Forex Market Updates & Commentary

EURUSD tests intraday support at 1.2790
EUR and CHF the movers today.
IMF’s Rice on the Wires
EURUSD reaches key resistance levels
US Business Inventories Figures Come Out Lower
The Traders Course with Greg Michalowski. Lesson 8. Using Ranges for trading clues (continued) and introduction to tools for trading
EURUSD marches back higher. Equals yesterday’s high.
Draghi Press conference Q&A comments
EURUSD has moved lower on weaker comments from German official, weak data and Draghi comments
Bobbys Corner-Open Market-January.12.2012
Draghi major comments
US Jobless Claims Rise, Retail Sales Drop, Weakest Reading in 7 Months
Weak. Weak and Weak…
Canada New Housing Index Slightly Stronger at 0.3% v 0.2%
The Forex Review and Preview for January 12th 2012

Posted: 12 Jan 2012 07:50 AM PST

The EURUSD is down testing the 38.2 % of the quick move higher this morning. That level comes in at the 1.2790 level. The level is also near the high from yesterday’s trade at 1.2788 area. A move below opens the downside for further corrective action of the move higher today. Holding keeps the bulls happy.

The sharp move higher stopped at the 200 hour MA (green line in the chart below). This has led to the correction lower. It now is up to the sellers to prove they have the selling momentum to push the price below the support. If they cannot, those shorts from above, should get scared and this could lead to another surge higher.

A move below the 1.2788-90 support, will look to target the 1.2770 to 1.2776 area. This is the 38.2% of the move up from yesterday’s low and the initial high of the day (see chart below).

EUR and CHF the movers today.

Posted: 12 Jan 2012 07:44 AM PST

The above chart shows the effects on the USD vs the major currencies. A line to the left of th 0% is indicative of the USD moving lower against the respective currency. A line to the right of the 0% is indicative of the USD rising against the respective currency. As can be seen the action is in $ is against the EUR, CHF to the downside and the opposite direction against the NZD. The rest of the currencies are basically unchanged versus the dollar.

The story for the move against the EURO seems to be focused on the auctions and the LTRO from the ECB. To me it is clear that the LTRO is the way the ECB does QE. They provide liquidity at 1% or below, and banks take the money and invests in debt of the high yielders. The carry profits earned are the way the central bank can recapitalize the banks. The Fed did the same thing via QE. The Fed bought mortgages, gave cash and banks bought US bonds lowering rates. The ECB gives out 600 billion, collects junk as collaterol, and banks buy junk at higher yields

The CHF move is likely a reaction by the market to test “the will” of the SNB without a leader in place. The EURCHF has been moving down since SNBs Hildebrands resignation as SNB head after the scandal from his wife’s questionable currency trades. The pair moved below the 1.2100 level today which is getting closer and closer to the 1.2000 pegged floor. This is also the lowest level since September 20th. Leader or no leader I have to think that the central bank will operate as expected and support the level they set.

IMF’s Rice on the Wires

Posted: 12 Jan 2012 07:33 AM PST

Says:

Time running short on debt swap, key issues unresolved
Greek Mission starts next week
Mark-Down in overall global forecasts
Will be an IMF mission in Cairo next week
IMF will asses Greek deal on haircut
It is up to Greece and its creditors to reach agreement
“The sooner the better” on reaching Greek PSI deal

EURUSD reaches key resistance levels

Posted: 12 Jan 2012 07:12 AM PST

The EURUSD has moved up to test the 38.2% of the move down from the January high and the 200 hour MA at the 1.2922 and 1.2936 level respectively. These levels represent levels for traders who are long to take some profit. They also are level for traders to perhaps test the water from the short side. Move and stay below is step one. The next step is a move below the 1.2790 level. This would give any shorts from above added confidence.

US Business Inventories Figures Come Out Lower

Posted: 12 Jan 2012 07:01 AM PST

Business Inventories: Survey: 0.4% Actual: 0.3% Prior: 0.8%

November v October
Business Inventories Breakdown:
Retail Inventories:   0.3% vs 0.2%
Ex-Autos:   0.2% vs. 0.0%
Motor Vehicles:   0.6% vs. 0.5%
Furniture:   0.2% vs. 0.2%
Building Material: -0.4% vs -0.3%
Food & Beverage:   0.1% vs -0.2%
Clothing:   0.3% vs 0.7%
General Merchandise:   0.0% vs 0.3%
Dept. Stores: -0.8% vs 0.1%

The Traders Course with Greg Michalowski. Lesson 8. Using Ranges for trading clues (continued) and introduction to tools for trading

Posted: 12 Jan 2012 06:56 AM PST

The Traders Course with Greg Michalowski will take place this afternoon at 4 PM ET. All are welcome.

In Lesson 8 of the “Traders Course” series, Greg Michalowski, Chief Currency Analyst of FXDD will continue his discusson on the importance of the high to low trading ranges and how they help traders with their Game Plan and Mission. He will also introduce the tools for trading.

All traders can participate in the webinars, but all do need to REGISTER. To REGISTER, click on the following link:

CLICK HERE REGISTER

EURUSD marches back higher. Equals yesterday’s high.

Posted: 12 Jan 2012 06:17 AM PST

The EURUSD has taken the comments from Draghi in stride. Although he sees considerable risk, he also sees stabilization and lauded the effects of the LTRO program which added liquidity in the banks at precisely the right time. As evidence is the bond yields declines in Italy and Spain. Let’s face it, money goes to banks at 1%. Banks buy bonds. They do the QE for the ECB. Yields come down. If the ECB does not want to do QE, they don’t have too as long as they provide “free” liquidity. Money will find it’s way and the market is taking the chance

So the EURUSD marches back above the 100 hour MA at 1.2743) and to new day highs for the day. The move higher has now equaled the high from yesterday and traders will now use that level as its next level to get through. Yesterday, the weeks low at 1.2665 was taken out by 4 pips and the failure to move lower, started the move higher. Today, we are not making new highs for the week -that remains above at the 1.2817 – but the high from yesterday ceiling may not be ignored either. Below look for support at 1.2751 to 1.2759. A move beow 1.2743 (100 hour MA currently) will really frustrate.

Draghi Press conference Q&A comments

Posted: 12 Jan 2012 05:50 AM PST

Evidence of ECB money isnt staying in the deposit facility. (likely in the form of demand for debt)
Injecting money increases the bank balance sheet
Large banks that have borrowed 3 year money are not the same as those depositing at the ECB
3 year LTRO has come at an appropriate time
It has prevented what could have been a major constraint for lending
The LTRO has been effective (evidence is the increased demand for sovereign debt of late)
Credit contraction is already visable in some part of the EURO
Some stress countries are showing significant progress
Fiscal consolidation is unavoidable. However it should be mitigated by structural reform
Fiscal contract should be signed by the end of January
ECB will act as agent for the EFSF
Substantial progress has been made on the ECB acting as agent
Some data indicates some stabilization at low levels
Not possible to express judgement of confidence in economy despite some good signs
Does see recesssion in some Euro states
Must have a debt sustainability in Greece
Greece has to brink back fiscal action on track
ECB never precommits on rates. ECB looks at all factors during rate deliberation
ECB not part of Greek taks on Private Sector involvement
ECB expects substantial demand for second LTRO (will be in February)
New collateral rules expanded potential risk
ECB is quite confident on risk management (HMM)
Cannot say if Greek PSI deal was a mistake
Progress on structural reforms is really extraordinary.
Draghi says cannot say for sure whether banks using ECB 3 year money in Bond auctions (HMMMM)

EURUSD has moved lower on weaker comments from German official, weak data and Draghi comments

Posted: 12 Jan 2012 05:47 AM PST

The EURUSD has moved back lower in morning NY trade on comments from German official that Greece is a lost cause and additional capital should not be given, on weak US data (Initial Claims and Retail Sales) and cautious comments from ECB Draghi (“Substantial downside risks”). Nevertheless, the price remains up on the day.

In the decline, the price fell below the 100 hour MA at the 1.3743 level and this level will be eyed by traders as a proxy for bullish or bearish today. Stay below and I think the rotation downside continues. A move above and shorts will likely cover. The midpoint of the week – which is shaping up as a ho-hum week – comes in at 1.2739.

The market seems unsure of direction for the pair and as such, I am not confident of a large scale move. There are concerns about Greece but auctions in Italy and Spain today were encouraging.

Levels will be watched for clues.

Bobbys Corner-Open Market-January.12.2012

Posted: 12 Jan 2012 05:33 AM PST

Good Morning:

Spanish and Italian bond auctions fared very well-with yields on the Italian bonds falling up to 40bps in the wake of strong demand.
The euro rose to the 1.2750 level-which is where we are sitting on presently.

As expected the ECB left interest rates unchanged at 1%.
The BOE also kept interest rates unchaged at .5%-and left the asset purchase program in place.
Fitch Rating’s Riley stated that Italy faces a “material risk” of a downgrade by the end of the month.

US Treasury Sec’t Geithner is in Asia looking for support on oil sanctions against Iran. He should be in the US working on how to rebuild the US economy-not traveling the world.
China has rejected limiting oil imported from Iran-but Japan will be joining the sanctions. Japan has been in talks with Saudi Arabia to replace any oil that they will not get from Iran.

Gold-Silver & Oil are all higher.

Asian equity markets were lower-while Europe is higher. US Futures are also higher.

HAVE A GREAT DAY & GOOD LUCK

Draghi major comments

Posted: 12 Jan 2012 05:32 AM PST

Downside risk are substantial
Cost wage should remain modest
Must manage inflation expectation to support growth
Tentative signs of stabilization
ECB liquidity will support euro area banks
Non standard measures are supporting banks
Ongoing tensions keep damping economic activity
All non standard measures are temporary
Growth dampened by moderate global demand
Expects gradual recovery in 2012
Substantial downside risk to economic activity
Environment of high uncertainty
Risk stemming from global economy and protectionish measures
Inflation has been at elevated levels since 2010
Inflation likely to exceed 2% for some months but expects to move below later in 2012
Inflation risks are broadly balanced
Downside risk is global growth risk
Upside risk is commodity prices
Soundness of bank balance sheets is key