Thursday, January 28, 2010

EURO WEAKNESS CONTINUES

BRIEFING
Euro weakness was the initial focus in Asia, as euro-dollar fell through the $1.4000 level to a $1.3935 low. Euro-dollar last traded below the psychological $1.4000 level on July 8 9$1.3838). Stops below $1.3985 and $1.3950 were taken out mid-morning, the pair hitting $1.3930 lows, bouncing back sharply to $1.3970/80 before stabilizing. It was trading back slightly above the $1.4000 level late in the session at $1.4005.

The dollar initially lost steam against the yen, ending the New York session around the Y90.00 level, beginning Tokyo around Y89.86 and winding up the morning around Y90.26. Euro-yen was generally well bid through the session, risk boosted by positive stocks with move to Y126.73 extending dollar-yen gains to Y90.40. The Kiwi barely budged after the Reserve Bank announced it would keep rates at a record low 2.5% and made no change to its post-meeting economic statement, though did manage to post an eventual high at $0.7107. Cable buoyed as euro-sterling broke under support at stg0.8650, rate holding around $1.6200. Further UK oil company demand expected.

EURO
Opened Asia around $1.4020, off NY lows at $1.3993, and edged up to $1.4040 in early trade on euro-yen led demand. Model and macro funds provided the main counter to the early rise, easing the rate back to retest the NY lows. News of further N.Korea artillery action off the coast of S.Korea, along with reported comments from PBOC official warning of the dangers of dollar carry trades, provided the catalyst for further selling with triggered stops through $1.3985 providing the weight to trigger option knock out levels at $1.3990, $1.3980, $1.3970, $1.3950 and $1.3930.

Rate touched $1.3930 before snapping back to $1.3965 bid in a breath. Rate recovered back above $1.4000 to $1.4020/25 before settling between $1.4005/20 ahead of Europe. Rate currently trades around $1.4020 in early European dealing. Asian talk of Asian sovereign demand aiding the recovery may have placed blame on the wrong person, some linking interest to a monetary authority, adding that same name may have sell interest now above the market. Offers $1.4020/25, $1.4040/50. Support $1.3985/80, $1.3950 and $1.3930.

RES 4: $1.4447 Low 14 Jan
RES 3: $1.4310/30 21, 200-day moving average
RES 2: $1.4195/18 High 25 Jan, Low 22 Dec
RES 1: $1.4090 5-day moving average

CURRENT LEVEL: $1.4016

SUP 1: $1.3960 Current base of the daily Bollinger band
SUP 2: $1.3902 Minor support line 3 Nov
SUP 3: $1.3801/25 50% retracement of March/Dec rally, Low 22 June
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June


YEN
Dollar-yen and cross yen opened Asia on a bid tone, with markets upbeat following Obama's State of the Union speech (no bank bashing seen boosting risk). Dollar-yen pushed to a high of Y90.40, from opening lows around Y89.88, with offers placed toward Y90.50 seen providing a cap.

Euro-yen pushed to an early high around Y126.45 from the low Y126's, dropping back to Y125.90, as euro-dollar fell back on triggered option stops, before recovering back to post highs at Y126.73 as risk trades remained in favour on positive equity markets. Yen retains a soft feel into early Europe, dollar-yen currently trading around Y90.35, euro-yen at its overnight highs of Y126.73. Dollar-yen offers to Y90.50, stops on break of Y90.60. Support Y90.00/89.90. Euro-yen offers Y126.80, Y127.40/50. Support Y126.00/125.90.

RES 4: Y92.65/85 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.40/50 21-day moving average, Kijun line
RES 1: Y90.55 Recent highs, Tenkan line of the Ichimoku cloud

CURRENT LEVEL: Y90.28

SUP 1: Y89.14/20 Low 27 Jan, Top of the Ichimoku cloud
SUP 2: Y88.95 Low 18 Dec
SUP 3: Y88.55 Base of the Ichimoku cloud
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally


CABLE
Opened Asia around $1.6175 and initially edged up to $1.6180 before dropping back to retest NY pullback lows at $1.6137 as rate tracked euro-dollar's severe drop as option levels were triggered. Cable posted a low at $1.6135 before snapping back, the recovery aided as the euro move allowed euro-sterling to break support at stg0.8650 (taking out the option barrier there). The cross posted a low at stg0.8632. Cable rallied back to post session highs at $1.6230, the recovery in euro-sterling back to stg0.8650 then weighing back to ease rate back to $1.6170 ahead of the European open.

Rate slowly recovered , breaking the overnight highs into early Europe to extend move to $1.6240, just short of Wednesday's highs at $1.6245. Rate retains a firm tone around $1.6235, the cross currently around stg0.8638. Cable offers seen placed between $1.6240/50, a break to open a move toward $1.6270/80 with stops above. Talk that Tullow Oil raising of stg1bln Wednesday to be converted to dollars to fund African expansion which could counter ongoing UK oil company dividend demand interest.

RES 4: $1.6459/79 High 19 Dec 61.8% retracement of the 16 Nov decline
RES 3: $1.6415 Current top of the daily Bollinger band
RES 2: $1.6295 100, 55-day moving average
RES 1: $1.6215 200-day moving average

CURRENT LEVEL: $1.6184

SUP 1: $1.6077 Low 22 Jan
SUP 2: $1.6061 Support line from 30 Dec
SUP 3: $1.6030 76.4% retracement of the $1.5898/1.6459 rally
SUP 4: $1.5898/30 Low 7 Jan, Current base of daily Bollinger band

Monday, January 25, 2010

MORNING FX
BRIEFING
German name sales of cross yen ahead of the Sydney open triggered exposed stops, left vulnerable in the thin markets, with euro-yen dropping 50 points to an early low of Y126.69 and dragging dollar-yen down to Y89.71. The move met fund demand at the lows which snapped euro-yen back to Y127.95, dollar-yen to Y90.41 before the rates settled back to Y127.80 and Y90.25. Euro-dollar got a mild bid tone at the start of the main session, thanks to the euro-yen recovery. The pair managed a $1.4173 high and then spent the rest of the morning shuffling between there and $1.4133. Rate currently trades around $1.4155.

After the active start market overall in Asia was described as subdued. Exporter demand for Aussie provided buoyancy, offsetting any negative react from the release of weaker than expected Australian PPI data, with Asian sovereign buys also cited as the rate lifted from lows of $0.8995 to $0.9075 before Japanese sales of Aussie-yen countered. Focus today is on developments over Bernanke's re-appointment, with US existing home sales the stand out data release.

EURO
Euro-dollar opened Asia around $1.4150, slightly firmer than the NY close as traders adjusted the rate on the weekend reports that Bernanke would secure enough Senate votes to be reappointed. Rate came under pressure in early pre Sydney trade as a German name took advantage of the thin conditions to target downside stops in euro-yen, forcing this rate down 50 points to Y126.69, the move taking euro-dollar to early lows of $1.4112.

Recovery was seen more aggressive as funds emerged into normal hours trading, euro-yen spiking back up to Y127.95, with euro-dollar tracking the move as it rallied to $1.4173. Rate then settled into a $1.4150/70 range for the balance of the session, currently trading around $1.4163. Offers seen placed between $1.4175/85,with talk of stops positioned on a break of $1.4190. Further offers noted toward $1.4220 with more stops above. Support seen at $1.4155/50, more between $1.4135/25 ahead of the mentioned Asian low at $1.4112.

RES 5: $1.4447 Low 14 Jan
RES 4: $1.4355 21-day moving average
RES 3: $1.4315 200-Day moving average
RES 2: $1.4218 Low 22 Dec
RES 1: $1.4170 5-day moving average

CURRENT LEVEL: $1.4162

SUP 1: $1.4090 Current base of the daily Bollinger band
SUP 2: $1.4009/29 Low 29 Jul, 50% retrace of April/Dec rally, Low 21 Jan
SUP 3: $1.3937 Minor support line 3 Nov
SUP 4: $1.3801/25 50% retracement of March/Dec rally, Low 22 June
SUP 5: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June


YEN
German name selling of yen crosses greeted the thin pre Sydney market Monday, euro-yen dropping 50 points to Y126.69, the move dragging dollar-yen to session lows of Y89.71. Fund demand emerged into the dips with the correction off the lows snapping euro-yen through reported CTA stops at Y127.80 to take rate on to Y127.95. Dollar-yen rallied back to Y90.41 before recovery faded, with Japanese sales of Aussie-yen noted as a factor in the counter. Euro-yen currently trades around Y127.70, dollar-yen at Y90.30.

Dollar-yen offers placed toward Y90.50, with stops reported above. A break here to open a move to Y90.80 ahead of Y92.00. Support remains toward Y89.70 (Asia low Y89.71), with stronger interest seen from Y89.50 through to Y89.30. For euro-yen, offers placed toward Y128.00, more from Y128.20 through to Y128.40 with stops placed on a break of Y128.50. Support Y126.70/50.

RES 4: Y92.05 High 14 Jan
RES 3: Y91.70/87 21-day moving average, High 21 Jan
RES 2: Y91.15/35 Kijun & Tenkan lines of the Ichimoku cloud
RES 1: Y90.36 Breakout level & 100-day moving average

CURRENT LEVEL: Y90.12

SUP 1: Y89.30 50% retracement of the 26 Nov rally
SUP 2: Y88.95 Low 18 Dec
SUP 3: Y88.55 Top of the Ichimoku cloud
SUP 4: Y88.24/30 61.8% retracement, Base of the Ichimoku cloud


CABLE
02:54 01/25 CABLE: Opened Asia around $1.6100 and initially marked session lows at $1.6090 as rate tracked the early cross yen sell pressure. Rate recovered off lows, in tandem with euro-yen and euro-dollar, pushing up to $1.6137 where it met US name supply. Rate eased back to $1.6100, settling for most of the session between $1.6095/1.6125 before a late rally spiked rate up to $1.6144 ahead of the European open, the move seen as a reaction to euro-sterling as this rate dropped back from overnight highs at stg0.8796 to stg0.87665.

Cable currently trades around $1.6125, the cross around stg0.8770. Cable offers seen between $1.6145/55, a break of $1.6160 to open a move toward $1.6190/00. Support seen at $1.6090 (Asia low), stronger between $1.6075/65.

RES 4: $1.6479 61.8% retracement of the decline from 16 Nov
RES 3: $1.6435/59 Top of the daily Bollinger band, High 19 Dec
RES 2: $1.6310/20 100, 55-day moving average
RES 1: $1.6220 5-day moving average

CURRENT LEVEL: $1.6118

SUP 1: $1.6077 Low 22 Dec
SUP 2: $1.6028/30 Minor support line, 76.4% of $1.5898/1.6459 rally
SUP 3: $1.5898 Low 7 Jan
SUP 4: $1.5880 Current base of daily Bollinger band

Monday, January 18, 2010

MORNING FX
BRIEFING
The dollar saw a subdued start to the new week in Asia, with light flows seen ahead of the US holiday weekend. Dollar-yen was trading around Y91.00, modestly higher from Friday's close and near the top of the session trading range. Dealers said early demand for yen crosses lifted the pair to the high but that fizzled out when Japanese stocks sank into the red, and caused risk appetite to wilt. Euro-dollar was knocked to early lows of $1.4335 (NY low $1.4336) as market reacted to an Ambrose Evans-Pritchard article in the Telegraph suggesting the ECB has begun to look at the legal ramifications if Greece were to leave the EU.

Rate quickly recovered back to opening levels around $1.4370/75 with trading conditions reported to be thin due to this afternoon's US holiday. Traders also noted a decent Chf1.0290 offer in dollar-Swiss aiding euro-dollar support. Sterling made decent gains overnight, boosted by positive M&A (France GDF/UK International Power) and better than expected RightMove house data, with euro-sterling trading back under its 200 day m/a. Very light data calendar today and US holiday.

EURO
Euro-dollar opened Asia around $1.4370, getting an early lift to $1.4374 before coming under pressure as market reacted to an Ambrose Evans-Pritchard article in the Telegraph suggesting that the ECB had begun to look at the legal ramifications if Greece were to leave the EU. Thin conditions (US holiday) allowed light early flows to press the rate down to $1.4335 (NY low $1.4336), with buyers placed around that NY low providing support. Initial recovery to $1.4350 picked up further sell interest from momentum and CTA accounts, with added sales of euro-sterling, allowing rate to retest lows before meeting stronger demand interest.

Rate recovered through its opening levels, extending to $1.4388 in Asia, $1.4395 into early Europe ($1.4398 NY high). Rate currently trades around $1.4385. Offers remain in place toward $1.4400, a break here to open a move toward $1.4430 ahead of $1.4445/50. Support remains at $1.4335/30, more toward $1.4300. Traders highlight the 200 day m/a at $1.4288 (some have this at $1.4275) as key support, with further demand interest seen placed behind at $1.4260/50 and $1.4220.


RES 4: $1.4790 61.8% retracement of December decline
RES 3: $1.4669/81 Former bear-flag base, 100, 55-DMA, 50% of Dec decline
RES 2: $1.4572/80 38.2% retracement of Dec decline, High 13 Jan
RES 1: $1.4447/50 Low 14 Jan, 5-day moving average

CURRENT LEVEL: $1.4382

SUP 1: $1.4339 76.4% retracement of 8 Jan recovery
SUP 2: $1.4287 200-Day moving average, Support line from 22 Dec
SUP 3: $1.4218 Low 22 Dec
SUP 4: $1.4118 38.2% retracement of March/Dec rally


YEN
Early euro-yen sales were prompted as the single European currency reacted to a negative article on Greece in the Telegraph, led cross yen and dollar-yen lower in initial trade, dollar-yen touching a low of Y90.70, while euro-yen triggered stops under Friday's low at Y130.30 to touch Y130.10. Weak Asian equities also added to the early negative tone. As equity markets steadied so euro-yen recovered. moving back up in tandem with euro-dollar to Y130.94 before meeting decent sell interest placed ahead of Y131.00. Rate dropped back to Y130.50 before picking up fresh demand interest into early Europe to edge it back toward the recent highs.

Dollar-yen recovered to Y91.07, holding around Y91.00 into early Europe. Euro-yen offers remain around Y131.00, a break above to open a move toward Y131.25/35 ahead of Y131.70/80. Support Y130.10/00, stops through Y129.90. Dollar-yen offers Y91.10/20, more between Y91.35/55. Support Y90.70/50 ahead of Y90.35/15. Equities continue to be seen as the main driver with attention also on JAL's expected bankruptcy and DPJ political concerns.


RES 4: Y94.22 50% projection of 26Nov/4Dec rally from 5 Jan
RES 3: Y93.78 High 7 Jan
RES 2: Y93.20 200-day moving average
RES 1: Y91.90/20 21-day moving average, Tenkan line of Ichimoku cloud

CURRENT LEVEL: Y90.85

SUP 1: Y90.60 Low 15 Jan
SUP 2: Y90.36 38.2% retracement, 100-DMA
SUP 3: Y90.00 55-day moving average
SUP 4: Y89.30 50% retracement of the 'December' rally


CABLE
Opened Asia around $1.6270 and eased to session lows of $1.6235 as rate tracked early pressured sales of euro-dollar. Cable recovered as euro-sterling broke under its 200 day m/a at stg0.8845, strong sales of the cross taking this rate down to stg0.8803 in Asia and allowing cable to rally to $1.6320. The cross rallied back to stg0.8830, as cable dropped back to $1.6275/70, but sterling again picked up fresh demand to take cable back to retest $1.6320 in early Europe (extending highs to $1.6335), while the cross sat back heavily on stg0.8800.

Sterling demand overnight seen from system accounts, with further sterling positive M&A flows (France GDF Suez making a stg5bln approach for UK International Power) also prompted. UK RightMove release of stronger than expected housing data also aided the pound's buoyancy overnight. Cable offers reported in place at $1.6345 (Europe high Friday), with further interest noted close behind between $1.6355/65. Support seen at $1.6300 ahead of $1.6280. Euro-sterling demand remains ahead of stg0.8800, with stops reported on a break below.


RES 4: $1.6479 61.8% retracement of the decline from 16 Nov
RES 3: $1.6410 High 16 Dec
RES 2: $1.6398 61.8% retracement of December decline
RES 1: $1.6356/81 Fibonacci levels, 55-day moving average

CURRENT LEVEL: $1.6314

SUP 1: $1.6211 Low 15 Jan
SUP 2: $1.6193 Highs 11 & 12 Jan
SUP 3: $1.6085 21-day moving average
SUP 4: $1.5896 Low 7 Jan

Wednesday, January 13, 2010

MORNING FX
BRIEFING
The dollar marked scant gains against the yen Weds. Dollar-yen fell to a 3-week low of Y90.73 in the U.S. session but started this morning with a slight uptick, trading around Y91.00 as the Asia-Pacific session got under way. The pair then marked a high of Y91.36 as the dollar's rebound continued and as risk appetite continued to worsen, with reaction to hawkish Fed comments from Plosser and Fisher aiding.

But the gains didn't last as yen crosses resumed their declines, with euro-yen briefly hitting a Y132.25 high before quickly withdrawing to Y131.51. Late on, dollar-yen was back down at where it had started the day, around Y91.00/05 while euro-yen was also near its opening levels, around Y131.80. Euro-dollar also failed to extend an initial rise as concerns about Greece's debt repayment problems continued to dog the eurozone currency. The pair pulled back from a high just shy of $1.4500 to hit $1.4456 in midmorning trade, despite the dollar's decline. The recovered to trade around $1.4485. Meanwhile, sterling was buoyed by comments from the Bank of England's Sentance as well as positive M&A flows.

EURO
Euro-dollar opened Asia around $1.4490 and began to ease as euro-yen was pressured lower after the Tokyo fix. Dollar demand was also given an added early boost as markets reacted to hawkish comments from Fed's Plosser and Fisher. Rate pressed down before meeting decent demand that restricted losses to $1.4456. Rate then recovered, with traders noting Asian sovereign demand interest in the move (two waves mentioned) with rate edging back to challenge the $1.4500 area into early Europe. Continued demand into this session took rate on to $1.4516, currently trading around $1.4507.

Rate continues to be seen within a basic $1.4450/1.4550 range with stops said to have been built on a break out on the bottom side, though fresh demand reported to begin from around $1.4440. Greek concerns continue as a counter to upside hopes with rate seen contained by two way cross flows. Resistance noted at $1.4530 ahead of $1.4545/60, with stops noted on a break of $1.4570.


RES 4: $1.4790/10 61.8% retracement and November lows
RES 3: $1.4695 55-day moving average
RES 2: $1.4669/81 Former bear-flag base, 100-DMA, 50% of Dec decline
RES 1: $1.4572 38.2% retracement of Dec decline

CURRENT LEVEL: $1.4488

SUP 1: $1.4450 5-day moving average
SUP 2: $1.4375 21-day moving average
SUP 3: $1.4270/76 200-Day moving average, Support line from 22 Dec
SUP 4: $1.4218 Low 22 Dec


YEN
Dollar-yen lifted off early lows of Y91.09 to Y91.36 as the dollar got an early lift on market reaction to reported hawkish comments from Fed Fisher and Plosser. However, move met willing sellers into the rally, with Asian equity markets trading soft as they took direction from the Shanghai reaction to yesterday's PBOC hike of 0.50% in reserve requirements. Euro-yen tracked the early move, finding demand interest as Japanese traders were attracted in by the lower levels presented after Tuesday's sell off ahead of the fix, the rate edging to a high of Y132.25 from Y131.94 opening level, before it too met sell interest that eased it lower again.

Dollar-yen eased to a session low of Y90.91 (NY low Y90.73) while euro-yen traded off to Y131.51. Dollar-yen again met willing buyers into the dip below Y92.00 with rate able to recover to Y91.25 into early Europe. Euro-yen currently trades around Y132.22, lifted by dollar-yen's recovery as well as euro-dollar extending its recovery back above $1.4500. Dollar-yen bids seen from Y90.90 to Y90.70 with stops below. Resistance toward Y91.80.


RES 4: Y94.22/27 50% proj 26Nov/4Dec rally from 5 Jan, Res line 4 Dec
RES 3: Y93.35/78 200-day moving average, High 7 Jan
RES 2: Y92.30 Tenkan line of the Ichimoku cloud
RES 1: Y91.75/00 21, 5-day moving average

CURRENT LEVEL: Y91.07

SUP 1: Y90.75 Low 12 Jan, High 4 Dec
SUP 2: Y90.36/45 38.2% retracement, 100-DMA and Kijun line &
SUP 3: Y90.00 55-day moving average
SUP 4: Y89.30 50% retracement of the 'December' rally


CABLE
Cable opened into Asian trade at $1.6160 before initially marking early highs at $1.6167 before easing back to $1.6137 on early dollar demand, seen as market reacted to hawkish comments from Fed Plosser and Fisher. Rate bounced again between $1.6167/37 before picking up a fresh bid tone as sterling's recent positive trend moved back into gear. Rate moved back up to retest Tuesday's highs at $1.6195, breaking above ahead of the European open and extending rally into early Europe to $1.6225.

Lot of talk around of euro-sterling LHS (sell) interest to be seen into the 0900GMT fix which has also aided the pounds positive feel. Demand for sterling seen M&A related (possible Vattenfall), with BOE MPC Sentance headline comments (highlighting hawkish element though disregarding dovish counter argument) also providing bullish tone. Key resistance seen between $1.6235/42, with stops noted on a break of $1.6250. A break and clear here to boost technical positive outlook. Support seen back at $1.6205/00 ahead of $1.6180.


RES 4: $1.6365/10 55-day moving average, High 16 Dec
RES 3: $1.6310 100-day moving average
RES 2: $1.6237/42 High 31 Dec, 4 Jan, Bollinger band top
RES 1: $1.6194 Highs 11, 12 Jan

CURRENT LEVEL: $1.6180

SUP 1: $1.6065/90 21, 5-day moving average
SUP 2: $1.5880/96 Current base of daily Bollinger band, Low 7 Jan
SUP 3: $1.5833 Low 30 Dec
SUP 4: $1.5707 Low 13 October


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