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

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