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

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