Forex Market Updates & Commentary

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• Bernanke testimony begins
• Morning Forex Report - Feb 25
• GBPUSD falls below the key 1.5272 level and tests the next support level at 1.5243
• EURUSD watching the 1.3517 area above. Support at 1.3482
• Durable Goods better than expected for the headline. The Initial Claims much worse than expectations. USDJPY lower.
• EURUSD awaits Durable Goods and Initial Claims
• Bobbys Corner-Open Market-Feb.25.2010
• GBPUSD tests 50% retracement support and bounces
• February 24th 2010, NY Opening Forex Commentary is avaiable for viewing
• BOE Gov King Speaks
• Eurozone M3 Money Supply Growth at 0.1%, Private Loans Fall
• German Unemployment Change
• Eurozone Consumer Confidence
• Spain is also pressuring the euro….
• Euro and Asian Stocks Fall on Talks of Greece Downgrade

Bernanke testimony begins Posted: 25 Feb 2010 06:41 AM PST With snow in NY coming down, says the weather could have a negative effect on the employment. He also comments that Deficit has limited effect on the inflation.  Longer term it could affect interest rates and the value of the dollar. This has led to a move lower in the dollar (higher deficits = lower dollar) with the EURUSD moving back above the 1.3483 level. Choppy conditions prevail in the pair.

Morning Forex Report - Feb 25 Posted: 25 Feb 2010 06:30 AM PST Click here to view the embedded video.

GBPUSD falls below the key 1.5272 level and tests the next support level at 1.5243 Posted: 25 Feb 2010 06:23 AM PST As per the prior post (CLICK HERE), the 1.5272 level gave way on the economic news at 8:30 and tested the next target level at the 1.5243 level (old low from May 2009 when the price was last at this level - see chart below).  The price is rebounding off the low but continues to have resistance at the 1.5293 trendline and more importantly the 100 bar MA on the 5 minute chart below. That level comes in at the 1.5304 currently (and falling).  The level has been tested but not breached on a number of times today.  The bias remains down for the pair until that time the price can get back above the 100 bar MA on the chart above.  Until then, the rallies will likely be sold with stops on a move back above.  Without that, the downside targets remain the attraction.

EURUSD watching the 1.3517 area above. Support at 1.3482 Posted: 25 Feb 2010 05:46 AM PST The EURUSD has rebounded after the data selloff,  as profit takers kept the price supported against the lows at 1.3451.  The price has moved up to test the 200 bar MA on the 5 minute chart and so far stalled at the area (green line in chart above0.  Another push higher should test the resistance at the 1.3517 area.  This level should find some resistance followed by better resistance at the 1.3531/39 area. Support is now at 1.3482 which is the blue line.  (the 1.3483 level is also is the 61.8% retracement of the move up from the 2009 low to the high trading range).

Durable Goods better than expected for the headline. The Initial Claims much worse than expectations. USDJPY lower. Posted: 25 Feb 2010 05:32 AM PST Durable Goods 3% better than expected and the prior month was revised higher from 1.0% to 1.9%. Durable Goods Ex Transportation -0.6% but prior month was revised to 2.0 from 1.4% Jobless Claims 496K much higher than expected. The weaker employment and Ex Trans has the USDJPY moving lower. 89.28 is upside resistance now. This is the 50% retracement of the move up from the Nov 2009 low to the Jan 2010 high.   On the downside the target becomes 88.81 area (see chart below).

EURUSD awaits Durable Goods and Initial Claims Posted: 25 Feb 2010 05:21 AM PST The Durable Goods is expected to show a gains of 1.5% vs a revised 1.0% in December. The Ex Transportation component is expected to show a gain of 1.0% vs 1.4% last month.  The Initial Claims are expected to decline to 460K from 473K but this would still be higher than the low reached in December. The trend in Initial Claims has stalled at the 430 to 480 range.  The EURUSD is back down below the key 61.8% retracement level of the 2009 trading range.  That level comes in at the 1.3483 level.  This should continue to pressure the pair with the low from earlier today (1.3451) and the low from last week (1.3444) being the next obvious targets for the bears.   IF the price moves back above the 1.3483 level off the 8:30 numbers, a move toward 1.3493 and 1.3517 are the levels needed to break on the topside to solicit additional buying interest.

Bobbys Corner-Open Market-Feb.25.2010 Posted: 25 Feb 2010 05:16 AM PST Good Morning: The Euro dropped as Moody’s Investor Service and S&P said they may cut Greece’s rating.  Sovereign debt issues are a rising concern for investors, and may put upward pressure on interest rates in other developed countries.  Fed Chairman Bernanke continues his speaking engagement in front of  Congress, and yesterday reiterated his stance on keeping interest rates low to keep the economy on the road to recovery. World equity markets are lower-and US Futures are also pointing to a lower opening this morning. Oil:$79.29                    Gold:$1091.50   TODAY’S RELEASES TIME FOR  EST PRIOR    REVISED 8:30A.M. DURABLE GOODS ORDERS JAN. 1.40% 0.30% 1.00% 8:30A.M. DURABLES EX TRANSPORTATION JAN. 1.00% 0.90% 1.40% 8:30A.M. INITIAL JOBLESS CLAIMS FEB.20 460K 473K 8:30A.M. CONTINUING CLAIMS FEB.13 4570K 4563K 10:00A.M. HOUSE PRICE INDEX MoM DEC. 0.40% 0.70%   HAVE A GREAT DAY & GOOD LUCK

GBPUSD tests 50% retracement support and bounces Posted: 25 Feb 2010 04:56 AM PST The GBPUSD tested the 50% retracement target at the 1.5282 level and bounced (low reached 1.5270).  The holding of the target gives profit takers a level to lean against. It gives bottom fishers a level to lean against.  As a result, it will continue to be a level to watch going forward today. Looking at the shorter term 5 minute chart the price moved briefly above the 100 bar MA (blue line) in the chart below early in the Far East session. The pair could not move above the 200 bar confirming moving average (green line), and the move to the downside was underway. The price corrected midday allowing the 100 bar MA to catch up to the market, and then the second wave down continued.   The price fall did not stop until the 1.5272 area where profit taking buyers were happy to enter.  From that point the price corrected sharply higher to test the 100 bar MA again before falling again.  Now the price is continuing to use the 100 bar MA and the trendline as topside resistance but has the 1.5272 level on the downside.    So the battle lines are set for the pair.  The 1.5272 is support on the downside (100 day MA) and the 100 bar MA on the 5 minute chart/trendline on the upside (at 1.5307/15 respectively).  On a move above the 100 bar MA the market should correct higher with 1.5342 as a key Remembered Level for the pair. On a break of the 1.5272 level, look for some support at the 1.5243 level and then 1.5113. The first level was a ceiling level the last time the GBPUSD was down at these levels in May 2009.  Below that the 1.5113 level was the low before the price moved sharply higher (again in May 2009).

February 24th 2010, NY Opening Forex Commentary is avaiable for viewing Posted: 25 Feb 2010 04:38 AM PST Click here to view the embedded video.

BOE Gov King Speaks Posted: 25 Feb 2010 01:54 AM PST Testifying about the future of banking at the Banking Commission hearing  in London, BOE governor King made the following comments: Willingness of governments to bail out big institutions removes the discipline from the system. We have to make sure the retail banking deposits are kept safe. Can’t rely on capital liquidity and resolutions processes alone to fix system. The financial system needs firebreaks and firewalls within it. Narrow banking is part of the solution. Radical bank reform would produce less intrusive regulation and firms wouldbe left to market. Failure to act now on bank reform will lead to another big crisis. Parts of banks, such as hedge funds, would be left to the market. We need to get rid of implicit subsidies that are “too big to fail”. US, UK, Canada, and Switzerland all have similar views on bank reform. Large banking sector does not go hand in hand with taxpayer guarantees. State owned banks should be used to try to change attitudes towards lending. effective constraints on bank lending are not from regulators but from markets.

Eurozone M3 Money Supply Growth at 0.1%, Private Loans Fall Posted: 25 Feb 2010 01:06 AM PST Eurozone M3 Money Supply y/y came in at 0.1% as expected and stronger than prior reading of -0.3%. Private Loans y/y came in at -0.6%, weaker than the 0.1% expected and -0.1% prior reading. Eur/Usd sold off about 10 points upon release, currently trading at 1.3484.

German Unemployment Change Posted: 25 Feb 2010 12:58 AM PST February unemployment in Germany was 7,000; much better than the forecast of 18K but still slightly worse than last month’s reading of 6K. The EUR reaction to the release was limited as it approaches the 1.3500 handle.

Eurozone Consumer Confidence Posted: 25 Feb 2010 12:19 AM PST Euro zone consumer confidence was -17; in line with it’s forecast, but was still worse than the prior reading of -16.

Spain is also pressuring the euro…. Posted: 24 Feb 2010 10:05 PM PST To add to the previous post; Spain’s problems are also putting pressure on the euro. Currently, Spain has a 19% unemployment rate and a GDP that contracted 3.6% in 2009. It seems as though the same problems that Greece is facing are now popping up in Spain, the euro zone’s fourth largest economy. However, due to its membership in the euro, Spain now lacks the ability to heal its own economy and it is receiving no help from a budget deficit that is now 11.4% of last year’s GDP.

Euro and Asian Stocks Fall on Talks of Greece Downgrade Posted: 24 Feb 2010 09:40 PM PST Moody’s investor services and S&P made comments that they may possibly downgrade Greece’s credit rating once again, which caused the euro to fall to a one year low against the JPY. It reached a rate of 120.74, the lowest level since February 24, 2009.  Additionally, the Nikkei dropped 0.9% and Australia’s S&P/ASK 225 fell 0.9%.  The comments released warned that Greece’s fiscal problems could possibly spread to other nations and continue losses in the euro. It will be interesting to see what happens to the euro when European traders come in later this session….

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