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OPENING COMMENT

Some second tier economic data out of Australia and New Zealand on Monday have hardly factored into price action, while the better than expected UK Rightmove house prices has also surprisingly failed to influence any fresh GBP buying off its very oversold levels. The US Dollar has been beaten down of late and many now anticipate some form of a rally for the greenback. Analysts have been citing oversold technical studies, a pullback in US equity prices and the recent announcement from the IMF that they would be selling 403 metric tons of gold, all as good reasons to start to look to buy the buck. Also due up this week is the FOMC which inevitably is sure to force some volatility in the FX market and could very well sway the USD direction.  Japan and Singapore are off on Monday for holiday which has kept trade in the early day fairly reserved. Looking ahead, the calendar is very light on Monday with the only key releases coming in North America with Canada international securities transactions at 12:30GMT, followed by US leading indicators at 14:00GMT. On the official circuit, Fed Cumming is slated to speak in New York at 21:30 on the economic recovery. It is still very early in the day, but US equity futures are pointing to s slightly lower open while commodities are also offered with gold having temporarily dropped back below $1000.

UPDATE: We have no new trades today as we are already well overexposed through our short Eur/Gbp and long Gbp/Aud positions. While we do not make it a rule to adjust our stop-losses wider, there are always exceptions to every rule. In certain markets, I will make an exception, as I had had done a few weeks back in Usd/Cad (removed the stop which would have been hit and ended up exiting the position at cost). At the same time, I will make sure to keep a close watch on the position so that it does not deviate too far from the original exit strategy. At this point, it appears as though the market could still yet forge ahead towards 0.9100, but we contend that a top-side failure is imminent and will materialize over the coming hours. As such we will hold for now with no stop and will watch closely as things unfold. I will continue to keep you informed and up-to date as always as things unfold.


Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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