Forex Market Updates & Commentary

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• Dec 14 2009 Forex Market Update
• $USDJPY testing 100 bar MA on the intraday chart at 88.56
• Dubai news keeps the market on its toes . EURUSD back around the 100 day MA at 1.4642.
• Eurozone Industrial Production & Employment Data
• Swiss PPI weaker than expected
• Cadbury issues defense document against Kraft; sends sterling tumbling
• Gbp/Usd above 100 hour M/A, fails to break below
• 12-14 Economic Calendar
• Eur/Usd surges off Dubai World repayment of 4.1B of debt
• UK Rightmove HPI/
• Tankan Manufacturing Index

Dec 14 2009 Forex Market Update Posted: 14 Dec 2009 06:30 AM PST Click here to view the embedded video.

$USDJPY testing 100 bar MA on the intraday chart at 88.56 Posted: 14 Dec 2009 05:38 AM PST  The USDJPY started off weak, got a boost from the Dubai news but has since resumed the downward momentum   - albeit at a slower pace.  The pair has been using the 100 bar MA on the 5 minute chart (see below( as a resistance level and although there has been some closes on the chart above the moving average today, there has been little in the way of upward momentum on the breaks.  However, the market has been consolidating since the earlier lows  (at 88.31) and currently the price is back up testing the 100 bar MA at the 88.57 level.  Look for sellers against the level - at least initially.  A move above, however,  should lead to further corrective gains toward  the 200 bar MA currently at the 88.74 level.  On the downside the initial low for the day at the 88.37 level  and the subsequent low at the 88.31 should provide support.  Below that the 88.00 level should limit the downside.  On topside in addition to the 200 bar MA, the 88.87 level is the 38.2% retracement of the move down from Friday’s highs. Also of note today is the 100 hour MA currently at the 88.43 level. Watch this level.  The market has dipped below this key moving average today but has rebounded each time.  The last 4 hourly bars has found good support against the level.   A close below this moving average will certainly be eyed.

Dubai news keeps the market on its toes . EURUSD back around the 100 day MA at 1.4642. Posted: 14 Dec 2009 04:58 AM PST The Abu Dhabi’s aid for Dubai ($10 billion bailout) caused the nights volatility.  The news sent the dollar down (risk pairs higher), with the EURUSD correcting 50% of the move down from Friday’s highs (50% came in at 1.4681 - high was 1.4685). The move higher also paused against Thursdays low price of 1.4692.  Later the market corrected with the EURUSD heading back down.  Nevertheless the dollar remains down on the day. For the EURUSD the 100 day MA is still in play.  The key  level comes in at 1.4642 today.  Prior to NY opening the price dipped back below the moving average and moved to a low of 1.4616. However, it has since bounced higher and is back above the key level trading.  I would expect that the market will use the level as pivot level this morning.  If the price dips below, there should be some selling interest.  The market closed below the key 100 day MA for the first time since April 28th on Friday.  This should lead to further sellling interest.  However, given the move back higher today, it may lead to further short covering gains or at least dip buying as profit takers enter the market. Later this week the Fed will meet and what they have to say about the economy will be key.  Of particular interest will be the use or change in the language whereby the Fed has said that rates are remain low for an “extended period of time”.  If the language is changed, it should lead to a stronger dollar as the market prepares for Fed tightening. If they keep the language the same, the dollar should give up some of the gains made on the back of the better data last week.  It is a long time until then, however, so we will continue to monitor the key technical clues.  Other technical levels to consider on the downside today are the 1.4628 which is the close from Friday.  The low today was at 1.4598. The low on Friday came in at 1.4586. All should provide support.  On the topside the 100 bar MA on the 5 minute chart comes in at 1.4659 level.  There is trendline resistance from the tops at the level too (see chart above).  A move above this level should solicit some renewed buying interest in the pair with a move back up to the highs for the day likely.

Eurozone Industrial Production & Employment Data Posted: 14 Dec 2009 02:06 AM PST Eurozone Industrial Production m/m came in at -0.6%, inline with estimates. Y/y came in at -11.1%, slightly weaker than the -10.8% expected. Eurozone Employment Change q/q came in at -0.5% matching prior change. Y/y came in at -2.1%, weaker than prior reading of -1.8%. There were no expectations for either figure. Benign data out of the Eurozone as market reaction indicates. Eur/Usd remains at 1.4665.

Swiss PPI weaker than expected Posted: 14 Dec 2009 12:24 AM PST Swiss PPI m/m came in at 0.0%, weaker than the 0.2% expected.  Usd/Chf is up about 10 points to 1.0325 and Eur/Chf about 5 points to 1.5127 on the news.

Cadbury issues defense document against Kraft; sends sterling tumbling Posted: 13 Dec 2009 11:28 PM PST Cadbury's chief executive will make a staunch defence of the confectionery group's future as a standalone company as he urges shareholders to reject Kraft's £9.9bn hostile bid. Based on this news a UK clearer began selling large amounts of Gbp/Chf. This sent Gbp/Usd to trade off 60 points to 1.6220. Also Eur/chf came of 20 points to 1.5110. Gbp/Chf has given up 80 points in last 30 minutes to trade down to 1.6705.

Gbp/Usd above 100 hour M/A, fails to break below Posted: 13 Dec 2009 10:53 PM PST Gbp/Usd broke above the 100 hour M/A of 1.6279 earlier in the session on the news of Dubai Worlds partial debt repayment. The pair has since begun a move to the downside, now testing that same 100 hour M/A which is acting as support. The 61.8% Fibo of the move down from Friday is also in play at 1.6280. A break below could see the pair give back considerable gains, possibly down to the 1.6220-25 level. Another failed break should bring pair back up to 1.6320.

12-14 Economic Calendar Posted: 13 Dec 2009 08:55 PM PST

Eur/Usd surges off Dubai World repayment of 4.1B of debt Posted: 13 Dec 2009 08:43 PM PST Eur/Usd moved up about 50 points to 1.4670 on news that the govenment of Abu Dhabi and the Central Bank of the U.A.E. agreed to provide $10 billion to the Dubai Financial Support Fund, allowing Dubai World to repay $4.1 billion of Islamic sukuk bonds that are due today. This as stated by the govenment of Dubai in an e-mailed statement.

UK Rightmove HPI/ Posted: 13 Dec 2009 04:09 PM PST The EUR and the GBP caught a modest bid across the board on the back of a slightly better than expected Rightmove House Prices y/y for December, which came in at 1.7% versus its prior reading of 1.6%. However, the monthly reading came in worse at -2.2% (versus -1.6%). Against the USD, the POUND advanced 30 pips and is approaching 1.6240. The EURO move was not as bold moving  15 pips.

Tankan Manufacturing Index Posted: 13 Dec 2009 03:54 PM PST Overall, the Tankan Manufacturing Index came in better than expected for Q4 of 2009. Despite the better than expected reading the market showed a limited reaction as the USD/JPY creeps up to 89.30. Tankan Lge manufacturers Index - Survey: -27   Actual: -24   Prior: -33 Tankan Lge Outlook - Survey: -22   Actual: -18   Prior: -21 Tankan Non-Manufacturing - Survey: -23   Actual: -22   Prior: -24 Tankan Non-Mfg Outlook - Survey: -20   Actual: -19   Prior: -17 Tankan Large All Indust. Capex - Survey: -11.3%   Actual: -13.8%   Prior: -10.8%

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