Forex Market Updates & Commentary

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• EU Barroso says “EU Needs Growth Not Just Dicipline, Sanctions”
• US Exisiting Home Sales MoM Rise to 4.3%
• Ireland’s Junior Minister on the Floor of Parliament
• USDJPY trends higher
• EURUSD on the back burner today. Looking for an extension of the narrow range
• GBPUSD tests Fibo support.
• Greek Finance Minister confirms that the Bond swap will take place on March 12.
• US Existing Home Sales Data Due at 10AM EST
• GBPUSD falls to 100 day MA and Fibo Retracement support. USDJPY breaks above 80.00
• EU on the Wires
• The FXDD Morning Review
• Fitch downgrades Greek long term ratings to “C” from “CCC”.
• Eurozone Industrial New Orders (Dec) 1.9% vs. 0.5% expected.
• MPC Meeting Minutes
• Eurozone Flash Mfg. & Services PMI weaker than expected for February

EU Barroso says “EU Needs Growth Not Just Dicipline, Sanctions” Posted: 22 Feb 2012 07:01 AM PST EU Barroso says “EU Needs Growth Not Just Dicipline, Sanctions”

US Exisiting Home Sales MoM Rise to 4.3% Posted: 22 Feb 2012 07:01 AM PST US Exisiting Home Sales MoM Rise to 4.3% Existing Home Sales: Survey: 4.66M    Actual: 4.61M  Prior: 4.61M  Revised: 4.38% Existing Home Sales (MoM):  Survey:   1.1%   Actual:  4.3%   Prior:  5.0%   Revised: -0.5%

Ireland’s Junior Minister on the Floor of Parliament Posted: 22 Feb 2012 06:59 AM PST Ireland’s Junior Minister on the Floor of Parliament Massive write down of Anglo Debt would hurt confidence Anglo Irish mechanism needs to be redesigned Anglo Irish focus on interest rate maturity Not looking for significant write down of Anglo debt No Anglo Irish prom notes resolution in short-term

USDJPY trends higher Posted: 22 Feb 2012 06:59 AM PST The USDJPY has trended higher after consolidating into the close yesterday. The 100 and 200 bar MA on the 5 minute chart was going sideways and converging. The range was narrow adding to the non trending nature of the market. When the price started to move, momentum developed and the trend was on.  Looking at the 5 minute chart above, the price has moved steadily higher, using the 100 bar MA and trendlines on the 5 minute chart as support.  In the early NY session, the price extended above the high from August 2011 at the 80.23 level and targets the  50% of the move down from the 2011 high at 80.535 (see chart below). However, there is some slowing in the bullish move (see trendline break in the chart above).  The 100 bar MA will be eyed as support on an intraday basis. That level comes in at the 80.17 level . A move below this level would signal a slowing of the trend and perhaps further corrective pressure.  Until then, the buyers remain in control.

EURUSD on the back burner today. Looking for an extension of the narrow range Posted: 22 Feb 2012 06:33 AM PST The EURUSD is confined in a narrow trading range today (54 pips) as the GBPUSD and the USDJPY has taken center stage.  Discounting the Christmas week at the end of of December, the low to high trading range is one of the most narrow trading ranges in the EURUSD going back to September 2010 (April 22nd there was a range of 55 pips, in September 2010, there was a day with a 54 pip trading  range).  The expectation would be for an extension of the range.  The average range over the last 20 trading days has been 134 pips. I would not expect the market to reach that range, but there still is room for some sort of extension. The 5 minute chart below has trend line support at 1.3214 and topside resistance at the 1.3256 level.  The midpoint of the days range is 1.3237.  Yesterday’s close came in at 1.3234.  The market may look to these in-between values as clues for bullish and bearish bias.  Price below = bearish. Price above = bullish. In a narrow range, risk can be limited. What you hope for is the longer the market non trends, the better chance for a trend. Trader will be watching for the break and momentum.

GBPUSD tests Fibo support. Posted: 22 Feb 2012 05:55 AM PST The GBPUSD has moved below the 100 day MA at the 1.5692 level (blue line in the chart above). The pair is testing the 38.2% of the 2011 low to high trading range at the 1.56614 level (low 1.5659 currently).  The break below the 100 day MA is negative for the pair but failure to break the 38.2% could solicit some profit taking.  Traders will be eyeing the 1.5684 level which is the 38.2% of the last leg down today.

Greek Finance Minister confirms that the Bond swap will take place on March 12. Posted: 22 Feb 2012 04:46 AM PST Greek Finance Minister confirms that the Bond swap will take place on March 12. The Greek bonds will be issued under English law according to the finance minister.

US Existing Home Sales Data Due at 10AM EST Posted: 22 Feb 2012 04:23 AM PST US Existing Home Sales Data Due at 10AM EST

GBPUSD falls to 100 day MA and Fibo Retracement support. USDJPY breaks above 80.00 Posted: 22 Feb 2012 04:21 AM PST

EU on the Wires Posted: 22 Feb 2012 04:21 AM PST EU on the Wires Saying: ICAO should continue to work on global CO2 curbs on aviation It is sure EU legislation doesnt breach international law ICAO dispute procedure will side with EU Law allows ban on airlines for lack of CO2 compliance Hungary has ‘plenty of time’ to avoid deficit sanctions Iran must fully cooperate with IAEA Foreign ministers to discuss extending syria sanctions

The FXDD Morning Review Posted: 22 Feb 2012 03:43 AM PST The USDJPY has continued it’s trend move higher eclipsing the 80.00 level for the first time since October 31st 2011 – the day of the BOJ intervention. The price also moved above the high on that day at the 80.23 level.  The 50% retracement of the move down from the April 2011 high to the low reached on the same October 31st intervention day, comes in at 80.535 and is the next target for the pair today.  The Yen has been weakening on the back of better US data and the surprise 10 trillion dollar QE stimulus announced at their last policy meeting.  The move has also been supported by favorable technical which have pushed the price above the 100 and 200 day MA, and key  longer term trendlines.   In the UK today, the minutes of the BOE showed that two members voted for increasing the QE above the 50 billion decided. The dovish comments sent the GBPUSD down to the 100 day MA and 50% retracement level at the 1.5693-98 level.  A break of this level should solicit additional selling in the market today.  In the EU PMI data came out weaker than expectations with the EU composite index falling back below the 50 level (49.7 vs 50.5 expectations).  EU Industrial Orders were higher however at the +1.9% vs +0.5 expectations.  The HSBC Flash Manufacturing Index for China came in a touch better at the 49.7 vs 48.8 last month and Australia Leading Indicators from Westpac came in at +0.5%. Despite the better data, the AUDUSD is down on the day.  The pair fell and closed below trendline support yesterday and is showing signs of topping.   In the US today, Existing Home sales are expected to rise to 4.66 million versus 4.61 million last month. The high for 2011 was a  4.64 million pace.  The months supply in December was 6.2 months. The trend is favorable in housing. The market will be watching to see if it continues today. In Canada,

Fitch downgrades Greek long term ratings to “C” from “CCC”. Posted: 22 Feb 2012 03:35 AM PST

Eurozone Industrial New Orders (Dec) 1.9% vs. 0.5% expected. Posted: 22 Feb 2012 02:09 AM PST

MPC Meeting Minutes Posted: 22 Feb 2012 01:36 AM PST Vote was 7-2; interest rate vote was 9-0. Posen and Miles voted for 75 bln GBP increase in bond purchases. Some members saw a case for not increasing stimulus. Sees headwinds from tight credit, weak global growth. U.K inflation is likely to continue to ease. Growth to strengthen gradually. Majority saw risk that above target inflation would be more persistent. Majority feared large QE might send message that the economy is weaker than it really is.

Eurozone Flash Mfg. & Services PMI weaker than expected for February Posted: 22 Feb 2012 01:08 AM PST Mfg. PMI 49.0 vs. 49.4 expected Services PMI 49.4 vs 50.7 expected. Eur/Usd off on news, down to 1.3220.

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