{"id":19538,"date":"2011-02-17T08:35:14","date_gmt":"2011-02-17T13:35:14","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=19538"},"modified":"2011-02-17T08:35:14","modified_gmt":"2011-02-17T13:35:14","slug":"forex-daily-market-commentary-218","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/02\/17\/forex-daily-market-commentary-218\/","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

A lack of news flow ensured a relatively subdued Asia session, \t\t\talthough the dollar still weakened against most of its G10 peers. \t\t\tEURUSD traded 1.3536-1.3609, USDJPY 83.50-83.86. Asian stocks \t\t\tcontinue to make gains, as risk appetite firmed despite further \t\t\ttensions in the Middle East. Earlier, the S&P 500 closed +0.63% \t\t\tahead, and has now doubled since the mid-crisis intra-day low of \t\t\tMarch 2009. US data was mixed. Housing starts surprised to the \t\t\tupside despite bad weather, though building permits dropped as \t\t\texpected. Industrial production unexpectedly fell -0.1%, and PPI and \t\t\tcore PPI both rose more than anticipated, though our US economists \t\t\tcaution on any extrapolation as January has usually shown \t\t\texaggerated swings.
\nThe FOMC minutes showed diminishing downside risks, however, the \t\t\t“assessment of the most likely outcomes for economic activity and \t\t\tinflation over the projection period was not greatly changed.” The \t\t\tcommittee upgraded its estimate for 2011 real (inflation-adjusted) \t\t\tGDP growth but only modestly lowered its unemployment forecast. It \t\t\talso lowered its inflation forecast. Changes to the outlook may not \t\t\toccur quickly enough to scale back QE2 but our economists expect \t\t\tthat the growth outlook, if realized, would be sufficient for the \t\t\tFOMC to allow the balance sheet to contract from H2 2011, followed \t\t\tby a gradual tightening cycle beginning in 2012.
\n EUR<\/span><\/em><\/strong><\/p>\n

German Chancellor Merkel nominated Jens Weidmann, her chief economic \t\t\tadviser, as the next Bundesbank president. Current Bundesbank \t\t\tPresident Weber is expected to remain in the post until April 30.
\nWe remain negative on the euro as US growth is likely to outperform \t\t\tthat of the Eurozone this year. We also doubt that Europe’s \t\t\t“comprehensive solution” due by the end of March will solve the \t\t\tsovereign debt crisis.
\n GBP<\/span><\/em><\/strong><\/p>\n

Sterling sold off after BoE Governor King talked down expectations \t\t\tof an early rate hike. He said that “some people are running ahead \t\t\tof themselves” if they think the BoE is laying the groundwork for a \t\t\trate rise. He denied that the bank was endorsing the market’s \t\t\texpectations for future policy tightening. He also dismissed the \t\t\tidea that the BoE might deliver an early hike to allay public \t\t\tconcern about inflation, adding that the MPC is “not in the business \t\t\tof futile gestures”.
\nNevertheless, our analysts note that the BoE’s inflation forecast \t\t\twas revised up in the quarterly inflation report, despite a new \t\t\thigher path for interest rates being used (this higher path assumes \t\t\tthe policy rate will reach 1% by year-end). Our UK economist sticks \t\t\tto his view that the first hike to the policy rate will come in Q3, \t\t\talthough he acknowledges that the chances of a May hike are now \t\t\t“significant”. Attention will now shift to the minutes of the BoE’s \t\t\tFeb. 10 policy meeting, which are due for release next week.
\nUnemployment data was slightly disappointing; the market was \t\t\tpredicting a decline in the jobless claims number by 3k but the \t\t\tnumber came in at +2.4k, with the claimant count rate and ILO rate \t\t\tunchanged.
\n CHF<\/span><\/em><\/strong><\/p>\n

The Swiss government announced measures to help domestic industries \t\t\tcope with the strong Swiss franc. However, these measures do not aim \t\t\tto weaken the franc itself, and the government was clear that \t\t\tmonetary policy is the responsibility of the SNB. The franc \t\t\toverreacted to the news, falling one big figure against the euro and \t\t\tdollar before eventually recovering.
\n AUD<\/span><\/em><\/strong><\/p>\n

RBA Assistant Governor Lowe noted that higher commodity prices are \t\t\tadding to global inflationary pressures, and he sees risks to Asian \t\t\tgrowth if central banks are forced to respond to accelerating food \t\t\tinflation.<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong>
\nGBPUSD 1.6186 resistance.
\nEURUSD NEUTRAL 1.3621 and 1.3428 mark the near-term bull and bear \t\t\ttriggers respectively.
\nUSDJPY BULLISH Focus is on 84.21\/51 resistance zone. Support at \t\t\t83.10.
\nGBPUSD BULLISH Recovery stalled in front of 1.6186; move above the \t\t\tlevel would expose 1.6279. Support is defined at 1.5987.
\nUSDCHF BULLISH Pullback through 0.9575 exposes 0.9524. Initial \t\t\tresistance at 0.9739 ahead of 0.9776.
\nAUDUSD NEUTRAL Initial resistance at 1.0075, while support is \t\t\tdefined at 0.9944.
\nUSDCAD BEARISH The pair eyes 0.9832\/20 support zone; break through \t\t\tthis would expose 0.9712. Near-term resistance at 0.9905.
\nEURCHF BULLISH As long as support at 1.2973 holds, expect gains to \t\t\ttarget 1.3131 ahead of 1.3206.
\nEURGBP BEARISH Move below initial support 0.8356 would expose \t\t\t0.8332. Near-term resistance is at 0.8450.
\nEURJPY BULLISH Targets 114.01\/94 resistance area. Support lies at \t\t\t11291.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/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":"

A lack of news flow ensured a relatively subdued Asia session, although the dollar still weakened against most of its G10 peers. EURUSD traded 1.3536-1.3609, USDJPY 83.50-83.86. Asian stocks continue to make gains, as risk appetite firmed despite further tensions in the Middle East.<\/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-19538","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19538","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=19538"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19538\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=19538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=19538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=19538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}