Friday, February 26, 2010

Dollar Mixed Overnight - Awaiting Marketmoving Data Today

Briefing
The dollar was mixed in Asia Friday, trading flat against the yen but lower against the euro. Euro-dollar extended gains that, started in late New York, with the rate breaking above $1.3550, triggering stops to take it to a session high at $1.3603. However, there was no follow-through above the figure, as the pair slipped back to $1.3585. Dollar-yen touched an early high at Y89.50, but slipped back to trade around Y89.30, close to the middle of the session range. Traders noted the Japanese unit had been under some downside pressure this morning after the release of CPI data.

Asian traders highlight an article in China's 21st Century Business Herald saying two ministries are carrying out stress tests in the exporting sector to see how they will handle a yuan appreciation. Cable lagged euro-dollar's recovery, allowing euro-sterling to make a show above stg0.8900. UK Nationwide house data due at 0700GMT, ahead of UK GDP at 0930GMT and EMU CPI at 1000GMT the morning's highlights, followed by US GDP at 1330GMT and Chicago PMI at 1445GMT.

Euro
Euro-dollar opened the Asian session around $1.3545, off NY recovery highs at $1.3572, and initially eased to mark session lows at $1.3531. Rate recovered on the back of strong cross yen demand at the Tokyo fix, the rate lifting through the NY high, triggering stops on the break of $1.3580 and moving on to a high of $1.3604.

Rate drifted lower in late Asia, squeezing back to $1.3560 into early European dealing. Offers seen placed between $1.3600/10, a break to open a move toward $1.3625/30. Support $1.3535/30 (Asia low $1.3531 and now 50% $1.3458/1.3604), a break to allow for a deeper move toward $1.3515/10 ahead of $1.3495/90. Rate currently trades around $1.3570.

RES 4: $1.3958 Top of declining channel, Bollinger band
RES 3: $1.3838/53 High 9 Feb, Low 1 Feb
RES 2: $1.3789 High 17 Feb
RES 1: $1.3693 High 23 Feb, 21-day moving average

CURRENT LEVEL: $1.3589

SUP 1: $1.3420/50 76.4% of April/Dec rally, Low 18 Feb
SUP 2: $1.3404 61.8% retracement of the post-Oct 2008, Bollinger base
SUP 3: $1.3310 2% Moving average envelope
SUP 4: $1.3286 Projected channel support 3 Dec


Yen
Dollar-yen opens in Europe at Y89.27 euro-yen Y121.13 The dollar-yen could not make too much impact sub Y89.00 and the reported bids down to Y88.80 held the market, the low was Y88.80 and since then the dollar-yen has rallied back to trade up to Y89.51 where traders reported Japanese exporters selling . The pair are still trading around the base of the cloud and a close outside of the cloud would add to the negative sentiment for the pair.

The cross-yen market has recovered somewhat overnight as many market participants used yesterdays dip to take profit on shorts. The euro-yen took out the reported barrier at Y120.00 and traded down to Y119.66 but has since recovered to Y121.41 as month end demand and Toushin flows helped the cross recover. Traders note to watch equity market moves today for clues of direction as the risk on/off correlation continues.

RES 4: Y92.16 High 19 Feb, 200-day moving average
RES 3: Y91.35 Top of the Ichimoku cloud
RES 2: Y90.55 Tenkan line & 55-day moving average
RES 1: Y90.25/35 21 & 100-DMAs, Kijun line

CURRENT LEVEL: Y89.35

SUP 1: Y88.80 Low 25 Feb
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of Oct/Dec rally
SUP 4: Y87.52 100% projection of the Jan pullback, from 19 Feb


Cable
Cable opened Asia around $1.5265, off NY lows at $1.5187. Rate initially eased back to mark session lows at $1.5234 before strong cross yen demand provided a lift, allowing the rate to push up to initial recovery highs at $1.5289. However, the upside correction lagged euro-dollar with euro-sterling extending its recovery to make a show above stg0.8900.

Cable dipped back to $1.5265 before picking up fresh demand interest which took it on to an overnight high at $1.5295. Rate currently trades back around $1.5265 as market awaits Nationwide house price data at 0700GMT. Support seen placed from around $1.5255/50, more between $1.5235/25. Resistance $1.5295/00.

RES 4: $1.5733 Broad Jan-Feb channel top
RES 3: $1.5640/57 Former bear-flag base, 21-day moving average
RES 2: $1.5576 High 23 Feb
RES 1: $1.5350/80 Breakout level, 5-day moving average

CURRENT LEVEL: $1.5284

SUP 1: $1.5200 Base of the daily Bollinger band
SUP 2: $1.5187 Low 25 Feb
SUP 3: $1.5164 Broad Jan-Feb channel base
SUP 4: $1.5072 Full bear-flag implied target

Tuesday, February 23, 2010

Dollar Loses Ground on Regained Risk Appetite

Briefing
The dollar was mixed in Asia Tuesday. Yen crosses led the early market action with a slight move higher and euro-yen was initially expected to break through Y125.00 again. That carried dollar-yen to an early peak of Y91.30, while euro-dollar also rode on euro-yen's gains to $1.3612. The gains tapered off around midmorning, and dollar-yen then gave up the Y91.00 mark for a Y90.94 low as euro-yen hit a morning peak of Y124.26.

Euro-dollar also dipped slightly for a $1.3588 low although rumors of demand from a 'semi official' then emerged, carrying euro-dollar back up through $1.3600 to a high at 1.3637. Euro-Swiss spiked higher in late Asian trade, with traders again pointing the finger at 'the usual suspect' (some suggest SNB bought at Chf1.4670/75), although no confirmation of central bank buying was found. The cross trades at 1.4665, having traded a 1.4620 to 1.4680. RBA Battellino speaks at 0700GMT and will provide an early focus, with Germany Ifo data at 0900GMT seen as the highlight data release for Tuesday.

Euro
Euro-dollar opened Asia around $1.3597 and initially challenged the $1.3600 before squeezing back to mark session lows at $1.3588. Talk of semi official buying, as well as talk of option related demand placed at $1.3570, prompted short term specs to lift the rate higher, with Asian sovereign buys taking the rate through $1.3600. Stops were triggered on the move, with rate able to push on to an eventual $1.3637 session high on cross yen demand, as well as talk of official buying seen in euro-Swiss which took the cross from Chf1.4620 to $1.4680.

Fresh demand emerged in early Europe with reported stops above $1.3655/60 targeted and triggered, with rate pushing on to $1.3664. Rate retains a firm tone, with corrective pullbacks so far remaining very shallow. Fresh offers seen toward $1.3680 with more stops above. A break here targets $1.3700/10 ($1.3707 76.4% $1.3789/1.3443). Germany Ifo due at 0900GMT.

RES 4: $1.4016 Channel top from 3 Dec
RES 3: $1.3838/53 High 9 Feb, Low 1 Feb
RES 2: $1.3760/89 21-day moving average, High 17 Feb
RES 1: $1.3655 Minor highs

CURRENT LEVEL: $1.3627

SUP 1: $1.3420/50 76.4% of April/Dec rally, Bollinger base, Low 18 Feb
SUP 2: $1.3404 61.8% retracement of the post-Oct 2008
SUP 3: $1.3360 2% Moving average envelope
SUP 4: $1.3344 Projected channel support 3 Dec


Yen
Dollar-yen opens in Europe at Y90.92 euro-yen Y123.94 The dollar-yen continues to test lower overnight as more light stops are taken out sub Y91.00. Traders had reported yesterday of potential buying interest in the dollar-yen at Y90.80 area. The market expects the Toushin interest that has been touted for the last week or so to materialise today as the first launches commence, this should add support to the cross-yen market and ultimately dollar-yen as most of this demand is done through the legs.

However one trader speculates that a good portion of this demand has already been executed in the recent sessions and that the impact on the fx market may not be as substantial as people have anticipated. The dollar-yen is back in the daily Ichimoku cloud and this has withdrawn a lot of the bullish sentiment for the pair. The 200dma is at Y92.20 and many traders expect this area to cap any rally in the near term.

RES 4: Y93.02 50% of Nov/Jan projection
RES 3: Y92.53 76.4% retracement of Jan/Feb decline
RES 2: Y92.16/20 High 19 Feb, 200-day moving average
RES 1: Y91.60 Top of the Ichimoku cloud

CURRENT LEVEL: Y91.09

SUP 1: Y90.70/75 Tenkan line & 55-day moving average
SUP 2: Y90.20/30 100-DMA, Kijun line & 21-day moving average
SUP 3: Y89.93 61.8% retracement of Feb advance
SUP 4: Y89.25 Base of the Ichimoku cloud


Cable
Cable extends recovery with fresh demand into early Europe taking the rate above its Asian high at $1.5540. Offers seen to $1.5550 with talk of stops placed on a break of $1.5560. A break here to open a move on toward $1.5600 ($1.5598 76.4% $1.5675/1.5350

RES 4: $1.6000 55-day moving average
RES 3: $1.5833/50 Low 30 Dec, Former bear-flag top, Low 1 Feb
RES 2: $1.5760 21-day moving average
RES 1: $1.5631 Former bear-flag base

CURRENT LEVEL: $1.5528

SUP 1: $1.5515 Minor support from 5-day moving average
SUP 2: $1.5350 50% retracement of $1.3659 to $1.7041, Low 19 Feb
SUP 3: $1.5310 Current base of the daily Bollinger band
SUP 4: $1.5275 61.8% of implied full bear-flag target

Monday, February 22, 2010

Greece Remains in Highlight - Risk Appetite Boosted

Briefing
The dollar was mixed in the Asian morning Monday, as risk appetite improved, driving yen crosses and the euro higher. Euro-dollar rose to a $1.3655 high in Asia, boosted by an early gap higher in euro-yen. The cross broke through Y125.00 and triggered stop-loss buy orders, which helped carry it up to Y125.24 before fixing flows dragged it off the high. Euro-dollar pulled back towards $1.3600 but made another run higher as talk emerged of possible orders from Asian sovereign accounts, which lifted the pair to around $1.3640. Dollar-yen meanwhile was trading around Y91.60 as the morning ended, little changed from the NY close. The pair got an early boost from euro-yen's gains but topped out after running into offers above the morning's fix at Y91.78, from Y91.90/Y92.00.

Greece remains in the spotlight, some suggesting that positive comments over the weekend have improved the general risk tone, while tech traders see the recovery in euro-dollar as a healthy correction with downside still favoured.

It is a light data calendar for today, focus for the week on Fed Bernanke Wednesday. Data wise, focus for the week is on German IFO (Tuesday), German GDP and US new home sales (Wednesday), US durable goods orders, German employment and Japan industrial production (Thursday), euro area CPI and the second estimate for US Q4 GDP and existing home sales (Friday).

Euro
Euro-dollar opened Asia around $1.3615, just off Friday's late recovery high of $1.3619, with rate meeting early demand interest from a US investment bank in thin Wellington trade that pushed rate up to trip stops above $1.3630, allowing rate to extend this early rally to $1.3648. Rate eased back to $1.3635/30 before pushing higher again, this time led by Tokyo fix demand for euro-yen, which took rate to session highs of $1.3655 ($1.3657 61.8% $1.3789/1.3443).

Rate met US investment house sales around this area which again squeezed it back to $1.3630, with early supply in Europe breaking the rate below this broken resistance level as market hunted out weak Asian longs. Rate dipped to $1.3615, currently holding around $1.3620. Offers remain in place around $1.3655, a break above $1.3660 to open a move toward $1.3705/15 ($1.3707 76.4%/$1.3714 Feb 17 int.day high). Support back at $1.3605/00, a break to open a move toward $1.3580/70 ahead of $1.3550. Euro-dollar recovery off Friday $1.3443 lows aided by positive reports on Greek debt, though tech traders so far see this as a correction and keep downside favoured.

RES 4: $1.4026/46 High 3 Feb, Lows 21 Jan, 17 Aug
RES 3: $1.3838/53 High 9 Feb, Low 1 Feb
RES 2: $1.3789 High 17 Feb, 21-day moving average
RES 1: $1.3655 Minor highs

CURRENT LEVEL: $1.3638

SUP 1: $1.3420/50 76.4% of April/Dec rally, Bollinger base, Low 18 Feb
SUP 2: $1.3404 61.8% retracement of the post-Oct 2008
SUP 3: $1.3380 2% Moving average envelope
SUP 4: $1.3364 Projected channel support 3 Dec


Yen
Dollar-yen opens in Europe at Y91.61 euro-yen Y124.76 The dollar-yen was relatively quiet overnight, spending much of the session consolidating in a Y91.42-Y91.90 range. Initial good demand coming ahead of this weeks Toshin releases which start tomorrow. Traders noted Japanese retail accounts buying the dip helping dollar-yen test higher, however the rally was short lived and stalled at the Y91.90 level as more supply comes in ahead of the Y92.00 level. Traders had reported last week of good selling interest layered on the topside from Y92.10 upwards.

The Y92.23 level is the 200dma and capped the market on it's last test of this indicator, close behind that is down trendline resistance at Y92.37. The cross-yen tested higher early in the session with euro-yen trading on the Y125.00 handle for the first time since 4th February. This strength was sold into and the market pulled back to the Y124.70 area.

RES 4: Y93.02 50% of Nov/Jan projection
RES 3: Y92.53 76.4% retracement of Jan/Feb decline
RES 2: Y92.30 200-day moving average
RES 1: Y92.16 High 19 Feb

CURRENT LEVEL: Y91.68

SUP 1: Y91.60 Top of the Ichimoku cloud
SUP 2: Y91.30 5-day moving average
SUP 3: Y90.35/60 Tenkan & Kijun lines
SUP 4: Y90.20/30 21 & 100-day moving average


Cable
Opened Asia around the NY recovery high at $1.5476 ($1.5474 38.2% $1.5675/1.5350) and picked up an early bid tone as rate tracked euro-dollar's recovery extension, the rate pushing to an initial high at $1.5485. US investment house sales squeezed rate back to $1.5430 (Friday's recovery break out level), the rate buoyed as currency demand emerged at the Tokyo fix, with demand for yen crosses taking cable up to mark session highs at $1.5497.

Rate drifted off this fresh high, finding support around $1.5480 before early Europe provided the added weight to squeeze it back to $1.5450. Rate currently trades around $1.5460. Support seen between $1.5450/45, a break to allow for a retest on the key $1.5430 level. Below here and rate can squeeze on toward $1.5310/00. Resistance remains in place toward $1.5500, a break to expose $1.5510/15 ($1.5513 50% $1.5675/1.5350) ahead of $1.5550 (50%). Tech traders see this recovery as a healthy correction (extends 4th wave) and while rate holds below $1.5600 seen keeping underlying focus on the $1.5265/60 area.

RES 4: $1.6020 55-day moving average
RES 3: $1.5833/50 Low 30 Dec, Former bear-flag top, Low 1 Feb
RES 2: $1.5800 21-day moving average
RES 1: $1.5623 Former bear-flag base

CURRENT LEVEL: $1.5483

SUP 1: $1.5565 Minor support from 5-day moving average
SUP 2: $1.5350 50% retracement of $1.3659 to $1.7041, Low 19 Feb
SUP 3: $1.5310 Current base of the daily Bollinger band
SUP 4: $1.5275 61.8% of implied full bear-flag target

Friday, February 19, 2010

Fed Hikes Discount Rate by 25 bps

Briefing
The dollar extended gains against the euro early in the Asian session Friday after the Fed raised the discount rate, but further gains were tempered as Fed officials' comments then quashed hopes of a coming rate hike. Euro-dollar fell to a $1.3443 low early doors, but rebounded slightly after comments from the Fed officials although the recovery was weak, and it failed to clear $1.3500, finding the bounce capped around $1.3490. Dollar-yen was trading at Y91.75, after briefly extending its overnight high from Y91.94 to Y92.10 this morning.

The pair pulled back to Y91.68 as rate hikes hopes were dampened, but remaine

d close to where it had ended in New York overnight, around Y91.80. Cable took the main brunt of the react pressure, initially hitting $1.5409 before extending lows to $1.5381. Dollar retains most of its gains into early Europe. Eurozone flash PMI's from 0758GMT and UK retail sales at 0930GMT the morning's highlights, followed by US inflation data at 1330 and Canadian retail sales at the same time.

Euro
Euro-dollar was trading around the $1.3620 level ahead of the late NY announcement of the Fed hiking the discount rate by 25bps. Dollar gained a strong general boost from the news, with euro-dollar dropping below $1.3500 to trigger a reported barrier that took rate on to a low of $1.3443. Rate recovered as Fed officials explained that the discount rate move was part of a normalizing process and didn't signal an imminent rise in Fed funds, the rate pushing up to a recovery high at $1.3537.

Rate again drifted off as fresh dollar demand emerged with rate settling between $1.3460/80 into the European open. Rate currently trades around $1.3470. Support seen in place between $1.3455/45, a break below to allow for a deeper move toward $1.3425/20 ahead of key support at $1.3400 ($1.3405 61.8% $1.2329/1.5145). A break here exposes $1.3350/40, with $1.3380 expected to provide interim support. Resistance remains back in the area of initial recovery highs at $1.3535/40, with interim interest noted around $1.3500. Eurozone flash PMI's due for release this morning from 0758GMT, with US inflation data at 1330GMT.

RES 4: $1.4026/46 High 3 Feb, Lows 21 Jan, 17 Aug
RES 3: $1.3838/53 High 9 Feb, Low 1 Feb
RES 2: $1.3789/00 High 17 Feb, 21-day moving average
RES 1: $1.3585 5-day moving average (minor)

CURRENT LEVEL: $1.3459

SUP 1: $1.3420 76.4% retracement of April/Dec rally
SUP 2: $1.3400/04 Current Bollinger base, 61.8% of the post-Oct 2008
SUP 3: $1.3383 Projected channel support 3 Dec
SUP 4: $1.3360 2% Moving average envelope


Yen
Dollar-yen opens in Europe at Y91.91 euro-yen Y123.80 The dollar-yen has traded higher overnight posting an initial high at Y92.10 in Asian trade. Momentum was added to the rally after the Fed's discount rate hike saw the dollar rally across the board.This was the event needed to help dollar-yen push through the Y91.50 level after it had been stalling at Y91.37 and then Y91.47. The break through saw the pair clear away from the top of the daily Ichimoku cloud which is at Y91.50 today and push onto the Y92.00 handle for the first time in over month.

A daily close last night at Y91.97 outside the top of the cloud is noted by traders as another positive signal for the dollar-yen and the market now targets a move to Y93.75 the high on the 7th January. The cross-yen was relatively quiet, as the main focus was the dollar overnight. The cross-yen came back slightly as the Asian equity markets were sold off, euro-yen was sold down to Y123.56 before recovering to Y123.80 at the European open.

RES 4: Y93.02 50% of Nov/Jan projection
RES 3: Y92.53 76.4% retracement of Jan/Feb decline
RES 2: Y92.25 200-day moving average
RES 1: Y92.10 High 18 Feb

CURRENT LEVEL: Y91.90

SUP 1: Y91.40 Top of the Ichimoku cloud
SUP 2: Y91.05 5-day moving average
SUP 3: Y90.40/60 Tenkan & Kijun lines
SUP 4: Y90.20 21 & 100-day moving average


Cable
Cable managed to recover off late NY lows at $1.5492 to $1.5529 into early Asia but move was short lived as the dollar gained a major boost from the Fed's decision to hike its discount rate by 25bps. Cable dropped to an initial low of $1.5404 before bouncing back to $1.5450/60 as the dollar pared gains on reported Fed comments suggesting that the discount rate move was not a signal for an imminent hike in Fed funds.

Rate eased back to retest the early lows, bouncing again to $1.5450/60 before breaking down to session lows of $1.5381 in late Asian trade. The move said to have triggered a reported barrier with rate recovering back to $1.5415/20 into early Europe. Rate currently trades around $1.5415. Support remains toward $1.5380, a break here to open a deeper move toward $1.5375/70 ahead of stronger level at $1.5350. Below here and the area between $1.5305/1.5290 moves into view. Resistance seen toward $1.5420, a break to open a move up to $1.5450/60 with stops placed on a break above.

RES 4: $1.6030 55-day moving average
RES 3: $1.5833/50 Low 30 Dec, Low 1 Feb
RES 2: $1.5820/31 21-day moving average, Bear-flag top
RES 1: $1.5614 Former bear-flag base

CURRENT LEVEL: $1.5409

SUP 1: $1.5385 Projection of bear-flag range
SUP 2: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009
SUP 3: $1.5310 Current base of the daily Bollinger band
SUP 4: $1.5275 61.8% of implied full bear-flag target

Thursday, February 18, 2010

IMF Announces It's Gold Sale Program - Drops Below 1100

Briefing
The dollar was mixed in the Asia, as the yen traded higher across the board. Dollar-yen touched an early high at Y91.27, then headed lower amid rumoured profit-taking following the overnight rally. Japanese exporters were also among the sellers of dollar-yen and yen crosses, with dollar-yen giving up Y91.00 for a low of Y90.83 minutes after the BOJ left policy unchanged.

Euro-dollar meanwhile continued to retrace lower, marking an extension of the pair's losses which began overnight in Europe. Euro-dollar slipped below $1.3600 early in the session as spec accounts reacted to the IMF gold sales news, tripping stops below $1.3580. These drove euro-dollar to a $1.3557 low and initially had some traders eyeing last week's $1.3532 low. Euro-dollar managed a mild rebound in late morning trade to around $1.3570/80.

Gold fell sharply in late NY/early Asia as market reacted to comments from the IMF that its 'on market' sales of gold (191.3 metric tonnes) would begin shortly. Gold saw lows of $1098 in Asia, currently around $1004. Rates are seen in corrective mode into early European dealing.

Euro
Euro-dollar opened Asia around $1.3602 and was initially seen in a consolidative mode following Wednesday's sharp reversal that had seen it fall back to $1.3585 from earlier highs of $1.3789. Rate held around $1.3600 in early trade, marking highs at $1.3613 before turning lower again as market reacted to reports of IMF gold sales. The Fund reported that they had sold 212 tonnes off market to central banks and would be conducting a 'phased over time' sale of a further 191.3 tonnes on market.

Gold dropped $10 to $1005, extending to $1098, and provided the impetus to take rate through the NY low, triggering stops through $1.3580 and $1.3560 before marking lows at $1.3557. Recovery met resistance in the $1.3580/85 area, with early Europe able to extend this move to $1.3593. Rate currently trades around $1.3588. Bids now seen between $1.3557/50 with stronger interest noted at $1.3535/30 ($1.3532 Feb 12 low). Model funds have stops below $1.3530, which if triggered leaves option structure heavy level $1.3500 exposed. Resistance seen toward $1.3600 (76.4% $1.3613/1.3557), more between $1.3610/20.

RES 4: $1.4026/46 High 3 Feb, Lows 21 Jan, 17 Aug
RES 3: $1.3932 38.2% retracement of Jan/Feb decline
RES 2: $1.3838/53 High 9 Feb, 21-day moving average, Low 1 Feb
RES 1: $1.3789 High 17 Feb

CURRENT LEVEL: $1.3568

SUP 1: $1.3532 Low 12 Feb
SUP 2: $1.3495 61.8% retracement of March/Dec rally
SUP 3: $1.3420/40 76.4% retracement of April/Dec rally, Bollinger band
SUP 4: $1.3403/04 Proj channel support 3 Dec, 61.8% of the post-Oct 2008


Yen
Dollar-yen opens in Europe at Y90.93. The dollar-yen tested higher overnight posting a new high for the move at Y91.39. The Bank of Japan left rates unchanged last night and noted that the economy is picking up but downside risks remain and went on to say it is important to get Japan out of deflation.

The cross-yen market was under pressure again last night after good buying in the crosses in the early part of yesterday's session. The market appears to have got ahead of itself going long on the back of all the Toshin demand expected next week. The Y91.39 high is just short of the top of the daily Ichimoku cloud line which is at Y91.41, a break of this level is expected to add more momentum to the upside.

RES 4: Y92.30/53 200-day moving average, 76.4% retracement
RES 3: Y91.87/03 High 21 Jan, 14 Jan
RES 2: Y91.77 61.8% retracement of Jan/Feb decline
RES 1: Y91.45 Top of the Ichimoku cloud

CURRENT LEVEL: Y90.89

SUP 1: Y90.10/25 21 & 100-DMA, Tenkan & Kijun lines
SUP 2: Y89.25 Base of the Ichimoku cloud
SUP 3: Y88.55 Low 4 Feb
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally


Cable
Cable opened Asia around $1.5675, just off its NY traded low of $1.5667. Rate marked session highs at $1.5688 in early trade before turning lower, the rate pulled lower as the dollar gained a further boost from reported IMF gold sales. Rate tracked euro-dollar's stronger react fall (euro-sterling eased from around stg0.8680 to stg0.8664), trading down to $1.5641 before meeting cross yen linked demand. Rate recovered to $1.5665, dropping back to $1.5650 ahead of the European open before getting a lift on to $1.5680 into Europe.

Rate currently trades around $1.5660. Support seen at $1.5650, with interest extending to the Asian low at $1.5641, a break to open a deeper move toward $1.5625/20 ($1.5628 Feb 16 low) ahead of $1.5610/00 and stronger interest at $1.5580. Offers noted at $1.5680/85, more seen placed from $1.5695 through to $1.5710 with stops above. UK lending data due today at 0930GMT, followed by CBI monthly trends at 1100GMT.

RES 4: $1.5997 50% retracement
RES 3: $1.5888 38.2% retracement of Jan/Feb decline
RES 2: $1.5875 21-day moving average
RES 1: $1.5833/50 Low 30 Dec, Low 1 Feb

CURRENT LEVEL: $1.5659

SUP 1: $1.5535 Low 8 Feb
SUP 2: $1.5435 Current base of the daily Bollinger band
SUP 3: $1.5409/12 61.8% retracement of $1.44 advance, Projection level
SUP 4: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009

Tuesday, February 16, 2010

Dollar Losing Ground Amid Thin Liquidity

Briefing
Euro-dollar was trading higher in Asian trade Tuesday, rallying from early lows of $1.3588, and boosted through the afternoon session to highs of $1.3655. However, traders say flows remain choppy in light holiday trade, as much of Asia remains out for the New Year celebrations. With Greek issues seemingly kicked into the long grass for a month by eurozone finance ministers, euro-dollar sellers have throttled back a little.

Dollar-yen is again tied to a modest range, stuck between Y89.72 to Y90.07 as the market traded sideways ahead of the return of US markets. The pair was last at Y89.80.

The release of RBA Minutes provided the main catalyst for risk on flows, the Bank concluding that if economic conditions improve then more hikes will be necessary, though with one eye kept on the global situation. Aussie triggered stops through $0.8910/20 with rate holding toward its session highs of $0.8945 into early Europe.

UK inflation data is due at 0930GMT, followed by Germany ZEW at 1000GMT providing the morning's highlights, along with any Greece developments. Already this morning, EU's Juncker has said the issue of aid to Greece was discussed but added that Greece must understand other EU nations are not prepared to pay for their mistakes.

Euro
Euro-dollar opened Asia around $1.3600 and held steady around this level before edging to $1.3630 (from an early low of $1.3588) into the Tokyo fix. Rally extended during the Asian afternoon to $1.3655, the move up aided by a generally soft dollar, last night's Eurogroup meeting basically putting back any firm decision on Greece 30 days and prompting some short covering along with Japanese demand for euro-yen.

Trading conditions remain thin as many Asian centres remain closed to celebrate the Chinese lunar new year. Rate retains a firm tone into early Europe, extending the topside to $1.3663, currently trading around $1.3650. Offers seen placed around $1.3686 (50% $1.3840/1.3532/recent high) a break to allow for a move on toward $1.3700 ahead of $1.3720/25. Support $1.3590/80, with Asian traders reporting strong interest placed at $1.3585. A break here to allow for a deeper move toward $1.3565/60 ahead of $1.3535/30.

RES 4: $1.4026/46 High 3 Feb, Lows 21 Jan, 17 Aug
RES 3: $1.3895 21-day moving average,
RES 2: $1.3838/53 High 9 Feb, Low 1 Feb
RES 1: $1.3687 Resistance line from 14 Jan

CURRENT LEVEL: $1.3649

SUP 1: $1.3532 Low 12 Feb
SUP 2: $1.3495 Current Bollinger band base, 61.8% of March/Dec rally
SUP 3: $1.3430/41 2% MAE, Proj channel support 3 Dec
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally


Yen
Dollar-yen open in Europe at Y89.82. Another very quiet session overnight as most of Asia is still off for the Lunar New Year. The dollar-yen traded a Y89.92-Y90.04 range in Asia as very little news or orders passed through the market. On a technical note the dollar-yen is still in the daily Ichimoku cloud, and the base of the cloud is still at Y89.29 the top of the cloud today is again at Y91.53 and doesn't appear to be in play at the moment.

The daily down trendline that capped yesterday and at the end of last week is at Y90.11 level today, traders report a break of this line could see the market make an attempt at the Y90.50 level which is said to hold some offers with traders going on to say some stops placed behind.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.55 Top of the Ichimoku cloud
RES 2: Y91.28 High 3 Feb
RES 1: Y90.43/61 High 11 Feb, Kijun line

CURRENT LEVEL: Y89.75

SUP 1: Y89.90 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec


Cable
Opened Asia around $1.5660, marking session lows at $1.5655 before pushing higher as rate took advantage of a generally weaker dollar. Rate edged to an initial high of $1.5690, squeezing on to $1.5710 during afternoon trade. Mid east buying of cable, and euro-dollar, into early Europe provided the upside impetus to take rate on to $1.5726.

Rate eased back to $1.5716 but seen nudging back toward the recent high. Offers seen placed between $1.5740/50. Support $1.5655/50. UK inflation data due at 0930GMT this morning's highlight.

RES 4: $1.5930 21-day moving average
RES 3: $1.5888 38.2% retracement of Jan/Feb decline
RES 2: $1.5833/50 Low 30 Dec, Low 1 Feb
RES 1: $1.5766 High 10 Feb

CURRENT LEVEL: $1.5708

SUP 1: $1.5535/88 Low 8 Feb Minor support line from 8 Feb low
SUP 2: $1.5425 Current base of the daily Bollinger band
SUP 3: $1.5409/12 61.8% retracement of $1.44 advance, Projection level
SUP 4: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009

Monday, February 15, 2010

Focus on EuroGroup Meeting on Greece Today

Briefing
The major FX pairs traded in tight ranges in Asia Monday, as regional and US holidays kept many players sidelined. Volumes were subdued. However, the euro remains pressured ahead of European finance minister meetings (Eurogroup meeting later today seen as the more important of the two, Ecofin Tuesday), as the market awaits further developments over Greece. Euro-dollar was last trading close to session lows at $1.3578, having slipped off earlier highs at $1.3635. Dollar-yen was also becalmed in a narrow range, with the pair trading a tight Y89.98 to Y90.23 range.

Goldman Sach's Jim O'Neill reported suggestions that China may revalue Yuan by up to 5% only caused slight reaction in the yen crosses, euro-yen holding overnight within a range of Y122.41/90, and favouring the bottom side into early Europe. Very light data calendar for today, with focus this week, apart from Greek developments, turning to January's FOMC Minutes (Wednesday), which should provide clarity on Kansas City Fed President Hoenig's dissention, and whether other members were openly sympathetic to his views.

Euro
Euro-dollar opened the holiday thinned Asian session around $1.3622 and initially edged up to mark session highs at $1.3635 before turning lower on euro-yen sales as this rate reacted to the release of better than expected Japanese GDP data, along with reported comments from Goldman Sach's Jim O'Neill suggesting that China is poised to let the yuan rise by as much as 5%. Rate filled demand interest placed around $1.3600 before extending the base to $1.3578 in late Asian dealing. Rate currently trades around $1.3587.

Focus today will be on the Eurogroup meeting and any information forthcoming on the current Greece situation. Bids seen placed from the overnight low at $1.3578 through to $1.3574 (61.8% $1.3532/1.3643) ahead of $1.3558 (76.4%) and Friday's lows at $1.3532. Behind here and demand said to remain between $1.3520/10 with residual barrier interest seen at $1.3500 (after part rolled off Friday). Resistance $1.3600/05, more toward $1.3620. A break here to open a move toward $1.3630/35 ahead of Friday's recovery high at $1.3643.

RES 4: $1.4026/46 High 3 Feb, Lows 21 Jan, 17 Aug
RES 3: $1.3930 21-day moving average,
RES 2: $1.3838/53 High 9 Feb, Low 1 Feb
RES 1: $1.3723 Resistance line from 14 Jan

CURRENT LEVEL: $1.3596

SUP 1: $1.3532 Low 12 Feb
SUP 2: $1.3495 Current Bollinger band base, 61.8% of March/Dec rally
SUP 3: $1.3461 2% MAE, Proj channel support 3 Dec
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally


Yen
Dollar-yen open in Europe at Y90.15. A very quiet session overnight as most of Asia is off for the Lunar New Year. The dollar-yen traded at Y90.04-Y90.23 range as very little news or orders passed through the market and with the U.S and Canada off today it looks set to be a quiet day ahead.

On a technical note the dollar-yen is still in the daily Ichimoku cloud, and the base of the cloud is now at Y89.29 the top of the cloud today is at Y91.53 and doesn't appear to be in play at the moment. The daily down trendline that capped last week is at Y90.24 level today, a break of this line could see the market make an attempt at the Y90.50 level which is said to hold some offers.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.55 Top of the Ichimoku cloud
RES 2: Y91.15/28 Kijun line, High 3 Feb
RES 1: Y90.43 High 11 Feb

CURRENT LEVEL: Y90.13

SUP 1: Y89.90 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec


Cable
Opened Asia around $1.5680 and came under early pressure which took rate to early lows of $1.5646 as market reacted to reports of Dubai World's proposals for restructuring its debt. Denial of this report helped rate to recover to retest earlier highs before settling between $1.5655/75 during the mid part of the overnight session before slipping back to mark session lows at $1.5639.

Rate retained a heavy feel as it entered European trashing, with early market again reacting to the Dubai World reports to take rate to fresh lows of $1.5611. Rate has since recovered, currently trading around $1.5640. Support said to remain in place from $1.5611 through to $1.5600, a break below to expose Friday's lows at $1.5580. Resistance $1.5685/95, more toward $1.5705/10 ahead of stronger interest at $1.5740/50. Light data calendar today, with interest this week focused on UK inflation data Tuesday and BOE Minutes Wednesday.

RES 4: $1.5960/97 21-day moving average, 50% retracement of Jan/Feb decl
RES 3: $1.5888 38.2% retracement of Jan/Feb decline
RES 2: $1.5833/50 Low 30 Dec, Low 1 Feb
RES 1: $1.5766 High 10 Feb

CURRENT LEVEL: $1.5647

SUP 1: $1.5535 Low 8 Feb
SUP 2: $1.5420 Current base of the daily Bollinger band
SUP 3: $1.5409/12 61.8% retracement of $1.44 advance, Projection level
SUP 4: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009

Thursday, February 11, 2010

US Retail Sales Postponed for Tomorrow Due to Heavy Snow

Briefing
The euro was traded higher in Asia Thursday, edging up from early lows of $1.3730 to $1.3802, as the market awaits clarification of the Greek situation as EU leaders meet in Brussels. The rate was holding off highs into early Europe, currently around $1.3780. However, volumes are thin ahead of the Summit, affected by the Tokyo holiday, China moving towards its New Year festivities this weekend, as well as the adverse weather conditions in DC and NY.

The greenback was trading with modest losses against the yen in thin holiday trade, last at Y89.95 - close to the lower end of the Y89.82 to Y90.15 range. The Aussie was better bid early on, boosted by the stronger than expected employment report. Focus will be on any source leakage from today's EU Summit on eurozone help for Greece, though most expecting any official comment to be for political support rather than concrete financial aid. Light data calendar today, US retail sales being moved to Friday.

Euro
Opened the Asian session around $1.3735, off NY lows of $1.3676. Rate initially marked session lows at $1.3730 before nudging higher, the market reacting to press reports suggesting that today's EU Summit could produce a solution to Greek debt problems. Rate gained an added boost from the release of stronger than expected Australian jobs data, which along with Chinese inflation data showing its first dip for 6-months, easing rate hike fears, prompted risk demand, and took rate on to highs of $1.3802 ($1.3801 76.4% $1.3840/1.3676).

Rate eased back to $1.3775/70 into the European open with initial attempts to lift it higher meeting Asian sovereign supply placed around $1.3785. Continued demand has taken rate on to $1.3790 at writing. Offers said to remain in place from $1.3802 through to $1.3813, a break to open a move toward $1.3820/25 ahead of $1.3840/50. Support $1.3775/70, more between $1.3755/45 ahead of the Asia low at $1.3730. All focus on any Greek debt solution developments.

RES 4: $1.4171 Channel top 3 Dec
RES 3: $1.4043/46 Lows 21 Jan, 17 Aug
RES 2: $1.4010/26 21-day moving average, High 3 Feb
RES 1: $1.3838/53 High 9 Feb, Low 1 Feb

CURRENT LEVEL: $1.3785

SUP 1: $1.3585 Low 5 Feb
SUP 2: $1.3525/45 2% MAE, Current Bollinger band base
SUP 3: $1.3485/00 61.8% of March/Dec rally, Proj channel support 3 Dec
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally


Yen
Dollar-yen open in Europe at Y89.97. The dollar-yen tested marginally higher overnight as the reported exporter offers between Y90.00-Y90.10 got filled and the pair posted a high of Y90.15. The market also found support after better than expected job numbers from Australia boosted the Aussie-yen cross and this ensured any dip in dollar-yen was bought into. It is a Japanese holiday today, volume is expected to be lower than normal so stop loss hunting would appear to be the order of the day. Traders talk of some stops around the Y90.25-Y90.30 area.

The base of the daily Ichimoku cloud is at Y89.02 and a clear break and daily close below here would significantly increase downside risk. Important levels to note on the topside are Y90.50 and Y91.30, traders expect to see supply at both these levels.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.28 High 3 Feb, Kijun line
RES 2: Y91.05 Top of the Ichimoku cloud
RES 1: Y90.15/35 21, 100 & 55-day moving average

CURRENT LEVEL: Y89.95

SUP 1: Y89.00 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec


Cable
Opened in Asia around session lows of $1.5595, off NY lows of $1.5572. Rate picked up an early bid tone as risk gained favour on release of better than expected Australian jobs data, which along with a dip in Chinese inflation, with press reports also helping the drive higher by suggesting that today's EU Summit could produce tangible support for Greece. Rate traded to a high of $1.5661 before rally faltered and rate slipped back to $1.5616 into the european open.

Rate picked up bid interest on the pullback which lifted it to $1.5635 only to be met by reported model sales, along with sterling-Swiss supply, which has taken the rate back to $1.5605/00 area. Rate currently trades around $1.5610. Bids seen to the Asian low at $1.5595, stronger between $1.5575/65. Resistance $1.5660/65.

RES 4: $1.5997/20 50% retracement of Jan/Feb decl, 21-day moving average
RES 3: $1.5888 38.2% retracement of Jan/Feb decline
RES 2: $1.5833/50 Low 30 Dec, Low 1 Feb
RES 1: $1.5760/66 Top of minor downchannel from mid-Feb, High 10 Feb

CURRENT LEVEL: $1.5639

SUP 1: $1.5535 Low 8 Feb
SUP 2: $1.5470 Current base of the daily Bollinger band
SUP 3: $1.5409/12 61.8% retracement of $1.44 advance, Projection level
SUP 4: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009

Wednesday, February 10, 2010

Greek Bailout Plan in Focus

Briefing
The dollar pared gains against the yen through the Asian session and was sitting close to the session lows of Y89.53 ahead of the European open. Dollar-yen traded to a high at Y90.02, as Asia took on board the increased hopes for a settlement to the Greek situation. This also saw euro-dollar trade to an early high at $1.3807. However, as the situation became less clear, with the Goldman's/Greece swap story again to the fore, euro-dollar fell to session lows at $1.3734. Japanese exporter sales were prominent as yen pairs eased, euro-yen off 100 points to Y123.00.

Chinese trade data came in weaker-than-expected and copper imports were down by a noticeable amount, which all added to negative weight against the Aussie, which was also pressured by weak domestic data. Aussie-dollar eased to lows of $0.8736 from $0.8797. IP out of Italy 0900GMT and UK 0930GMT ahead of BOE Inflation Report at 1030GMT provide this morning's highlights. Inclement weather in DC and NY to affect calendar releases in the US. Bernanke text will be released but US trade data may lag stated release time of 1330GMT.

Euro
Euro-dollar opened Europe around $1.3797 before cross yen buys in early Asia lifted it on to mark session highs at $1.3808. Rate eased off, settling for a while around $1.3790/75 before Asian sovereign sales emerged to knock rate down to session lows of $1.3734. Rate was on a recovery course ahead of the European open, with added demand from early buyers lifting rate back toward the mentioned Asian sovereign sell level at $1.3775. Offers seen placed between $1.3775/80 ($1.3780 61.8% $1.3808/1.3734), a break to open a move toward $1.3800 (61.8% $1.3840/1.3734) ahead of $1.3810/15.

Traders have noted that there has been good demand for $1.3850 strikes for Friday expiry. Support seen at $1.3735/30 with interim interest suggested at $1.3750. Focus remains on any developments to eurozone plans for possible aid to Greece, and other periphery eurozone countries. Inclement weather in DC and NY has hit data releases for the rest of the week, though trade data today to be released via website. Bernanke testimony will be released (1500GMT), though no appearance.

RES 4: $1.4191/95 Channel top 3 Dec, High 25 Jan
RES 3: $1.4043/46 21-day moving average, Lows 21 Jan, 17 Aug
RES 2: $1.4026 High 3 Feb
RES 1: $1.3853 Low 1 Feb

CURRENT LEVEL: $1.3757

SUP 1: $1.3585 Low 5 Feb
SUP 2: $1.3519/35 Proj channel support 3 Dec, Bollinger base, 2% MAE
SUP 3: $1.3485 61.8% retracement of March/Dec rally
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally


Yen
Dollar-yen continues to be the most stable of the currency pairs for the time being. Opening in London at Y89.76 after trading up to Y90.02 in the early part of the Asian session. There were talk of exporter offers layered up to this area. Talk is that the dollar-yen is benefitting from cross-yen demand as the market continues to focus on any noise coming out of Euroland regarding the Greek debt situation.

Technically the dollar-yen is in no-mans land, trading deep within the daily Ichimoku cloud. A daily close below the base of the cloud at Y89.00 area would signal more downside pressure for dollar-yen. On the topside Y90.00-15 area is said to hold more offers. Y90.54 is the 38.2% Fibonacci retracement of the Y93.75-Y88.56 downmove, past that we have Y91 as the top of the daily Ichimoku cloud.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.28 High 3 Feb, Kijun line
RES 2: Y91.00 Top of the Ichimoku cloud
RES 1: Y90.00/35 Tenkan line, 21, 100 & 55-day DMAs,

CURRENT LEVEL: Y89.67

SUP 1: Y89.00 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec


Cable
Opened Asia around $1.5715, off NY highs of $1.5749. Rate initially edged up to mark session highs at $1.5728, the move seen in tandem with euro-dollar, with both pairs then slipping lower, cable dropping back to $1.5660 by late Asian dealing, as risk positions were pared on release of weaker than expected Chinese trade data, along with market looking for confirmation/clarity over speculated eurozone plans for Greece (and periphery eurozone countries). Cable was recovering off lows ahead of the European open, with early buys lifting the rate on to $1.5690/95 before momentum again faltered. Rate currently sits back around $1.5775.

UK industrial production/manufacturing data is due for release at 0930GMT, partly overshadowed by the BOE Inflation Report at 1030GMT. Traders have suggested going short ahead of the Report, suggesting the Bank could lower its 2-yr inflation targets because of lower GDP, with Report in general expected to be dovish. Support seen at $1.5660/50, a break to open a deeper move toward $1.5635/30 ahead of $1.5610/00. Resistance $1.5705/15 ahead of $1.5725/30 and $1.5750.

RES 4: $1.6055 21-day moving average
RES 3: $1.5833/50 Low 30 Dec, Low 1 Feb
RES 2: $1.5811 Top of minor downchannel from mid-February
RES 1: $1.5749 Hourly high

CURRENT LEVEL: $1.5680

SUP 1: $1.5655 5-day moving average
SUP 2: $1.5530/35 Current base of the daily Bollinger band, Low 8 Feb
SUP 3: $1.5409/12 61.8% retracement of $1.44 advance, Projection level
SUP 4: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009

New Scenario on GBPJPY

Tuesday, February 9, 2010

Critical Level on GBPJPY

Friday, February 5, 2010

Focus on US Labor Data Today

Briefing
The dollar chalked up modest gains in the Asian morning Friday as risk sentiment continued to worsen. Dollar-yen got a lift from lows of Y88.90 early doors to trade at Y89.75 initially. The pair extended those gains even as yen crosses retreated, touching Y89.79. The euro was battered again this morning, courtesy of the weakening risk environment, touching a low at $1.3761, before rallying to $1.3710. There was good action in Swiss crosses overnight, with some market chatter - unconfirmed - of SNB activity. Euro-Swiss dipped early to Chf1.4551, attracting some spec names.

The cross edged up to Chf1.4620 initially, and then jumped to Chf1.4905, sparking talk of intervention (some traders say the SNB was seen paying at the high, with the rate through the legs trading a lot lower, before eventually it eased back to settle around Chf1.4700/20). Dollar-Swiss was also higher, touching Chf1.0800 highs before profit-taking from specs emerged. US employment report at 1330GMT the day's highlight. Expect position adjustments ahead of release.

Euro
Euro-dollar opened in Asia around the NY closing lows at $1.3727. Early, pre-fix demand for euro-yen provided an initial recovery lift which took rate up to session highs of $1.3747, but demand faltered in post fix trade leaving the rate to drop back through overnight lows, the momentum able to trigger stops/barrier through $1.3700 before taking it to fresh lows of $1.3669. Rate snapped back to $1.3725 as euro-Swiss saw a savage reversal off its pressured lows of Chf1.4551, with official intervention suggested to have taken rate to a high of Chf1.4905.

Euro-Swiss eased back to settle between Chf1.4700/20, while euro-dollar corrected back to $1.3700 before lifting back toward those recovery highs into early Europe. Rate currently trades around $1.3725. Offers seen placed to $1.3730 ($1.3729 76.4% $1.3747/1.3669), a break above to allow for a move toward $1.3745/50. Support remains at $1.3700 ahead of $1.3669.

RES 4: $1.4195 High 25 Jan
RES 3: $1.4160 21-day moving average
RES 2: $1.4026/46 High 3 Feb, Lows 21 Jan, 17 Aug
RES 1: $1.3853 Low 1 Feb, 5-day moving average

CURRENT LEVEL: $1.3895

SUP 1: $1.3655 2% Moving average envelope
SUP 2: $1.3635 Current base of the daily Bollinger band
SUP 3: $1.3485 61.8% retracement of March/Dec rally
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally


Yen
Dollar-yen was hit hard late in Thursday's session as the cross-yen sell- off impacted. Overnight, a range of different accounts were seen buying cross yen, and this helped the dollar-yen recover over 100 points off the low of Y88.55. We are now firmly in the Ichimoku cloud that was initially providing decent support, a daily close below Y88.90 would be seen as very negative for the pair but the market awaits US non-farm payrolls for the next indication on direction.

The cross-yen collapsed late in Thursday trade, the risk-off scenario continuing as equities and commodities markets were sold aggressively. Overnight there was a light recovery, some bargain hunting occurred as a range of different accounts bought the crosses.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.28 High 3 Feb
RES 2: Y90.70 21-day moving average
RES 1: Y90.00/35 Tenkan line, 100 & 55-day DMAs, Top of the Ichimoku cloud

CURRENT LEVEL: Y89.62

SUP 1: Y88.95 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec


Cable
Opened Asia around $1.5760, off its NY lows of $1.5716, and extended its recovery in early trade to $1.5776 as cross yen saw good demand interest into the Tokyo fix. This demand faded post fix and allowed rate to drop back to $1.5714 ahead of the European open, with added selling into Europe providing the weight to extend move to $1.5704.

Rate currently trades around $1.5735/40. Resistance seen toward $1.5750 ($1.5748 61.8% $1.5776/04) ahead of $1.5760 (76.4%) and $1.5775/80. Support remains in place between $1.5705/1.5690 with stops below, which if triggered to open a deeper move toward $1.5660/50.

RES 4: $1.6125 21-day moving average
RES 3: $1.6080 Low 22 Jan
RES 2: $1.5880 5-day moving average
RES 1: $1.5833/50 Low 30 Dec, Low 1 Feb

CURRENT LEVEL: $1.5721

SUP 1: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance
SUP 2: $1.5680/88 2% moving average envelope, 38.2% of 2009 range
SUP 3: $1.5545 100% projection of $1.7041/1.5708 decline
SUP 4: $1.5409/12 61.8% retracement of $1.44 advance, Projection level

BOE and ECB policy decisions in focus today

Briefing
The dollar was steady in Asia Thursday, after yet another lackluster session which saw the dollar trade narrow ranges. Dollar-yen opened around Y90.99, before making marginal gains to Y91.05. The pair then edged off towards the session lows at Y90.80, before range trading in light flows. Traders noted the upside appears capped by exporter offers from Y91.10, with bids building from around Y90.60/70 with larger interest seen toward Y90.50 and stops below there.

Euro-dollar also slipped from an early high of $1.3903 to hit its session low of $1.3867, before bouncing. Late in the session, euro-dollar was little changed at $1.3888.

The release of disappointing New Zealand employment data, jumping to 7.3% from 6.8%, provided for early risk-off flows, with sales of Kiwi-yen weighing on other yen pairs, a fall of 0.7% in Australian retail sales adding to this scenario. Sovereign demand aided an Aussie correction, helped by strong buildings approvals data.

The Bank of England and European Central Bank policy decisions provide today's main highlight. Both are expected to remain unchanged though the BOE decision on future QE is the main focus.

Euro
Euro-dollar opened Asia around $1.3893, off Wednesday's pullback lows of $1.3889, the rate having corrected off intraday highs of $1.4026 (European morning) on concerns over Spanish and Portuguese debt. Release Thursday of better than expected ADP data has led to some analysts adjusting their forecast for Friday's NFP data which has also benefited the dollar. Euro-dollar initially edged up to $1.3903 before reversing as rate came under pressure from cross yen sales, prompted by release of the disappointing NZ employment data. The rate initially met demand at $1.3880 before a secondary push squeezed the pair on to a low of $1.3866.

A decent sized $1.3850 barrier was seen within touching distance but was said to have attracted decent protective demand ahead. This level is expected to remain in focus into European trade. Euro-dollar then recovered through the balance of the Asian session, meeting resistance around $1.3895 ($1.3894 76.4% $1.3903/1.3866). Support is seen from the overnight low through to the mentioned barrier at $1.3850, with tight stops noted on a break. Resistance remains at $1.3895/05, stops above $1.3910.

Asian traders note that euro demand interest is seen thinning, though admit that there are some bids still around. They suggest that the much publicized $1.3850 barrier is vulnerable. Stops are noted below this level, though expect some profit take demand to quickly emerge should any downmove look pressured.

RES 4: $1.4218 Low 22 Dec
RES 3: $1.4195 High 25 Jan, 21-day moving average
RES 2: $1.4132 38.2% retracement, while $1.3853 remains base
RES 1: $1.4026/32 High 3 Feb & First Fibonacci level, Low 21 Jan

CURRENT LEVEL: $1.3895

SUP 1: $1.3853 Low 1 Feb
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3801 50% retracement of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June


Yen
Dollar-yen finally took out the Y91.00 level in yesterday's trade buoyed by higher US yields, the weakness in a Japanese automakers share price and general dollar recoveryto a high of Y91.28. Overnight, there was not much action in the dollar-yen as the market drifted lower to trade down to Y90.79 as the crosses were sold off. The overnight range was Y90.79-91.06.

There is talk of plenty of selling interest placed near yesterday's high with potential for some more stop losses behind. Expect there to be some tech resistance at Y91.45 area (50% Fibonacci retracement). On the downside initial support at Y90.75 but bigger support at Y90.10 then Y89.85 (the latter being the top of the Ichimoku cloud line).

RES 4: Y92.65/70 High 11 Jan, 200-day moving average
RES 3: Y92.00/05 61.8% retracement of Jan decline, High 14 Jan
RES 2: Y91.87 High 21 Jan
RES 1: Y91.28/45 High 3 Feb, 50% retracement of Jan decline & Kijun line

CURRENT LEVEL: Y90.91

SUP 1: Y89.80 Top of the Ichimoku cloud
SUP 2: Y89.14 Low 27 Jan
SUP 3: Y88.80/95 Base of the Ichimoku cloud, Low 18 Dec
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally


Cable
Opened Asia around $1.5890, off Wednesday's pullback lows at $1.5886, the rate having seen intraday highs during the european morning of $1.6070 before disappointing CIPS data deflated the enthusiasm. Rate initially pushed up to mark session highs at $1.5921, as euro-sterling came under early sell pressure, with traders seen adjusting positions ahead of today's BOE rate decision (1200GMT). Market expecting no change in rates but decision on QE will be in focus.

A softer tone in Asian equities prompted market to pare back risk, the release of disappointing NZ employment data, along with poor Australian retail sales also added weight, with cable breaking back below the figure, marking session lows at $1.5882 in late Asia, with early Europe taking it on to $1.5868. Rate has since recovered, currently trading around $1.5897 as it continues to gain buoyancy from euro-sterling weight. Demand seen placed toward recent lows at $1.5850, a break to expose another band of strong support at $1.5935/30. Resistance now seen at $1.5900/10, more at $1.5920/25.

RES 4: $1.6245/65 200, 100-day moving average
RES 3: $1.6220 55-day moving average
RES 2: $1.6145 21-day moving average
RES 1: $1.6080 Low 22 Jan

CURRENT LEVEL: $1.5894

SUP 1: $1.5833/50 Low 30 Dec, Low 1 Feb, Bollinger band base
SUP 2: $1.5770 Low 28 Sep
SUP 3: $1.5749 38.2% retracement of $1.3659 to $1.7041
SUP 4: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance

Wednesday, February 3, 2010

Focus Today on Greek Deficit Cutting Plan

Briefing
The dollar was little changed in Asia Wednesday. Just ahead of the European open, dollar-yen was at Y90.45, in the middle of it's Y90.31/57 Asian range and little changed from where it ended in New York, around Y90.39. Euro-dollar stood at $1.3963, in the middle of the $1.3946/76 range. Flows were muted and tied to narrow ranges. Sterling enjoyed standout activity, boosted by the release of upbeat Nationwide consumer confidence data which took cable above $1.6000, with continued buying able to brush aside reported real money offers toward $1.6010, trading around $1.6030 in early Europe.

Focus today will be on the European Commission's response to the Greek deficit cutting plan, though most expect any criticism to be tempered. Eurozone and UK services PMIs provide additional focus, while the Norges Bank rate announcement at 1300GMT should see a pause in the recent tightening cycle. US ADP hiring and ISM non-manufacturing data in focus for this afternoon.

Euro
Euro-dollar opened Asia around $1.3970 and initially pushed up to mark session highs at $1.3978 before meeting decent supply placed on approach to $1.3980. US name selling provided the main counter with stronger sales prompted as the market reacted to a report that Fitch had downgraded two Chinese banks. The news weighed on Asian equity markets, prompting strong selling in euro-yen and Aussie-yen, which helped to squeeze euro-dollar to lows of $1.3947.

Recovery in Asian stocks allowed euro-dollar to recover, trading around $1.3970 into early Europe. Rate remains contained, traders noting strong demand Tuesday by a semi official name which kept rate buoyed above $1.3920/10, while decent supply kept rate capped below $1.3980. Offers remain in place between $1.3980/90, with plenty of talk mentioning stops above $1.4000, some suggesting main interest seen from $1.3905 through to $1.4025. European Commission is due to deliver a response to the Greek deficit cut plans, though most expect any criticism to be tempered. Greek/bund spreads and equity market influence on risk to continue to provide main drive.

RES 4: $1.4218 Low 22 Dec, 21-day moving average
RES 3: $1.4195 High 25 Jan
RES 2: $1.4132 First main Fibonacci level, while $1.3853 remains base
RES 1: $1.4032 Low 21 Jan

CURRENT LEVEL: $1.3963

SUP 1: $1.3853 Low 1 Feb
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3801 50% retracement of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June


Yen
Quiet session overnight in the dollar-yen with the pair staying in a very tight range of Y90.30-Y90.56. Talk of some real money accounts and Japanese lifers on the bid but overall very lacklustre. The cross yen was bit of a different story in particular the Aussie-yen and euro-yen as the risk on/off theme continued. News that Fitch downgraded 2 Chinese banks appeared to have a negative influence on the Asian equity markets and this led to a sell off in the cross-yen.

However as the equity markets recovered so did the crosses and the euro-yen Y126.35 and Aussie-yen Y80.33 both returned levels just off the highs of the session. For today support can be seen in Aussie-yen at Y79.80, Y79.50 and Y79.26 resistance is noted Y80.40, Y81.00. In euro-yen support at Y126.00, Y125.80, resistance Y126.48, Y126.70. Key levels in dollar-yen support, Y90.20, Y90.00 resistance at Y90.60 and Y90.95.

RES 4: Y92.65/70 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.50 Kijun line of the Ichimoku cloud
RES 1: Y90.93/00 Recent highs 29 Jan/2 Feb, 21-day moving average

CURRENT LEVEL: Y90.51

SUP 1: Y89.14/45 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
Cable opened Asia around $1.5970 and pushed up to challenge reported offers placed toward $1.6000 (NY high $1.5998). Rate made a show above the figure to $1.6009 before meeting real money supply which capped this initial move. Rate reversed the early rally as risk took a knock as Asian equities fell on reports that Fitch had downgraded two Chinese banks. Rate found support at $1.5966 ($1.5963 is 50% of $1.5917/1.6009) before bouncing back. This move again met resistance ahead of $1.6000 before a second push took rate through the reported offers at $1.6010 and on to challenge tech resistance at $1.6013 (38.2% $1.6277/1.5850).

Eventual break here took rate on to session highs of $1.6033 ahead of the European open, with Europe taking it on to $1.6038 before momentum faded. Rate eased to $1.6025/20 before finding renewed demand interest that has lifted the rate on to fresh highs at $1.6045. Offers seen placed toward $1.6050 with further interest seen dotted toward $1.6065 ($1.6064 50%). Above here and rate can push on toward $1.6080 ahead of $1.6114 (61.8%). Support seen at $1.6025/20, $1.6000.

RES 4: $1.6235/70 200, 55 & 100-day moving average
RES 3: $1.6155 21-day moving average
RES 2: $1.6080 Low 22 Jan
RES 1: $1.6015 5-day moving average

CURRENT LEVEL: $1.6004

SUP 1: $1.5833/50 Low 30 Dec, Low 1 Feb
SUP 2: $1.5770 Low 28 Sep, 2% moving average envelope
SUP 3: $1.5749 38.2% retracement of $1.3659 to $1.7041
SUP 4: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance

Tuesday, February 2, 2010

Australia Keeps Interest On Hold

Briefing
The greenback was narrowly mixed in the Asia, ending close to the middle of trading ranges against the majors as the RBA surprised markets as it left rates on hold (+25bp had been widely forecast). The Aussie fell sharply from around $0.8925 to a low of $0.8823 almost immediately after the RBA decision, extending the low to $0.8782. The move triggered a broad unwinding in risk positions, and euro-dollar came unhinged along with that, falling to a $1.3886 low after spending most of the morning between $1.3908/36.

However, the pair rallied to $1.3925 ahead of the European open. Aussie-yen fell below Y80.00 for a low of Y79.65, and that initially triggered a retreat in dollar-yen. Dollar-yen was at Y90.80 in early Europe, having been as low as Y90.58, with some speculative demand in the recovery seen prompted by Japan Kamei comments suggesting Japan Post diversification. Euro-yen had lifted to an early high of Y126.61 before it too fell back on the RBA decision, dropping to Y125.86. Euro recovery in early Europe sees rate back at Y126.40.

Euro
Euro-dollar opened Asia around $1.3930 and got an early lift from cross yen demand taking it up to session highs of $1.3937. Decent sell interest placed ahead of $1.3940 capped the move and saw it ease back to $1.3910. The RBA's surprise decision to keep rates unchanged (most had forecast a hike of 25bp) prompted a paring back in risk positions with euro-dollar dropping down to $1.3886. Rate recovered on the back of reported European demand, lifting back above the figure ahead of the European open and extending move to retest earlier highs at $1.3937, before again meeting that same resistance from offers placed ahead of $1.3940.

A tightening in Greek bonds to German bunds seen aiding euro's buoyant tone, with traders also reporting decent buys seen from a US investment house in Asia. Tech traders have suggested that rate needs to move above $1.3940 to boost recovery hopes going forward, following a 5-day series of lower highs. Rate currently trades around $1.3926. A break above $1.3940/50 to open a move toward $1.3988 (Jan 28 high) with sell interest noted from here and extending toward $1.4000.

RES 4: $1.4240 21-day moving average
RES 3: $1.4195/18 High 25 Jan, Low 22 Dec
RES 2: $1.4032 Low 21 Jan
RES 1: $1.3945 5-day moving average

CURRENT LEVEL: $1.3926

SUP 1: $1.3853 Low1 Feb
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3790/01 Current Bollinger band base, 50% of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June


Yen
Dollar-yen failed to break out of its recent range highs overnight. The pair traded up to Y90.92 (recent high Y90.93) on the back of a Financial Times report quoting Japan's banking minister Kamei as saying Japan Post should buy more corporate bonds and US Treasuries rather than JGBs. However the strength was short lived as the RBA kept rates on hold despite an expectation of a hike.

This saw some Aussie-yen sales hit the market and drag the dollar-yen down to Y90.60 area coupled with some euro-yen sales (down to Y125.86). Traders say that there is still good resistance at Y91.00 for the time being although stops are said to be building behind. Support is seen at Y90.55 previous breakout point and treble bottom on the intra-day chart since the break higher.

RES 4: Y92.65/75 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.50 Kijun line of the Ichimoku cloud
RES 1: Y90.93/10 Recent highs 29 Jan/2 Feb, 21-day moving average

CURRENT LEVEL: Y90.76

SUP 1: Y89.14/35 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 $1.5958 with rate restricted to an early range of $1.5940/65 before pushing up to post session highs at $1.5975 before dropping back to $1.5920 as markets reacted to the surprise no rate change by the RBA. The move overtook euro-dollar's negative reaction to the decision, allowing euro-sterling to recover off early dip lows of stg0.87095, rallying back to stg0.87405.

Cable recovered, meeting resistance ahead of $1.5950 in Asia before getting a lift on to $1.5955/60 into early Europe before again dropping back, finding support this time around $1.5925. Rate currently trades around $1.5945. Offers reported in place between $1.5975/80 with stops above. Support remains at $1.5920 ahead of $1.5900.

RES 4: $1.6235/75 200, 55 & 100-day moving average
RES 3: $1.6150 21-day moving average
RES 2: $1.6040/80 5-day moving average, Low 22 Jan
RES 1: $1.5986 Intra-day gap top from 29 Jan

CURRENT LEVEL: $1.5939

SUP 1: $1.5833/50 Low 30 Dec, Low 1 Feb, Base of daily Bollinger band
SUP 2: $1.5770/85 Low 28 Sep, 2% moving average envelope
SUP 3: $1.5749 38.2% retracement of $1.3659 to $1.7041
SUP 4: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance

Monday, February 1, 2010

Market Remains Cautious on Risk
BRIEFING
Euro-yen sank to fresh 9-month low of Y124.50 in early Asian trade, the move down led by sales of Aussie-yen as the market supposedly reacted to weekend comments from FSA Head Lord Turner signalling a crackdown on carry trades. The move dragged dollar-yen through rumored stops around Y89.85 to a low of Y89.76. Although dollar-yen rebounded smartly soon after, euro-yen remained depressed near Y124.80/90 through much of the morning, before rallying to Y125.43. Dollar-yen's recovery saw it hit a high of Y90.39, as specs sought shelter in the dollar and as the euro was shunned against a backdrop of rising risk-aversion and persistent worries about euro-zone debt. Late on, euro-dollar was at $1.3875, near the top of the session's $1.3852/88 range (defence of an option barrier at $1.3850 cushioned the lows).

The market remains wary of risk assets with direction to again be dictated by equity market action. Data highlights today include Eurozone and UK manufacturing PMIs ahead of US PCE and ISM data later on. In view this week are rate decisions from the RBA (+25bp expected), Norges Bank (pause in recent hiking cycle), BOE (halt in asset purchase prgramme in Feburuary), ECB (no change). US jobs data is the main focus, released Friday.

EURO
Euro-dollar opened Asia around $1.3862 (NY low) and was under pressure in early trade on strong euro-yen selling. Move suggested to have been prompted by market reaction to weekend comments from UK FSA Head Lord Turn 'signalling' a crackdown on carry trades, which triggered early sales of Aussie-yen. A major US name was linked to early heavy sales but move ran into decent demand placed ahead of a reported barrier at $1.3850 which cushioned the move at $1.3853. Reversal in euro-yen (Aussie-yen bounced away from its 200 day m/a at Y79.12, Y79.00 low) took euro-dollar back to $1.3888.

Rate eased back to retest the early lows, getting rejected again with recovery this time passing through the earlier Asian highs into Europe, extending to $1.3895. Rate currently trades around $1.3892. Offers seen placed between $1.3900/10, more toward $1.3920 ahead of $1.3940/50. Support remains ahead of the mentioned barrier at $1.3850, with stops placed on a break of $1.3845. Stronger demand expected to emerge between $1.3835/25 ahead of $1.3800 (50% $1.2455/1.5144).

Government bond supply this week in the eurozone is due from France, Germany, Spain and the Netherlands and is expected to ease to E22.0bln vs E27.8bln last week.

RES 4: $1.4265 21-day moving average
RES 3: $1.4195/18 High 25 Jan, Low 22 Dec
RES 2: $1.4032 Low 21 Jan
RES 1: $1.3975 5-day moving average

CURRENT LEVEL: $1.3884

SUP 1: $1.3820 Current base of the daily Bollinger band
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3801 50% retracement of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June


YEN
Took some light buy stops out in Friday's trade but ran into good offers layered between Y90.80-Y91.00 posting a high of Y90.93. The market has tested lower briefly overnight, Y89.76 the low, as selling pressure in Asian trade (notably Aussie-Yen) came in after a UK Telegraph report that the head of Britain's Financial Supervisory Authority was looking to crack down on carry trades by limiting leverage for such activity.

The dip was short lived however as models and Japanese retail names sold yen. The pair now trades back to Y90.35 as the dollar buying continues ahead of good support in the Y89.00-Y89.30 zone (50% Fibonacci retracement and Ichimoku Cloud Support). Initial resistance on the topside is at Y90.40 (highs in the Asian session) and then stronger resistance at Y90.93 (Fridays high).

RES 4: Y92.65/80 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.15/50 21-day moving average, Kijun line
RES 1: Y90.55 Recent highs 22/28 Jan, Tenkan line of the Ichimoku cloud

CURRENT LEVEL: Y90.23

SUP 1: Y89.14/30 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 the Asian session around $1.5950, off from its late NY posted low at $1.5983, with rate coming under early cross yen led pressure that took it on to $1.5936. Recovery in cross yen led cable up to highs of $1.5993 before momentum faltered and rate eased back to retest lows as markets tracked Asian equity markets lower. Fresh demand emerged at the base allowing rate to slowly recover through the balance of the Asian session, pushing back to $1.5975/80 into early Europe.

Recovery presented stale longs an exit with rate quickly dropping back to $1.5950. Support seen at $1.5950, a break to allow for another challenge on $1.5936. Below here and rate can squeeze on to $1.5915 with bid interest suggested to begin from here, strengthening toward $1.5900 ($1.5896 Jan7 and 2010 low). Resistance $1.5980 (76.4% $1.5936/93), more from that early high at $1.5993 through to $1.6000.

RES 4: $1.6270/80 100, 55-day moving average
RES 3: $1.6230 200-day moving average
RES 2: $1.6160 21-day moving average
RES 1: $1.6080 5-day moving average, Low 22 Jan

CURRENT LEVEL: $1.5957

SUP 1: $1.5898 Low 7 Jan
SUP 2: $1.5833/50 Low 30 Dec, Current base of daily Bollinger band
SUP 3: $1.5770 Low 28 Sep
SUP 4: $1.5708 Low 13 Oct


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