: Y91.55 Top of Ichimoku cloud, 100-day moving average
RES 2: Y91.31 High 4 Nov, 50% retracement of Aug to Nov decline
RES 1: Y90.50/75 Base of Ichimoku cloud, High 4 Dec

CURRENT LEVEL: Y88.34

SUP 1: Y88.05 Kijun line
SUP 2: Y87.79 50% retracement of 26 Nov rally, Tenkan line
SUP 3: Y87.09 61.8% retracement of 26 Nov rally
SUP 4: Y85.89 Minor low 30 Nov


CABLE
Opened Asia around $1.6284 and came under strong sell pressure in the period between the NY close and the Tokyo open, the market taking advantage of the thin conditions to target and trigger stops through $1.6250. Rate dropped to session lows of $1.6224 before picking up demand interest into the dip. Rate recovered, aided by reported Asian sovereign demand, but failed to make a show back above $1.6280.

Rate consolidated for most of the session between $1.6540/75 before fresh selling into early Europe saw rate trade to an initial low of $1.6199. Rate recovered to $1.6220 but move was short lived as a UK clearer executed a sterling-yen sell order which provided the weight to take rate back below the figure and on to lows of $1.6167. Rate has since recovered back above $1.6200 but underlying tone remains negative with focus turning toward UK trade data at 0930GMT, ahead of more important Pre Budget Report (PBR) at 1230GMT. Support from that traded low at $1.6167 with stronger interest close behind at $1.6155/50. Below here and next support between $1.6130/20. Resistance $1.6220 ahead of $1.6250

RES 4: $1.6878/85 High 16 Nov, Top of the Bollinger band
RES 3: $1.6722/47 High 3 Dec, 25 Nov
RES 2: $1.6575 21-day moving average
RES 1: $1.6405 5-day moving average

CURRENT LEVEL: $1.6263

SUP 1: $1.6227/55 Low 8 Dec, Current base of the daily Bollinger band
SUP 2: $1.6155 61.8% retracement of $1.5708 to $1.6878
SUP 3: $1.5905 200-day moving average
SUP 4: $1.5682/07 38.2% of the 2009 range, Low 13 October

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