Forex News | Currency News by Forexlive

JAPAN DATA: Monthly household spending data from the Ministry of
Internal Affairs and Communications:
– Japan Jan Household Spending -1.0% Y/Y Vs Dec Revised -3.3%
– Japan Jan Household Spending MNI Survey Median Forecast -1.4%
– Japan Household Spending Posts 4th Y/Y Fall in Row

JAPAN DATA: Monthly jobs report from the Ministry of Internal
Affairs and Communications (1):
– Japan Jan Jobless Rate 4.9% Vs Dec Revised 4.9%
– Japan Jan Jobless Rate MNI Survey Median Forecast 4.9%

We’ve heard a few comments over the last week from Finance officials who have toned down their opposition to the strong JPY/USD rate. The main reason of course is that in the face of rising oil prices, Japan becomes insulated to some extent. The JPY crosses are still in no-mans land and giving few clues away so I still favour sticking with the sell-USD-rally strategy.

Another important factor for the JPY is that March is the end of financial year and there are usually some heavy repatriation flows during the month.

Massive option plays at 80.00 will become increasingly magnetic as we near that level but that could be weeks away. The hourly charts suggest an 81.60/82.10 range with a bearish bias.

EUR/CHF looks like its forming important technical support at 1.2700 and should go higher. EUR/GBP and EUR/JPY are best described as choppy but the EUR/AUD is also exhibiting some ‘basing’ tendencies. With the USD in sell mode, the path of least resistance for EUR/USD would seem to be up.

It will not happen in a straight line so we can expect fairly deep pullbacks from time to time. I sense that 1.3850 might prove a tough nut to crack over the next few days and with EUR/GBP in a short-term down phase, there should be some selling opportunities intraday as well.

I’d suggest a 1.3770/1.3850 session range with a neutral bias intraday.

AUD/USD is trading within 100 pips of 30-year highs and there is talk in the market of big sell orders between 1.0200/50. Nevertheless, the USD is seriously out of favour so selling the AUD/USD is a dangerous trade. Corporate bids haven’t really moved higher yet and are still solid around 1.0030/50.

January retail sales are expected to increase slightly to +0.3% and the RBA will almost certainly keep rates on hold whilst maintaining its bullish assessment of the Australian economy.

Outlook: Stick with range trading for now. There might be some good day-trading opportunities to sell the AUD on the crosses (for instance AUD/CHF above .9550?)

Thanks to Barry for the GBP/CHF trade idea on Friday and we’ve reached our first target around 1.5110. With cable near the top of its short-term trading range and USD/CHF sitting just below important resistance at .9310/20, I do not need a second invitation to book some partial profits. I am looking to increase my longs again now on any move back towards 1.5000.

The short-term range in cable is 1.6000/1.6275 but I expect a bullish break to happen sometime soon. The sterling will remain choppy on the crosses as always but with USD-selling becoming entrenched in the market, buying dips in cable is still my strongly favoured preference.

Session: Cable, bit toppy near recent highs, but buying dips to 1.6170 preferred. GBP/CHF, exactly the same, bit toppy at moment but buying dips to 1.5000/25 preferred.

The USD seems to lose a bit of ground almost every night and whilst there are the usual cross adjustments, there can be little argument that the market is set on selling the greenback. USD/CAD was one pair to break fresh ground overnight as it broke below supposedly big bids at .9750; this level will now provide most immediate resistance. Cable made a 200 pip move higher but much of this was attributable to short-covering in pairs like GBP/CHF. USD/CHF didn’t move much as the CHF weakened on the crosses, but it’s still below it’s previous support at .9310/20. USD/JPY was similar to to USD/CHF and the EUR/USD made some ground but eased significantly against the GBP. The AUD/USD held firm at lofty levels ahead of a big day of economic data.

I’ll go through the pairs individully as the morning progresses.

Good luck today.

• Fed’s Bullard: Possible to end QE2 early; oil shock not a big risk
• Fed’s Dudley: Improved growth no reason to shift policy
• US personal income rises 1.0%; spending up 0.2%; savings rate rises to 5.8%; Core PCE index rises 0.8% y/y
• Canadian GDP rises 3.3% in Q4 versus expectations of a 3.0% rise
• Chicago PMI rises to 71.2 from 68.8; much firmer than expected; highest since 1988
• US pending home sales fall 2.8% in January
• Deutsche Bank downgrades US Q1 GDP forecast to 3.8% from 4.5% annual rate
• Dallas Fed index rises to 17.5 from 10.9
• Eurogroup’s Juncker: Debt deal will be finished in two weeks
• US calls for Gaddafi to stand aside; freezes assets
• S&P 500 rises 0.6% to 1327
• US 10-year note yield unchanged at 3.42%
• Oil falls $1.00 to $96.88

EUR/USD rallied quite close to the February 1 high at 1.3862 today, reaching 1.3857 before the rally fizzled. A barrier at 1.3850 was defended but the market was able to take it out and make a run for the highs but was unable to sustain the lofty levels. EUR/USD pulled back below a number of intraday bottoms around 1.3820 and triggered stops in advance of the 16:00 GMT fixing, belying chatter throughout the session that dollars would be heavily sold at the fixing. If anything, the business was mixed with buying of USD/JPY and USD/CHF seen at 16:00 GMT…Prices slipped as low as 1.3780 on profit-taking as it became clear that 1.3863 would not be easily overcome. We end at 1.3803. Offers are seen at 1.3815/20 near-term.

USD/JPY rallied close to 82.00 during the US morning. JPY was sold versus GBP and AUD, suggesting that risk aversion is easing as Gaddafi’s grip on power in Libya looks tenuous at best. We eased during the afternoon and traded a tight 81.74/98 range overall.

GBP/USD rallied quite strongly at month-end, catching the market off guard. EUR/GBP is traditionally bought at month end (as the UK makes its payment to the EU on the last day of the month. That usually keeps cable under wraps, but it was off to the races, surging as high as 1.6275 testing critical resistance.  EUR/GBP fell sharply, reaching 0.8477 from 0.8555 in London trade.

EUR/CHF recovered lost ground today as oil prices eased, rising to 1.2860 at its best levels USD/CHF rose as well but stalled once again above 0.9300. Take a sustained move through the 0.9300 area as a sign that the worst of the dollar slide may be over.

Commodity currencies traded firmly today. USD/CAD fell as low as 0.9706 as Canadian GDP came in firmer than expected. AUD/USD recovered overnight losses and ends near its highs in the 1.0190 area.

US ambassador to the UN Susan Rice calls on Libya’s Gaddafi to step aside. She also calls him delusional. (That’s not very diplomatic, no is it?…)

Whatever little risk aversion we’ve seen in the markets in reaction to goings-on in the Middle East and North Africa in recent weeks, I guess you could say we’ve seen a moderate unwinding of risk-averse trades today. GBP/JPY has had a nice rebound, as has GBP/CHF. Commodity currencies are trading well, led by the Loonie which got a boost from firm Canadian GDP this morning.

Oil prices are lower on the day, at just below $97.00 as the international community tries to push Gaddafi from power…

USD/CHF holds below the 0.9300/20 area where it stalled late last week despite a rally in EUR/CHF today. A break back above the 0.9300 area on a sustained basis would be a sign that tensions are easing and a dollar bounce may be at hand…

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