{"id":19300,"date":"2011-02-11T08:43:41","date_gmt":"2011-02-11T13:43:41","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=19300"},"modified":"2011-02-11T08:43:41","modified_gmt":"2011-02-11T13:43:41","slug":"forex-daily-market-commentary-214","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/02\/11\/forex-daily-market-commentary-214\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

By GCI Forex Research<\/strong><\/p>\n

Fundamental Outlook at \t\t\t0800 GMT (EDT + 0400)<\/strong><\/p>\n

USD<\/span><\/em><\/strong><\/p>\n

The dollar held firm overnight on a combination of elevated yields \t\t\t and caution in equity markets. EURUSD traded in a range of \t\t\t 1.3552-1.3621 and USDJPY 83.21-83.52. A Japanese holiday limited \t\t\t volumes somewhat, though given yesterday’s jitters in Eurozone \t\t\t sovereign bond markets and ongoing geopolitical tension in the \t\t\tMiddle East, we would expect the dollar to continue enjoying \t\t\tunderlying support, especially with data surprises to the upside in \t\t\tthe US. Yesterday’s initial jobless claims plunged to 383k, the \t\t\tlowest since July 2008. A combination of unusually bad winter \t\t\tweather and normal volatility around the holidays has added extra \t\t\tvolatility to the claims readings recently, although the trend is \t\t\tdownward is consistent with an improving labor market, which could \t\t\tbolster the case for some payback in the next Bureau of Labor \t\t\tStatistics release. Better claims data pushed yields higher while \t\t\tthe new 30y auction went roughly as expected.
\nFed Chairman Bernanke and other officials are not worried about \t\t\thigher yields because they say they reflect expectations for growth \t\t\tand reactions to future data prints should help confirm whether \t\t\tmarket participants are fully onboard with the US recovery. \t\t\tMeanwhile, Fed Governor Warsh, one of the more outspoken governors \t\t\tagainst the Fed’s asset purchase program announced his resignation, \t\t\teffective March 31. We are against consensus for the February \t\t\tpreliminary University of Michigan confidence index forecast as we \t\t\tare looking for a decrease to 71.5. But a print in line with our \t\t\testimate would still be the fourth consecutive month of an above-70 \t\t\tfigure, so we would not expect a low figure to necessarily weigh too \t\t\tmuch on the dollar. There are no major releases out of Europe but \t\t\tinvestors will continue to monitor volatility in Eurozone periphery \t\t\tspreads.
\n EUR<\/span><\/em><\/strong><\/p>\n

Eurozone peripheral bond yields marched higher, prompting reports of \t\t\tcentral bank bond purchasing to stem the rise. Portuguese yields \t\t\tseemed to be the larger movers, which prompted Portuguese officials \t\t\tto say the higher yields represent a speculative attack on the euro \t\t\tand that Europe is preparing a response to the situation. Officials \t\t\talso said current yields do not correspond to the fundamentals and \t\t\tthat the country will be able to finance itself in the debt markets. \t\t\tRegardless, the latest move in yields show that recent talk on \t\t\tEurozone sovereign solutions are still not viewed as a comprehensive \t\t\tsolution, which puts more focus on the upcoming March 11 EU summit. \t\t\tSpanish Prime Minister Zapatero even went so far as to say the \t\t\tsummit would be “transcendental\u201d.
\nThat said, we still remain negative on the euro as potential \t\t\tsolutions could disappoint expectations and as borrowing costs \t\t\trepresent a significant obstacle. German CPI came in at 2.0%, \t\t\tslightly above market expectations.
\n GBP<\/span><\/em><\/strong><\/p>\n

PPI figures are due in the UK today and the market is looking for \t\t\tsofter growth in input costs while output price levels are expected \t\t\tto register 0.3%m\/m gains. Core output PPI is also expected to hit \t\t\t3.0%y\/y and the BoE will be watching nervously for signs of \t\t\tsecond-round effects in general price levels.
\nThe BoE left policy unchanged as expected, though there was a small \t\t\trisk of a change given the timing of next week’s inflation report. \t\t\tAs such no explanatory statement was issued and the focus shifts to \t\t\tthe Feb 23 minutes.
\nThe National Institute of Economic and Social Research said the UK \t\t\teconomy grew +0.6% in January, largely due to the recovery of output \t\t\tfrom the impact of adverse weather at the end of last year.
\n AUD<\/span><\/em><\/strong><\/p>\n

RBA Governor Stevens was on the wires overnight and sounded more \t\t\tcautious in testimony to parliament. He noted that although China’s \t\t\teconomy is stronger than expected, inflation is now a little lower \t\t\tthan thought and price effects are not a serious threat to \t\t\tinflation. Crucially, he said that market pricing of no hikes until \t\t\tlater in the year is “reasonable”, noting that the RBA is “ahead of \t\t\tthe game” with policy and comfortable on the level of interest \t\t\trates. AUDUSD responded negatively, trading from 1.0045 at the open \t\t\tto below parity.
\n CAD<\/span><\/em><\/strong><\/p>\n

Canadian officials are concerned that currency strength could hamper \t\t\tgrowth but a recent publication by Export Development Canada, an \t\t\texport credit agency, essentially says Canadian exporters have \t\t\tadapted their methods to a stronger Canadian dollar. So while our \t\t\tforecasts call for Canadian dollar weakness relative to the US \t\t\tdollar on the basis of an improving US backdrop, another expected \t\t\ttrade deficit print may not be as much of a damper on growth or the \t\t\tloonie, should exporters have quickly adapted to sustained currency \t\t\tstrength.<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong>
\nUSDJPY 83.68 resistance.
\nEURUSD NEUTRAL Break of 1.3572 has turned the model to neutral; \t\t\tSupport zone is at 1.3509\/1.3482 while resistance is at 1.3744.
\nUSDJPY BULLISH Violation of 82.93 pressurises initial resistance \t\t\t83.68, break of which would expose 83.91, support lies at 81.20.
\nGBPUSD BULLISH As long as support at 1.5922 holds, expect recovery \t\t\ttowards 1.6186 ahead of 1.6279\/99 zone. Near-term support is defined \t\t\tat 1.6010.
\nUSDCHF BULLISH Breach of 0.9687 has exposed 0.9764 next; support at \t\t\t0.9575\/24 zone.
\nAUDUSD NEUTRAL Pressure on initial support 0.9964 builds, break of \t\t\tthis would expose 0.9897. Initial resistance is at 1.0152.
\nUSDCAD NEUTRAL 1.0011 and 0.9915 mark the near term directional \t\t\ttriggers.
\nEURCHF BULLISH Momentum is positive; focus is on 1.3206\/87 \t\t\tresistance zone. Support at 1.2973.
\nEURGBP BEARISH Focus is on initial support at 0.8420 ahead of \t\t\t0.8377. Near-term resistance is at 0.8530.
\nEURJPY BULLISH Resistance zone is at 114.01\/94. Initial support lies \t\t\tat 112.06.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/span><\/p>\n

GCI Financial Ltd (\u201dGCI\u201d) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (\u201dForex\u201d) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (\u201dCFDs\u201d) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.<\/p>\n

DISCLAIMER: GCI\u2019s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n","protected":false},"excerpt":{"rendered":"

The dollar held firm overnight on a combination of elevated yields and caution in equity markets. EURUSD traded in a range of 1.3552-1.3621 and USDJPY 83.21-83.52. A Japanese holiday limited volumes somewhat, though given yesterday’s jitters in Eurozone sovereign bond markets<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-19300","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=19300"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19300\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=19300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=19300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=19300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}