Forex Market Updates & Commentary

EURUSD makes move to the next step but finds dip buyers
France’s treasury source says has not been given word on a imminent credit downgrade
GBPUSD makes new three month low
AUDUSD finds proper support today in up and down session
Gold caught up in the whippy action this morning
Mexico Industrial Production Moves Lower, Trade Balance -232.20M
Fed’s Evans US economy need continued, substantial accomodation
EURUSD pushed around by talking heads
Italian’s Monti says there will be broad package of liberalisation in coming days
Bobbys Corner-Open Market-January.11.2012
Feds Lacker sees serious headwinds for the US
Germans Merkel says if solidarity is necessary we are ready to react immediately
EURUSD weighed by Fitch’s comments.
Fitch’s Riley says ECB must do more to prevent cataclysmic Euro collapse
UK Trade Balance

EURUSD makes move to the next step but finds dip buyers

Posted: 11 Jan 2012 07:07 AM PST

The low for the week at the 1.2665 is the next target to get through.

On the downside, the price has not been this low since September 2010. The lows from that time period came in at 1.2643 and below that 1.2586. These would be downside targets on a break of the low today (see daily chart below)

Looking at the hourly chart, the 138.2% extension of the move up from the January 9th low to the high of the week, comes in at the 1.2607 level. This will be another downside target on a break lower.

On the topside today, traders will want to see the momentum down to continue. The correction off the last move down shows the 38.2% -50% retracement at the 1.2691-99 (see 5 minute chart above). Stay below this level and the bears remain in control. Break above and the bearishness loses some power intraday at least (it would also be a double bottom)

France’s treasury source says has not been given word on a imminent credit downgrade

Posted: 11 Jan 2012 06:47 AM PST

Pop goes the EURUSD on the comment.

GBPUSD makes new three month low

Posted: 11 Jan 2012 06:35 AM PST

The GBPUSD has made new 3 month lows taking out the end of December lows at the 1.5360 level. Traders will be looking for momentum to the downside to continue on the break. After all, the price has moved to new lows in December on a two occassions and quickly rejected those moves (see daily chart below). On the hourly chart above, the next target for the pair comes in at the 1.5327 level. This is the 138.2% of the move up from the January 6th low to the high.

AUDUSD finds proper support today in up and down session

Posted: 11 Jan 2012 06:26 AM PST

The AUDUSD has had an up and down trading day today. The price moved down to test the 38.2% of the move up from January 6th low at the 1.02708 level in early Asian trading. It then rallied sharply higher, only to sell off to new lows on the back of the selloff in the EURUSD. That selloff, moved below the 38.2% retracement level but found support against the 100 and 200 hour MAs (blue and green lines in the chart above). So the risk on//risk of currency pair is stuck. Holding above key support, but down on the day.

I would expect that like most other currencies, the AUDUSD direction today is contingent on deciding on a trend. That is contigent on moving through key technical levels. For the AUDUSD that is this 38.2, 200 hour and 100 hour MA levels. Failure to break support, gives the confidence to the bulls to buy back up. Look for buyers against the support with stops below the 1.0253 level. ON the topside a move above the 1.0311 closing level from yesterday will likely get the bulls, bulled up even more.

Gold caught up in the whippy action this morning

Posted: 11 Jan 2012 06:16 AM PST

Gold has been testing the 200 day MA over the last few days of trading. Yesterday, the price moved above the key moving average but closed below the line. Today, the price used the level earlier in the day as a bullish above, bearish below line (see 5 minute chart below). Over the last few hours, Gold has been whipped around along with dollar as Fitch’s Riley, Germany’s Merkel, and Italy’s Monti dualed with the comments.

Going foward, I will have to keep the 1635.60 level as the bullish/bearish line. Stay above and the bulls remain in control. Move below and the bulls lose some confidence in its last move higher.

Mexico Industrial Production Moves Lower, Trade Balance -232.20M

Posted: 11 Jan 2012 06:00 AM PST

Fed’s Evans US economy need continued, substantial accomodation

Posted: 11 Jan 2012 05:44 AM PST

Sees 2012 inflation at 1.8%
Only modest pickup in the economy. Warrants Fed action
Would like to get the economy going at the expense of some inflation.

Evans is a dove and not a voting member on the FOMC board

EURUSD pushed around by talking heads

Posted: 11 Jan 2012 05:30 AM PST

Germany’s Merkel came to the rescue of the EURUSD this NY morning by saying that if it is solidarity you want, Germany will provide that solidarity immediately. Well is that not what the European Union is supposed to be? A solid unit with common goals and interests?

The comments helped negate the harsh comments from Fitch’s Riley who urged the ECB to do more in order to prevent a cataclysmic Euro collapse. Merkel’s own advisor Peter Bofinger did not help things either this morning. He was reported as saying its getting tough for the Euro and “Europe is not acting as a unit”. Italian’s Monti is also doing damage control with comments here and there about Italy’s moves to avert further debt crisis.

So the voices are all being heard this morning and it has caused some fireworks in what has been a rather dismal trading week for the most major of the currency pairs (ie. the EURUSD). At the same time they are frustrating traders who are looking for a change from the non -trending market. Just leave us alone and let the market decide.

Anyway, from a technical perspecitve, the EURUSD price did push below the close from last week at the 1.2721 level. This led to further selling which took the price to a low of 1.26805 so far. The low for the week came in at the 1.2665 level and this is the next key downside target for the pair.

On the topside the quick move back higher on Merkels comments sent the price back above the 1.2721 level (close from Friday). This level increased its importance today as it is also the 38.2% of the days trading range. It also was a low price from Monday’s NY afternoon trading. Although the price moved above this level, the price is now back down and “seems” to be resuming the earlier downward bias. A break of the low for the day at 1.2680 is needed to take some of the range trading bias out of the traders. It would next target 1.2665 – the low reached in the first few hours of trading on Sunday night (ET).

Bearish trader’s will not want to see another move above the 1.2721 level today. A move above would likely muddy the waters and be indicative of a market which is still scared and not willing to trend… yet.

Italian’s Monti says there will be broad package of liberalisation in coming days

Posted: 11 Jan 2012 05:12 AM PST

Interest rates must go down
Need orderly reduction of interest rates and further EU integration
There will be reduction in borrowing costs as mkt appreciate reforms
Good economic policies will take many more quarters before turning into growth
Italy is not contagion for Eurozone
Further austerity measures aim at economic growth
A financial transaction tax could make more sense now than in other periods.

Bobbys Corner-Open Market-January.11.2012

Posted: 11 Jan 2012 05:12 AM PST

Good Morning:

A fairly lackluster overnight session greets us this morning.
German GDP came in at 3%-which was widely expected. Analysts are not overly optimistic on growth in 2012-and expect German GDP to grow under 1% for the year. With continued turmoil in the Euro Zone and the sovereign credit crisis that is not going away-the prospect for growth is weak. The German economy has been resilient in the past-time will tell.
Continued investor confidence in the German economy allowed the sale of 5 year bunds (bonds) below 1% for the first time.
Italian bonds fared well during the morning session-with 10 year yields below 7%.
Comments by Fitch Ratings that the Euro regions debt crisis will worsen unless the ECB boots bond purchases sent the Euro lower.

Asian equity markets were higher-while European equity markets are lower-as are US Futures.

Oil is lower (still over &101/bar)-Gold and Silver are both higher.

HAVE A GREAT DAY & GOOD LUCK

Feds Lacker sees serious headwinds for the US

Posted: 11 Jan 2012 05:08 AM PST

Sees slow progress on Unemployment
QE could not reduce unemployment on sustained basis
Sees 2-2.5% growth in 2012
Inflation heading to around 2%
The consumer is an upside risk for the EU
Mild European downturn won’t push the US into a recession

Germans Merkel says if solidarity is necessary we are ready to react immediately

Posted: 11 Jan 2012 05:00 AM PST

Germany willing to pay more capital into ESM at the start in order to give message to the mkts
We should also consider where we can use EU funds to support growth
Still much money available in EU structure and cohession funds

The comments pushed the EURUSD back higher in the knee jerk reaction. The price is back at the 1.2721 level which represents the 38.2% of the days range, the close from last Friday and a low from January 9th PM trade. This level will be an important level to gauge sentiment today.

EURUSD weighed by Fitch’s comments.

Posted: 11 Jan 2012 04:53 AM PST