US Dollar Forecast to Appreciate versus Euro Ahead of NFPs Data

Fundamental Outlook for US Dollar: Bullish
-The US Dollar was far and away the best-performing G10 currency on sharp losses in the US S&P 500 and broad deterioration in financial market risk sentiment. A positive surprise in highly-anticipated US Q4 GDP results likewise helped boost the low-yielding Greenback, and the currency now boasts three consecutive weeks of fairly substantial appreciation against the Euro. Given previous bearish extremes in US Dollar sentiment and positioning, we have frequently argued that the otherwise-downtrodden currency could stage a major comeback through the new year. Already we see that both the Euro/US Dollar and S&P 500 have posted significant declines on the month, and the January Effect in stocks and currencies points to further Greenback appreciation into February and beyond.

The first week of February likewise promises a great deal of economic event risk, and forex options markets have priced in considerable price moves in the days ahead. The critical question is whether the US Dollar will react positively to better-than-expected data or instead respond to cues in the S&P 500 and other measures of financial market risk sentiment. Traders will get their first clue on the results of Monday morning’s US Personal Income and Spending as well as ISM Manufacturing survey results in rapid succession. Consensus forecasts call for modest pullbacks in Income and Spending growth in December, while domestic Manufacturers are likely to report slower gains in activity for January. Substantive surprises in either release could easily force US Dollar moves, but the true fireworks may wait until later-week ADP Employment Change, ISM Services, and US Nonfarm Payrolls releases.

US Dollar traders will pay extremely close attention to surprises in NFPs results, while earlier ADP and ISM numbers will likely shape consensus estimates for the monthly employment figure change. Economists currently predict that the US labor market added a net 13,000 jobs through the month of January, but the monthly figures are notoriously difficult to predict, very volatile, and prone to major revisions. Suffice it to say, most analysts often question the flawed report’s relevance to the US Dollar and other major asset classes. Yet traders respond to the data at hand, and any significant surprises in earlier ADP Employment and ISM Services Employment Index figures could easily set the stage for similar surprises in clearly market-moving Nonfarm Payrolls numbers.

Current market conditions make it extremely difficult to predict price action a day ahead and much less a week in advance. Yet recent momentum clearly favors US Dollar appreciation, and our research on the “January Effect” for currencies and the S&P strongly suggest that the Dollar could finish the year considerably stronger against the Euro and other major counterparts. What happens between now and December, however, is anything but clear. Shorter-term traders should keep a close eye on the S&P and other risk barometers surrounding major news events out of the US and other large economies. We remain bullish the US Dollar on the Euro’s break below 1.40, but sharp Greenback gains warn that a very-short-term correction is possible.  

From DailyFX.com

USD Edges Higher as Stocks Slide

The greenback edged higher against the majors, pushing the euro beneath the 1.40-level to 1.3950 and climbing back above the 90-mark versus the yen. Weekly jobless claims was higher than expected, climbing to 470k and missing estimates for a decline to 450k versus a downwardly revised 478k in the previous week. Durable goods orders fell short of market forecasts, with the headline figure up by 0.3% in December compared with a 0.4% decline in November. The durable goods orders excluding transportation was higher by 0.9% versus a 2.1% increase in the previous month. 

In the coming session, markets will look ahead to several key economic reports including Q4 GDP, January Chicago PMI and the University of Michigan consumer confidence survey. The US economy is estimated to expand by a robust 4.6% in the fourth quarter, more than double the third quarter growth rate of 2.2%. The Q4 GDP deflator is expected to edge up to 1.3% from 0.4% while the PCE index is seen unchanged at 2.6%. The January Chicago purchasing managers index is estimated to slip to 57.5 from 58.7 in December. The University of Michigan consumer confidence survey is expected to edge up to 73.0 from 72.5, while the current component is seen unchanged at 78.0.

US equity bourses were lower with the Dow Jones and S&P 500 sliding by over 1% and the Nasdaq losing nearly 2%. Yesterday’s FOMC policy statement revealed a dissenter to the vote, with Hoenig suggesting that current conditions no longer warrant exceptionally low rates for extended period of time. Gold and oil both drifted lower in Thursday trading. 


by Korman Tam
ForexNews.com

Consumer Confidence Stalls USD Gains

The dollar climbed higher against the majors with the exception of the yen, advancing to 1.0692 against the Canadian dollar and 1.4043 versus the euro. US equity bourses halted early morning losses after a report revealed better than expected consumer confidence, pushing the Dow Jones, S&P 500 and the Nasdaq back into positive territory. Spot gold and crude oil also tempered overnight losses following the upbeat confidence survey, edging back up toward the $75-level and $1,100-mark, respectively.

The November Case-Shiller home prices improve to -5.32% from -7.27% a year earlier and increase by 0.24% versus 0.26% in the previous month. The Conference Board’s consumer confidence survey outpaced consensus estimates for an improvement to 53.5 in January from 53.6 a month earlier, instead climbing to 55.9, and its highest level in 16-months. The November home price index increased to 0.7% from 0.4% in October.

In the coming session, traders will look ahead to December new home sales and the FOMC monetary policy decision. New home sales for December are estimated to increase by 3.1% compared with a decline of 11.3% in the previous month at 366k units. 



by Korman Tam
ForexNews.com

Spot Gold Fails to Hold Above $1,100

XAU/USD peaked during the European session at $1,104.25 but then failed to hold above $1,100 and fell finding support at $1,092. Currently spot gold trades at $1,097.30, 0.43% above today’s opening price. 

Greenback is consolidating moderate losses across the board after rising sharply last week. EUR/USD remains moving in a range between 1.4130 and 1.4160. GBP/USD is rising further to new daily highs above 1.6250. USD/JPY is also moving in ranges between a key resistance at 90.30 and 90.20. 

“The U.S. Dollar is trading mixed at the mid-session with no clear theme at this time. Traders may be choosing to stand on the sidelines or lighten-up positions during the two days leading up to the Fed FOMC meeting on January 27”

FXstreet.com (Córdoba) – X

Forex: Dollar pulls back on Monday on a quiet session

FXstreet.com (Córdoba) – Greenback finished mostly lower across the board after last week rally and rose slightly against the Yen and the Canadian Dollar. The Japanese currency ended with losses. 

EUR/USD finished barely above the price it had at the beginning of the day after being unable to break above 1.4200. The Euro lost ground against the Pound and the Yen. 

USD/JPY tested several times the resistance zone at 90.30 but failed to break above. The pair moved in ranges most of the day. Against European currencies the Yen’s decline was bigger. 

Currencies tied to commodities finished slightly up but remain near last week lows. 

Markets appear to be on hold waiting for major economic news to be published on coming days, which include interest rate decision in Japan and the US and GDP figures in UK. 

French Finance Minister: Obama Bank Reforms Reflect Our Position

PARIS -(Dow Jones)- U.S. President Barack Obama's plan to reform the U.S. banking sector reflects France's position on the matter, French Finance Minister Christine Lagarde said Sunday. 

Obama's plan, outlined last week to limit the size and concentration of banks and limit their ability to leverage their operations, "corresponds completely to the positions that France has upheld," within the Group of 20 industrialized and developing nations, Lagarde said in an interview with television channel France 2. 

"The shift in [the U.S. administration's] stance is impressive," Lagarde said. 

-By David Pearson, Dow Jones Newswires

Pound Ends Week Falling on Retail Sales

The U.K. currency retreated from a previous advance versus the euro as attractiveness for the currency declined after a report showed worse than expected numbers for monthly retail sales in Britain before the end of this week’s session.

The pound lost versus several currencies including the U.S. dollar and the euro after a retail sales report showed an increase of 0.3 percent in December, much below what forecasts suggested on their majority, expecting a growth beyond 1 percent. Even if retail sales forced the pound down, it remains a winner versus the euro this month with almost 2 percent of gains versus the European single currency.

EUR/GBP closed the week at 0.8767 from 0.8694 on Thursday.

from:TopForexNews.com

USD Advances to 5 Month High vs EUR

The dollar rallied sharply across the board, popping to a 5-month high against the euro to 1.4089 and climbing just shy of the 1.05-level versus the Canadian dollar. A combination of heightened risk aversion and skepticism over the viability of the global economic recovery dragged US equities sharply lower, also pulling down oil and gold prices on the session. By afternoon trading, the Dow Jones and Nasdaq were both down by over 1.8% while the S&P 500 tumbled by 1.6%. 

The economic reports released from the US earlier today included December PPI, building permits and housing starts. The headline producer price index increased by 0.2% on a monthly basis from 1.8% in November and on an annual basis higher by 4.4% from 2.4%. The core PPI reading was flat in December compared with a 0.5% increase in November and up by 0.9% versus 1.2% a year earlier. Meanwhile, housing reports were mixed with building permits up sharply to 10.9% in December from 6.9% while housing starts declined by 4.0% compared with an 8.9% increase previously.

In the session ahead, the data slated for release will see weekly jobless claims, December leading indicators and the January Philadelphia Fed manufacturing survey. Weekly jobless claims are seen little changed, down marginally to 440k from 444k in the previous week. The January Philadelphia Fed manufacturing survey is estimated to slide to 18.0 compared with a 22.5 reading in the previous month and December leading indicators are seen slipping to 0.7% from 0.9%. 


by Korman Tam
ForexNews.com 

Wall Street Sees Steep Drop Following New Financial Regulatory Proposals

TOP MARKET NEWS Stocks See Steep Drop Following New Financial Regulatory Proposals - U.S. Commentary Clinton Calls For Unfettered Access To Internet On Global Level Pelosi Says House Dems Lack The Votes To Pass Senate Health Care Bill Stocks Stuck Firmly In Negative Territory In Mid-Afternoon Trading - U.S. Commentary Obama Calls For New Restrictions On Bank Size, Trading Practices

(RTTNews) -  Stocks closed significantly lower on Thursday, as newly proposed financial regulations from the White House and a muddled economic outlook drove traders out of the markets. The major averages all saw heavy losses, pulling back further off the more than one-year highs set earlier in the week. The Dow fell by more than 213 points, adding to the 122 point loss posted on Wednesday.

Traders pulled capital out of the stocks markets this morning amid concerns about remarks from President Barack Obama, who proposed fresh regulations for the financial industry that he said are aimed at protecting the consumer and the economy. The large financial companies led the way lower on the news.

Obama said the proposed rules would close loopholes that allowed firms to trade in risky products without oversight, strengthen capital and liquidity requirements to make the system more stable and ensure that the failure of any single institution will not pose a risk to the financial system as a whole.

Also this morning, traders were presented with another mixed batch of economic data, which was unsuccessful in indicating a clear direction for the U.S. economy.

The Federal Reserve Bank of Philadelphia released a report showing a bigger than expected slowdown in the pace of growth in regional manufacturing activity in January, while the Conference Board revealed that its leading economic indicators index rose for the ninth consecutive month in December.

Additionally, the Labor Department reported that first time claims for unemployment benefits unexpectedly rose in the week ended January 16th, although the headline figure was significantly impacted by seasonal factors.

Earnings also garnered some attention today, as financial services firm Goldman Sachs (GS) reported a profit for the fourth-quarter compared to a loss in the previous year, helped by a surge in revenues at its investment banking as well as trading and principal investment operations. The firm's bottom line trounced analyst estimates, while revenues fell just short of expectations.

The major averages all saw choppy movement in late-session dealing, remaining firmly in the red. The Dow fell 213.27 points or 2 percent to 10,389.88, the Nasdaq dropped by 25.55 points or 1.1 percent to 2,265.70 and the S&P 500 declined by 21.56 points or 1.9 percent to 1,116.48.

In overseas trading, stock markets across the Asia-Pacific region closed mixed on Thursday. Japan's benchmark Nikkei 225 gained 1.2 percent, while Hong Kong's Hang Seng Index sank by 2 percent.

(RTTNews) -  Meanwhile, the major European markets all finished notably lower on the day. The U.K.'s FTSE 100 fell by 1.6 percent, while the French CAC 40 Index and the German DAX Index declined by 1.7 percent and 1.8 percent, respectively.

In the bond markets, treasuries saw notable gains amid the pullback on Wall Street. Subsequently, the yield on the benchmark ten-year note closed at 3.611 percent, falling by 4.8 basis points.

Steel stocks were some of the day's worst performers, resulting in a 5.8 percent pullback by the NYSE Arca Steel Index. With the decline, the index ended the session at its lowest closing level in roughly one month's time.

Gold, housing, commercial real estate and healthcare provider stocks also declined by substantial margins, reflecting today's broad-based sell-off.

Health insurance stocks saw a particularly weak outing, driving the Morgan Stanley Healthcare Payor Index down by 2.6 percent. WellCare (WCG) was one of the sector's leading decliners, posting a loss of 6.1 percent. With the drop, the stock closed at its lowest price in roughly seven weeks.

On the other hand, some electronic storage stocks bucked the downtrend, with Seagate Technology (STX) closing up 9.7 percent after reporting a second quarter profit versus a year-ago loss. Some regional banks also ended the day notably higher despite the steep losses by the financial giants.

The economic calendar is light on Friday, with traders likely taking the day to further digest the week's news and tweak their positions for the following week.

Market giants Google (GOOG), Advanced Micro Devices (AMD), American Express (AXP) and Capital One (COF) are among the major companies that are likely to see movement tomorrow after reporting their quarterly results after the closing bell this afternoon.

by RTT Staff Writer

FinancialAustralian Dec New Motor Vehicle Sales +3.3% On Month

(RTTNews) - The sale of new motor vehicles in Australia was up a seasonally adjusted 3.3 percent in December compared to the previous three months, the Australian Bureau of Statistics said on Thursday, coming in at 89,741. That follows a 3.7 percent monthly increase in November.

On an annual basis, new motor vehicle sales were up 17.2 percent after gaining 15.8 percent in the previous month.

On month, other vehicles increased by a seasonally adjusted 14.2 percent, while sports utility vehicles increased 3.8 percent. Passenger vehicles decreased 1.6 percent over the same period. On year, other vehicles increased 38.6 percent, while sports utility vehicles increased 36.7 percent and passenger vehicles increased 3.0 percent.

By region, Tasmania recorded the largest percentage increase, rising by a seasonally adjusted 17.9 percent, followed by New South Wales and Queensland, with increases of 5.6 percent and 5.5 percent, respectively. The Northern Territory reported the largest decline, plunging 9.3 percent.

from:  forextv.com

FinancialJapan Residents Sold Net 122.6 Billion Yen In Foreign Stocks

(RTTNews) - Japanese investors sold a net 122.6 billion yen in foreign stocks for the week ending January 16, the Ministry of Finance said on Thursday.

Japanese residents also sold a net 11.9 billion yen in foreign bonds last week.

Foreign investors purchased a net 611.9 billion yen in Japanese stocks last week, and they also sold a net 152.2 billion yen in Japanese bonds.

From: forextv.com

China Forex Regulator: Some Speculative Funds Have Entered China

BEIJING (Dow Jones)--China on Tuesday played down concerns about speculative fund inflows, saying there aren't "inexplicable" gains in its foreign-exchange reserves when currency fluctuations and investment returns are taken into account, but it acknowledged that some foreign speculative funds have entered the country.

"China still needs to maintain capital-account curbs," the State Administration of Foreign Exchange said in a statement on its Web site. It said it will squeeze illegal fund inflows and tighten channels through which excessive capital enters China.

The regulator sought to allay concerns speculative funds had led forex reserves to grow US$453 billion in 2009, saying it would be wrong to regard the gains in the reserves above the trade surpluses and foreign direct investment in the year as inexplicable and a form of "hot money." 
-By Terence Poon and Victoria Ruan, Dow Jones Newswires

Euro Slides After German Sentiment Report

The euro tumbled today versus most of the key-currenciesin Europe after Germany published an important economic confidence report with worse-than-expected data, declining attractiveness for the single currency as some of its member countries struggle with a growing budget deficit.

The European single currency dropped versus most of the 16 main traded currencies today as the outlook for the economic bloc declined considerably after the German ZEW Economic Sentiment report brought negative data to traders, which opted for other currencies in the region and overseas as Germany is the main economy currently using the euro. Greece’s deteriorating budget deficit is still a reason of big concern and is affecting the appeal for the euro, as the European Central Bank affirmed that further measures should be taken by the Southern European nation to solve its growing budget crisis. The pound climbed versus the euro as the U.K. posted a higher than expected annualized inflation rate.

Speculations that a slow down in the Eurozone recovery pace are already affecting the outlook for the currency, according to analysts. The region still has low interest rates, and the disparities among the bloc’s members are influencing traders who would rather invest in other regions for the moment.

EUR/USD traded at 1.4276 as of 17:26 GMT from a previous rate of 1.4391 yesterday. EUR/GBP declined to 0.8715 from 0.8815.

From TopForexNews.com

Forex: European Economics Preview: U.K. Consumer Price Data Due

(RTTNews) - Tuesday, major economic reports due for the day include consumer price inflation from the United Kingdom and Germany's economic sentiment.

At 2:00 am ET, Hungary's Central Statistical Office is scheduled to release wage statistics for November. Average gross wages are expected to fall 1% year-on-year in November, slowing from the 1.6% decline in October.

Producer price inflation data for November is due from Statistics Austria at 3:30 am ET. The producer price index had dropped 3.3% annually in October.

At 4:30 am ET, the U.K.'s Office for National Statistics is slated to issue consumer price inflation figures for December. Year-on-year, consumer prices are tipped to rise 2.6% in December, accelerating from the 1.9% growth in the preceding month. The monthly inflation rate is seen at 0.3%. Retail price annual inflation is seen at 2.1%.

Afterwards at 5:00 am ET, the Centre for European Economic Research or ZEW is expected to release economic sentiment survey results for Germany. The economic sentiment indicator for Germany is seen at 50 in January, down from 50.4 in the previous month. The current conditions index is expected to rise to minus 56.2 from minus 60.6. Meanwhile, the economic sentiment indicator for the Eurozone is seen at 48 in January, unchanged from November.

Finally at 8:00 am ET, wage growth data is due from the Polish statistical office. Wages are expected to rise 3.1% on a yearly basis in December, adding to the 2.3% gain in the prior month.

FinancialJapan Industrial Production Due On Monday

(RTTNews) - Japan is scheduled to release final November numbers for industrial production and capacity utilization on Monday, headlining a light day for Asian economic news.

Analysts are expecting the output numbers to show little change from the preliminary figures released earlier this month. Production was said to gain 2.6 percent on month but shed 3.9 percent on year, while capacity utilization was up 0.2 percent on month.

Also, Bank of Japan Governor Masaaki Shirakawa will give a speech at the central bank's quarterly branch managers' meeting in Tokyo.

Singapore will provide December figures for non-oil domestic exports, which analysts predict to have risen 22 percent on year following the 8.7 percent annual expansion in November. The electronics NODX number is forecast to ease 0.2 percent on year after surging an annual 19.8 percent in the previous month.

Dollar Profits From Global Economic Pessimism

This Friday’s shift in market sentiment allowed the U.S. dollar to post a weekly advance versus most of the mainhigher-yielding currencies, as risk aversion rose globally and traders opted by the relative safety provided by dollar-priced assets.

The dollar gained significantly versus commodity producer currencies like the Brazilian Real and the Australian dollar towards the end of this week as China’s new lending restrictions raised concerns that demand for raw materials may decline in the country, affecting exports from these countries. The dollar also reverted a losing trend versus the euro and ended the week with a positive result as some of its member countries increasing budget deficit are raising speculations that the currency attractiveness may be impacted among traders, making the European single currency to drop sharply in this week’s last trading session.

Even if economic data published in the U.S. during this week was below forecasts, pessimism was stronger and allowed not only the dollar, but also the yen to outperform most of main trading currencies towards the end of the week. Fed rate hikes speculations declined significantly, but the dollar may continue to sustain its current levels as uncertainty regarding the global economy remains considerable.

EUR/USD closed the week at 1.4381 from 1.4505. NZD/USD closed the week at 0.7368 from 0.7424 on Thursday.

From TopForexNews.com

Forex: RealtyTrac Report Shows Record Number Of Foreclosure Filings In 2009

(RTTNews) - RealtyTrac released its Year-End 2009 Foreclosure Market Report Thursday, showing that a record 2.8 million U.S. properties with foreclosure filings in 2009.

According to the report, a total of 3,957,643 foreclosure filings ? default notices, scheduled foreclosure auctions and bank repossessions ? were reported on 2,824,674 U.S. properties in 2009.

This represented a 21% increase in total properties from 2008 and a 120% increase in total properties from 2007.

In addition, 2.21% of all U.S. housing units (one in 45) received at least one foreclosure filing during the year, up from 1.84% in 2008, 1.03% in 2007 and 0.58% in 2006.

Foreclosure filings were reported on 349,519 properties in December, up 14% from November and up 15% from December 2008. Despite this increase, foreclosure activity in the fourth quarter decreased 7% from the third quarter, though it was still an 18% increase from 2008's fourth quarter.

"As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said James Saccacio, chief executive officer of RealtyTrac.

He added, "After peaking in July with over 361,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline."

"Despite all the delays, foreclosure activity still hit a record high for our report in 2009, capped off by a substantial increase in December," Saccacio said.

Looking ahead, he said, "In the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog."

Forex: Crude Prices Barely Budge Amid Recovery Concerns

(RTTNews) - Crude prices were stuck in a narrow range on Thursday, even as traders reacted to the week's busiest day on the economic news front.

Developments on both sides of the Atlantic raised concerns about the pace of the global recovery, fueling expectations that demand for energy products may wane.

The price of crude for February fell $0.26 to $79.39 a barrel, its fourth consecutive daily decline. Earlier in January, crude hit a yearly high above $83, but has since tailed off despite dollar weakness.

In economic news from the US, the number of Americans filing for first-time unemployment claims rose modestly last week, suggesting lingering weakness in the jobs market. The U.S. Labor Department said that initial jobless claims came in at 444,000 for the week ended January 9. This was up 11,000 from the previous week's revised total.

Retail sales unexpectedly showed a modest decrease in the month of December, according to a report released by the Commerce Department on Thursday, although the drop in sales followed a notable increase in sales in the previous month.

The report showed that retail sales edged down by 0.3 percent in December following an upwardly revised 1.8 percent increase in the previous month.

Despite the discouraging news, the dollar held its ground versus the euro, which came under heavy pressure after European Central Bank President Jean Claude Trichet predicted the euro area economy will grow only at a moderate pace in 2010 and endure further job losses.

European Central Bank President Jean Claude Trichet predicted the euro area economy will grow only at a moderate pace in 2010 and endure further job losses.

His remarks came after the ECB decided to keep interest rates unchanged at one percent for an eighth straight month, noting factors supporting tenuous economic growth are of a temporary nature.

Canadian Dollar Continues to Profit on Commodities

Speculations that demand for commodities will continue to grow in the U.S. and globally are helping the Canadian dollar to benefit from this scenario as exportation of raw materials account for half of the country’s trading revenue.

The Canadian rose against almost all of the 16 main traded currencies as metallic and energetic commodities abundant in the country are experiencing a high demand as the global economic recovery spurs demand for raw materials. Canadian fundamentals are also stronger than most of its main trading partners, and the loonie rose versus the greenback today as U.S. retail sales declined, touching the highest level in three months versus its U.S. counterpart. The loonie also gained considerably versus the euro as several Eurozone member countries are struggling with deteriorating budget deficits.

Not only the demand for commodities but also the Canadian economy seems to perform better than the several wealthy nations as the U.S. and the U.K., this is bringing investors to the country, according to analysts. If the Bank of Canada doesn’t express concern, it is likely that the loonie will reach parity with the greenback at some point this year.

USD/CAD traded at 1.0252 as of 18:17 GMT from a previous rate of 1.0308 yesterday.

From TopForexNews.com

ForexLive US Wrap-up; Commodities Slide After China Tightens Again

• Commodities weakened during US trading as markets absorb the second tightening action by the PBOC in as many weeks; today reserve requirements, last week 3-mo bill rates
• Gold fell $33 to $1125; oil down $2 to 80.55, copper down $9 to $333.75
• US trade deficit widened to $36.3 bln in November; wider than expected
• Canadian trade deficit $0.34 bln in November
• Federal Reserve posts 2009 net income of $52.1 bln
• EU may sue Greece over economic statistics
• Greek FinMin: No skeletons in Greece’s closet
• US sells $40 bln 3-year notes at 1.49%, Bid to cover 2.98
• US yields slip 13 bp to 3.71% in 10-year maturity, 2 year note ends at 0.91%

It was a choppy session for EUR/USD with prices opening on the weak side around 1.4460/65 in New York after China unexpectedly raised reserve requirements late in the London session. That move undermined the reflation trade and sent traders looking to square short-dollar positions against the euro and the commodity currencies.

EUR/USD rebounded ahead of options expiries at 1.4500 and follow-through buying was seen ahead of the 16:00 GMT fixing. Heavy offers at the 1.4560/90 level dissuaded dealers from pushing the EUR higher and we soon slipped back from where it all began.

Risk aversion was the theme of afternoon trade as gold fell sharply and US equities experienced their biggest dip of the new year of just over 1%.

AUD/USD slipped as low as 0.9170 support as traders gunned for stops below that level. Failing to trigger them, they scrambled for cover and price settled into a range around 0.9200 for the balance of the afternoon.

USD/JPY was a victim of long liquidation as uptrend support gave way early in the session. Prices fell as low as 90.75 before rebounding. Solid bids are seen in the 90.60/75 area but very large stops are clustered below the 90.00 level.  We end near 91.00.

GBP/USD traded firmly during the US afternoon as the outcast USD, JPY and GBP all hovered together for shelter while the formerly invincible AUD and CAD weakened on the day. Cable closed just 20-pips below session highs of 1.6195 where central banks out of Asia were reported sellers.

By Jamie Coleman  || January 12, 2010 at 21:17 GMT

Players ask Government to Liberalise Forex Trading

PETALING JAYA: Foreign exchange (forex) traders in the country are upset over a recent Bank Negara caution on forex trading and want the Government to liberalise the domestic forex trading sector.

The central bank had recently cautioned the public not to participate in any illegal investment or training programme on foreign currency trading offered by individuals or companies, both domestic and foreign.

In a random survey by StarBizWeek, forex traders, primarily online traders, questioned why the Government was “painting all forex traders with one brush as illegal just because of a few scams that happened.”

“The government said that there are authorised dealers but they are all banks. They do not have a forex trading system which assists and allows users to trade whenever and wherever.

“What we need are forex dealers like in other countries,” one forex trader said.

Another forex trader said traders were “not trading in ringgit, they do not take money from the public for trading and they do not act as a broker in Malaysia.”

Some traders in the country have been trading with legal foreign forex brokers such as those affiliated with and authorised by the National Futures Association (NFA), an industry-wide, self-regulatory organisation for the US futures industry.

Local traders are hoping for something similar, so that they can be authorised by the Government and work within an official domestic framework for private forex trading.

This would allow Malaysians to tap legally into the “US$3 trilion to US$4 trillion a day forex market,” local traders said.

By AU KA-SHING

U.S. dollar down on Taipei FOREX

Taipei, Jan. 11 (CNA) The U.S. dollar fell against the Taiwan dollar on the Taipei Foreign Exchange Monday, dropping NT$0.1 to close at NT$31.78, the greenback's lowest level against Taiwan's currency in 16 months.
A total of US$912 million changed hands during the day's trading session.
The U.S. currency opened at the day's high of NT$31.88 and hit a low of NT$31.72 before rebounding.

Weak US Jobs Hurt Dollar

U.S. Dollar Trading (USD) weakened considerably across the board as December US jobs numbers missed forecasts. December Non Farms at -85k were expected at 0k. December Unemployment Rate remained at 10.0%. Adding to the USD weakness was the relative strength of the stock market after bad economic news. DJIA +11 points closing at 10618, S&P +3 points closing at 1144 and NASDAQ +17 points closing at 2317.

The Euro (EUR) the upside came squarely into focus with the market testing the upper end of the range. Holding the Euro back was the November US jobs revisions at +4k. Q3 EU GDP was unrevised at 0.4%. EUR/JPY spiked lower but recovered well into the US close on Buoyant Stocks. Overall the EUR/USD traded with a low of 1.4264 and a high of 1.4439 before closing at 1.4411.

The Japanese Yen (JPY) had a volatile day with Yen weakness in Asia being reversed from comments by PM Hatoyama that the government should not comment on FX. This came as the new MoF Kan stated that he would welcome more Yen weakness on Thursday. After the US jobs data the USD/JPY slumped back in the low Y92 region but was supported by the crosses. Overall the USDJPY traded with a low of 92.30 and a high of 93.76 before closing the day around 92.59 in the New York session.

The Sterling (GBP) gained against the USD but was volatile as market largely ignoring the Pound and going with the AUD and CAD to express risk. Weighing heavily was the GBP/JPY which suffered greatly with the USD/JPY pull back. Overall the GBP/USD traded with a low of 1.5917 and a high of 1.6110 before closing the day at 1.6029 in the New York session.

The Australian Dollar (AUD) made substantial gains against the greenback with market sentiment towards the Aussie still very strong. Helping the pair lift was the substantial gains in Commodities and EUR/AUD and GBP/AUD cross support. Overall the AUD/USD traded with a low of 0.9122 and a high of 0.9253 before closing the US session at 0.9242. 

Oil & Gold (XAU) rallied $15 after the US jobs announcement to test the $1140 resistance level. Overall trading with a low of USD$1120 and high of USD$1140 before ending the New York session at USD$1137 an ounce. Made fresh multi month highs above $83 a barrel. Crude Oil was up $0.59 ending the New York session at $83.25.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4218	1.4258	1.4470	1.4484	1.4536
USD/JPY	91.52	92.11	92.35	94.07	94.57
GBP/USD	1.5833	1.5897	1.6090	1.6154	1.6241
AUD/USD	0.8939	0.9093	0.9305	0.9323	0.9406
XAU/USD	1115.00	1140	1155.00	1169	1200.00
OIL/USD	82.00	82.50	83.30	84.00	85.00

Euro - 1.4470

Initial support at 1.4258 (Jan 4 low) followed by 1.4218 (Dec 22 low). Initial resistance is now located at 1.4484 (Jan 5 high) followed by 1.4536 (Dec 17 low)

Yen - 92.35

Initial support is located at 92.11 (Jan 7 low) followed by 91.52 (Jan 6 low). Initial resistance is now at 94.07 (Aug 28 high) followed by 94.57 (Aug 26 high).

Pound - 1.6090

Initial support at 1.5897 (Jan 7 low) followed by 1.5833 (Dec 30 low). Initial resistance is now at 1.6154 (Jan 5 high) followed by 1.6241 (Jan 4 high).

Australian Dollar - 0.9305

Initial support at 0.9093 (Jan 5 low) followed by the 0.8939 (Jan 4 low). Initial resistance is now at 0.9323 (Dec 3 high) followed by 0.9406 (Nov 6 high).

Gold - 1155

Initial support at 1140 (previous resistance) followed by 1115 (Jan 5 low). Initial resistance is now at 1169 (Dec 8 high) followed by 1200 (Major level).

Oil - 83.30

Initial support at 82.50 (Intraday support) followed by 82.00 (Intraday Support). Initial resistance is now at 84.00 (Intraday resistance) followed by 85 (Major level).
Written by Tony Darvall  

EUR/USD Outlook for January 11 -15

Non-farm payrolls didn’t move EUR/USD out of its range. This week features a rate decision in Europe and important inflation figures. Here’s an outlook for the upcoming week in Euroland, and an updated technical analysis for EUR/USD.

Also European unemployment reaches 10%, and this weighs heavily on the Euro. At least prices began rising, as seen in the preliminary release. This week should see a confirmation of the rise in prices. Let’s start the review for 7 events in Europe. The technical analysis will follow.

1. French Industrial Production: Published on Tuesday at 7:45 GMT. The continent’s second largest economy suffered from two disappointing drop in its industry’s output. Economists usually expected small changes, but the actual results were rather strong. A rise of 0.4% is predicted this time.
2. French CPI: Published on Wednesday at 7:45 GMT. In the past three months, French prices have disappointed with slow advances of 0.1% or drops in prices. Contrary to Germany, inflation is still quite asleep in France. A modest rise of 0.3% is expected.
3. German Final CPI: Published on Thursday at 7:00 GMT, a few hours before the rate decision. While this is a late figure, the timing makes it important. Germany’s prices picked up in December, according to the preliminary release – 0.7%. A confirmation of this number will probably be seen, and might put a rate hike in European policymakers’ horizon.
4. Industrial Production: Published on Wednesday at 10:00 GMT. The all-European figure is preceded with numbers from Germany and France. This makes this figure more predictable. Two months of rise were followed by a drop of 0.6% last time. A rise this time is important for the Euro. A rise of 0.6% is predicted.
5. Rate decision: Published on Thursday at 12:45 GMT. Jean-Claude Trichet isn’t expected to move the interest rate. Yet again, for the 8th month in a row, the European Minimum Bid Rate is predicted to remain at 1%. As in previous cases, the focus will shift to the ECB Press Conference, where Mr. Trichet may lay out the policy for 2010, and may hint a possible timing for a rate hike, now that prices stopped falling in the Euro-zone. The press conference will take place at 13:30 GMT.
6. German WPI: Published on Friday at 7:00 GMT. This is the first inflation indicator in a week full with such figures. The continent’s largest economy has printed a leap in wholesale prices after two months of drops. This is one of the signs that Europe is pulling out of deflation. A 0.4% rise is predicted this time.
7. CPI: Published on Friday at 10:00 GMT. The last inflation release is the official and final one for the whole continent. The Consumer Price Index rose by an annualized rate of 0.5% in November and rose by 0.9% in December according to  the initial print last week. This is expected to be confirmed this time. Core CPI is different: prices have been slowing down according to this figure, to an annualized rate of 1% last month, continuing a gradual drop throughout 2009.

EUR/USD Technical Analysis

The range of 1.42 to 1.4480 continues to dominate the pair. No change from last week. A failed attempt to breach 1.4480 was made at the beginning of the week. The low for this week was at 1.4257.

Looking up, the upper border of the range consists of two line: 1.4444 which was the resistance line in the summer, and 1.4480, which is now more important: EUR/USD didn’t go below this line after breaking upwards in September, and tested this line just now.

Above this range, 1.466 is a line that served as a support line when the Euro was trading higher. During November, EUR/USD was stuck in a different range, and 1.48 was the bottom border of it. Even higher, 1.5144 was the peak for 2009, and looks far at the moment.

Below, 1.42 serves as the bottom border of the current range, and will continue to serve as an important support line. Lower, 1.40 is a round number and worked as a stepping stone for the Euro as it went up.

Strongest support is found at 1.3750: this was an important support and resistance line during 2009.

I am bearish on EUR/USD

With American and European Unemployment rates equal at 10%, Europe has no advantage, and a European rate hike seems unlikely in the near future. I see the range broken to the downside.

This popular pair receives many interesting reviews on the web. Here are some that I like:

• Casey Stubbs analyzes the range and asks when it will break.
• Mohammed Isah sees consolidation to the downside in force for this pair.
• James Chen sees a potential inverted flag pattern.
• The Geek Knows brings and in-depth review of EUR/USD and looks towards the new week.

From: ForexCrunch.com  posted by Yohay