Thursday, March 18, 2010

Reports Suggesting Greece May Seek IMF Aid

Briefing
The dollar was narrowly mixed in early Asian trade Thursday, with major pairs tied to very tight ranges until coming under late downside pressure as the market reacted to reported comments from a Greek official that the 'rift with Germany over debt crisis deepening' and a DJ report suggesting Greece may seek IMF aid over the April 2-4 weekend. Euro-dollar was pressed lower on the Greek reports with the pair trading into early Europe around $1.3675, close to the lows of the $1.3667 to $1.3741 range.

Dollar-yen is trading close to the lows of the session, last at Y90.15, having traded a Y90.06 to Y90.46 range. There was little in the way of flows and traders said the market was bound for now by orders at Y90.00 and Y90.50.

Some risk aversion was prompted overnight by reports of the China regulator telling banks to suspend loans to property developers, and that China may conduct more stress tests (linked to yuan appreciation).

Euro
Euro-dollar opened Asia at $1.3735 and initially edged to session highs at $1.3741 on early demand for euro-yen. Japanese supply into the fix reversed this early move with stops triggered on the break below $1.3720 ($1.3727 Wednesday low), the rate then meeting support at $1.3710. Stronger selling was then prompted as market reacted to DJ report that Greece could ask for IMF aid on weekend of April 2-4, as well as reported comments from a 'Greek official' suggesting that the rift with Germany over the debt crisis was deepening and that Greece not hopeful of aid from the Mar 25 EU Summit.

Rate dropped to $1.3667 before meeting willing buyers into the dip. Rate has slowly recovered into early European dealing, currently around $1.3685. Support seen around that mentioned low, a break to expose a stronger support area which begins from around $1.3655, strengthening toward $1.3640 with stops below. A break here to open a deeper move toward $1.3625/20. Asian traders suggest that stops have been building on the downside and therefore see it as the weaker side. Resistance $1.3695/00, more at $1.3715/25.

RES 4: $1.3910 55-day moving average
RES 3: $1.3853/73 Low 1 Feb, 38.2% retracement of Jan/Mar decline
RES 2: $1.3838/39 High 9 Feb, 55-DMA, 23.6% of Dec/Mar decline
RES 1: $1.3819 High 17 March

CURRENT LEVEL: $1.3670

SUP 1: $1.3625 21-day moving average
SUP 2: $1.3530 Low 5 March
SUP 3: $1.3490 Current Bollinger band base
SUP 4: $1.3420/37 76.4% of April/Dec rally, Low 2 Mar


Yen
Open Dollar-yen Y90.17 and Y123.39 Dollar-yen spent much of the session sliding lower as cross-yen remained heavy during Asian trade. The pair traded a Y90.06 to Y90.46 range. There was little in the way of flows and traders said the market was bound for now by orders at Y90.00 and Y90.50. The Y90.00 area is holding some decent buying interest and there is speculation that a Japanese government entity has left bids sub Y90.10.

Traders go on to note that this is the 3rd time the market has tested this level without a break. The 38.2% Fibonacci retracement of the Y88.13-Y91.07 rally is at Y89.95 and it is keeping the market underpinned. Euro-yen remained heavy after triggering some light stops yesterday above Y125.00. Macro names were noted driving the cross lower looking to take out some weak long positions. The pair traded below the recent low of Y123.23 down to Y123.12 before recovering to Y123.45

RES 4: Y91.70 200-day moving average
RES 3: Y91.17/24 Minor resistance line 7 Jan, 76.4% retracement
RES 2: Y91.09 High 12 Mar
RES 1: Y90.78 Minor resistance line 19 Feb

CURRENT LEVEL: Y90.16

SUP 1: Y90.00/15 Ichimoku cloud base, 21 & 100-DMA, Kijun & Tenkan lines
SUP 2: Y89.65 Low 9 March
SUP 3: Y88.24 61.8% retracement of Oct/Dec rally
SUP 4: Y88.13 Low 4 March


Cable
Cable opened Asia around $1.5320, initially edging up to post session highs at $1.5324 before settling between $1.5310/20 ahead of the Tokyo fix. Cross yen supply through the fix provided the main weight to take rate through support at $1.5305/00 and on to an initial low at $1.5289. Rate recovered and bounced between $1.5297/1.5312 before getting shoved lower again as rate tracked euro-dollar slippage, as this latter rate reacted to negative comments from the Greek official. Cable dropped to a low of $1.5271, finding support from reported demand placed to $1.5270.

Dip again attracted demand, aided by euro-sterling breaking lower into early Europe (Asian range stg0.8943/73) to stg0.8930 on M&A reports of Deutsche Bahn looking to buy part of UK Arriva (+E2bln). This M&A was reported Wednesday but highlighted by an FTD report this morning. Cable recovered to $1.5315, currently trading around $1.5305. Support now reported in place between $1.5275/65, more toward $1.5250. Resistance $1.5325/35 ahead of $1.5350/55 and stronger interest at $1.5380/85.

RES 4: $1.5583 38.2% retracement of Nov/Mar decline
RES 3: $1.5525 Current top of the daily Bollinger band
RES 2: $1.5420/22 61.8% of Feb/Mar decline, 38.2% of 2010 decline
RES 1: $1.5382 High 18 March

CURRENT LEVEL: $1.5280

SUP 1: $1.5215 5-day moving average
SUP 2: $1.5195 21-day moving average
SUP 3: $1.4950 Minor support line 1 Mar
SUP 4: $1.4866/73 Low 2, 10 March

Monday, March 15, 2010

EU FinMin meeting Today

Briefing
The greenback was modestly higher across the board in Asian trade Monday, albeit in thin volume and narrow ranges.

Euro-dollar was last trading at $1.3740, towards the lower end of the $1.3726 to $1.3784 trading range. Traders said the market was on hold ahead of the Eurogroup meeting and any possible announcement regarding aid packages for Greece.

Dollar-yen was trading at Y90.65, having been stuck in a Y90.55 to Y90.97 trading range. Traders said the press reports noting further unease over the US fiscal position from Moody's had little impact on FX rates.

For this week the Fed and BoJ meetings are the highlights, although no rate change is expected from the Fed and it is expected to hold the line on end asset purchases. The BoJ is widely expected to announce additional easing policies - increased quantity and maturity of current liquidity programs. Key economic data releases during the week are US IP (Monday), euro area CPI (Tuesday), UK employment (Wednesday) and US CPI (Thursday). UK BOE Minutes Wednesday will also be in focus for any comment on need for further QE.

Euro
Euro-yen gapping higher into early Asian trade saw euro-dollar push up from its opening level around $1.3764 to post session highs at $1.3784. The move was seen as an early reaction to weekend press reports that the EU is getting close to agreeing a rescue package for Greece. However, comments from France FinMin Lagarde that Germany's trade surpluses built on holding down labour costs may be unsustainable for the other countries in the eurozone (an unusually blunt warning to Berlin) acted to temper this early enthusiasm.

Euro-dollar eased off the highs, holding between $1.3767/72 for around 4-hours before stronger sales of euro-yen (as Asian equity markets traded in the red) squeezed the rate to lows of $1.3726. The rate settled between $1.3730/40 ahead of the European open, edging back to $1.3754 (50% $1.3784/26) on early European demand. Support remains in place at $1.3730/20, a break to expose stronger support, said to have been building, toward $1.3700. Resistance noted at $1.3755 ahead of $1.3760/70 and the overnight high at $1.3784. Weak talk emerging suggesting the $1.3800 level holds barrier interest.

RES 4: $1.4008/26/46 50% of Jan/Mar, High 3 Feb, Lows 21 Jan, 17 Aug
RES 3: $1.3853/73 Low 1 Feb, 38.2% retracement of Jan/Mar decline
RES 2: $1.3838/39 High 9 Feb, 55-DMA, 23.6% of Dec/Mar decline
RES 1: $1.3796 High 12 March, Bollinger band

CURRENT LEVEL: $1.3739

SUP 1: $1.3610 21-day moving average
SUP 2: $1.3530 Low 5 March
SUP 3: $1.3475 Current Bollinger band base
SUP 4: $1.3420/37 76.4% of April/Dec rally, Low 2 Mar


Yen
After briefly taking out the Y91.00 level on Friday dollar-yen settled back to range trade under this level. The market was Y90.55-Y90.97 in Asian trade as the early gains to Y90.97 were not able to hold and dollar-yen was sold off for the majority of the session. Talk for some traders that the BOJ may hold back on any policy change until after the next Tankan survey helped the yen rally and dollar-yen traded back down to Y90.55 where the daily Ichimoku cloud line is currently located.

The cross-yen had a similar trade, euro-yen opening around the highs at Y125.35 level as some light stops were taken out after Fridays rally to Y125.20 (previous high Y125.23). However the rally did not last long as negative equity markets and renewed fears of problems with providing Greece with a bailout package saw risk aversion and euro-yen was once again sold off trading down to Y124.40 as Japanese exporters were noted sellers through the Y125.00 level.

RES 4: Y92.15 High 19 Feb
RES 3: Y91.80 200-day moving average
RES 2: Y91.24 76.4% retracement
RES 1: Y91.09 High 12 Mar

CURRENT LEVEL: Y90.59

SUP 1: Y90.15 21 & 100-DMA, Kijun line
SUP 2: Y89.60/65 Tenkan line of the Ichimoku cloud, Low 9 March
SUP 3: Y89.25 Base of the Ichimoku cloud
SUP 4: Y88.13/24 Low 4 March, 61.8% retracement of Oct/Dec rally


Cable
Saw an early high in Wellington of $1.5218 before opening main Asia around $1.5180, with rate edging up to $1.5200 on early risk-on trade prompted by weekend reports that the EU were close to agreeing a rescue package for Greece. This early view on risk was quickly reversed as market took note of China comments on yuan and dollar fluctuations, with press reports suggesting Moody's will warn the US over its AAA rating if it can't get its public finances in order.

Rate dropped, posting session lows at $1.5152 before settling between $1.5155/70 ahead of the European open. Fresh demand into this session took rate back up to retest the overnight high, extending to $1.5206 in a quick spike before being slapped back to $1.5155. Rate currently trades around $1.5160. Bids said to remain in place between $1.5155/50, a break to open a deeper move toward $1.5125/20 ahead of $1.5100/090. Resistance remains toward $1.5210, with mention of stops placed on a break above $1.5220. Above $1.5220 and rate can edge toward $1.5235 ahead of $1.5250.

RES 4: $1.5420/22 61.8% of Feb/Mar decline, 38.2% of 2010 decline
RES 3: $1.5350 Breakout level
RES 2: $1.5265/99 21-DMA, 50% retracement of post-17 Feb decline
RES 1: $1.5218 High 12 March

CURRENT LEVEL: $1.5166

SUP 1: $1.4866/73 Low 2, 10 March
SUP 2: $1.4770/81 Current base of the daily Bollinger band, Low 1 March
SUP 3: $1.4659 High 23 Feb
SUP 4: $1.4619 Low 29 Apr

Wednesday, March 10, 2010

Cable Remains Under Selling Pressure

Briefing
The dollar was little changed against the majors Wednesday, although trended higher against the pound. Dollar-yen was last at Y90.01, compared with Y89.96 late in the U.S. session, with trade in Asia contained within a tight range of Y89.85/90.11. Euro-dollar was last at $1.3597, versus $1.3610 close in NY. The pair traded between $1.3588 and $1.3614 in Asia. The pair gave up the $1.3600 mark in quiet morning trade in Asia today as sell orders from $1.3620/25 weighed down on the euro-zone currency and with sterling weakness also adding to the pressure.

Cable was last at $1.4965, at the low end of its $1.4955 to $1.5017 Asian range. Sterling remains pressured on concerns over the UK fiscal position, the looming election and renewed fears over the banking system. German CPI at 0700GMT, France IP at 0745 and UK IP at 0930 the morning's highlights, with a light US data calendar. Trading in Asia was described as generally subdued, the only real moves coming in cable as it failed to build after its overnight recovery above $1.5000.

Euro
Euro-dollar opened the Asian session around $1.3610, having recovered from NY lows of $1.3537, with rate edging up to $1.3614 in early trade as rate took direction from early cable gains, helped in part by minor demand for euro-yen. Rate drifted off highs, as cable dropped back, but found support around $1.3588 on Swiss name buys of euro-sterling.

Fresh sales into early Europe has taken the rate through the overnight lows to $1.3577 (50% $1.3537/1.3617), currently trading around $1.3580. Early talk suggests stops placed between $1.3570/65, though Asian traders note sovereign demand interest placed around the $1.3560 level close behind. Resistance seen at $1.3615/20.

RES 4: $1.3838/53 High 9 Feb, 23.6% of Dec/Mar decline, Low 1 Feb
RES 3: $1.3802 Top of Dec/Mar channel
RES 2: $1.3789 High 17 Feb
RES 1: $1.3736 High 3 March, Current Bollinger band

CURRENT LEVEL: $1.3600

SUP 1: $1.3530 Low 5 March
SUP 2: $1.3475 Current Bollinger band base
SUP 3: $1.3420/37 76.4% of April/Dec rally, Low 2 Mar
SUP 4: $1.3404 61.8% retracement of the post-Oct 2008


Yen
Dollar-yen open Y89.92 and euro-yen open Y122.34 in Europe. Dollar-yen had a quiet session overnight as trading in Asia was restricted to a Y89.85 - Y90.11 range with the majority of that time spent around the Y90.00 level. Traders report decent size expiries maturing today with strikes at Y90.00. Technically traders expect decent support in the Y89.40 region.

Late in the session traders noted Sovereign interest to buy lifting the pair to the highs of the session. The cross-yen was very similar to the dollar-yen with a very quiet session overnight. After an initial sell off the crosses rallied, helped by decent demand for the Aussie and Kiwi. However traders report decent size expiries in Aussie-dollar all the way up to $0.9200 providing some supply on the topside and these offers halted the rally.

RES 4: Y91.90 200-day moving average
RES 3: Y91.24 76.4% retracement
RES 2: Y91.00 Top of the Ichimoku cloud
RES 1: Y90.65/70 61.8% retracement, 55-day moving average

CURRENT LEVEL: Y90.07

SUP 1: Y89.65/70 Low 9 March, First near-term Fibonacci level
SUP 2: Y89.40 Tenkan line of the Ichimoku cloud
SUP 3: Y89.25 Base of the Ichimoku cloud
SUP 4: Y88.13/24 Low 4 March, 61.8% retracement of Oct/Dec rally


Cable
Opened in Asia around $1.4995 and was initially squeezed to a session high of $1.5017 on reported UK bank buys, traders suggesting that stops placed above $1.5030 were the target. However, move up ran into good supply around $1.5015 from a US investment house and a Nordic name which initially faced off the UK bank demand before pressuring the rate lower, the UK name turning his long position on the break back below the figure.

Continued sales of sterling, via sterling-yen, and Swiss name buys of euro-sterling, took rate down to session lows of $1.4955. Rate came under further pressure into early Europe, a major UK clearer the noted seller as rate broke below Tuesday's lows at $1.4936, extending its recent corrective pullback to $1.4913. Rate currently trades around $1.4925, buoyed off lows as euro-sterling again meets decent resistance ahead of stg0.9100. Support seen from that mentioned low through to $1.4900, a break to expose stronger support at $1.4880 (76.4% $1.4781/1.5197) ahead of $1.4855/50. Resistance now seen at $1.4950/55.

RES 4: $1.5420/22 61.8% of Feb/Mar decline, 38.2% of 2010 decline
RES 3: $1.5340/50 21-day moving average, Breakout level
RES 2: $1.5299 50% retracement of post-17 Feb decline
RES 1: $1.5197 High 8 March

CURRENT LEVEL: $1.4974

SUP 1: $1.4820/55 Low 2 March
SUP 2: $1.4781 Current base of the daily Bollinger band, Low 1 March
SUP 3: $1.4659 High 23 Feb
SUP 4: $1.4619 Low 29 Apr

Monday, March 8, 2010

Risk Trades Boosted by Friday's NFP Numbers

Briefing
Friday's release of better than expected US employment data provided a boost for risk trades into late Friday trade, with this trend continuing into Asia Monday. Weekend reports suggesting France and Germany are planning a new initiative to reinforce eurozone economic cooperation aided this view with firm Asian equity markets adding further weight against the dollar and yen as traders continued to favour risk, to the benefit of euro and sterling.

Good demand was seen for dollar-yen and euro-yen into early Asia, pushing the rates up to Y90.69/Y123.80 respectively. Traders however continue to expect counters from FY end exporter supply, though recent reports have downplayed the size of the expected sell interest. Euro-dollar pushed up to a session high of $1.3693 (NY high $1.3631), holding just off into early Europe, with traders noting sell interest placed around $1.3700. The $1.3740/50 area though seen as key to further upside progress. It is a fairly light data calendar for today with the highlight being German IP data at 1100GMT.

Data for the week sees RBNZ and SNB rate announcements Wednesday/Thursday respectively. The RBNZ is expected to keep rates unchanged though the market will focus on the accompanying comments as we could see an increase in hawkish rhetoric. The SNB is also widely expected to maintain its current policy stance at it's quarterly policy meeting on Thursday, but with the franc trading close to its highs a dovish SNB is likely. As mentioned earlier, Monday brings German IP. Wednesday UK IP and Japan Q4 GDP revision, Thursday brings China data and Australian employment, with Friday seeing release of US retail sales and Michigan consumer confidence.

Euro
Euro-dollar opened Asia around $1.3630, initially dipping to mark lows at $1.3615 before pushing higher as Friday's late risk-on tone continued, prompted by the release of better than expected US employment data. Weekend reports that France and Germany are planning a new initiative to reinforce eurozone economic cooperation (FT) also aided this risk positive outlook, with Asian equity markets trading positive helping to boost the tone.

Rate traded to a high of $1.3691 (on reported Asian sovereign book balancing demand) before meeting willing sellers positioned on the approach to $1.3700, the rate settling back above $1.3670 into early European dealing. Resistance seen from around $1.3695 with interest said to extend to $1.3715, encompassing Mar 4 highs at $1.3712. A break here to open a move back toward $1.3736 (Mar 3 high) ahead of key area between $1.3740/50. Support seen back at $1.3655/50 ahead of $1.3630.

RES 4: $1.4026/32 High 3 Feb, Low 21 Jan
RES 3: $1.3838/53 High 9 Feb, Top of Dec/Mar channel, Low 1 Feb
RES 2: $1.3789 High 17 Feb, Current Bollinger band
RES 1: $1.3736 High 3 March

CURRENT LEVEL: $1.3675

SUP 1: $1.3530 Low 5 March
SUP 2: $1.3460 Current Bollinger band base
SUP 3: $1.3420/37 76.4% of April/Dec rally, Low 2 Mar
SUP 4: $1.3404 61.8% retracement of the post-Oct 2008


Yen
Dollar-yen open Y90.42 euro-yen open Y123.66 The dollar-yen opens higher this week after Fridays rally post US NFP data. The dollar-yen has traded up to Y90.65 as Japanese lifers, retail and momentum accounts all buy the dip in Asian trade. However exporters have been reported selling near the highs as traders note this rally is helping the exporters end of year operations as they look to repatriate funds coming into the end of the financial year. The 61.8% Fibonacci retracement of the Y92.15-Y88.13 sell off is at Y90.61 and is providing some initial resistance.

Beyond that traders report the top of the daily Ichimoku cloud is at Y90.98 and the 200dma is at Y91.94. The euro-yen like the dollar-yen performed well post NFP rallying to Y123.55 area. The cross remained bid in Asian trade with talk of a US name buying to trigger some stop loss activity above the Y123.60 area, however exporters were again noted sellers on the rally. with the market stalling ahead of the 76.4% Fibonacci retracement at Y123.91.

RES 4: Y91.95 200-day moving average
RES 3: Y91.24 76.4% retracement
RES 2: Y91.00 Top of the Ichimoku cloud
RES 1: Y90.65/80 61.8% retracement, 55-day moving average

CURRENT LEVEL: Y90.42

SUP 1: Y90.00/15 21 & 100-DMA, Kijun line
SUP 2: Y89.70 Tenkan line of the Ichimoku cloud
SUP 3: Y89.25 Base of the Ichimoku cloud
SUP 4: Y88.13/24 Low 4 March, 61.8% retracement of Oct/Dec rally


Cable
Opened Asia around $1.5130, off Friday's late recovery highs of $1.5149, having seen an initial reactive dip to $1.4993 after release of US payroll data. Rate dipped back to mark session lows at $1.5121 before picking up decent demand interest, the main part seen as a US investment house bought sterling-yen. Rate pushed up to $1.5170 before meeting resistance, the rate dipping back to $1.5130/25 before breaking above on the third attempt, the break taking the rate on to $1.5190.

Rate drifted off through the Asian afternoon, dropping back to $1.5140 ahead of the European open before picking up fresh demand interest that has allowed rate to recover back to $1.5180. Offers seen placed between $1.5190/00, with further interest close behind at $1.5210/15. A break here to open a move toward $1.5230/35 ahead of $1.5250. Support $1.5150 ahead of $1.5130/20.

RES 4: $1.5410/22 21-DMA, 61.8% of Feb/Mar decl, 38.2% of 2010 decline
RES 3: $1.5350 Breakout level
RES 2: $1.5299 50% retracement of post-17 Feb decline
RES 1: $1.5177/86 38.2% retracement, Intraday high

CURRENT LEVEL: $1.5166

SUP 1: $1.4875 Current base of the daily Bollinger band
SUP 2: $1.4781 Low 1 March
SUP 3: $1.4659 High 23 Feb
SUP 4: $1.4619 Low 29 Apr


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