Forex Market Updates & Commentary

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• GBPUSD squeezes higher to resistance level. 1.6182 comes more into focus
• Consumer Confidence better than expectations. Richmond Fed weaker
• Forex Morning Report - Jan 26th
• EURUSD breaks to new lows. Does it have the downward momentum?
• GBPUSD moves back. Holds the 1.6144 level above
• EURUSD tests support at 1.4066. The 1.4029 is the 2010 low.
• IMF on the newswires with growth adjustments
• Bobbys Corner-Open Market-Jan.26.2010
• GBPUSD consolidating at the lows as NY enters the fray
• January 26th 2010 NY Opening Forex Report is available for viewing
• BOE King Speaks…
• UK Prelim GDP
• German IFO
• Gbp/Jpy does an about face as S&P Japanese outlook turns “negative”
• S&P Sees Poor Japanese Outlook

GBPUSD squeezes higher to resistance level. 1.6182 comes more into focus Posted: 26 Jan 2010 07:13 AM PST The GBPUSD has squeezed higher to test the 38.2% retracement and th 100 bar MA on the 5 minute chart.  A move above targets the 1.6182 level where the 200 day MA is found.  This is key resistance. On the downside, the move above the 1.6144 level now makes that level the support level to get through for the sellers up here.   We will be watching that level on the downside.

Consumer Confidence better than expectations. Richmond Fed weaker Posted: 26 Jan 2010 07:06 AM PST Richmond Fed comes in at -2 vs 0 expectations but better than last months -4 reading.  Below are the component pieces  New order volume        1  vs.   -4 last  Order backlog         -13 vs   -12 last   Capacity utilization   -3  vs   -3 last  Vendor lead time        5  vs   -2  last  Number of employees    -5  vs   -2 last  Average workweek       -6   vs   2 last  Wages                   6  vs   -2 last Consumer confidence rose to 55.9 from 53.6 last month. This is the highest reading since September 2008.

Forex Morning Report - Jan 26th Posted: 26 Jan 2010 06:30 AM PST Click here to view the embedded video. Online Training today at 4pm

EURUSD breaks to new lows. Does it have the downward momentum? Posted: 26 Jan 2010 06:26 AM PST The EURUSD has broken below the low floor at the 1.4066 level reaching a low at 1.4054 but has pushed back toward the break level (1.4066 - SEE PRIOR POST).  The quick reversal is not necessarily the best reaction for the bears.  However, risk remains up to the 100 bar MA on the 5 minute chart which comes in at the 1.4085 level (and moving lower - blue line in the chart above).   We should see sellers against the level with stops above the moving average level.

GBPUSD moves back. Holds the 1.6144 level above Posted: 26 Jan 2010 05:58 AM PST   As per the prior post (see post by clicking here), the price tested the 1.6144 resistance target and reversed. The pair is back down, looking to test the 1.6101 low for the day. A break below will target lower levels with the 1.6088 low for the week and the 1.6076 low from last week as the obvious next targets. Longer term a more substantial move lower can not be ruled out given the break back below the 200 day moving average today.

EURUSD tests support at 1.4066. The 1.4029 is the 2010 low. Posted: 26 Jan 2010 05:32 AM PST The EURUSD is testing support at the 1.4066 level. The level was a low price on January 21st and January 22nd.  A move below will look toward the 2010 low of 1.4029 for the pair.  Below that level is support at 1.4000 to 1.4007. The pairs move down today, is a break from the corrective phase that took the pair up to the 38.2% retracement resistance of the move down from the January 19th high to low range today.  The level came in at the 1.4176. The high today reached 1.4178 and reversed. The price has stalled at the lows so far. Nevertheless, the price remains below the 100 bar MA on the 5 minute chart (blue line in the chart below).  The price moved above this key intraday moving average on the 5 minute chart this morning but quickly reversed.  The level comes in at 1.4087 currently. A move above will likely lead to a move toward 1.4109 which is the 38.2% of the daystrading  range (see chart below).   Longer term, the window remains open for a more substantial move lower as the EURUSD corrects after the trend move higher in 2009.  That move took the pair from a low of 1.2456 to a high of 1.5144. The midpoint of that range comes in at 1.3800.  The price today moved back below the 38.2% retracement of that same move today at 1.4117.  This is another bearish bias for the pair.  Nevertheless, we need the break lower and will be watching the key levels outlined above closely for the next directional clues.

IMF on the newswires with growth adjustments Posted: 26 Jan 2010 05:18 AM PST  AVG. OIL PRICE OF $76/BARREL THIS YEAR, $82 IN 2011  COMMODITIY PRICES MAY RISE A BIT FURTHER RECOVERY IN EMERGING ECONOMIES RELATIVELY VIGOROUS  SEES 2.1% 2010 GROWTH IN ADVANCED, 6% EMERGING MKT GROWTH CHINA’S 2010 GDP TO GROW 10% VS 9% PRIOR PREDICTION  U.S. GROWTH 2.7%, JAPAN 1.7%, EURO AREA 1% THIS YEAR CREDIBLE’ PLANS NEEDED TO CONTAIN INFLATION EXPECTATIONS INFLATION LOW AND UNEMPLOYMENT HIGH TO REMAIN EXCESS CAPACITY LIKELY TO HELP KEEP INFLATION CONTAINED MANY CENTRAL BANKS CAN KEEP RATES LOW RISSES 2010 GLOBAL OUTLOOK TO 3.9% VS 3.1% SEEN IN OCTOBER World Output   4.3%  for 2010, 3.9% for 2010  Advanced economies 2.4% for 2010 ,   2.1% for 2010      United States 2.4% for 2010, 2.7% for 2011      Euro area 1.6% for 2010,  1.0%  for 2011       Germany 1.9% for 2010, 1.5% for 2011       France  1.7% for 2010,  1.4% for 2011        Italy 1.3% for 2010, 1.0%  for 2011       Spain  0.9% for 2010,  -0.6%  for 2011     Japan  2.2% for 2010,  1.7% for 2011       United Kingdom  2.7% for 2011, 1.3%  for 2011 The dollar has gotten a bid off the changes.

Bobbys Corner-Open Market-Jan.26.2010 Posted: 26 Jan 2010 05:10 AM PST Good Morning: As China takes further steps to slow down the fast pace of their economy, the USD and JPY rose as demand for higher-yielding assets waned.  With China slowing the availability of loans to the marketplace, along with raising the proportion of deposits banks must set aside for reserves-investors are looking for the safe haven of the USD and JPY.  World equity markets dropped as news of China curbing their lending practices, thus causing speculation that any global recovery and growth will be curtailed. US Futures are slightly lower this morning. Oil:$74.60                                               Oil:$1091.30   Today’s Data: TIME FOR  EST PRIOR 9:00A.M. S&P CASESHILLER HOME PRICE IND. NOV. 146.58O 9:00A.M. S&P /CS COMPOSITE-20 YoY NOV. -5.00% -7.28% 10:00A.M. CONSUMER CONFIDENCE JAN. 53.8O 52.9O 10:00A.M. HOUSE PRICE INDEX MoM NOV. 0.60% 10:00A.M. RICHMOND FED MANUFACT. INDEX -4.O HAVE A GREAT DAY & GOOD LUCK

GBPUSD consolidating at the lows as NY enters the fray Posted: 26 Jan 2010 04:44 AM PST The GBPUSD fell sharply overnight - pushed lower after failing to break through the 200 hour MA at the 1.6266 and then on the fall through the 100 hour moving average as GDP came out much weaker than expectations.  The fall has taken the price to a low so far of 1.6111.  The low from yesterday came in at 1.6088 and the low from Friday came in at 1.6076.  These levels should find some profit taking buyers, however, from a longer term perspective the picture is not that positive. Yesterday, the price moved back above the 200 day MA after falling below the key level on Friday.  Today, the 200 day moving average comes in at the 1.6182 level and will be a level the market watches going forward as topside resistance.  The market should look to move away from this moving average now with trendline support at the 1.6065.  The  longer term targets focus on 1.5832 which is the low from December 2009, and 1.5689 which is the 38.2% retracement of the move up from the 2009 low to the August 2009 high.   The move below the 200 day moving average, give the bears the reason to explore the downside further.  This type of move is certainly a possibility as long as the price remains below that key 200 day MA level. Shorter term, the price has an intraday high at 1.6144, and the 38.2% retracement of the days range which comes in at the 1.6164 level.   I would expect that these level hold the topside moves.  A move above will bring the 1.6182 200 day MA level as the next target. This would be a disappointment for the bears but their last line of defense. I would expect that sellers would emerge before this key level with stops on a move above.

January 26th 2010 NY Opening Forex Report is available for viewing Posted: 26 Jan 2010 04:34 AM PST Click here to view the embedded video.

BOE King Speaks… Posted: 26 Jan 2010 02:01 AM PST Testifying before the Treasury Committee, BOE Governor King made the following statements: Obama plans signal radical reform is on the table. Business may possibly migrate back to safer financial centres. No one set of proposals will solve all problems in the banking sector. A big change is needed in the  liability structure of the banking system so creditors may face possible losses. A structure is needed where finance providers believe they won’t be bailed out. We need a safer and more robust financial system, not for BOE to decide on size of sector. One way to sustain Long Financial centre is to ensure it doesn’t burden the UK taxpayer. Banking system is inherently unstable due to low capital and liquidity levels. Must ensure that in the future, capital is a major part of the banking system. Must think about turning more branches into subsidiaries. We can take our time to get debate on bank structure right; will take many years.

UK Prelim GDP Posted: 26 Jan 2010 01:36 AM PST The GBP fell against all of the majors after Prelim GDP did not meet its forecast forecast of 0.4%; coming in at 0.1%.  Additionally, BBA Mortgage Approvals were 45.9K versus its forecast of 46.0K and prior reading of 44.7K. Lastly, the Index of Services 3m/3m was 0.1%; also not meeting its expectation of 0.4% but better than the prior reading of -0.2%.

German IFO Posted: 26 Jan 2010 01:02 AM PST German IFO- Business Climate came in at 95.8, slightly stronger than the 95.1 expected. IFO- Current Assessment came in at 91.2, slightly weaker than the 91.3 expected. IFO- Expectations came in at 100.6, stronger than the 99.1 expected. Overall positive numbers for the euro as Eur/Usd is up about 15 points to 1.4110.

Gbp/Jpy does an about face as S&P Japanese outlook turns “negative” Posted: 25 Jan 2010 11:27 PM PST Gbp/Jpy traded up to 146.72, just off its 100 hour M/A, on the S&P’s negative outlook of Japan. The pair had looked poised for a further move down earlier in session, however unforeseen news can change a currencies momentum rather quickly.

S&P Sees Poor Japanese Outlook Posted: 25 Jan 2010 11:07 PM PST The JPY lost nearly 70 pips against the USD after Standard and Poors released a statement saying they see a poor outlook for Japan.

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