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Forexpros.com Daily Analysis - 12/01/2009

Discussion in 'Fundamental Analysis' started by ForexAnalysis, Jan 12, 2009.

  1. ForexAnalysis

    ForexAnalysis Contributing Member

    Apr 13, 2008
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    Forex Analysis - Daily

    Overnight Asia/Europe

    • USD better on follow-through, opens New York mixed
    • Stops and technical trade seen traders report
    • Volumes better despite Japan holiday and light data today

    Today’s Economic Reports
    All times EASTERN (-5 GMT)
    • 12:40pm USD FOMC Member Lockhart Speaks

    Looking Ahead to Tuesday
    All times EASTERN (-5 GMT)
    • 8:00am USD Fed Chairman Bernanke Speaks
    • 8:30am USD Trade Balance
    • 10:00am USD IBD/TIPP Economic Optimism
    • 2:00pm USD Federal Budget Balance
    • 5:00pm USD FOMC Member Lacker Speaks

    Traders note a busy start to the Asian session this week with spillover selling of the majors from Friday’s extended drop. Despite the Japanese holiday today, volumes were modest and order flow was reasonable most desks report. Although the USD is firmer against most pairs the USD/JPY is still under pressure as weak equities markets continue to be the rule and most bourses are lower to start the week. Cross spreaders for Yen and Sterling were the main focus as Yen continues to remain the strongest currency on the board; high prints in USD/JPY at 90.27 and lows at 89.59 making for the lowest level since December 22 last year. The rate is holding firm at 89.80 area after clearing stops under the 89.80 area. GBP is lower after dropping over 100 points in early Asia, low prints at 1.4907 in European trade with high prints at 1.5179 from the open. Traders note that stops were seen close in around the 1.5100 and 1.5050 area with minor stops in between making for a fairly large sell order across that area of price. Traders also note that spillover pressure from EURO likely as well suggesting that the USD buy side was fairly well coordinated this morning. EURO opened firmer and then slid off with other pairs, high prints at 1.3476 with lows at 1.3325 near the January low of 1.3312; traders note stops under the 1.3350 area were the main attraction and once cleared the rate bounced smartly back over the 1.3400 handle. Opening in New York at the 1.3420 area the EURO has reached important technical levels and in my view is back on the offensive; aggressive traders can look to the buy side of EURO this week as a rate cut from the ECB at Thursday’s policy meeting is likely well-factored in. Traders are expecting a 50 BP cut for the most part with some suggesting a 75 BP cut. In my view, the ECB is not one to move too fast or too quickly regardless of pressure from trading partners and other central banks. The European model of banking makes for a faster response time to economic needs and a less aggressive rate policy. In my view, the ECB doesn’t have to do as much as aggressively as other banks need to do suggesting that they may remain more cautious with rate changes. In other pairs, USD/CHF remains a bit better as Gold is slightly lower but don’t get too excited about a rally; high prints at 1.1244 are right up against technical resistance at the 1.1250/80 area. Low prints at 1.1109 making for a net higher action to start the week. USD/CAD high prints at 1.2009 and lows at 1.1871 making for a higher Monday but still and inside week range from last week to start. Loonie most likely will stall on any move over the 1.2020 area with possibly a reach up to the 1.2100 handle but I think the market is fairly clear that the bears are in control on rallies. Today is a light economic calendar for everyone making for technical trade and two way action. The main news will be the ECB rate announcement on Thursday with some potentially market moving US data mid-week. Look for the Greenback to remain two-way to start.

    GBP USD Daily

    Resistance 3: 1.5480
    Resistance 2: 1.5420
    Resistance 1: 1.5350
    Latest New York: 1.5006
    Support 1: 1.4900/10
    Support 2: 1.4860
    Support 3: 1.4820

    Rate falls back to start on follow-on selling; cross spreaders still pressuring EURO/GBP spread. Spillover from EURO likely but action still technical. Stops noted under 1.5100 and 1.5050 area; more likely under the 1.4980 area. Rate recovers from lows in early New York to trade back above the 1.5000 area. Stops above the market likely now in the 1.5180 area or above as late traders place risk close-in. Bears took a stand above the 1.5250 area last week; likely they will be back again so look for two-way action near-term. Sellers likely active suggesting a dip back to potential support around the 1.4700 area although a close over 1.5100 today might negate that. Two-way and firmer action due to cross-spreaders liquidating EURO-Sterling; repatriation also lending to the firm tone.
    Data due Tuesday: All times EASTERN (-5 GMT)
    4:30am GBP Trade Balance
    4:30am GBP DCLG HPI y/y
    5:00am GBP CB Leading Index m/m

    EURO USD Daily

    Resistance 3: 1.3850
    Resistance 2: 1.3800
    Resistance 1: 1.3750/60
    Latest New York: 1.3423
    Support 1: 1.3320/30
    Support 2: 1.3280/90
    Support 3: 1.3250

    Rate two-way but falls through stops to make double-bottom at monthly support; rally back over the 1.3400 handle quickly suggests the bears are losing control from above the market and the dip may have been a technical correction. Cross-liquidation continues. Rally back as official bids absorb offers under the 1.3350 area. Sovereign offers seen into the highs last week traders say but those may be covering into the dip this morning. Traders note sovereign offers seen above the 1.3640 area again and this time the sellers are winning. Aggressive liquidation by EURO-Sterling cross spreaders providing the main selling. Technical levels around the 1.3300 area are firm; look for a solid bounce from here. Correction lower is likely near its end, likely at a buy point on this dip to start the week.
    Data due Tuesday: All times EASTERN (-5 GMT)
    2:00am EUR German WPI m/m
    2:45am EUR French Gov Budget Balance
    4:00am EUR ECB President Trichet Speaks

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    Analysis Provided by: Forexpros.com - Written by Jason Alan Jankovsky

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