Wednesday, April 21, 2010

Focus on UK Job Numbers and Greek Spreads



Briefing 

The dollar spent a fairly subdued Asian session holding steady against the yen and edging higher on the euro.
Dollar-yen was last trading at Y93.16, having traded a Y92.97/Y93.28 range in Asia almost flat from where it had ended in New York trade.

Euro-dollar was last at $1.3424, after a $1.3397/1.3466 overnight range, but down from where it had ended in New York around $1.3445.

The euro ran into renewed selling pressure, with some players initially taking aim at the overnight $1.3428 low and stop-losses said to be placed below $1.3420. Rumored sovereign demand at $1.3400 and larger buy orders in the $1.3390/85 region cushioned the downside, allowing the pair to inch its way back higher. Euro-yen provided some early downside pressure with strong sales noted into the Tokyo fix, which were said to be linked to French bond redemptions due early next week. The cross traded to a low of Y124.65, bouncing above Y125 into early European dealing.

Sterling has proved more resilient, cable edging back toward $1.5400 in early European trade.

Today sees a light data calendar with UK employment and BoE Minutes at 0830GMT being the highlights. Greek bond spreads also remain in focus.

Euro
Euro-dollar opened Asia around $1.3435, just off NY pressured lows of $1.3428. Rate initially edged up to mark session highs at $1.3446 before coming under strong headwind sell pressure via euro-yen sales. Talk of French bond redemptions into early next week cited as euro-yen was sold off, the move taking euro-dollar down to retest the NY low. The break below triggered stops that provided the added weight to take it down to initial lows of $1.3405. Move ran into Swiss name demand ahead of $1.3400, with some traders noting Asian sovereign demand interest into the dip.

Rate bounced back to $1.3425, settling for a while within $1.3415/25. Further sales in pre Europe open trade targeted stops below $1.3400, the rate touching a low of $1.3397 before profit take demand quickly emerged following the pressured move. Rate has since recovered to $1.3440, currently around $1.3435. Talk of Asian sovereign demand to be seen between $1.3400/1.3380, with minor stops mixed in from below the figure and extending down to $1.3370, larger below this latter level. Main offers seen up at $1.3480/00.



RES 4: $1.3925 50% of 2010 range
RES 3: $1.3819 High 17 Mar
RES 2: $1.3692 High 12 Apr, Current top of Bollinger band
RES 1: $1.3580 5, 21-day moving average

CURRENT LEVEL: $1.3415

SUP 1: $1.3368 Former resistance line 3 Dec
SUP 2: $1.3270/80 Low 25 Mar, 8 Apr, Bollinger band
SUP 3: $1.3246/50 Low 6 May, 50% projection level
SUP 4: $1.3057 38.2% of $0.8232 to $1.6039


Yen
The yen opened in early Europe around Y93.18 and Y124.89 vs the euro. Dollar-yen traded up to Y93.39 in New York last night taking out the stops placed between Y93.25-35 and then spent the Asian session in a Y92.97-Y93.28 range. Dollar-yen appears to have broken back into the recent range after taking out some stops sub Y92.50 over the last few sessions, exporters were noted sellers of dollar-yen on the rally and the crosses as they take advantage of the bounce. Also taking advantage of the bounce were retail investors who took the opportunity to book some profits in the crosses.

With all the selling dollar-yen dipped sub Y93.00 to Y92.97 however the dip was bought into and the pair recovered to Y93.20 area at the European open and onwards to Y93.28 during early European trade driven by cross-yen demand which looks set to continue, traders note offers around Y125.50 area in euro-yen with stops beyond Y125.70 level.



RES 4: Y95.05/09 High 24 Aug 2009, 61.8% retracement of 2009 decline
RES 3: Y94.99 Minor resistance line from Jan high
RES 2: Y94.72/78 76.4% retracement of Aug/Nov decline, High 2 April
RES 1: Y93.26 Minor resistance line from 2 Apr high

CURRENT LEVEL: Y93.19

SUP 1: Y91.60/67 Low 19 Apr, 61.8% of 18 Mar rally
SUP 2: Y91.25/30 55, 200-day moving average
SUP 3: Y90.90 100-DMA
SUP 4: Y90.67 61.8% of 4 March rally, Top of the Ichimoku cloud


Cable
Opened Asia around $1.5365 and initially edged up to $1.5379, in line with euro-dollar, before reversing lower as move met strong cross yen sales. Rate pressed down to lows of $1.5332 but met willing buyers into the dip. Rate recovered, pushing up to session highs of $1.5386, extending on to $1.5413 into early Europe, as euro-sterling pressed down to stg0.8721. Cable currently trades around $1.5390. Sterling continues to enjoy risk demand interest, benefitting from concerns toward the euro.

Support seen in place between $1.5380/70, a break to open a deeper move toward $1.5350. One major Swiss bank in a morning note sees $1.5335 as a pivot. Offers seen place at the recovery high at $1.5413, with further interest positioned from around Tuesday's high of $1.5435, strengthening toward $1.5445/50. UK employment data and BOE Minutes due for release at 0830GMT.



RES 4: $1.5620 50% of 2010 decline
RES 3: $1.5580/93 High 23 Feb, Bollinger band, 38.2% of Nov/Mar move
RES 2: $1.5522 High 15 Apr
RES 1: $1.5375 5-day moving average

CURRENT LEVEL: $1.5367

SUP 1: $1.5235 21-day moving average
SUP 2: $1.5163 50% retracement
SUP 3: $1.5130 Low 6 Apr
SUP 4: $1.5078 61.8% retracement 

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