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02:58 NZD/USD: Dragged Higher By The AUD Sydney February 14. The Kiwi trades towards the top of a 0.7835/67 range, dragged higher by the surging AUD/USD on the strong employment data, but capped by AUD/NZD demand, the cross has moved up from 1.1425 to test 1.1485. Dealers report good volumes within the fairly tight range and look for the AUD to lead the way into the European open. Initial resistance comes in at 0.7875, an hourly range high last night, then yesterday"s high at 0.7910, while support begins at the overnight low around 0.7815, which was tested twice. The Kiwi trades 0.7860/65.
02:58 AUD/USD: Moves Above 0.925 And Now Targeting 0.9045 Sydney, February 14: The AUD/USD is grinding through minor fibo resistance at 0.9025 (61.8 of 0.9086/0.8923) and is now targeting yesterday"s 0.9045 high. The AUD is getting a boost from forecasts from large Australian banks that the RBA will hike 25 BPS to 7.25% in March after the very strong Australian job number. At least one major Australian bank expects the RBA cash rate to be 7.50% by June.
The steep move lower yesterday cleared out a lot AUD/USD longs that had built up after the hawkish RBA Quarterly on Monday and traders say that the buyers have returned after the strong job numbers. The AUD/USD trades 0.9023/28.
02:53 USD/JPY: Off Early Highs On Japanese Exporter Sales Tokyo, February 14. From highs in the 108.30/35 area, USD/JPY has come off into the Tokyo lunch on the back of Japanese exporter sales. This interest was well-telegraphed in preceding weeks and looks to continue to should the pair continue to trade higher. The offers should not be considered an indomitable rock however. As the market trades higher and the offers filled, they are unlikely to come back at the same level with this bloc looking to layer in sales successively higher. Option-related offers are also noted, especially ahead of presumed barriers at 108.50 and 109.00. USD/JPY has seen a low of 108.00/05 so far today. Although some trader stops may be seen below 108.00, the feeling is that bidders will return from the high-107 area with the pattern of successively higher bids also still intact. This is especially the case with IMM CTAs still seen very long JPY. USD/JPY currently trades 108.11/14.
01:50 NEWS: PBOC Advisor - Yuan Rise Should Be Gradual, Controllable Tokyo, February 14. Over DowJones. Nothing new here. According to the as-yet-to- identified PBOC advisor, US economic stimulus looks to add to upward pressure on CNY. He/she also notes that the central bank continues to face pressure to up interest rates.
01:48 AUD/USD: Maintains Grip Above 0.9000 After Stall Around 0.9025 Sydney, February 14: The AUD/USD is maintaining a foothold above 0.9000 after the stronger than expected Aus job data. The high so far has been 0.9023, which is the 61.8 fibo of the most recent 0.9086/0.8923 move. A break above 0.9025 would suggest that a short-term bottom is in place at last night"s low and targets a move back towards tough resistance between 0.9085/0.9100. The AUD/USD trades 0.9013/18.
01:47 NEWS: Nikkei Looking To Close AM TSE Session With Most Of Gains Tokyo, February 14. The Nikkei 225 looks to close out the morning TSE session with most of its gains. It is indicated at 13,426.97, up 358.67 points or 2.74% on the day. TOPIX is indicated at 1317.27, up 31.92 or 2.48%. The range so far has been 13,251.86-13,484.35. Very good Japanese Q4 GDP data helped the index higher. Dealers are aware that the Q4 results may be followed by a big decline in Q1 but, with subprime jitters receding again following the signature of the US economic stimulus plan by Pres Bush and given other plans to help out bond insurers, the stock market feels more buoyant and further gains may be seen. The DJIA closed overnight at 12,552.24, up 178.83 points or 1.45% on the day
01:42 EUR/JPY: Above Both Ichimoku Tenkan & Kijun Lines, Cloud Lower Tokyo, February 14. After trading roughly to its Ichimoku kijun line Tuesday, EUR/JPY did a head-fake lower to below its tenkan line before re-breaking above this line as well as the kijun line overnight. The cross is currently consolidating gains above both lines in Asia today. The kijun line comes in at 157.21, just below the current 157.48/52, and the tenkan at 156.50. Both levels look to work as supports going forward. The Ichimoku cloud itself is up at 163.16-17 today but will come down and widen in the days ahead. Next Friday, the cloud will be down at 160.10-161.67. On March 3, it will have moved down to the 157.52-159.41 level. If EUR/JPY can maintain current levels going forward, attempts to break above the cloud may be seen. More closer to home, initial resistance topside is seen at ahead of 158.00 from the 157.85 area, 157.89 the spike high overnight. More stops are likely above 158.00. Next resistance up is the 158.85 area, a high dating back to February 1. Support below looks to be building around 157.00 now with more at 156.75 and then towards 156.00.
00:51 NEWS: EcoMin Ota - US Slowdown To Eventually Hurt Japan Exports Tokyo, February 14. Over DowJones. More from the EcoMin. Ms Ota also notes that there has been little progress in totally expunging deflation and that high oil prices remains a major downside risk for the Japanese economy. -
01:11 EUR/JPY: In Holding Pattern Just Above 155, Topside Resistance Tokyo, February 12. EUR/JPY like other JPY pairs is doing little in Asia this morning, in a holding pattern just above 155.00. The cross traded a 154.33-155.57 range overnight. Like USD/JPY, it is holding at about the middle of yesterday"s range. Stock market moves continue to be the focus but the Nikkei is not doing a whole lot this morning, holding around Friday"s close of 13,017.24. At writing, the index is indicated at 13,022.07, up 4.83 points on the day.
Technicals in EUR/JPY show no trend currently. What is certain is that the cross continues to face considerable resistance on any moves higher. Both the Ichimoku tenkan and kijun lines have flat-lined at 156.79 and 157.21, and these levels look to define the topside. The kijun line has defined the upside since the break below on January 2. The cross briefly traded above this level on January 30 but fell back almost immediately thereafter. Key support on the downside remains at 152.00-10, 152.10 the spike low on January 22. EUR/JPY currently trades 155.03/07.
23:54 NEWS: Fed Poole- No Question Odds Of Recession Up, Inflation OK Tokyo, February 12. Over Reuters. Comments from the St Louis Fed president. Mr Poole believes the odds of a recession are higher now and that inflation is well anchored. He expects the US economy to grow around 2% this year, adding that consumer debt levels are not likely to be serious drag on growth unless unemployment rises. On inflation, he sees food and energy prices creeping into core inflation, suggesting continued vigilance here.
Nikkei 225 2/12 - 9:54
12,997.82 - 19.42
00:21 USD/JPY: Well Behaved, At Center Of Yesterday"s Range Tokyo, February 12. USD/JPY did little yesterday following the weekend G7 meeting, trading a 106.33-107.04 range between London and New York. Asian trading looks to have been subdued due to the Japanese holiday and with other Asian centers still a bit jaded following Chinese New Year holidays last week. China itself remains closed till Wednesday. Talk of possible subprime hits at Japanese financial institutions helped push USD/JPY and JPY crosses higher yesterday. Initially weaker stock markets abroad on report of earnings hits and bankruptcies helped push the JPY pairs lower.
At 106.84/87 and trading very quietly, USD/JPY is at about the middle of yesterday"s range and not looking to go anywhere fast. For that matter, USD/JPY has been relatively stable since the push down to the 104.95 level on January 23, holding for the most part around its Ichimoku tenkan line. Trading has been choppy at times but the pair has not veered much from this level. The tenkan line comes in at 106.77 today. The kijun line has moved down to the 107.54, and a break above could be significant but such a move remains to be seen with good selling interest noted every time the pair trades up into the 107-handle. Offering interest continues to trail up to 107.50. Stops above this level and 107.54 are likely to be larger now. Bidding interest below remains towards 106.00, trailing lower. Light stops are eyed below 106.00 and larger stops below 105.70, 105.70-80 a double bottom from January 31-February 1.
23:15 USD/JPY: Talk Of Redemptions & Coupon Repayments Limit Upside Sydney, February 12: There was talk during the Lon/NY sessions that there will be a decent amount of USD/JPY selling flows resulting from a large number of US Treasury redemptions and coupon repayments that are likely to be repatriated. The USD/JPY plunged to 106.34 at one stage during the London session when the Dow futures were much lower and led to heavy EUR/JPY and GBP/JPY selling. Wall Street closed in the black and the pressure is off of the EUR/JPY for the time being. The USD/USD is expected to trade between 106.50 and 107.20 in Asia today. The USD/JPY trades 106.85/90.
21:17 USD/JPY: NY Traders" Forecasts for Asian Dealings San Francisco, February 11th. The USD/JPY trades at 106.93 this afternoon, little changed from NY opening levels with the price action on USD/JPY falling and rising with the moves on the DJIA today. The DJIA is closing about 53 pts higher this afternoon. NY traders" forecasts for the topside of tonight"s range in Asia begins with 107.22 and extends to 107.50. Downside forecasts begin around 106.60/70 and extend to 106.40.
EUR/JPY trades at 155.37 this afternoon and forecasts for the topside of tonight"s range begins at 155.60 and extends to 155.90. Forecasts for the downside of tonight"s range begins at 155.20 and extends much lower to 154.35.
G7 approves IMF gold sales - Italy econ minister
http://in.reuters.com/article/businessNews/idINIndia-31847320080209?sp=true
Analyst: Fannie Mae faces worse credit
NEW YORK
Shares of Fannie Mae fell Friday as a Morgan Stanley said he expects it to report decaying credit quality in its portfolio, a worrying sign that the meltdown in subprime lending may be spilling over into prime mortgage.
In November, Fannie Mae disclosed about 0.9 percent of its single-family mortgage loan portfolio was "seriously delinquent." Morgan Stanley analyst Kenneth Posner wrote in a client report he expects this rate crept up to 1 percent in December. His "Underweight" rating on Fannie Mae is predicated on deteriorating credit quality.
Fannie Mae buys mortgage loans, packages them into bonds and sells the bonds to investors. Because the company is chartered by Congress, investors assume the government would not let Fannie Mae default, and so its bonds trade at a premium.
Still, the company has not been immune to the widespread decay of credit quality plaguing mortgage lenders across the U.S. Fannie Mae's stock has lost more than half its value in the past six months as investors worry about more missed payments on the company's mortgage portfolio, which is responsible for covering losses on more than $2.4 trillion in loans.
"Credit quality is now deteriorating sharply even for prime mortgages," Posner said, referring to home loans issued to people with good credit. "Delinquency trends and transition rates have deteriorated in the last few months at an accelerating pace."
Shares of Fannie Mae lost $1.25, or 3.9 percent, to $31.12. The stock traded at more than $70 last August.
Shares of Freddie Mac, another government-chartered mortgage financier, slipped $1.35, or 4.4 percent, to $29.70. Freddie Mac's stock has also lost more than half its value in the last six months.
01:50 EUR/USD: Slightly Better Bid After Reuters G7 Report Sydney, February 08: The EUR/USD traded up to 1.4496 after Reuters reported that they were read a copy of the G7 Communique and there were indications that the wording regarding FX was unlikely to be changed from the October Communique. The EUR/USD ran into selling ahead of 1.4500 once again and has settled back around 1.4485. There are stops above 1.4525 from those who sold the break of the 100-day MA at that level. Bids are soild between 1.4440/50 with stops eyed below yesterday"s 1.4440 low. The EUR/USD trades 1.4483/88.
21:55 FOREX: Fed Custody Holdings Retreat From Record Highs San Francisco, February 7th. After gaining $60 bln over the prior three weeks, Fed custody holdings have dropped back in the last week, easing by $6.221 bln the week of February 6th to $2.112 tln. Average holdings however were up, increasing by $7.251 bln to $2.117 tln. The sharp shift into dollars by central banks earlier this year appears to be a factor that has provided a near term cap on EUR gains.
Recent changes in global reserve holdings include a rise in India forex reserves the week of January 25th with reserves increasing by $3.418 bln to $288.316 bln moving the to fourth largest foreign currency reserves in the world. Brazilian reserves rose $7.2 bln in January to $187.5 bln. Russian reserves rose $5.1 bln to a new record high of $484.5 bln the week of February 1st and are the third largest in the world. Taiwan"s reserves were at $272.8 bln in January. S. Korea"s reserves fell to $261.9 bln in January. Japan"s reserves hit new record highs of $996.04 bln in January and are the second largest reserves in the world, after China.
22:06 USD/JPY: In 107.30-60 Range in Early Sydney Trade San Francisco, February 7th. USD/JPY trades at 107.46 in early Sydney after a very volatile session in New York. Selling from Chinese names was said to cap gains with more offers still tipped on USD/JPY at 108.00 though stops are eyed above. The currency has consolidated in a range of 107.30-60 through much of the NY afternoon, with traders caught out by the sharp bounce in USD/JPY earlier this session. Buyers are eyed on dips to 107.00-20 where numerous large stops were triggered on the USD/JPY short-squeeze this morning, fostered by earlier US stock market gains and the sharp rise in US bond yields.
Amongst data in Japan tonight is the Economic Watchers survey which is expected to show a further decline in confidence due to the recent Nikkei slide and higher price pressures emerging in food and also in oil prices.
Canadian Dollar Outlook
20:15 GMT Feb 7th USD/CAD opened Toronto around 1.0080, soared to 1.0125 as
oil prices plunged and the ECB announced "no change", then recouped as Corporate
Canada sell orders held the high ground. The pair slid to a New York low of
1.0075 as oil prices rebounded, however solid bids from spec accounts, and day
traders stymied the sell off. USD/CAD surged again on another general greenback
rally, primarily against EUR/USD as a British clearer pushed for stops, and
USD/CAD touched 1.0125 again before closing at 1.0115 with oil at $88.05.
Other than the market's attention drawn to the ECB, and the general USD
rally; local press was focused on the likelihood that an early election is to be
triggered as Tories and liberals look set to clash on the Afghan mission; the
crime bill, and the upcoming budget. The uncertainty created by the political
tension heightened the USD's early potency, and acted as a support for the buck
on dips. Oil futures closed higher on a bigger than expected natural gas draw in
the weekly US DoE data. Gold futures closed higher, up $5 at $910, and were bid
all day, no one knew why. The TSX closed up 0.12% with US equities off 0.2%.
19:51 AUD/USD: Stocks Reverse Course, AUD & NZD Tumble San Francisco, February 7th. Stocks have reversed course after the morning rally with the DJIA turning briefly negative after triple-digit gains mid-afternoon. NZD/USD, once it broke under 0.7885, forced out the weak longs for a sharp decline to 0.7853. NZD/USD has bounced to 0.7868. NZD/JPY has fallen from 85.24 to 84.32.
Similarly, AUD/USD is probing support around 0.8920. a break of which targets support around 0.8875/85 and the morning lows. AUD/JPY has dropped from the session highs of 96.57 to 95.92. Next support is at 95.35. The DJIA is now up 17 after the decline with talk of a negative close. Certainly the retail same-store sales data released earlier today confirms the slowdown in the US.
19:13 EUR/USD: Fed's Fisher Sees Low Growth, Not Negative Growth New York, February 7th. Fisher sees a couple of quarters of growth below 1%, but he does not foresee a traditional recession, two quarters of negative growth. He doesn't think the Fed is "behind the curve" and he feels that 3% rates are "where we should be" according to a swathe of headlines.
He did say that he thinks that inflation rates, and expectations for them are "too high" which could be taken as hawkish if he means that the market's expectations are too high and the Fed has to lower them. On the other hand if he means that the market's expectations for inflation are too high compared to Fed forecasts, that's a horse of a different colour, and the primary problem with news headlines.
EUR/USD trades at 1.4490 as US equities rally, and EUR/JPY surges.
03:51 EUR/JPY: Resilient, Back Above 156.00 Despite Still Weak Stocks Tokyo, February 6. EUR/JPY has shown resilience, moving back above 156.00 despite continuing weakness in stock markets. From lows of 155.70/75 seen just ahead of the Tokyo lunch, the cross has moved back up above 156.00, trading 156.01/04 currently. The cross broke below the New York low of 156.19 very early in Asia. Though the cross is not expected to stage a miraculously recovery any time soon, bids below look to be stiff with rumors continuing of semi-governmental Japanese buys. Key support below is seen at 155.50-60, 155.56 the low on January 28. Topside, offering interest remains from 156.20, trailing up to 157.00.
02:15 EUR/USD: WSJ Article Adding Weight To EUR/USD Sydney, February 06: Traders in Asia say that a Wall Street Journal article entitled "Will Dollar Overshadow Yuan at G7?" is helping to add pressure on the EUR/USD. The article states that the G7 is likely to complain officially about the weak CNY, behind closed doors "they are much more likely to squabble about the weak US dollar."
The article suggests that Europe and Canada are becoming increasingly alarmed about the inability of their export sectors to compete with the US due to the strength of their respective currencies. The article goes on to say that their concerns and complaints are unlikely to get a sympathetic response from US officials including Treasury Secretary Paulson so the end result is that they will not go public with their disagreements and instead focus on China again. It is debatable whether or not the article in its entirety should be negative towards the EUR/USD or have any significant impact on the FX market, as it doesn"t suggest that any action will result from the G7 meeting on the weekend.
01:46 USD/JPY: Lower Again With JPY Crosses On More Nikkei Weakness Tokyo, February 6. USD/JPY is close to making fresh lows for the session, having traded down to as low as the 106.45 level. It was down to as low as 106.40 very early this morning. JPY crosses are feeling the heat from fresh Nikkei weakness. The index is down over 4% and 550 points on the day at writing. Despite weakness in USD/JPY, support below is still seen solid with bidding interest especially from the 106.20 level and trailing down to the spike low Friday of 105.76. There is talk that bids from Kampo are mixed. The just launched Y41 bln GE Capital Euroyen issue also looks to be helping to support the market. Some stops are mixed in just below 106.00 however with more seen below 105.75. USD/JPY currently trades 106.51/53.
01:13 USD/JPY, EUR/JPY: Easier As Tokyo Fix Demand Sated, Nikkei Weak Tokyo, February 6. Demand into the Tokyo looks to have played a major part in relative USD/JPY and EUR/JPY buoyancy this morning. Up until a few minutes ago, EUR/JPY was holding above 156.00 and USD/JPY at levels higher than the 106.52/56 seen currently. Though both pairs remain well above earlier lows of 106.40 and 155.75, respectively, the upside is likely to remain limited from here what with the Nikkei continuing to fall. At writing, it is down 487.23 points or 2.54% on the day at 13,258.27. Both pairs see support below around earlier lows. USD/JPY sees more towards 106.00 where sizeable Japanese bids are still eyed. EUR/USD sees good support ahead of 155.50, 155.56 the low on January 28. EUR/JPY currently trades 155.95/98.
00:31 AUD/USD: Getting Support From A Number Of Sources Sydney, February 06: The AUD/USD has held up well this morning despite some steady and at times heavy selling from US model funds. Traders say that local funds and corporates have been absorbing the selling and have been joined in by Asian and Japanese names as well. Traders say that newspaper reports saying that Australian coal and iron ore miners are about to benefit from a massive price increases with China and Japan are helping to encourage some of the local buying. The reports say that the miners are very close to settling on a price that is nearly double the current price. The Australian newspaper says that if the increases are achieved, Australia"s export revenue from coal and iron ore is set to jump from 42 BLN AUD to more than 70 BLN AUD next year. The AUD/USD trades 0.8963/68. --
00:17 Treasuries: Late Short End Rally Boosted By MBIA News Sydney, February 6: The late rally in short-date Treasuries was in part due to the weak close on Wall Street and in part due to a Bloomberg report saying that major US bond insurer MBIA was put back under review for a downgrade by Fitch Ratings less than a month after affirming the grade with a stable outlook. Fitch said the reconsideration was due to higher assumptions on MBIA"s losses on sub-prime related securities.
Analysts feel that deadlines are approaching for the bond-insurers efforts to raise enough capital to retain triple-A ratings from the major ratings agencies. If it becomes apparent that more downgrades are inevitable, it will put an already stressed bond market under heavy pressure.
00:05 UK Nationwide Consumer Confidence Falls To Lowest Ever Level Sydney, February 06: Reuters is reporting that the UK Nationwide Consumer Confidence has fallen to the lowest level since the series began in 2004. Nationwide said that the confidence index fell to 81 from 85 the month before despite expectations that the BOE will ease rates when they meet on Thursday.
23:40 USD/JPY: Down But Not As Sharply As Europe Crosses, EUR Weak Tokyo, February 6. USD/JPY is down over a yen from the overnight high of 107.75 seen in London but perhaps not as sharply as some would have expected given the poor US ISM showing and plunge on Wall Street. Part of this may be due to US repatriation out of Europe which has boosted USD against EUR and most other European currencies to the benefit of USD. The feeling is that the ECB and perhaps some other central banks are behind the curve in meeting the needs for growth, especially with the US economy turning down as confirmed to an extent in the ISM release overnight.
USD/JPY has since traded down to as low as the 106.40 level in early Asian trading with many players anticipating another plunge on regional bourses and more JPY cross sales, especially against European currencies but also against AUD and NZD, recent star performers. Lows overnight in the 106.65-70 area were pierced early despite on-going talk of semi-governmental Japanese buys at the lows. Bidding interest is not expected to go away however with Japanese players still eyeing dips to buy back in. With Tokyo open again, moves lower should see bids increase towards 106.00 and the spike low Friday of 105.76. Some light stops may be seen below 106.00 and large below 105.75. Japanese importers are likely to be good buyers on the 105-handle. Topside, the 107-handle looks to be heavy again though technical resistance above is not seen till the overnight high. USD/JPY currently trades 106.50/55.
22:26 AUD/USD: Vulnerable After Global Growth Fears Intensify Sydney, February 06: The AUD/USD has fallen hard from the 0.9100 level hit late Monday after fears of a global slowdown intensified in the wake of weak EZ data and extremely weak US non-manufacturing ISM. The implications for the AUD might be extremely negative if the commodity market starts to reflect the fear in the equity and credit markets. The Australian economy has been traveling extremely well due to the benefits of rising world commodity prices so much so the RBA hiked rates again yesterday and left the impression they may do so again in the months ahead. In the meantime the Australian government is bracing the public for a tough budget in hopes that fiscal restraint will temper inflation pressures. Some analysts fear that a perfect storm could form where China"s efforts to slow their booming economy start to bite while US and EZ growth slows significantly. This would push commodity prices lower and negatively impact the Australian economy around the time recent rate hikes and fiscal tightening takes hold.
There is a view in the FX market that if global growth concerns continue to intensify, currencies with central banks that promote growth will be rewarded and yield advantage will take a back seat. The AUD/USD trades 0.8960/65.
13:18 USD/CAD: Loonie Bulls Bucked By Greenback, Sliding Commodities New York, February 5th. With a generally resurgent greenback, buoyed by another set of soft European data that hammered EUR/USD down to 1.4660, USD/CAD has been bid up alongside other currency pairs. Soft oil futures, down 93 cents to $89.09, and gold futures off $16.00 to $893.40 have also buoyed the buck.
Canadian banks note that yesterday USD/CAD continued to find support ahead of the 100-day M/A just above 99 cents, with Canadian importers, real money accounts and spec accounts as active buyers. Range traders suspect that this is just more range trading and look to fade rallies up to 1.0030, but do concede that the buck is better bid than they had assumed yesterday.
Some good news yesterday was that the "Montreal Group" responsible for restructuring Canada's ABCP market have extended the standstill agreement to Feb. 22nd, but in one of those "good news, bad news" approaches, traders are a bit unnerved by the fact that this agreement continues to be dragged out unresolved.
Last night USD/CAD closed around 0.9935, and traded as high as 1.0027 in early Toronto trading this morning; spot is now 0.9990; overbought hourlies 1.0010/35; the 24-hr M/A 0.9960; the normal distribution channel 0.9935/85; and oversold 0.9880/0.9910.
12:21 USD/JPY: U.S Investment Names Helped Turn The Market At 107.70 London, February 5. A slightly softer bias to USD/JPY as the North American session gets underway. U.S investment type accounts reportedly sold the Dollar from the 107.70 level down through 107.60 and the market is now attempting top base at 107.60. Good sized option related offers are still touted at 107.80 through 108.00 with stops above.
12:38 USD/JPY: Bids Reportedly Sitting in the 107.30-40 Area London. February 5. A swift 30-pip drop from 107.70 and early U.S interest has added further weight to the fall. We are hearing of Japanese bids, corporate and possibly agency, in the 107.30-40 area and it remains to be seen if the current fall is arrested before rumoured stops are tripped under 107.20.
21:57 AUD/USD: Big Day Ahead With Key Data And RBA Decision Sydney, February 05: The AUD continued to be one of the favoured currencies during the Lon/NY sessions despite the fact that Wall Street pulled back and gold fell below 900 at one stage. The AUD is getting support from expectations that the RBA will hike rates 25 BPS to 7.0% and will retain a hawkish bias in their statement following the decision. The RBA will be announcing at 03:30 GMT for the first time so the market will first react to the release of Aus December Retail Sales at 00:30 GMT. The median expectation is for a rise of 0.6%.
The AUD/USD traded up to 0.9102 during the US session before option related selling helped cap and push it back towards the 0.9080 level. The next level of resistance is found at the daily high made on Nov 12 at 0.9015 (minor) with the likely objective being the multi-year high around 0.9400. The break above the 61.8 fibo of the 0.9401/0.8513 move at 0.9060 yesterday was a bullish event and only a break below hourly support around 0.9055 would take the pressure off of the upside. The AUD/USD trades 0.9077/82.
18:46 US TECHS: Dollar Index Bullish Outside Day Versus Trendline Boston,
February 1. Yesterday's break below the trendline off the November and early
January lows has not been able to generate follow-through selling, but the
return to that line, both yesterday and today, has mostly kept a lid on further
upside.
Today's action may change the potential for further upside due to the
bullish outside day that has formed--typically a reversal pattern. A close above
the trendline, now at 75.45, would be a good indication of further upside
potential, focusing expectations on the center of the range that has been
underway since November at 76.17.
Alternatively, a failure to close above the trendline would be an
endorsement of the triangle breakout that occurred with the move below the
trendline; it ultimately targets 72.67 if sellers can get some momentum going.
Daily charts favor the sellers due to bearish moving average alignments and sell
signals on 8-day ADX and 14-day slow stochastics.
18:23 EUR/JPY: Bouncing Back; More on ECB Liquidity Auctions San Francisco, February 1st. EUR/JPY has bounced back to 157.68 after dipping on the news of the ECB liquidity auctions. Reuters is reporting an ECB spokesperson states that USD liquidity in the Eurozone has improved and there is no need for the ECB to extend its dollar lending facility. This follows the news this morning that the Fed will sell $60 bln in 28 day loans in February.
There has been speculation that some accounts have been borrowing the cheaper USD facility and using it to fund higher cost positions such as EUR and GBP. It is possible, with the ECB auctions cancelled and these accounts unable to roll over the positions, the accounts might have to cover the USD to repay the loans, which helped push the EUR lower this afternoon. One month USD Libor is at 3.141% while EUR is at 4.191% and GBP at 5.540%.
17:27 EUR/GBP: Frustrated Bears Surrender on Break Back Above 0.7500 New York, February 1. Many accounts who had been short the cross over the past several days in anticipation of a more meaningful pullback have been sorely disappointed today, with the break back above 0.7500 stopping them out of their positions. A retest of the mid-January all-time highs by 0.7614 now seems to be probable, with further gains to be expected on a break of the latter.
Narrowing yield differentials on diverging monetary policies can not be ignored with much of the price action being driven on this theme. Growing concerns over the ECB"s unwillingness to take a more accommodative stance in the face of the global liquidity crisis have left bears in extreme frustration as the market refuses to mount a significant pullback.
Additionally, continued market instability in the face of the global slowdown places an added strain on the higher yielding GBP with many accounts forced to liquidate their riskier positions. EUR/GBP currently trades 0.7538 and has eased back off of the 0.7545 daily highs. Fresh bids are now seen building on dips back to 0.7500, with some light offers touted by 0.7565-70.
16:57 USD/CAD: Oil & Gold Slide, Loonie Still Rallies New York, February 1st. In a day that has been punctuated by staccato moves that stop and reverse at the drop of a hat, USD/CAD has dropped back to 0.9940 post-fix, where dealers reported good selling interest. The pair plumbed 0.9920 lows, then bounced, with tech traders wary of oversold indicators flashing red in the 0.9935/60 range.
Oil futures have continued their decline, sliding to $90.00, off $1.75, and gold futures are $15.20 lower at $912.80 following a massive sell order in the silver pit, 25mn oz, that cracked silver futures down to $16.79. Of the daily fundamentals, only the TSX trading up 0.64% is positive, but the Loonie is rallying anyway. Bank traders note that order books have been cleaned out over the past two days, and are now looking at buy orders down at 0.9900, and offers up at 1.0050.
16:21 AUD/USD: European Bid Underpins Aussie San Francisco, February 1st. A European buyer is among support for the AUD/USD that has seen the currency ratchet up to 0.9024. Demand for the fix is also suspected after CAD and NZD buying at the fix, though some banks report being net sellers of AUD at the fix. The bias, as with NZD/USD, still favors the currency going lower in the wake of today"s commodity sell-off. Stocks have bounced however, and are marginally positive with the DJIA up 11 pts and this is giving support to the carry trades and USD bloc currencies.
16:15 EUR/USD: Traders Lament, Another Fine Mess You Got Me Into New York, February 1st. Ugly, that's how traders are describing this morning's post- payroll events. After this morning's payrolls data you had to be a buyer; or if you had anticipated it, and was looking for levels to get short, you offered into it once it had cleared the Jan 15 1.4920 high, expecting a little price extension as stops were run. Range extension become market rout as spot soared to 1.4956, with traders cognizant of E4bn of 1.5000 puts expiring this morning. A break of the all time high 1.4966 seemed inevitable.
The sharp spike prompted EUR/USD shorts to cross hedge, some against CHF after a recommendation from a NY tech team to short EUR/CHF this morning. The sharp turnaround in EUR/USD, and the subsequent bounce in US equities caught everyone by surprise. Euro crosses bounced, but EUR/USD collapsed under its own weight; black box system traders shorted it on topside failure and the huge negative divergence on hourly and daily RSIs. Leveraged accounts bailed, and the pair collapsed to 1.4788 before stalling. The subsequent bounce to 1.4840 has been lack lustre and traders are starting to have a serious re-think. US investment banks and a large Swiss man were sellers on the drop. As Ollie said to Stan, "That's another fine mess you got me into".
15:16 USD/JPY: Moody"s: Some Bond Insurers Likely to be Downgraded San Francisco, February 1st. In the wake of bond insurer downgrades and ratings warnings by Fitch and S&P over the last two sessions, Moody"s is being reported by Dow Jones, stating that some bond insurers will likely be downgraded. They also add that the industry is likely to be restructures and they will complete a review by mid-February. News of a possible bail-out structure by 8 banks for the monoline insurers may dampen the impact of the news, however stocks have pared their triple digit gains after the Moody"s news, with the DJIA up 87 pts.
USD/JPY remains firm after the stop-loss driven rally and trades at 106.63 with resistance still eyed around 106.70/80. More offers are eyed to 106.90/00.
13:57 USD/CAD: Amended Overbought/ Oversold Levels New York, February 1st.
The levels in the previous article related to the 30-min study, and the 12- hr M/A; The hourlies are:- Oversold 0.9940/65; overbought 1.0070/95; normal distribution channel 0.9990/1.0045; and the 24-hr M/A at 1.0020. Short term momentum traders are fading rallies to the 24-hr M/A with stops just above. Spot last 1.0008.
looks like the market is going to be artificially fluffed up..
13:59 USD/JPY: Talk of Asian Central Bank Bids San Francisco, February 1st. Earlier this week in Asia a good deal of the buying interest on dips on USD/JPY was linked to Asian central bank and Chinese buying interest that provided the support on dips. Similar talk has emerged this morning with the bounce off 105.70 attributed to the same accounts. Leveraged names have been good sellers of USD/JPY after the jobs data, reportedly adding to existing shorts. Stops are still eyed under 105.70 but more buying interest is tipped from that level down to 105.50. USD/JPY currently trades at 105.94.
11:45 FX OPTIONS: Morning Overview: EUR/USD Vols Off Early Lows London, January 31. Vols along the EUR/USD curve were hit shortly after London opened, with losses seen along the curve. 1 month atmf given 9.2-9.1, 2m at 8.8, 3m at 8.7 and 1yr from 8.4 through 8.325. Spot slipped to lower 1.48"s which lent some mild support at the time. Vols then reversed those early losses, as a US investment name lifted EUR 1bln of 3 month atmf at 8.8 and a few hundred EUR"s of 1 year atmf at 8.35-8.4. Large vanilla expiry at 1.4780 today. Spot USD/JPY still closely correlated with Stock performance, especially Dow Futures and the slide in to negative territory here, saw the USD/JPY hit low 106"s. Vols found fresh support after early London Losses - the 1m atmf vol given 13.0 from 13.5 (peaked 14.0 in early Asia). 1yr atmf was given 9.8. Spot Cable unable to breach yesterday"s post FED peak at 1.9960 as yet. Vols marginally weaker. Good interest for 1 week atmf at 9.4-9.5 first thing (now includes UK MPC rate decision).
Dollar libors down nearly 13bp on the session after the Fed rate cut so no
mystery here. There appears to be scope for further improvement given the Fed
left the door open for more and a return to the 3.00 region. Euros down half a
bp and Sterling down 1bp and certainly envisage Sterling rates have embarked on
a downward path into next weeks MPC meeting.
05:15 JPN ECON: Housing Starts Rise Less Than Expected In Dec Sydney, January 31. Japan's housing starts rose just 8.1% in December, rather less than expected, to leave them down 19.2% from a year earlier, the sixth straight month of double-digit declines thanks to the impact of changes to the construction law in the middle of the year. IFR had expected a 15.4% annual decline in December while the market looked for a larger 18.2% fall, still not quite as bad as the actual result. Although starts bounced 19.9% over the December quarter, that was not much considering they slumped a massive 37.0% in the previous quarter; still, residential investment should contribute to GDP growth in the last quarter. For the year as a whole, starts fell 17.5%, wiping out the gains of the previous four years to hit a 25-year low. On the other hand, construction orders rose 4.7%, the first increase since June, and managed to rise 1.3% over the year as a whole thanks to a strong first half. The government has rightly come under a lot of criticism for the inept implementation of this law that nearly pushed the economy into recession, and has severely damaged the construction sector. IFR expects a more gradual improvement in the current quarter than the double-digit gain seen in December as demand is weakening and poor confidence suggests starts are unlikely to rise much above 100,000 per month from 87,500 in December.
Orders Board
04:36 GMT January 31st USD/JPY continues to see good offers, many from Japanese players, around 106.00. Stops still below 105.90. Offering interest ahead of 107.00 now, option-related offers ahead of 107.50.(hi)
04:35 GMT January 31st JPY sell-side flows noted into Tokyo fix for month- end.(hi)
04:34 GMT January 31stEarly EUR/JPY plunge sees stops tripped on breaks below 158.40 and 158.00. Japanese demand noted from 157.25/30 lows.(hi)
04:33 GMT January 31stTalk of central bank EUR/USD offers up top at 1.4910- 20.(hi)
04:32 GMT January 31st AUD/USD bid after early plunge as stocks recover. Talk however of large month-end sell-side flows at London fix.(hi)
04:31 GMT January 31st AUD/JPY sold heavily in late New York/early Asian dealings. Japanese investment trust-related demand seen from 93.70 lows.(hi)
04:30 GMT January 31stNearby option expirations today include vanilla USD/JPY 106.70, EUR/USD 1.4750, 1.4780, GBP/USD 1.9800, AUD/USD 0.9000 and NZD/USD 0.7725 strikes.(hi)
13:07 GMT January 30th USD/CAD Sell stops are tipped below 0.9900.
11:06 GMT January 30th EUR/JPY 158.45/50 tested amid Euro strength. US and Japanese players seen as the last decent buyers. Stops rumoured above 158.55.
11:04 GMT January 30th EUR/CHF Spikes Lower on Franc strength. 1.6110 hit but further macro account buyers emerge. Bids now seen trailing back to 1.6100 in better size.
03:31 USD/JPY, EUR/JPY: Easy Despite Strong Morning Nikkei Close Tokyo, January 31. Both USD/JPY and EUR/JPY have eased of despite a relatively strong morning finish for the Nikkei. The index fell after the open to as low as 13,154.77. it rose steadily thereafter, moving back into positive territory ahead of the morning close. It closed at 13,417.98, up 72.95 points on the day and just a point off the high. USD/JPY and JPY crosses followed the Nikkei higher after losses but look to have come off again. USD/JPY from the 106.65 level and EUR/JPY from the 158.30 level. USD/JPY currently trades 106.31/36 and the cross 157.72/77. They remain well off early lows where support is seen. USD/JPY sees good support around 106.00 though stops remain below 105.90. EUR/JPY sees support at 127.25-30, the early low, and then ahead of 157.00.
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