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

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