South Korean FX authorities have been spotted buying USDKRW. USDKRW has moved up from a low of 1138 to 1143.

Early Japanese Institutions have been seen selling USDJPY this morning with key support seen at 91.00-10 area. Below stops will be triggered and a fall back to 90.60, the 100 day MA, is highly likely. EURJPY will takes its cues from USDJPY rather than EURUSD. Support seen here at 131.30-35(38.2% fibo retracement of the recent move up from 127.35). Under that and we should see the 50% fibo retracement level at 130.60 achieved.

Light vehicle sales were up 6.8% at 1,013, 968 in December.

North American December vehicle SAAR 8.54 mln, imported vehicle SAAr 2.54 mln

Morning all,

The AUD was unable to break higher overnight and once again the level on top to watch is the 9165-70 area. Range traders looking to buy 9090-9100, but critical support not until 9040. The building approvals number is keenly awaited, for further clues to interest rate hikes. Forecast for the November reading is +3% MoM and a number much greater than that, will see speculation about a February rate hike grow.

Personally, I feel market is sitting touch long, waiting for the number. Risk is to the downside, especially if a worse than expected number is seen. Still short, with a stop above 92c.

A move down through 83.00 in AUDJPY will also see longs liquidate and will confirm a temporary top seen at 85.30 in late October.

• Krugman sees 30-40% chance of recession in H2 2010.
• Australia new home sales up 0.3% in November.
• CFTC: Dollar spec positions incresed to $4.76 bln.
• China official says Yuan to face new round of appreciation.
• Nikkei rises to 15 month highs, up 0.8%, ASX200 up 1%, Kospi flat.
• Gold higher at 1123.50.
• USDKRW hits multi month lows.

Yen cross selling once again prevailed throughout the Asian session. There was USDJPY and Yen cross selling into the fix which continued throughout the day, pinning back the majors. The dollar was also under pressure from fund managers looking to build their new year portfolios by buying stocks, commodities and high yielders. USDJPY fell from the 92.50 area all the way back to sub 93.00, as traders continued to trim long USDJPY positions. Buyers at 91.90 held USDJPY temporarily until stops beneath were tripped sending back to the 91.50 area.  Like yesterday,Yen cross selling pressure saw EURJPY drift off under 133.00 and back towards the 132.50-60 area, before the next bout of selling sent it straight down to 132.20, triggering stops in the process.

EURUSD drifted of on the back of EURJPY selling but found buyers ahead of 1.4400 to see an afternoon bounce back up to 1.4440. Still 1.4460 is the level on top, with good sellers reported.

AUDUSD saw a consolidation type day, which usually happens after such an upmove. Sellers via AUDJPY weighed on the AUD, but local demand ahead of the 91c area has held, with traders weary of the Asian session moves.

Ranges:

EURUSD 1.4402 – 1.4443

GBPUSD 1.6064 – 1.6137

USDJPY 91.62 – 92.55

EURJPY 132.22 – 132.46

AUDUSD 9113 – 9163

USDJPY has continued to fall here this afternoon, back to test the bids at 91.90. Unfortunately the bids are no match for the amounts being sold, with some stops triggered beneath. Next level 91.50.

EUR, AUD, and GBP are seeing some upside on the back of a lower dollar but are being held back by Yen cross selling.

ReutersNews: A Chinese NDRC official has just come out saying that the Yuan is to face a new round of appreciation pressures, which may lead to hot money inflows. Such inflows would create difficulties for liquidity mangement. He goes on to say that China will encourage overseas investment to secure stable energy and resource supply.

Sales of new homes in Australia rose slightly, up 0.3% in November. That follows a 6% drop in October.

Seeing Yen crosses sold off across the board as USDJPY peels back to the 92.00 area. Buyers parked just beneath at 91.90, under that and its its back to 91.50. Yen cross selling has been prominent all day keeping AUD and EUR in very tight trading ranges.

Speculators have increased long USD positions for a second straight week ending Dec 29 according to CFTC data. Dollar net long positions were valued at $4.76 bln, a dramatic increase from the net long of $700 mln the week prior, making it the biggest net long USD position since April. Obviously some position have been trimmed since then, even with Friday’s unemployment number approaching.

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