Forex Market Updates & Commentary

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• EURUSD falls below the 100 hour MA at the 1.3416 level and stops triggered
• Bernanke’s Testimony to the House Financial Services Committee
• Chicago Purcasing Manager Stronger 64.0 vs Survey of 61.0 and Prior of 60.2
• GBPUSD breaks above topside trendline resistance
• A technical look at the EURUSD, GBPUSD, USDJPY and USDCHF
• German official sees no risk that IMF not participate in bailout
• Better GDP. Consumption better
• Bobbys Corner-Open Market-Feb.29.2012
• GDP and Personal Consumption Both Higher
• US GDP & Personal Consumption Data Due at 8:30AM
• ECB Lending higher than expectations. US GDP, Bernanke and Feds Beige Book awaited.
• MBA Mortgage Applications Released -0.3% vs Prior of -4.5%
• ECB lend banks 529.5 bln EUR for 3 years; more than the 470 bln estimate.
• Eurozone CPI (y/y) 2.6%; worse than the 2.7% forecast.
• BOE’s Bean

EURUSD falls below the 100 hour MA at the 1.3416 level and stops triggered Posted: 29 Feb 2012 07:09 AM PST The less than positive comments from Bernanke has pushed the price lower in the EURUSD on risk off. The price also fell below the 100 hour MA at the 1.3415 level and stops were triggered. The price scooted down to 1.3387 which was a tick below the low from yesterday. Traders will want to see the correction hold below the 1.3415 level in order to judge the commitment of the sellers. Look for sellers against this level with further stops below the 1.3387 level.

Bernanke’s Testimony to the House Financial Services Committee Posted: 29 Feb 2012 07:04 AM PST Bernanke’s Testimony to the House Us Expansion uneven and modest GDP in 2012 likely to grow at pace of 2nd half 2011 Fed accounts for magnitudes of deviation from goal Positive developments in the labor market Inflation and Employment mandates complementary Fall in unemployment more rapid than expected Gas prices will temporarily push up inflation Job market remains far from normal Fed follows balanced approach on dual mandate Long term expectations suggest subdued inflation Especially important to evaluate economic data Unemployment elevated and price outlook subdued Critical challenges remain for eurozone

Chicago Purcasing Manager Stronger 64.0 vs Survey of 61.0 and Prior of 60.2 Posted: 29 Feb 2012 06:46 AM PST Chicago Purcasing Manager Stronger 64.0 vs Survey of 61.0 and Prior of 60.2 Feb 12 vs Jan 12′ Prices Paid: 65.6 vs 62.4 Production: 67.8 vs 63.8 New Orders: 69.2 vs 63.6 Order Backlogs: 53.6 vs 48.6 Inventories: 49.6 vs 51.6 Employment: 64.2 vs 54.7 – Highest Number since may of 1984 Supplier Deliveries: 57.7 vs 61.5

GBPUSD breaks above topside trendline resistance Posted: 29 Feb 2012 06:34 AM PST

A technical look at the EURUSD, GBPUSD, USDJPY and USDCHF Posted: 29 Feb 2012 06:19 AM PST

German official sees no risk that IMF not participate in bailout Posted: 29 Feb 2012 06:09 AM PST Adds that does not expect a decision on ESM size by the end of March

Better GDP. Consumption better Posted: 29 Feb 2012 05:37 AM PST The Annualized QoQ GDP came in better at 3% (expected 2.8%) Consumption: 2.1% vs 1.9% in the first cut. Investment rose to 20.6% from 20.0% in the advance release. Government fell -4.4% which was better than the -4.6% previously reported. Exports increased 4.3% vs 4.7% and imports rose 3.8% vs 4.4%. The net exports were slightly improved at -404.4 billion vs -405.8 billion. Contributions to the 3% Annualized Growth Consumption 1.52% Investment     2.42% Net Exports   -0.07% Government  -0.89% The US runs a trade deficit so Net Exports tend to be a negative contributor to GDP.  Federal Government subtracted -0.58% from GDP while State and Local government subtracted -0.30% Real Final Sales increased 1.1% which was better than the 0.8% previously reported

Bobbys Corner-Open Market-Feb.29.2012 Posted: 29 Feb 2012 05:32 AM PST Good Morning: 800 European banks took advantage of the ECB’s 3 year lending program.  The ECB distributed over 529 billion euros-this exceeded the 470 billion euros that was expected. The lending plan has alleviated a credit crunch in Europe, but has it helped increase lending in the EU?   In US political news- Mitt Romney won both the Arizona and Michigan Republican primaries on Tuesday.  He won Arizona with a big lead-but Michigan (his home state), only gave him a 3  point lead-which is a narrow margin for a native son-His father George Romney was a GM executive and Governor  of the state.  Arizona gave him a 22 point lead.  These will all lead to the next round of primaries-Super Tuesday which will be on March 8th. Gold is lower-but Silver is slightly higher.  Oil is trading just below $107/bbl. Equity markets are higher-as are US Futures.  Fed Chairman Bernanke in on his way to testify on Capital Hill this morning. He will deliver his semi annual report to the House Financial Services Committee. Beige Book released this afternoon. HAVE A GREAT DAY & GOOD LUCK

GDP and Personal Consumption Both Higher Posted: 29 Feb 2012 05:31 AM PST (Annualized):   Survey: 2.8%   Actual: 3.0%   Prior: 2.8%   Personal Consumption:   Survey: 2.0%   Actual: 2.1%   Prior: 2.0%   GDP Price Index:   Survey: 0.4%   Actual:  0.9%   Prior: 0.4%   Core PCE QoQ:   Survey: 1.1%   Actual: 1.3%   Prior: 1.1%

US GDP & Personal Consumption Data Due at 8:30AM Posted: 29 Feb 2012 05:05 AM PST

ECB Lending higher than expectations. US GDP, Bernanke and Feds Beige Book awaited. Posted: 29 Feb 2012 04:52 AM PST CLICK ON PICTURE FOR PDF VERSION A total of 800 banks will receive a total of 529.5 billion euros ($712 billion) in the latest round of 3 year lending by the ECB.  This was higher than the previous 489 billion Euros (523 banks participated last time).  The total was higher than the 470 billion expected. The funds are which are intended to spur on lending has mainly led to a decline in yields of sovereign debt as banks take look to recapitalize their balance sheets with carry profits.  It has also averted a liquidity or credit crunch in the EU. Whether it encourages lending is still open for debate.  The results (which were released at 5:25 AM ET) led initially to a rally in the EURUSD. When the underside of old trendline resistance held, the price rotated to new lows for the day.  The EURUSD is starting NY near the middle of the post announcement range (at 1.3450) and will battle between the upside resistance and on the downside the 100 hour MA which comes in at the 1.3413 level (low reached 1.34215).  It is month end so, there could be unusual flows that cause choppy trading conditions so be aware.   In other EU news overnight, Germany Unemployment Change held steady MoM (0K vs -5K) and the Unemployment rate rose to 6.8% from an expected 6.7%.  EU CPI Estimate came in a touch lower at 2.6% (vs est of 2.7%).  The next 3months a total of 2.4% of MoM gains from last year will roll off (0.4%, 1.4% and 0.6%).  The net effect on the YoY inflation will be of interest to the mkt & the ECB.  Should economic activity slow more than expected it could give the ECB a reason to ease further (currently 1% target). Finland and the the Netherlands approved the Greek bailout.  In the UK Mortgage approvals increased to 58.7k (est 54K).  Swiss CPI fell by a greater than expected -0.7%  (-0.3% exp).  The EURCHF barely moved/the USDCHF moved higher but has since come back down. NZ building permits increased by 8.3% MoM which was much higher than the 3.4% expected. The news sent the NZDUSD to it’s highest level since Sep 1 2011.  It also pushed the pair above its month long Non trending range. The old high of 0.8426 will now be support for the pair.  Today US GDP will be released at 8:30 AM with the second cut of the data coming in unchanged at 2.8%. Consumption is expected to decline slightly to 1.9% from 2%. US Chicago PMI (10 AM) is est to show a rise to 61 from 60.2.  The Feds Bernanke testifies in Washington at 10 AM and the Fed’s Beige book will be released at 2 PM

MBA Mortgage Applications Released -0.3% vs Prior of -4.5% Posted: 29 Feb 2012 04:08 AM PST MBA Mortgage Applications Released -0.3% vs Prior of -4.5%

ECB lend banks 529.5 bln EUR for 3 years; more than the 470 bln estimate. Posted: 29 Feb 2012 02:27 AM PST BOE’s King says the ECB LTRO has removed the possibility of a bank run in the Eurozone and the UK.

Eurozone CPI (y/y) 2.6%; worse than the 2.7% forecast. Posted: 29 Feb 2012 02:20 AM PST Core CPI was also worse at 1.5%.

BOE’s Bean Posted: 29 Feb 2012 01:48 AM PST Expects subdued growth in the first half of 2012. Sees a gradual strengthening of the UK economy, easing a squeeze on household incomes. Expects inflation falling back to target the near term. Sees wages and oil prices as upside risks to inflation.

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