Forex Market Updates & Commentary

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• EURUSD has moved below the 1.2661-65 level on Italy rumored two notch downgrade
• Fed’s Lacker says inflation risk tilted upward
• Italy Cut Two Levels by S&P to BBB+, EU Offical States
• Report that Germany, Finland, Luxembourg and Netherlands will not be cut
• LCH Clearnet raises margin requirement on Italian bonds
• GBPUSD moves back into days orginal channel
• Financial Times says France and Austria to be cut to AA+

EURUSD has moved below the 1.2661-65 level on Italy rumored two notch downgrade Posted: 13 Jan 2012 10:19 AM PST The EURUSD has moved back below the 1.2661-65 level (lows for the week before today).  The two notch downgrade of Italy which would put the nation at BBB+, has been the catlyst for the dip below. The market low for the day has come in at the 1.2623 level. There is a trendline on the daily chart which comes in at the 1.2638 level.  In the quiet afternoon trading, stay below 1.2665 and there could be another run at the lows.

Fed’s Lacker says inflation risk tilted upward Posted: 13 Jan 2012 10:12 AM PST He is also reported as saying: Although inflation risk tilted to the upside a rate below 2% is possible if global growth slows Home prices appear to have stabilized in 2011 Payroll employment gain a heartening sign of potential firming trend US economy expanding at 2-2.5% in 2012

Italy Cut Two Levels by S&P to BBB+, EU Offical States Posted: 13 Jan 2012 10:05 AM PST

Report that Germany, Finland, Luxembourg and Netherlands will not be cut Posted: 13 Jan 2012 09:31 AM PST They will maintain, their AAA status with S&P (according to sources)

LCH Clearnet raises margin requirement on Italian bonds Posted: 13 Jan 2012 08:59 AM PST They raised initial margin on 7-10 year bonds to 8.3%. Other periods have also had their margins raised The EURUSD has moved back lower on the report. The original lows for the week at the 1.2661-65 will be the nect level to breach.

GBPUSD moves back into days orginal channel Posted: 13 Jan 2012 08:11 AM PST The news is all out and the GBPUSD has found a short covering bid. The price is back into the original day channel and is testing the 38.2% of  the days range. A move above would target the 50% and initial low in the London morning session at the 1.53196 area. The 100 bar MA and upside trendline is currently just above these levels (at the 1.5325 level) . If the 38.2% holds (traders may sell against the level on the first test), traders will be eyeing support at the 1.5275-79. This is the area by the bottom trendline in the chart above.

Financial Times says France and Austria to be cut to AA+ Posted: 13 Jan 2012 07:28 AM PST This only a 1 notch move and as a result, the market has moved back higher.

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