Forex Market Updates & Commentary

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• Feds Hoenig on CNBC
• USDJPY non-trending as the pause continues
• Forex Morning Report - March 2
• Bank of Canada keeps rates unchanged.
• GBPUSD holds the 61.8% retracement and squeezed higher
• EURUSD continues to consolidate in the range as the market awaits directional clues.
• Bank of Canada Interest Rate decision today at 9:00
• Bobbys Corner-Open Market-March.2.2010
• The March 2nd 2010 NY Open Forex Commentary is available for viewing
• Eurozone CPI Flash Estimate
• UK Construction PMI
• Greece’s Christodoulou comments on bonds
• Swiss GDP
• 3-2 Economic Calendar
• RBA Rate Decision

Feds Hoenig on CNBC Posted: 02 Mar 2010 07:14 AM PST Says that raising rates would be difficult. He is concerned about unemployment but he does say that rates at 0.25% are very accomodative and that raising rates would not be tightening, it would just be less accomodative. He says tthat keeping rates low for an extended period may cause problems later.  Raising rates slowly is ok but raising rates quickly could be a problem. His comments are somewhat hawkish.

USDJPY non-trending as the pause continues Posted: 02 Mar 2010 06:47 AM PST The USDJPY is non-trending between the 100 hour MA at 89.33 currently (blue line in the chart above), and a floor at the 88.73 area.  Additional upside resistance comes in at the 89.45. The USDJPY has been pressured on the last move down, since peaking at 92.14 on Feb 19th. The pair has been consolidating that move lower over the last 3 trading days with the price trading between resistance at the 89.45 level and support at the 88.73/82 area.  This has allowed the 100 hour MA to come back into play (at 89.33).  The market is at a crossroad. With the bias to the downside, look for sellers against the 100 hour MA and the 89.45 ceiling level.  A break above these level would turn the bias back to the upside (as long as the price remains above the MA line or blue line in the chart above).  On the downside, a break of support at 88.73 would next target the 61.8% of the move up from November which comes in at the 88.23 level.

Forex Morning Report - March 2 Posted: 02 Mar 2010 06:30 AM PST Click here to view the embedded video. FXDD Online Trading Class today at 4pm Sign up here

Bank of Canada keeps rates unchanged. Posted: 02 Mar 2010 06:03 AM PST Drops reference to having flexibility at low rates Factors supporting growth unchanged. Inflaton slightly higher than forecast, but say they are temporary High Canadian $, weak US demand still slowing growth Rates to stay the same until June. The USDCAD has moved below support at the 1.0325 level on the news.

GBPUSD holds the 61.8% retracement and squeezed higher Posted: 02 Mar 2010 05:59 AM PST The GBPUSD fell early and has since rebounded. The fall took the pair down to test the 61.8% retracement at the 1.4854 (low reached 1.4852).  The failure to break, led to a sharp bounce higher.  The price is moving up to test the close from yesterday at the 1.4989 level. The midpoint of the weeks trading range is at 1.4993.  This should provide some resistance. However, this is the second test of the day. So I would not fade a break higher.  The next target on the upside is the 1.5015 level (NY PM high yesterday) and 1.5042. On the downside look for support now at the 200 bar MA on the 5 minute chart at the 1.4943 level. This is also where the 38.2% retracement of the weeks trading range is found (see green line and 38.2% retracement in the chart above). In the back of everyones, mind is the gap from Friday to Monday’s high.  A momentum move higher would have the market eyeing this level.

EURUSD continues to consolidate in the range as the market awaits directional clues. Posted: 02 Mar 2010 05:32 AM PST The Greece situation, the ECB rate decision and press conference on Thursday, the NFP on Friday (snow effect?), all are coming to a head in the next couple of days and the market is preparing for it by converging at the equilibrium levels.  Over the last week or so, the price has made a few breaks below the 1.3483 level  which is the 61.8% of the 2009 low to high range.  However, each time, the market rebounded.  Today the break took the pair to new 9 1/2 month lows, at 1.3437 but that failed and the market shot back higher.  ON the topside, the price seems to find reason to pause at the 1.3653 level. There have been a few breaks to the upside, but each time, the price increase was quickly rejected. So it is probably appropriate that the price is around the 100 and 200 hour MA at the  1.3552 and 1.3560.  Which way will we break (and I am anticipating a break), is a toss up.  With the Moving averages converged with the price, the move above or below the moving average will determine the bias. Above the moving averages and the bias is bullish. Below and the bias is bearish.  The market will confirm a bullish bias with moves through 1.3613 and then 1.3654. On the downside, a break below the 1.3483 level (61.8% on daily) and then the 1.3437/44 level will confirm that directional play. Markets are meant to trade and they are meant to move in a direction.  When they are non-trending, they tend to get antsy and the market looks to move away.  Be aware.  A move away should be on the horizon.

Bank of Canada Interest Rate decision today at 9:00 Posted: 02 Mar 2010 05:08 AM PST After prior interest rate decisions, the BOC has said that they would keep rates on hold through the 2nd quarter.  We are in March so I would expect them to be true to their word this time as well despite the 5% GDP increase in the 4th quarter released yesterday.   From a technical perspective the USDCAD has moved below the 104.05-15 support level (see prior post) and trading at the lowest level since January 20th.  Look for support at the 103.26 level where the bottom side trendline is found.   The low has reached 1.0338  and has bounced.   Watch this value through the announcement. On the topside, the 1.0380 level and then the 1.0405-15 level become key levels once again.

Bobbys Corner-Open Market-March.2.2010 Posted: 02 Mar 2010 05:06 AM PST Good Morning: The UK’s political situation is adding to the decline of the GBP.  The markets are concerned that the UK will not be able to elect a government with a strong majority.  A majority will be needed to get any true economic and deficit controls in place. The Euro continues to be under pressure as Greek civil servants have orchestrated a new nationwide 24 hour strike on March 16, 2010.  Concerns that Greece’s current austerity plan is not enough, is causing the EU to look for new measures by the Greek government to control the deficit. World equity markets are higher-and US Futures are pointing to a higher opening this morning. Oil:$79.31                             Gold:$1121.60 No major US economic data due out today. HAVE A GREAT DAY & GOOD LUCK

The March 2nd 2010 NY Open Forex Commentary is available for viewing Posted: 02 Mar 2010 04:27 AM PST Click here to view the embedded video.

Eurozone CPI Flash Estimate Posted: 02 Mar 2010 02:03 AM PST Eurozone CPI Flash Estimate came in at 0.9%, weaker than the 10.% expected and 1.0% prior reading. Eur/Usd making a push higher on news, currently trading at 1.3505.

UK Construction PMI Posted: 02 Mar 2010 01:32 AM PST UK Construction PMI came in at 48.5, weaker than the 48.9 expected and prior reading of 48.6. Gbp/Usd has remained either side of 1.4900.

Greece’s Christodoulou comments on bonds Posted: 02 Mar 2010 12:25 AM PST In an attempt to act prudent and not out of desperation Greece’s debt agency chief Christodoulou states the country is not under pressure to sell bonds anytime soon. He goes on to say Greece will sell bonds when conditions are favorable, hoping to raise more capital when time is right. This may boost the European currencies as any seemingly positive commentary out of Greece is welcome.

Swiss GDP Posted: 01 Mar 2010 10:52 PM PST Swiss GDP q/q came in at 0.7%, stronger than the 0.4% expected and the 0.5% prior reading. Strong number for the Swiss economy, however not the reaction you might think in the currency markets as Euro and GBP weakness is still the focus of most traders. Chf just running in place against the majors. Eur/Chf currently trades at 1.4635 and Usd/Chf at 1.0820.

3-2 Economic Calendar Posted: 01 Mar 2010 08:43 PM PST

RBA Rate Decision Posted: 01 Mar 2010 07:39 PM PST The market anticipated a 25 basis point hike in the Australian interest rate and the market got it this time around as the RBA raised rates to 4%. The AUD/USD pair quickly popped to .9031, however has since moved below the 90 cent handle as this hike has been built into the price for sometime. The accompanying comments from the RBA did not help the AUD sustain its early bid, the comments were as follows: Expansion still hesitant in major countries. Growth likely to be close to trend. Many countries have ongoing excess capacity. Appropriate for rates to be closer to average. Growth in Asia continued to be quite strong. Today’s increase a step toward average rates. Home loan approval moderated in recent months. Concerns regarding some sovereigns remain elevated. Dwelling prices have risen significantly over the past year. Australia 2009 economy stronger than expected. Lenders becoming more willing to lend. Australia’s jobless rate appears to have peaked. Economic growth has been close to trend for a few months. Growth in Aussie economy at or close to trend.

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