- Overnight Interest Rate Update 03.22.10 Mon, 22 Mar 2010 04:17 GMT
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- Mar, 18 Greenback Still Finding Solid Bids on Dips
- Mar, 17 Sterling Outperforms While Buck Falters Across the Board
- Mar, 16 Currencies Locked in Holding Pattern Ahead of FOMC
- Mar, 15 Sterling Stands Out As Big Loser on Weighing Fundamentals
- Mar, 12 Currencies Higher; Commodity Bloc Lags
- Mar, 11 Currency Consolidation in Majors Still the Name of the Game
- Mar, 10 Fed in Process of Orchestrating Policy Shift
- Mar, 09 Rating Agency Casts Dark Cloud Over Risk Sentiment
- Mar, 08 Currency Gains Capped Overnight; Market Direction Still Unclear
- Mar, 05 Currencies Locked in Holding Pattern Ahead of NFPs
- Mar, 04 FX Market Set to Digest BOE/ECB Event Risk
- Mar, 03 Sterling/Yen Poised for Short-Term Corrective Bounce; Look to Buy
- Mar, 02 Euro Breaks to Fresh 2010 Lows But Setbacks Show No Follow Through
- Mar, 01 EUR/GBP Short Trade Triggers @0.9025; Intraday Studies Overbought
- Feb, 26 Euro Better Bid into North American Trade
- Feb, 25 Euro Approaching Test of Key 61.8% Fib Retracement
- Feb, 24 Commodity Currencies Underperform Despite Euro Bounce
- Feb, 23 Curreny Longs Caught in Nasty Bull Trap
- Feb, 22 Currencies Lack Direction in Lightened European Session
- Feb, 19 Currencies Digesting Latest Fed Move
Friday and Monday’s USD selling appears to have mostly abated, with market participants looking to take advantage of the latest currency rally to establish fresh long positions in the buck.
MORNING SLICES
FUNDYS
Friday and Monday’s USD selling appears to have mostly abated, with market participants looking to take advantage of the latest currency rally to establish fresh long positions in the buck. The BoJ has come out leaving the call rate unanimously unchanged at 0.10%, while also not diverging from its overall assessment of the economy. Nevertheless, price action in the Yen has been quite interesting, with the currency initially selling off sharply on the back of news out from S&P that it had cut Japan’s outlook, but then sharply reversing course, rallying to fresh highs on the day ahead of the US open. The acceleration in the Yen buying was attributed to comments from MoF Noda who said that the government would “stick to fiscal discipline with a sense of crisis.”
Relative Performance Versus USD on Tuesday (As of 10:00GMT) –
1) YEN +0.80%
2) EURO -0.38%
3) SWISSIE -0.38%
4) CAD -0.49%
5) AUSSIE -0.65%
6) STERLING -0.66%
7) KIWI -0.78%
Market sentiment has been weighed down on Tuesday, with the news that selected Chinese banks have been ordered to raise their reserve ratios, adding more to the onslaught of the recent ramp up of tighter monetary policy and regulatory requirements. As such, it is no surprise that the USD has benefitted while higher yielding currencies like the Aussie and Kiwi have been hit hard. ECB Nowotny has not helped risk appetite after saying that he sees further risks of asset bubbles in many emerging markets.
Price action in Sterling was also not to be ignored with the Pound getting hit hard following the weaker than expected GDP data. Although final growth figures showed the data recovering into positive territory at 0.1%, the fact that the result was barely positive left traders with an unsettled feeling. In the Eurozone, German IFO was released and did manage to come in on the better side of expectation.
Looking ahead, Case-Shiller house prices (146.80 expected) are due at 14:00GMT, followed by consumer confidence (53.5 expected), Richmond Fed manufacturing, and the house price index (0.2% expected) at 15:00GMT. US equity futures point to a lower open, while commodities have also been weighed down, with oil leading the way.
GRAPHIC REWIND
TECHS
EUR/USD After breaking down through a multi-day consolidation below the 200-Day SMA to signal a material shift in the structure and expose a measured move objective by 1.3800 further down, the pair has been in the process of a fresh bout of consolidation between 1.4030 and 1.4190. We anticipate that the consolidation will soon be broken to the downside, with a break below 1.4030 accelerating declines to 1.3800. Only back above 1.4200 delays outlook and gives reason for pause.
USD/JPY Despite the latest bounce to 93.75, the pair still remains confined to a very strong downtrend off the April 2009 highs and any rallies should be limited. Falling trend-line resistance off of the April 2009 highs has been adhered to on the latest rally and a medium-term lower top could be in the process of carving below 94.00. Recent price action seems to be suggesting that we could be headed for underlying bear trend resumption after the market triggered a double top, with the break below neckline support at 91.25. This now projects a measured move downside extension towards 89.00 over the coming session. Only back above 92.00 would give reason for concern and delay.
GBP/USD Gains have stalled out by 1.6455, with the market looking like it is now ready for bear trend resumption after the formation of a bearish daily gravestone doji-like candle in the previous week. Key short-term support comes in by 1.6085 and we will look for a break below this level to reaffirm our bearish outlook and accelerate declines back towards critical medium-term support by 1.5700 over the coming days. For now, any intraday rallies should be well capped ahead of 1.6370.
USD/CHF The market is in the process of carving out a major base since dipping down below parity in November 2009. Look for a higher low by 1.0130, to be confirmed on a break back above 1.0500 over the coming sessions. Above 1.0500 will then open a fresh upside extension back towards next key resistance in the 1.0700 area. Only back under 1.0130 would delay outlook and give reason for pause. Bulls should look for opportunities to buy on dips into the 1.0250-1.0300 area.
FLOWS
UK clearer selling Gbp/Usd. Option barriers in Usd/Jpy at 89.00. French bank buying Eur/Gbp. Hedge funds and leveraged accounts on the offer in Eur/Usd. Model and system accounts selling commodity currencies. US investment house heavy Yen cross seller.
TRADE OF THE DAY
No Trade: We are entirely flat after our long Eur/Gbp position was stopped at cost. There is nothing compelling as of yet, but will continue to look for new opportunities.
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Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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