Wednesday, April 7, 2010

RBA Hikes Rates with 25 bps to 4.25%

Briefing
The RBA hiked rates 25 bps to 4.25% adding that it was appropriate for rates to rise closer to average and the Aussie bounced to $0.9231, having earlier in the session been pressuring reported stops sub $0.9160, registering a low of $0.9165.

The reaction to the rate move also saw Aussie-Kiwi post fresh 9-year highs of NZ$1.3130 (NZ$1.3152 Nov14 2000).

Risk aversion was the main play during the overnight session, with strong sales of euro-yen from Japanese exporters leading a move into yen and dollar. This triggered stops through Y94.00, which took dollar-yen to lows of Y93.89, while euro-dollar was pressured to lows of $1.3414, from earlier highs of $1.3497, with negative reports on Greece, including an MNI story providing the main weight.

Greek government sources tell us that the Greek government wants to amend the aid accord to bypass the IMF. The government fears that tough conditions imposed by the IMF could cause social unrest. The sources said there is "a strong chance" Greece will have to request aid, despite recent avowals of self-sufficiency. The Greek government wants a clearer, speedier, European aid plan with more lenient conditions for triggering aid.

Euro
Euro-dollar opened Asia around $1.3485, having eased off Monday's US highs of $1.3529. Rate initially edged up to mark session highs at $1.3497 before reversing lower as strong euro-yen sales from Japanese exporters weighed. Negative news surrounding Greek debt problems also sapped risk appetite and pushed the euro lower.

The break below $1.3450 ($1.3461 NY low Monday) provided the impetus to take rate to lows of $1.3414. The hike in Australian interest rates provided some respite from risk aversion trades, allowing rate to edge back to $1.3435, but move has only presented bears with better levels to sell, with rate currently trading around $1.3420. Bids $1.3415/00, $1.3380. Offers $1.3435, $1.3450/60.

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: $1.3550/65 21-day moving average, Channel top 3 Dec

CURRENT LEVEL: $1.3421

SUP 1: $1.3393 61.8% retracement level
SUP 2: $1.3385 Low 31 Mar
SUP 3: $1.3246/50/70 Low 6 May, 50% projection, Low 25 Mar
SUP 4: $1.3122 61.8% projection level


Yen
Dollar-yen faced strong selling pressure via Japanese exporter sales of euro-yen during overnight trade in Asia, with traders seeking to take profit on dollar-yen's rise to Y94.52 overnight in the U.S. The rise in risk aversion weighed, sparked by renewed concern over Greece, taking dollar-yen to lows of Y93.89, after opening near session highs of Y94.38, while euro-yen was sold down to Y126.05, having seen early highs of Y127.35.

The decline however failed to trigger stop-loss orders cited around Y93.90/85, and that gave way to some short-covering, which allowed dollar-yen to stabilize around Y94.20 ahead of the european open, but again seen under pressure into early Europe, currently resting on Y94.00. Euro-yen currently trades around Y126.25/30. Most yen crosses were also trading lower, with Aussie-yen getting a late lift after the RBA hiked rates.

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: Y93.96

SUP 1: Y93.90 5-day moving average
SUP 2: Y92.55 Tenkan line of the Ichimoku cloud
SUP 3: Y91.75 21-day moving average
SUP 4: Y91.39 Support line 4 Mar, 200-day moving average


Cable
Opened Asia around $1.5297 and initially edged up to mark session highs at $1.5307. Pressure on the euro from negative reports on Greece, along with general yen demand, worked to pressure cable lower, the rate easing to initial lows around $1.5225 before pressing on to $1.5212 in late Asian dealing.

Rate recovered to $1.5235 as the Australian rate hike provided some respite to the general risk aversion moves, but move provided better levels to sell and eased rate back to retest the overnight lows. Rate currently trades around $1.5230. Resistance seen at $1.5235, more toward $1.5250. Support $1.5212 through to $1.5200 ahead of stronger interest toward $1.5180.

RES 4: $1.5420/22 61.8% of Feb/Mar decline, 38.2% of 2010 decline
RES 3: $1.5400 Current top of the daily Bollinger band
RES 2: $1.5382 High 17 Mar
RES 1: $1.5320 High 5 April

CURRENT LEVEL: $1.5214

SUP 1: $1.5100 21-day moving average
SUP 2: $1.4820 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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