Forex Market Updates & Commentary

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• ECB Paramo says Greece has resources to solves its problems
• EU Juncker says IMF may not release Tranche for Greece next month
• BOE Tucker very worried about inflation.
• EU Juncker says Greece won’t reach 2011 budget goals
• USDCHF tests channel support line at 0.8648
• ECB Bini Smaghi says growth in Euro nations sluggish
• GBPUSD rises above the 1.6337. Targets 1.6370 and 1.6400
• USDCAD moves higher on lower USD growth
• USDJPY falls on lower GDP and higher Initial Claims
• GDP Stays Same as Prior, Jobless Claims Rise
• EURUSD awaits GDP/Initial Claims
• The NY Morning Forex Commentary for May 26th 2011
• US Jobless Claims & GDP Data Due at 8:30AM
• EU’s Van Rompuy
• Trichet speaks in Berlin

ECB Paramo says Greece has resources to solves its problems Posted: 26 May 2011 07:20 AM PDT He adds that talk of leaving the EU is absurd.  He also says that Greece need to privatize more of its state owned businesses..

EU Juncker says IMF may not release Tranche for Greece next month Posted: 26 May 2011 06:57 AM PDT Further, that IMF needs 12 month Greek Refinancing guarantee and that governments unable to make up IMF portion. This news has sent the EURUSD lower and is now moving below 200 hour MA support at the 1.4163 level (and 50% at 1.4157).  This turns the bias back to the downside.

BOE Tucker very worried about inflation. Posted: 26 May 2011 06:35 AM PDT Sends the GBPUSD higher A move above targets the 50% off the daily chart at the 1.6400 level.

EU Juncker says Greece won’t reach 2011 budget goals Posted: 26 May 2011 06:29 AM PDT He adds that they need ambitious privitization program. The problem is that the privitization is not all that easy to do when the ship is sinking.  How do you privatize with no buyers?

USDCHF tests channel support line at 0.8648 Posted: 26 May 2011 06:19 AM PDT The channel trendline target at the 0.8648 level should provide support for the USDCHF and will be eyed by the market.  Risk is limited and defined at the level which may solicit some profit taking.  Although weak US dats/strong Swiss Trade data support the CHF strength/USD weakness. The pair continues to get hit on the back of slow growth/flight into safety like the CHF.  In addition, the Trade Surplus increased today to 1.52 Billion for the month of April with exports up 7.9% and imports up 4.0%.  This is not necessarily congruent with an economy suffering from a strong currency  (or at least what you would expect).

ECB Bini Smaghi says growth in Euro nations sluggish Posted: 26 May 2011 06:04 AM PDT Euro growth differentials are significant Nations must stick to adjustment programs ECB to support if nations stick to plans Monetary policy cannot take up fiscal slack Central banks cannot provide solvency slack There is no alternative to reforms Crisis showed growing pains of EURO Earlier today Trichet was talking and said: ECB ready to do what’s needed to fulfill mandate Recovery moe firmly establishe d in recent months Must anchor inflation expectations Non standard tools don’t impinge tighter rate policy Upside risk to medium term inflaton outlook Current crisis is not a crisis of the EURO I get the feeling that the ECB is getting tired with Greece. Trichet is more focused on inflation for sure as it seems the Greece situation is only solved by making deep cuts in their nations spending.  Rate moves by the ECB will do little one way or the other.

GBPUSD rises above the 1.6337. Targets 1.6370 and 1.6400 Posted: 26 May 2011 05:56 AM PDT The GBPUSD has moved above the 1.6337 level and looks toward the the next target at the 1.6370 level (topside resistance on the hourly chart below) and above that the 1.6400 level  (50% of the move down from the April high to the May low).  Support below now at the 1.6333 level and below that the 1.6320 level.

USDCAD moves higher on lower USD growth Posted: 26 May 2011 05:42 AM PDT The dollar does benefit against the CAD$ on the back of the weaker US data. The thought is that if the US slows Canada will suffer more. The 100 hour MA (blue line in the chart above at 0.9766 currently) has held support over the last few days and remains the support for the pair. The 100 day MA is also a key level. That comes in at the 0.9758 level today.

USDJPY falls on lower GDP and higher Initial Claims Posted: 26 May 2011 05:32 AM PDT The consumption is down. Inventories up. Higher oil slows consumption. The Initial Claims are showing signs of weakening. The USDJPY has fallen in response and tests the lows for the day. The next target to get through is the 81.61.   The EURUSD is higher with the 61.8% at the 1.4201 the next key target for the pair. Overall, although the dollar is lower, the move is not all that large.

GDP Stays Same as Prior, Jobless Claims Rise Posted: 26 May 2011 05:31 AM PDT GDP (Annualized):   Survey: 2.2%   Actual: 1.8%   Prior: 1.8%     First Quarter vs Fourth Quarter Profits with inventory and capital adjustments:  1.3%   vs   2.3% Tax Liability:                         7.8%  vs   -0.3% Profits after tax with inventory and capital adjustments:  -0.9%  vs  3.3% Divedends:                               2.1%  vs  1.2% Undistributed Profits:       -5.4%  vs  6.5% Personal Consumption:   Survey: 2.8%   Actual: 2.2%   Prior: 2.7%   GDP Price Index:   Survey: 1.9%   Actual: 1.9%   Prior: 1.9%   Core PCE QoQ:   Survey: 1.5%   Actual: 1.4%   Prior: 1.5%  Initial Jobless Claims:   Survey: 404K   Actual: 424K  Prior: 409K   Revised: 414K Continuing Claims:   Survey: 3700  Actual: 3690K   Prior: 3711   Revised: 3736K

EURUSD awaits GDP/Initial Claims Posted: 26 May 2011 05:24 AM PDT The 200 hour MA comes in at the 1.4161. The midpoint of the move down from last Friday’s high comes in at 1.4156.

The NY Morning Forex Commentary for May 26th 2011 Posted: 26 May 2011 05:15 AM PDT

US Jobless Claims & GDP Data Due at 8:30AM Posted: 26 May 2011 04:25 AM PDT

EU’s Van Rompuy Posted: 26 May 2011 03:10 AM PDT G-8 will talk about global economy and middle east. Reasons for cautious optimism on Eurozone, adding Obama will update G-8 on plans to curb US deficits. Won’t let EU fail. Greek government determined to meet promises, and that he is confident Greece will take all necessary steps to meet fiscal goals. Will do everything to avoid Greed default, and credit event on Greece. IMF could be involved in future funding for Greece.

Trichet speaks in Berlin Posted: 26 May 2011 02:35 AM PDT ECB’s primary mandate is price stability. “More needs to be done” to address crisis. Focus on reducing government debt right direction. Current crisis is not a crisis of the Euro. Need more automaticity in sanction mechanisms. Non-standard tools don’t require tighter rate policy. Liquidity and interest rates are separate tools. Carefully monitoring inflation, ready to do whatever is necessary to fulfill mandate. With the recovery more firmly established, have witneseed emergence of upside risks to inflation outlook. have to avoid commodity price increases leading to second-round effects.

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