Wednesday, April 7, 2010

Ongoing Concerns Over Greece - IMF In Athens Today

Briefing
Ongoing concern over Greek sovereign debt, along with increased speculation that China is laying the groundwork for a yuan revaluation, continued to apply downside pressure on euro-yen into early Asian trade Wednesday, as the Japanese currency, seen as a proxy for the Chinese yuan, strengthened.

Risk-aversion also allowed the dollar to trade with a firmer tone, despite last night's FOMC Minutes tending to lean toward the dovish side.

This early tone in euro-yen reversed later in the session on reported demand for Aussie-yen, said to be linked to Sumitomo Chemical buying of a 20% stake in Australian Nufarm (A$611mln), taking the rate from lows of Y125.22 to Y126.16, trading around Y125.80 into early Europe.

Euro-dollar saw early highs of $1.3409 before being pressured to lows of $1.3371, while cable was trading soft, off Asian highs of $1.5277 (NY $1.5281) after the market reacted to weaker than expected BRC data.

Euro
Euro-dollar opened Asia around $1.3398, off NY lows of $1.3355 with recovery seen as market reacted to 'dovish' FOMC Minutes. Rate slipped back to early lows of $1.3373 as euro-yen came under early sell pressure, linked to ongoing concern over Greek debt and speculation that China is laying ground work for yuan appreciation. Rate recovered with euro-yen but ran into willing sellers positioned around $1.3390. Rate began to slip lower again in late Asia, the move down gathering pace as Europe added weight, the move down filling reported Swiss private bank demand in the area between $1.3370/65 before meeting stronger Asian demand placed between $1.3360/50.

Rate currently trades around $1.3366. A break of $1.3350 exposes further demand seen at $1.3345, with stops suggested on a break of $1.3340. Below here and rate can ease on toward $1.3325/20. Resistance remains at $1.3390/00, more toward $1.3410 with stops above. A break here to open a move toward $1.3440, with offers noted from here and extending toward $1.3460, with reports of stops mixed in on a break of $1.3452.

RES 4: $1.3925 50% retracement of Jan/Mar decline
RES 3: $1.3819/30 High 17 Mar, 9 Feb, Current top of Bollinger band
RES 2: $1.3591/10 High 1 Apr, 61.8% retracement of late March pullback
RES 1: $1.3540/47 21-day moving average, Channel top 3 Dec

CURRENT LEVEL: $1.3385

SUP 1: $1.3355 Low 6 April
SUP 2: $1.3270 Low 25 Mar
SUP 3: $1.3246/50 Low 6 May, 50% projection level
SUP 4: $1.3122 61.8% projection level


Yen
Risk aversion into early Asia, linked to ongoing concern toward Greek debt as well as speculation that China is laying ground work for yuan appreciation, acted to weigh on euro-yen to take it to session lows of Y125.22. Model sellers were noted selling as rate broke below Y125.40. Move dragged dollar-yen to early lows of Y93.56. Japanese assets managers were noted buyers into the dollar-yen dip, the demand able to lift rate back up to Y94.27.

Euro-yen tracked the recovery, aided by decent demand for Aussie-yen, with short covering taking it on to Y126.16. Dollar-yen seen holding back around Y94.00 into early Europe, while euro-yen trades around Y125.65 as the euro comes under early pressure into European trade. Dollar-yen support seen at Y93.50 with minor stops on a break of Y93.40. Resistance toward Y94.30 ahead of Y94.50.

RES 4: Y97.79 High 7 August
RES 3: Y97.52 76.4% retracement
RES 2: Y95.05/09 High 24 Aug 2009, 61.8% retracement of 2009 decline
RES 1: Y94.72/78 76.4% retracement of Aug/Nov decline, High 2 April

CURRENT LEVEL: Y94.19

SUP 1: Y93.57 Low 6 April
SUP 2: Y93.20 Tenkan line of the Ichimoku cloud
SUP 3: Y91.90 21-day moving average
SUP 4: Y91.53 Support line 4 Mar, 200-day moving average


Cable
Opened Asia around $1.5262 and edged up to mark session highs at $1.5277 before reversing on general cross yen supply in early Asian dealing. Rate eased to a low of $1.5235. Rate recovered in line with yen crosses, faltering around $1.5265 before settling between $1.5240/60 ahead of the European open.

Rate came under stronger sell pressure into early Europe, as rate tracked euro-dollar slippage, extending the intraday lows to $1.5227 before settling back into a $1.5235/50 range. Rate currently trades around $1.5237. Support seen at $1.5225/20, more toward $1.5205, with demand interest said to be dotted down to $1.5190. Resistance $1.5250/55 ahead of $1.5270/80.

RES 4: $1.5420/22 61.8% of Feb/Mar decline, 38.2% of 2010 decline
RES 3: $1.5410 Current top of the daily Bollinger band
RES 2: $1.5382 High 17 Mar
RES 1: $1.5320 High 5 April

CURRENT LEVEL: $1.5259

SUP 1: $1.5110 21-day moving average
SUP 2: $1.4830 Current base of the daily Bollinger band
SUP 3: $1.4783/98 Recovery low 1 March, Low 25 Mar
SUP 4: $1.4619/59 Low 29 Apr, High 23 Feb

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