MORNING FX

BRIEFING
The dollar remained under pressure into early Asian trade, the US unit having been given brief respite from ongoing pressure by an unusual strong dollar comment from Fed Bernanke, euro-dollar dropping back from $1.4975 to $1.4880, but this move proved short lived as US yields remained low and Bernanke added dovish comments, with euro-dollar going on to post highs at $1.5017 ahead of this session's close. Rate opened Asia at $1.4972 with initial buying failing to lift it back above $1.5000, with Aussie dollar also opening firm, taking an initial boost from the release of RBA Minutes but quickly reversed as comments were viewed less hawkish than had been expected. Rate dropped from $0.9378 to $0.9324. Cable saw similar opening moves, trading up to $1.6846 (off NY rally highs of $1.6879) before slipping back on the Aussie turnaround. Tokyo fix saw currencies sold but Toshin demand provided a cushion to allow dollar-yen to straddle Y89.00 in a range of Y88.92/89.17. UK inflation data at 0930GMT provides early focus, with US PPI, TICS, Cap.Ut/IP and NAHB data this afternoon's highlights.

EURO
Dramatic moves during the NY afternoon Monday with the euro dropping from around $1.4975 to $1.4880 as Fed's Bernanke made a comment on a strong-dollar, but additional comments reiterated the recent dovish tome which saw rate rally back, pushing up to post fresh intraday highs at $1.5017. Rate opened the Asian session back at $1.4975 with early model demand lifting it on to $1.5000 but reported sovereign supply provided decent resistance. The negative reaction to the RBA Minutes took the shine off risk on trades, Asian equity markets not following Wall Street's late rally, with euro-dollar slipping back to initial lows at $1.4946, stretching on late in the session to $1.4935 ($1.4932 61.8% $1.4880/1.5017). Rate was lifting back into the European session on reported Asian sovereign buys, recovering to current level around $1.4960 (38.2% $1.5000/1.4935). A move above here to allow for a challenge on $1.4975/85 ahead of $1.5000. Stronger offers said to remain in place between $1.5015/20 ahead of $1.5050/65. Support $1.4935/30, $1.4915/10 ahead of $1.4880 (seen pivotal intraday).

Euro-dollar faded ahead of the highs at $1.5060/64 and the subsequent pullback is holding around the 5 & 21-DMAs at $1.4890 and $1.4945. These levels remain in focus as the euro seeks direction with bulls encouraged by a positive daily stochastic study but momentum uninspiring. The pair remains broadly constructive above the 17 August support line at $1.4732.

RES 4: $1.5235 2% moving average envelope
RES 3: $1.5163/82 76.4% of decline from July 2008 high, Res line 3 June
RES 2: $1.5100 Current Bollinger band top
RES 1: $1.5047/64 High 11 Nov, Double-day high 23, 26 October

SUP 1: $1.4890 21-day moving average
SUP 2: $1.4788 61.8% retracement of $1.4628 rally, 1% MAE
SUP 3: $1.4732 Support line 17 Aug
SUP 4: $1.4628/80 Low 3 Nov, Base of Bollinger band




YEN
After slipping five-week lows at Y88.75 in the US session Monday, dollar-yen closed around Y89.05, as euro-yen ended towards the bottom of the range at Y133.30. Asian dealing found yen pairs notching early highs, dollar-yen moving to Y89.17 as the cross edged up to Y133.58, before Tokyo names stepped in to sell the currencies into the fixing. Dollar-yen dropped back to Y88.95 as euro-yen slipped to Y133.10, before a period of consolidation into the afternoon session. Dollar-yen bids said to come in under Y88.80, with a deeper move set to expose a move towards the October lows just ahead of Y88.00. Euro-yen stops reported under Y133.90, which if triggered would expose further slippage within the Ichimoku Cloud, the base of which come in today at Y131.74. Traders are noting a shift in sentiment over recent sessions, beginning to see yen demand from a variety of names, including long-term models cutting yen shorts and real-money accounts taking an interest in the Japanese currency on a reweighting basis. Spec names are also eyeing yen inflows from increasing Japanese share issuance.

Dollar-yen studies remain soft and just above oversold levels as the market trades below the Ichimoku cloud at Y89.95 and bears focus on the Y88.02 lows. Any break there will get bears focused on the major low of Y87.12, although there is also a trendline from April 1995 at Y87.58. Initial resistance is Y89.60. The daily studies are in neutral territory in euro-yen and not giving much direction as the cross slips back into the Ichimoku cloud (top at Y133.90). This leaves the cross searching for direction with next resistance nearby at Y134.80. Downturns face the 200-DMA and cloud base at Y131.70.

RES 4: Y92.32/53 Failure highs 27 Oct, 21 Sep, 100-day moving average
RES 3: Y91.31 High 4 Nov
RES 2: Y90.55/65 21, 55-day moving average
RES 1: Y89.95 Base of the Ichimoku cloud

SUP 1: Y88.65/80 Base of Bollinger band, Lows 14 Oct, 16 Nov
SUP 2: Y88.02/24 Major low 7 Oct, Low 25 Sep
SUP 3: Y87.81 100% projection of the 21 Sep pullback from 27 Oct high
SUP 4: Y87.12 Major lows Dec/Jan




CABLE
Opened the Asian session around $1.6825, off NY session rally extension highs of $1.6879. Initial pressure on the dollar into the Asian session allowed rate to push higher again, though this time the move up was restricted to $1.6846. The early risk on tone quickly faded as Asian equity markets moved into negative territory, ignoring the late Wall Street rally, and the Aussie reacted negatively to the RBA Minutes, seen less hawkish than had been hoped for. Cable dropped back to $1.6798. Rate was recovering ahead of the European open, with momentum increasing into the session to take rate through the overnight high and on to $1.6860 (76.4% $1.6879/1.6798). Move seen driven by reported euro-sterling sell interest, suggested to be linked to M&A interest. The cross opened around stg0.8896, off NY lows of stg0.8873, edging to mark highs at stg0.89075 before slipping lower, extending intraday lows to stg0.8878. Bids placed toward stg0.8870, a break exposes stg0.8845/40. Resistance stg0.8905/10, stg0.8940/45. Cable offers $1.6860, $1.6880, $1.6900. Bids $1.6830/20, $1.6800, stops $1.6795/90.

Reversals in cable held above the 21-DMA, now at $1.6550 and while studies remain fairly neutral, holding above there is looking key. Bulls eye the top of the daily Bollinger band, which is a rising target and currently at $1.6900. Break over there risks high/lows at $1.7044/52, while initial supports are $1.6710 and $1.6626.

RES 4: $1.7240 100% projection of first October upwave
RES 3: $1.7044/52 High 5 August, November 2005 low
RES 2: $1.6900 Current top of the daily Bollinger band
RES 1: $1.6879 High 26 Nov

SUP 1: $1.6710 5-day moving average
SUP 2: $1.6626 Support line 13 October
SUP 3: $1.6550 21-day moving average
SUP 4: $1.6515 Low 12 Nov





OPTIONS AND MORE
FX Option expiries for today's 1500GMT cut

* Euro-dollar; $1.4950, $1.4955, $1.4800
* Dollar-yen; Y89.75, Y90.10, Y90.15, Y90.20, Y90.35
* Euro-yen; Y131.00
* Aussie; $0.9355, $0.9400

IMF/Gold: The sale of another 2 metric tons of gold was announced Monday night, this time to the central bank of Mauritius. Worth about $717 mln and adds to the 200 metric tons already sold to the Reserve Bank of India. A total of 403.3 tons being sold 'in a phased manner over time.' See the text repeated on the MNI main wire.

DAILY CALENDAR
The US visits to Asia continue with President Obama meeting the Chinese Premier today. Also, at 0700GMT, IMF Managing Director Dominique Strauss-Kahn holds a press conference in Beijing at the conclusion of their China visit.

At 0800GMT, ECB Governing Council member Ewald Nowotny introduces a morning session, at the conference in Vienna, which is followed at 0830GMT when ECB's Yves Mersch and Belgian Finance Minister Didier Reynders speak at the 5th Economic Forum Belgium-Luxembourg-Arab Countries, taking place in Brussels.

At 0845GMT, ECB Governing Council member Ewald Nowotny chairs a panel on Financial Market Stability in Central and Eastern Europe. UK data sees October CPI data at 0930GMT.

Having dropped to the lowest level in five years, annual CPI is expected to start creeping up from October with forecasts of 0.1% m/m, 1.4% y/y as favourable base effects go into reverse. This will be the first rise since February.

The EMU Sep trade balance is due at 1000GMT, US events start at 1030GMT when San Francisco Fed President Janet Yellen delivers a speech on linkages between monetary and regulatory policies to the Institute of Regulation & Risk in Hong Kong.

At 1200GMT, ECB's Guy Quaden speaks at the 5th Economic Forum Belgium-Luxemburg-Arab Countries, in Brussels.

US data starts at 1245GMT with the weekly ICSC-Goldman Store Sales, which is followed at 1330GMT by PPI, at 1355GMT by the weekly Redbook Average, at 1400GMT by the weekly TICS data and at 1430GMT by Industrial Production and Capacity Use data.

Producer prices are expected to rise 0.5% in October on a rise in energy prices following sharp movements in recent months. Gasoline pump prices were reported down slightly, but crude prices rose. Core PPI is expected to rise 0.1%. The 2010 model year vehicles should begin to appear in the data.

Industrial production is expected to rise 0.4% in October after posting a third straight increase in September. Manufacturing production is expected to posted another increase. Factory payrolls fell 61,000 in the month, but auto production jobs rose 5,000. The factory workweek rose to 40.0 hours, while the ISM production index rose to 63.3. Capacity utilization is forecast to rise only slightly to 70.7%.

At 1430GMT, ECB Executive Board member Juergen Stark speaks at a Business Process Management Conference in Frankfurt.

At 1500GMT, Richmond Fed President Jeffrey Lacker delivers a speech on the economic outlook to the Virginia House Appropriations Committee in Richmond.

Back in Europe at 1600GMT, ECB Executive Board member Gertrude Tumpel-Gugerell speaks on 10th anniversary of the euro, while at 1700GMT, ECB President Jean-Claude Trichet introduces Eurogroup Chairman Jean-Claude Juncker at European Banker of the Year event, in Frankfurt.

At 1755GMT, Cleveland Fed President Sandra Pianalto delivers a speech to the Annual Ohio Housing Conference in Columbus.

Later US data sees the 1800GMT NAHB Housing Market Index and the 2200GMT release of the weekly ABC

17 November 2009

MORNING FX
BRIEFING
The market this week will be focusing on inflation data for most of the major economies, as well as Q3 GDP for several EM countries. Fed Bernanke headlines a week full of speeches by Fed officials, Bernanke, Fisher and Kohn are due to speak this evening. Most expected to repeat that exits from non-conventional policies are necessary but still too early to initiate such moves. ECB Trichet speaks Thursday and Friday. RBA and MPC minutes will be released on Tuesday and Wednesday respectively. The dollar came under early pressure into Asian trade as any hopes for a surprise change in the yuan were quashed in Chinese press reports over the weekend. Cable was pressured higher in early trade as a Swiss bank hunted out stops above $1.6700, taking the rate to highs of $1.6735. The move lifted euro-dollar and Aussie with it, the former trading up from early lows at $1.4905 to $1.4974. Aussie trailed the rally as Aussie-yen sales provided counter. Dollar-yen was pressed lower, stronger than expected Q3 GDP data and model fund sales providing weight though countered by Toshin-linked buyers.

EURO
Euro-dollar opened Asia around session lows of $1.4905 and was pressured higher as the dollar came under early pressure as weekend hopes for a statement from China for a change in the yuan peg were quashed by press reports. Rate pushed to an initial high of $1.4965 before momentum waned, the rate slipping back to $1.4935 as euro-yen was sold off after the Tokyo fix. A reversal in the cross, on reported short covering, allowed euro-dollar another rally this time extending the session highs to $1.4974. Upside pressure remains into early Europe with the topside stretching on to $1.4979, currently trading around $1.4975. Offers seen placed toward $1.4980/85, stronger on approach to $1.5000 with one trader suggesting that sovereign accounts are expected to try and keep rate enclosed within a $1.4800/1.5000 range. A break above $1.5000 to expose $1.5015/20 ahead of stronger $1.5050/65 area. Barriers have recently been noted at $1.5050 and at $1.5070 (recent high $1.5049), as well as a $1.48/1.51 short dated dnt in play (helped to keep rate buoyed above $1.4800 Friday). Support $1.4920, $1.4905/00.

The euro-dollar faded ahead of the highs at $1.5060/64 and the subsequent pullback is holding around the 5 & 21-DMAs at $1.4890 and $1.4945. These levels remain in focus as the euro seeks direction with bulls encouraged by a positive daily stochastic study but momentum uninspiring. The pair remains broadly constructive above the 17 August support line at $1.4722.

RES 4: $1.5210 2% moving average envelope
RES 3: $1.5163/75 76.4% of decline from July 2008 high, Res line 3 June
RES 2: $1.5100 Current Bollinger band top
RES 1: $1.5047/64 High 11 Nov, Double-day high 23, 26 October

CURRENT LEVEL: $1.4965

SUP 1: $1.4890 21-day moving average
SUP 2: $1.4788 61.8% retracement of $1.4628 rally
SUP 3: $1.4722 Support line 17 Aug
SUP 4: $1.4628/80 Low 3 Nov, Base of Bollinger band


YEN
Japan Q3 GDP came in well ahead of expectations at +1.3% q/q (cons. +0.7%). representing the fastest rate of growth seen since Q1 2007, though analysts sounded a note of caution as inventory replenishment contributed +0.4% to the final figure. Note Q2 GDP was also revised up from 0.6% to 0.7% q/q. Traders said the data failed to inspire the currency market, with main focus centred around talk of sizeable Toushin issuance for today and tomorrow. Model supply of yen crosses pulled dollar-yen lower in the morning session,dropping under Friday's Y89.46 NY low to Y89.38 as euro-yen slipped to Y133.65. Chatter of semi-official demand under Y89.40 provided a cushion, prompting spec buying of dollars and lifting the pair back to the day's highs at Y89.74. Euro-yen meanwhile was able to regain the Y134 handle, moving to a Y134.18 high into the Asian afternoon. Toushin takeup said to be disappointing for today's launch, though Tuesday's offering said to be attracting stronger interest. Dollar-yen offers seen into Y90.00 with stops at Y90.05. Downside stops are lurking through Y89.30.

Dollar-yen studies remain soft and just above oversold levels as the market trades below the Ichimoku cloud at Y89.95 and bears focus on the Y89.21 lows. While that low remains in place, the main nearby Fibonacci levels are Y90.77 and Y91.13, although break there will get bears focused on the major low of Y88.02.

RES 4: Y92.32/53 Failure highs 27 Oct, 21 Sep, 100-day moving average
RES 3: Y91.31 High 4 Nov
RES 2: Y90.70 21, 55-day moving average
RES 1: Y89.95 Base of the Ichimoku cloud

CURRENT LEVEL: Y89.57

SUP 1: Y89.21/28 Spike low 30 Oct, Low 11 Nov
SUP 2: Y88.80/90 Lows 14 Oct, Base of Bollinger band
SUP 3: Y88.02/24 Major low 7 Oct, Low 25 Sep
SUP 4: Y87.81 100% projection of the 21 Sep pullback from 27 Oct high


CABLE
Opened in Asia around $1.6700 and was the first pair to take advantage of the weaker dollar view into early Asian trade, the rate pushing up to session highs of $1.6735 on reported Swiss name buying as it hunted for stop above $1.6710. Rate eased off as yen crosses came under pressure after the Tokyo fix, the rate easing to $1.6685/80. Rate then settled between $1.6690/1.6720 before picking up a fresh bid tone into late Asian trade, the rate breaking above Asian highs into early European dealing, extending the highs to $1.6750. Rate continues to pressure the upside, currently trading around $1.6748. Offers seen placed between $1.6750/55 with stops positioned on a break of $1.6760, which if triggered to expose recent, post BOE Inflation Report highs of $1.6799, with offers noted toward $1.6800. Interim interest also expected to emerge around $1.6780/85. Bids reported at $1.6735/30 ahead of $1.6700, $1.6680.

The focus for cable is the sharp reversal from the $1.6844 high and support at the 21-DMA, now at $1.6515. Studies remain fairly neutral, leaving reaction to the 21-DMA looking key. One warning for the bulls continues to be the recent "hanging man" pattern, which is a reversal signal and could be a sign the Oct/Nov rally is stalling. Euro-sterling briefly pushed over the 21-DMA but with a sharp pullback on Thursday failed to close above there, which is now resistance at stg0.9015. Daily studies have been bouncing along the lows through November and while stg0.8896 remains the low, the main Fibonacci levels are stg0.9093, stg0.9154 and stg0.9214. Initial resistance is at stg0.8970. Bears will continue to focus on the stg0.8896 low.

RES 4: $1.7240 100% projection of first October upwave
RES 3: $1.7044/52 High 5 August, November 2005 low
RES 2: $1.6844 High 9 Nov, Current top of the daily Bollinger band
RES 1: $1.6767 Minor Fibonacci level

CURRENT LEVEL: $1.6715

SUP 1: $1.6660 5-day moving average
SUP 2: $1.6589 Support line 13 October
SUP 3: $1.6515 21-day moving average, Low 12 Nov
SUP 4: $1.6470/85 61.8% retracement of $1.6240 to $1.6844



OPTIONS AND MORE
FX Option expiries for today's 1500GMT cut

* Euro-dollar; $1.5000, $1.4980, $1.4900, $1.4800
* Dollar-yen; Y90.00, Y91.00
* Aussie; $0.9050

Elsewhere, speculative accounts further increased their net euro long positions as well as their net yen long positions as per Nov 10, according to CFTC data released Friday. The net position in non-commercial futures (ex-options) showed that speculators increased their net euro long to +25,712 contracts, the CFTC said. This compares to last week's net long of +22,191 contracts and the +51,045 contracts seen October 6, which was the largest long since Jan 8, 2008. In the yen, as per Nov 10, spec accounts had a net yen long of +21,878 contracts. This compared to last week's long of +19,832 and the net yen long of +45,615 contracts, seen September 22, which was the largest since Feb 3, when speculative accounts had a net long of +50,518 contracts, the largest of 2009. Spec accounts have maintained a net euro long position since May 5 and a net yen long since July 7. The euro closed at $1.4982 and dollar-yen at Y89.84 Nov 10, which compares to Friday's closing levels of $1.4905 and Y89.67.

DAILY CALENDAR
The calendar for Monday is dominated by central bank speakers, starting at 0715GMT when ECB Governing Council member Ewald Nowotny speaks on economic integration in Europe, in Vienna.

European data starts at 0730GMT with the Bank of France Oct retail sales survey.

At 0815GMT, EU Commissioner for Economic & Financial Affairs Joaquin Almunia speaks, in Vienna.

For the UK, there is no major data due, but at 0815GMT Bank of England Deputy Governor Paul Tucker gives an address at the Belgian Financial Forum, in Brussels.

At 0850GMT, ECB Governing Council member Axel Weber speaks on "Lessons and Consequences from the Financial Crisis" for Germany, in Frankfurt while at 0900GMT, ECB Governing Council member Ewald Nowotny chairs a panel on the euro in times of crisis with Riksbank Deputy Gov. Karolina Ekholm and Bank of Portugal Deputy Gov. Pedro Duarte Neves, in Vienna.

European data at 1000GMT sees the German November DIW as well as the EMU Oct final HICP, which is expected to confirm the flash release.

At 1045GMT, ECB Executive Board member Gertrude Tumpel-Gugerell, Hungarian National Bank Gov. Andras Simor, Poland National Bank President Slawomir Skrzypek and Czech National Bank Gov. Zdenek Tuma all take part on a panel at the Austrian National Bank, in Vienna.

Speakers continue into the European afternoon, at 1315GMT, when ECB Governing Council member Ewald Nowotny presents an award, while at 1330GMT, ECB Governing Council member Ivan Sramko and National Bank of Romania Deputy Gov. Cristian Popa participate in a panel discussion, in Vienna.

US data starts at 1330GMT, when retail sales are expected to rise 0.9% in October. Industry light vehicle sales rose modestly in the month after see-sawing in August and September. Meanwhile, gasoline prices fell slightly and should partly offset gains in other categories. Sales excluding motor vehicles and parts are expected to rise 0.4%.

Also at 1330GMT, the NY Fed Empire State Index is expected to fall to a reading of 29.0 in November, after jumping to 34.57 in October.

This is followed by the weekly MNI Capital Goods Index at 1430GMT, while at 1500GMT, US business inventories are expected to fall 0.8% in September. Factory inventories were already reported down 1.0%, while wholesale inventories down 0.9%.

At 1500GMT, ECB Governing Council member Erkki Liikanen speaks, in Tampere, Finland.

US data for Monday concludes at 1530GMT with the weekly MNI Retail Trade Index.

At 1615GMT, ECB Governing Council member Guy Quaden speaks at the Belgian Finance Forum Conference, in Brussels.

European speakers continue into the evening, at 1800GMT, when Bundesbank Vice President Franz-Christoph Zeitler speaks, in Frankfurt, while at the same time, ECB Governing Council member Ewald Nowotny introduces a dinner discussion on east/west integration, in Vienna.

Also at 1800GMT, Bank of England MPC member Andrew Sentance delivers a speech at Royal Holloway, University of London.

US central bank speakers come late in the day, starting at 1815GMT with Dallas Fed President Richard Fisher who delivers remarks on the economy at the bank's community forum in Tyler, Texas. At 2315GMT, Fed Vice Chair Donald Kohn delivers a speech on policy challenges at Northwestern University in Evanston, Ill.

10 November 2009

MORNING FX

BRIEFING
Risk remained in favour into early Asian trade, supported by the positive close on Wall Street, though early pressure on the dollar was tempered by reported Asian sovereign demand. Euro-dollar continued to meet headwind supply on moves above $1.5000, with reports of ACB supply situated between $1.5020/30 countering upside pressure and allowing for a pullback from early highs of $1.5013 to $1.4950. Aussie and Kiwi traded with an underlying form tone, but profit taking by real money accounts helped to cap the former below $0.9330. Sterling was given a minor lift on release of stronger than expected BRC retail sales and RICS housing data, but the positive react only provided for better levels for stale longs to cover back. Sterling was given a severe shock late on as Fitch Head of Sovereigns suggested UK was most at risk for a downgrade among major economies. Cable dropped from $1.6760 t0 $1.6600, slowly clawing its way back into the European open. US data calendar remains light, German CPI at 0700GMT, UK trade at 0930 GMT and ZEW at 1000GMT the morning's highlights.

EURO
Euro-dollar opened Asia around $1.4990, the rate having consolidated during the NY afternoon in a tight range around $1.5000. Risk remained in favour into early Asian dealing with the dollar coming under early pressure, the rate able to move above $1.5000, posting highs at $1.5013 before meeting resistance. Strong talk in Asia of ACB sell interest between $1.5020/30. Rate reversed as spec longs covered back, with strong sales of euro-yen, along with noted sales from model funds, adding weight that took rate back to $1.4970. Swiss name demand provided some respite, lifting rate to $1.4980 before further sales knocked it down to $1.4950. This latter move was seen led by a reaction to Fitch comments suggesting UK was most at risk of losing its AAA staus among the four leading economies, dropping cable 150 points. However, comment that Germany was the least likely provided for a stronger recovery in euro-dollar, taking it to $1.4990 area, while cable lagged correction. Euro-dollar bids remain at $1.4950, with resistance $1.5020/30. Russian sales of euro-dollar into early Europe ease rate back to $1.4982.

The momentum is still struggling to maintain an upward break in euro-dollar, although the pair has seen a bull-cross in the daily Stochastic study and now in the 5 & 21-DMAs, which are initial support at $1.4915 and $1.4885. Close above 21-DMA helps bulls to turn attention to the $1.5060/64 highs.

RES 4: $1.5135 2% Moving Average Envelope
RES 3: $1.5090 Current Bollinger band top
RES 2: $1.5060/64 Double-day high 23, 26 October
RES 1: $1.5021 High 9 Nov

CURRENT LEVEL: $1.4976

SUP 1: $1.4915 5-day moving average
SUP 2: $1.4885 21-day moving average
SUP 3: $1.4680 Support line 17 Aug, 1% MAE, Base of Bollinger band
SUP 4: $1.4618/20 76.4% of Oct recovery, 50% of Sep-Oct advance




YEN
Dollar-yen closed a quiet US session around Y89.95, with euro-yen also holding steady to end around Y134.90. Initial lows were hit into the Asian session around Y89.80 before Japanese real-money demand kicked in, lifting the pair to session highs at Y90.05. Option related selling was noted here, amid reports of decent-sized expiry interest rolling off at Y90.00 in the next few days. Euro-yen hit early highs at Y135.00 before slipping back to the Y134.70 and holding within a tight range over the remainder of the morning session. Dollar-yen held above Y89.80 into the Asian afternoon before a late dip to the day's lows at Y89.68 as euro-yen slipped to Y134.30, despite a positive close for the Nikkei. Early European dealing sees both pairs holding off lows, offers seen at and around Y90.00, more at Y90.35/45 with system stops still lurking at Y90.50. Key resistance still seen as the base of the falling Ichimoku Cloud at Y90.40. Options traders report increasing demand for one-month to six-month dollar-yen upside via both vanilla and exotic trades.

The daily stochastic remains soft as the market holds below the Tenkan line and 21-DMA at Y90.50/70. The market is stalling around Fibonacci level of Y89.66 and spike low of Y89.21, while main nearby resistance is the base of the Ichimoku cloud, at Y90.40. The daily stochastic seeks a base in euro-yen although momentum is yet to make a bull-cross. After recently breaking the base of the Ichimoku cloud, the cross has now exceeded the top at Y133.90, which becomes initial support and will encourage bulls if the break is sustained and Fibonacci/high at Y135.64/98 can be tackled.

RES 4: Y92.80/90/00 100-DMA, 50% of Aug/Oct decline, Ichimoku cloud top
RES 3: Y92.32/53 Failure highs 27 Oct, 21 Sep
RES 2: Y91.31 High 4 Nov
RES 1: Y90.40 Base of the Ichimoku cloud

CURRENT LEVEL: Y89.80

SUP 1: Y89.66 61.8% retracement of October rally
SUP 2: Y89.21 Spike low 30 Oct
SUP 3: Y88.80 Lows 14 Oct
SUP 4: Y88.24 Low 25 Sep




CABLE
Opened Asia at $1.6760 with early risk trade, following the positive close on Wall Street, allowing the rate to drift up to highs of $1.6789, with traders noting reaction to strong BRC retail sales and RICS housing data tempered as stale longs took advantage to pare back positions. Rate eased to $1.6735, recovering back to $1.6760 before dropping violently lower as market reacted to Fitch comments suggesting that out of the four major economies the UK was most at risk of losing its AAA status. Cable dropped to $1.6610 in a straight line, the move extending to $1.6600 before rate slowly clawed its way higher, edging to $1.6675/80 into the european open. Fresh sell interest took rate back to $1.6625, the recovery boosted as a 'good name' bought sterling between $1.6630/35 to take it up to $1.6665/70. Recovery efforts remain laboured, a break above $1.6680 to boost a positive feel, but while it remains below seen keeping the overnight lows in view. Bids now reported between $1.6610/00 with stops $1.6595/90.

The focus for cable is the sharp reversal from the $1.6844 high, which is holding around the 5-DMA of $1.6620 but remains above the key 21-DMA at $1.6425. Studies are mixed with a downturn in momentum yet to make a bear-cross. While above $1.6425 and a minor support line at $1.6451, bulls will hope for a return to the topside. Euro-sterling remains below the 21-DMA at stg0.9065 with daily studies still bouncing along the lows. While stg0.8896 remains the low, the main Fibonacci levels are stg0.9093, stg0.9154 and stg0.9214. Initial support & resistance is at stg0.8965 and stg0.9017.

RES 4: $1.7240 100% projection of first October upwave
RES 3: $1.7044/52 High 5 August, November 2005 low
RES 2: $1.6844 High 9 Nov
RES 1: $1.6790 Current top of the daily Bollinger band

CURRENT LEVEL: $1.6630

SUP 1: $1.6620 5-day moving average
SUP 2: $1.6425 21-day moving average
SUP 3: $1.6240 Low 19 Oct
SUP 4: $1.6115/34 High 8 Oct, Low 1 Sep, Spike 30 Sep, Low 21 Sep





OPTIONS AND MORE
FX Option expiries for today's 1500GMT cut

* Euro-dollar; $1.5000, $1.5050
* Dollar-yen; Y89.00, Y90.00, Y90.70, Y91.00
* Cable; $1.6700
* Aussie; $0.9250(lge)

European equity bourses are seen opening higher today, buoyed by a strong session on Wall St overnight. Earnings results from Vodafone (VOD), Credit Agricole (ACA) and a trading statement from HSBC (HSBA) will take focus on the corporate front this morning, and on the economic calender, UK Trade Balance data and UK DCLG House Prices at 0930GMT, as well as German ZEW at 1000GMT, will be eyed for direction. Spreadbetters have the FTSE-100 up 16pts, CAC-40 up 5pts and Xetra-DAX up 13pts.

DAILY CALENDAR
European data started with the inflation data for Germany at 0700GMT, where German HICP was revised down to +0.1% for the month in October, bringing the annual rate to -0.1%, the Federal Statistical Office reported on Tuesday. The HICP was below the median forecast.

France industrial production data is due at 0745GMT and is expected to rise by 0.5% m/m, falling by a reading of -9.7% y/y. Industrial investment data is due at 0750GMT, while Italian industrial output data follows at 0900GMT.

UK data at 0930GMT sees the DCLG House Price Index and the Total Trade Balance data, which are followed at 1000GMT by the latest Leading Indicator Index .

The main European data release is the 1000GMT ZEW data. The ZEW economic sentiment indicator fell by 1.7 points to 56.0 in October, following a 1.6-point rise in September. Meanwhile, its current conditions counterpart posted a fifth successive gain in the month, rising by 1.8 points to hit -72.2. Another mixed picture is expected today with median forecasts looking for a decline to 54.3 but an improvement to -70 in those numbers.

The European afternoon and evening are dominated by a long list of European and Fed speakers, starting at 1300GMT, when ECB Governing Council member Marko Kranjec speaks on a panel (to be confirmed), in Vienna.

US data starts just ahead of then, at 1245GMT with the weekly ICSC-Goldman Store Sales data, which is followed by the weekly Redbook Average at 1355GMT.

At 1400GMT, ECB Governing Council member Jose Manuel Gonzalez-Paramo speaks in the European Parliament.

At 1415GMT, Atlanta Fed President Dennis Lockhart delivers a speech on the economy to the Urban Land Institute conference in Atlanta, while at 1500GMT, San Francisco FedP resident Janet Yellen delivers a speech on the economic outlook and real estate to Lambda Alpha International in Phoenix.

The US Economic Optimism Index is also due at 1500GMT. At 1545GMT, ECB Governing Council member Jose Manuel Gonzalez-Paramo is due to give a keynote speech on the origins of the crisis and possible solutions, in Brussels.

At 1615GMT, Boston Fed President Eric Rosengren delivers a speech to the European Economics and Financial Centre in London.

In Norway, at 1630GMT, Norges Bank Deputy Governor Jan Qvigstad delivers a speech at the Norwegian Academy of Science and Letters, in Oslo. Data then continues with the 1700GMT release of the Energy Information Agency monthly Short-Term Energy Outlook.

Later on, US data sees Treasury Allotments By Class at 2000GMT, while at 2030GMT, Fed Governor Daniel Tarullo speaks on resolution authority to the Institute of International Bankers in New York.

The weekly ABC News Survey is released at 2200GMT. Into 0030 Wednesday, Dallas Fed President Richard Fisher delivers a speech on the economic outlook to the Austin Headliners Club in Austin.



Best Regards,

NordMarkets.com

Bounce at Trend Line

GBPJPY Last Week

NordMarkets Morning FX - October 29

MORNING FX
BRIEFING
The negative close on Wall Street passed over to Asian equity markets with the recent paring back of risk trades continuing through the overnight session. Yen and dollar were the main beneficiaries, strong sales of yen crosses, Aussie-yen and sterling-yen highlighted, helped to punch dollar-yen to session lows of Y90.23, with euro-yen making an appearance below Y133.00, trading to a low of Y132.81. Euro-dollar remained under pressure, having been sold off after Wednesday's London fix, extending the NY low of $1.4693 to $1.4683 in early trade before rate was able to recover back above the figure. This correction allowed euro-yen to edge back above Y133 later in the session, though the euro seen under renewed pressure in early Europe. RBNZ left interest rates unchanged, as widely expected, the accompanying statement disappointing as it provided no indication for any near term rate hikes. Kiwi came under pressure, Aussie-kiwi was able to lift despite the reported sales of Aussie-yen. US GDP data today's highlight, with German unemployment, UK money data and EMU confidence also noted.

EURO
Euro-dollar opened the Asian session around $1.4720, off late NY lows of $1.4690, with the recovery extending to around $1.4730 in early trade before meeting strong headwinds from cross yen sales. Rate dropped back, moving through the NY low to $1.4683, the move meeting decent demand interest in the area between $1.4685/80 before recovering. Talk late Wednesday suggested that the $1.4680 level holds the strike of a large expiring option for today's 1400GMT cut and expected to provide some attractive influence. Upside correction continued through the balance of the Asian session, the rate edging up to highs of $1.4736. Rate dropped back toward $1.4700 ($1.4703 61.8% $1.4683/1.4736) as early Europe sold into the recovery, but dip attracted further demand, lifting it back to current level around $1.4720. Weak talk in Asia suggested Asian sovereign demand seen off the earlier lows and expected a similar scenario to Wednesday with ACB's buying into dips. Bids remain in place toward $1.4700, stronger between $1.4685/80. Offers $1.4736 through to $1.4750. Further offers $1.4770/80. US GDP the main focus.

Elsewhere, euro-sterling is under pressure again into early European trade Thursday, with traders noting further long positions getting squeezed out, with continued talk that M&A related sales have provided the main downside lead. Rate saw a low in NY of stg0.8951, consolidated the break under stg0.9000 in Asia between stg0.8976/95, with the reported early sales taking the rate to early session lows at stg0.8955. Bids remain in place to stg0.8950, a break below to open a deeper move toward stg0.8910, with demand noted from here and extending to stg0.8898. Some suggest stg0.8840 as a near term target. Resistance remains toward stg0.9000.

The euro sees the bear-cross in the daily Stochastic, 10-day momentum and now in the 5 & 21-DMAs, keeping bear's on further Fibonacci retracements at $1.4628 and $1.4561. Bulls now need a break above $1.4825/35 to get back in control.

RES 4: $1.5163 76.4% of $1.6039 to $1.2329
RES 3: $1.5080/10 Top of the daily Bollinger band
RES 2: $1.5060/64 Potential double-day high 23, 26 Oct, 1% MAE
RES 1: $1.4825/35 5, 21-day moving average

CURRENT LEVEL: $1.4728

SUP 1: $1.4628 50% retracement of Sep-Oct rally
SUP 2: $1.4561/90 38.2% of the Jun-Oct advance 2% MAE, Bollinger band
SUP 3: $1.4480/88 Low 2 Oct, 23.6% of Mar-Oct advance
SUP 4: $1.4407/47 50% retracement of June-October advance, High 5 Aug

YEN
Yen crosses were under heavy pressure in the NY session as euro-yen gave back close to 200-points, closing just off the Y133.28 low, while dollar-yen slipped back to Y90.55, ending around Y90.75 amidst a backdrop of negative equity markets. Early Asian dealing then saw Japanese margin stops being triggered in the crosses as Aussie-yen and sterling-yen were sold heavily. Euro-yen followed suit, slipping from early highs at Y133.73 to fresh lows for the recent run at Y132.81. Dollar-yen had notched early highs at Y90.81 before a move down to Y90.40, while Japanese data again came in better than forecast as Industrial Production rose 1.4% m/m versus expectations of +1%. Tokyo names gunned for stops through Y90.30 as dollar-yen slipped to Y90.23, consolidating under Y90.40 into the Asian afternoon. Euro-yen was able to bounce back to Y133.30, subsequently remaining contained in a relatively tight range ahead of the European open. Early Europe now seeing bounces extended as dollar-yen makes a show above Y90.50 and euro-yen moves to Y133.40.

Dollar-yen sees bids in the Y90.20/15 area this morning, with stops coming in below Y90.00. Techs see the 50% retrace of this month's rally under pressure at Y90.17, ahead of the 61.8% retrace at Y89.66. Traders are also noting Toushin issuance today for a maximum value of Y400bn, said to be split primarily between S. Africa, Brazil and Australia, though Tokyo names were not expecting a good take-up. Better results are expected Friday with Y1trn of issuance due (Y100bn each for S.Africa, Brazil, China and Australia).

The daily stochastic is now making a bear-cross in dollar-yen as the market pulls back below the 8 Oct support line and tests the Kijun line and 21-DMA at Y90.10/25. Initial resistance is at Y91.25/40 from the Tankan line and 5-day moving average. Euro-yen has pulled back further and now moved below a series of resistance from Y133.50 to Y134.00, which includes the parameters of the Ichimoku cloud and also the 21 & 100-DMAs. This all comes after the daily stochastic sees a bear-cross. Next Fibonacci level is nearby, at Y132.68.

RES 4: Y92.81/90 Projected channel top, 50% of Aug/Oct decline
RES 3: Y92.53 Failure high 21 Sep
RES 2: Y92.00 Base of the Ichimoku cloud
RES 1: Y91.25 Tenkan line of the Ichimoku cloud

CURRENT LEVEL: Y90.37

SUP 1: Y90.25 21-day moving average
SUP 2: Y90.09/17 Low 20 Oct,Kijun line, 50% of October rally
SUP 3: Y89.66 61.8% retracement of October rally
SUP 4: Y88.80 Lows 14 Oct

CABLE
Opened Asia around $1.6390 and initially edged to mark session highs at $1.6409 before meeting strong headwind sales as Japanese accounts sold yen crosses, sterling-yen and aussie-yen coming under the main pressure. Cable was pressured to lows of $1.6335 (almost mirroring Wednesday's early Asian move). Cable recovered off lows, as continued sales of euro-sterling provided a counter to sterling-yen supply, the rate edging back to $1.6400 ahead of the European open, dipping back to $1.6360 before stronger selling in euro-sterling provided the added upside momentum to spike cable to $1.6446. Rate currently trades around $1.6440. Offers seen placed between $1.6465/70 with recent reports noting stops in place on a break above. Tech resistance noted around $1.6480 may restrict further upside move, one trader suggests. However, through here and rate can edge toward $1.6500 ahead of $1.6530/35. Support seen at $1.6420 (23.6% $1.6335/1.6446), a break here to allow for a deeper move toward $1.6405/00.

In Cable, the bearish engulfing pattern and the bear-cross in the stochastic now risks being joined by a bear-cross in the 10-day momentum, keeping bear's attention on Fibonacci retracements of the $1.5708 to $1.6694 rally from $1.6201 and the $1.6115/70 support area, which starts with the 21-DMA. While $1.6251 remains the low, upside retracements are $1.6474, $1.6526.

RES 4: $1.6726/40 76.4% retracement of $1.7041-$1.5708, High 11 Sep
RES 3: $1.6695 Current top of the daily Bollinger band, High 23 Oct
RES 2: $1.6526 61.8% retracement
RES 1: $1.6474 50% retracement of 23 Oct decline

CURRENT LEVEL: $1.6390

SUP 1: $1.6240 Low 19 Oct
SUP 2: $1.6201 50% retracement of the October recovery
SUP 3: $1.6170 21-day moving average
SUP 4: $1.6115/34 High 8 Oct, Low 1 Sep, Spike 30 Sep, Low 21 Sep


DAILY CALENDAR
European data for Thursday started at 0700GMT when German seasonally adjusted employment fell by 33,000 persons between August and September to 40.101 million, according to the Federal Statistical Office. In non-seasonally adjusted terms, employment rose by 269,000 to 40.355 million as measured by the International Labour Organization.

From 0730GMT, there is an ECB conference on key developments in monetary economics. Speeches will be delivered by ECB President Jean-Claude Trichet and Vice-President Lucas Papdemos. The event takes place in Frankfurt and continues through to Friday.

At 0800GMT, German Chancellor Angela Merkel is due to deliver a speech in parliament on the agenda of her new government.

The main German unemployment data for October is due at 0855GMT and is expected to see the unemployment rate edge up to 8.3%. This is followed shortly by German VDMA machine-tool orders data at 0900GMT.

UK data at 0830GMT Thursday sees Final M4 Lending, Lending Secured On Dwellings, Consumer Credit and also Final M4 Money Supply. Final EMU data at 1000GMT sees the EMU October economic sentiment index and the business climate indicator, where the economic sentiment index is expected to rise to 84.5 from 82.8 last month.

At 1000GMT, ECB Governing Council member Mario Draghi speaks at the "2009 World savings day", in Rome , while at 1110GMT, ECB Governing Council member Axel Weber is due to participate in a discussion on the financial crisis, at an event in Berlin.

US data starts at 1230GMT with the weekly Jobless Claims, while Q2 GDP and the Chain Price Index are due at the same time.

Jobless claims are expected to fall 6,000 to 525,000 in the October 24 week, while third quarter advance GDP is expected to rise 3.0% after the 0.7% decline in the previous quarter.

The key factors are expected to be a strong gain in PCE due to car sales, smaller fixed investment and inventory declines, and increased government spending. Net exports appear to be a very modest drag in this quarter's release and after adding to growth in previous quarters. The chain price index is forecast to rise 1.4% after the flat reading in the second quarter.

At 1330GMT, Treasury Secretary Tim Geithner testifies to the House Financial Services Committee on "Systemic Regulation, Prudential Matters, Resolution Authority and Securitization."

US data then continues at 1400GMT with Housing Vacancies data, which is followed at 1430GMT by the weekly Natural Gas Stocks data and at 1500GMT by Kansas City Fed Production.

Later on, at 1615GMT, White House National Economic Council head Lawrence Summers speaks to the Economic Club of New York.

Late in Europe, at 1730GMT, Bundesbank board member Thilo Sarrazin takes part in a panel discussion, in Berlin.

Late US data sees the 2030GMT release of M2 Money Supply. Overnight, at 0040GMT Friday, Treasury Secretary Tim Geithner speaks to the Economic Club of Chicago.



Best Regards,

NordMarkets.com