Thursday, May 13, 2010

Dollar Trading Mixed Overnight

Briefing
The dollar traded with a mixed tone in the Asian session, easing against the euro but little changed against the yen. Traders mentioned a lot of strikes in the Y93.00/20 area which helped to contain the rate within Y93.07/29.

Euro-dollar was last pressing up against the overnight highs at $1.2669, up from $1.2613 Asia lows. Euro-dollar offers are now said to be above $1.2685, while bids remain in place on approach to $1.2600, with stops building on a break below there.

Dollar-yen is currently trading at Y93.20, with reported stops above Y93.30 intact.

Sterling trades close to session highs of $1.4869 vs the dollar, with cable last at $1.4865.

The Aussie was the star performer overnight, the currency getting a boost from better than expected jobs data (employment up 33.7k in April, though the unemployment rate edged to 5.4% from 5.3%).

Ascension Day holiday has some European centres closed and expected to weigh on the already low liquidity. Fairly light data calendar, UK trade at 0830GMT, with US import/export prices due at 1230GMT. Fed speakers later in focus. Equity markets seen directional.

Euro
Euro-dollar opened Asia around session lows of $1.2611, the rate having come under strong sell pressure late in the NY session as rate sunk to $1.2616. Strong demand placed ahead of $1.2600 contained the move and allowed rate to recover, the move up meeting Swiss name supply around $1.2640 but able to push on to trigger stops above $1.2650 that lifted rate on, in steps, to an eventual session high of $1.2669 ahead of the european open.

Continued buying into Europe has taken rate up to $1.2682, with rate seen meeting reported offers placed around the $1.2685 level. A move above this area expected to meet stronger sell interest placed toward $1.2700. Demand remains in place to $1.2600 with stops said to be building below. Further demand then noted at $1.2580 with more stops on a break.

RES 4: $1.3120 21-day moving average
RES 3: $1.3100/15 High 10 May, 50% of $1.3692 decline, Low 28 Apr
RES 2: $1.2950 High 7 May
RES 1: $1.2670 5-day moving average

CURRENT LEVEL: $1.2660

SUP 1: $1.2515 Low 6 May
SUP 2: $1.2480 Current base of the declining Bollinger band
SUP 3: $1.2459 Recovery low 4 March
SUP 4: $1.2329 Lows Oct 2008


Yen
The yen opened in early Europe around Y93.22 and Y118.01 vs the euro. Another very quiet session fro dollar-yen overnight, confined to a Y93.07-Y93.29 range. Offers between Y93.30-Y93.50 still capped in Asia although the pair tested higher in early European trade taking out some of the selling interest and printing a high at Y93.46. A quiet session for the crosses too, remaining slightly bid as equity markets faired slightly better.

Euro-yen traded Y117.58-Y118.10 again testing higher in early European trade, traders note some offers Y118.50-Y118.70 with chatter of stops beyond here. One trader observes that the market is still wary of any news from the Euro region and concerns remain over contagion despite the EMU/IMF stability fund. Bids are said to start around Y117.90 with more around Y117.50 and Y117.20

RES 4: Y95.24 Resistance line from 7 Jan
RES 3: Y95.05/09 High 24 Aug, 61.8% retracement of 2009 decline
RES 2: Y94.97 High 4, 5 May
RES 1: Y93.25/54 21-day moving average, High 10 May

CURRENT LEVEL: Y93.22

SUP 1: Y92.20/45 55-day moving average & Top of Ichimoku cloud
SUP 2: Y91.45/55 Tenkan & Base of Ichimoku cloud, 100-day moving average
SUP 3: Y91.20 200-day moving average
SUP 4: Y88.22 Spike low


Cable
Opened Asia around $1.4830, off NY lows of $1.4819, seen after the pound was sold off following the release of the dovish BOE IR. Rate initially dipped to mark session lows at $1.4815 before reversing higher in tandem with euro-dollar as Asian equities pushed into positive territory. Rate edged to a session high of $1.4869 ahead of the European open, with early Europe taking the rate on to $1.4885. Rate currently trades around $1.4875.

A move above $1.4885 to allow rate to edge on toward $1.4900/05, with stops noted on a break of $1.4910 which if triggered targets $1.4930 (50% $1.5046/1.4815). Support seen at $1.4850 ahead of $1.4835/30 and the overnight low at $1.4815. UK trade data due at 0830GMT the morning's highlight but Wednesday's dovish BOE Inflation Report still weighs on the pound.

RES 4: $1.5316 Resistance line 19 Jan
RES 3: $1.5190 21-day moving average
RES 2: $1.5122/26 61.8% retracement of Apr/May decline, Low 28 Apr
RES 1: $1.5055 High 10 May

CURRENT LEVEL: $1.4857

SUP 1: $1.4712 Low 6 May, Base of the Bollinger band
SUP 2: $1.4487 61.8% projection
SUP 3: $1.4475 Low 7 May
SUP 4: $1.4336 76.4% of 2009/10 range

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