Forex Market Updates & Commentary

It is the day after Christmas, and not a creature is stirring
The NY Review and Preview for December 26th 2011
GBPUSD
USDCHF Holding Steep Trendline
usd/cnh slow market due to the holidays.
USDSGD Continues to Hold 61.8%
China Sets Yuan Reference Rate @ 6.3167

It is the day after Christmas, and not a creature is stirring

Posted: 26 Dec 2011 06:20 AM PST

The US dollar is down on the day against all the major currencies except the NZD which suffered continued earthquake tremors over the weekend (the above chart shows the dollars change agains the major currencies). The China/Japan pact over the weekend got the dollar off on the wrong foot and that has continued through the quiet holiday trading in Europe and the US. The pair is doing the worst against the Yen. Against the Euro the dollar has lost 0.12%.

Versus the EURUSD, the 100 hour MA and trendline off the most recent highs on the hourly chart come in at the 1.3067 level. A move below the level, could solicit more intraday selling in the pair in the quiet trading conditions.

The GBPUSD has had more of a volatile up and down trading day. The GBPUSD has developed a ceiling against the 38.2% of the move up from the December 14th low to the December 20th high at the 1.5832 level. A move above the level opens the way for a test of the 100 hour MA (blue line in the chart below) and downward sloping trendline at the 1.5666 level currently). Additional resistance comes in today at the 1.5647 level. On the downside, the pair has support at the 1.5589 area.

The USDCHF is down on the day, but has found support against the 100 hour MA (blue line in the chart below) at the 0.9340 level. The 0.93578 retracement is the next target with better resistance against the 200 hour MA currently at the 0.9379 level (green line in the chart below).

The dollar has faired the worst against the USDJPY today on the back of the China/Japan pact announced over the weekend. The USDJPY has moved below its 100 and 200 hour MAs. The price moved below the 61.8% of the move up from the December 21st low at the 77.885 level, but is back above that level. The 200 hour MA, at the 77.96 level currently, is upside target with additional resistance at the 78.00 level.

Of course, with Europe and the US basking in the day after Christmas holiday, I do not expect much. Nevertheless, liquidity is at low levels, so adjust trading to reflect the risk.

The NY Review and Preview for December 26th 2011

Posted: 26 Dec 2011 04:53 AM PST

Stocks and Commodities

Nikkei Composite: +84.18 or 1%
Shanghai Composite: -14.67 or -0.67%
US, Canada and European stock markets are closed today

Key events and releases Pre NY

China and Japan announced pact to promote the use of the Yuan in trade and investment rather than converting their respective currencies to USD first. They also announced Japan could hold yuan in its foreigh exchange reserves. Tokyo says they will purchase up to 10 billion of Chinese debt for its reserves. The action was interpreted as a diversification move away from the US dollar. However, the action can also be an opening of the market for yuan which should raise the value over time and lead to a more market driven currency rather than a manipulated currency. The transition of the currency will take time. As a result, the effects are likely more superficial rather than one that has a major impact.
UK Hometrack Housing Survey: -0.2% vs -0.2% last. YoY -2.1% vs -2.3% last.

Key Events and Releases in NY Session

No economic releases or events scheduled for today.

FXDD Scheduled Webinar’s for today

No Scheduled Webinars this week.
Shawn, Jason, James and Greg wish you all a Happy, Healthy and Peaceful Holiday Season

GBPUSD

Posted: 25 Dec 2011 08:26 PM PST

The Cable chart below shows the break out of the triangle had led to a ~2 big figure rally, but a break back below trendline support could put Sterling under some pressure. The trendline 21hr is breaking below the 100hr from a short-term perspective as the pair sits right above the 50% retracement of the December move.

USDCHF Holding Steep Trendline

Posted: 25 Dec 2011 07:28 PM PST

The USDCHF pairs appreciation from the end of the 3rd quarter through the 4th quarter of 2011 has been supported by the trendline support below. The moving averages have also turned positive with the 100 day breaking above the 200 day and the pair above the 92.50 area where there has been resistance from last March are all bullish signals.