Thursday, December 17, 2009

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.

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