{"id":19734,"date":"2011-02-22T08:40:29","date_gmt":"2011-02-22T13:40:29","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=19734"},"modified":"2011-02-22T08:40:29","modified_gmt":"2011-02-22T13:40:29","slug":"forex-daily-market-commentary-220","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/02\/22\/forex-daily-market-commentary-220\/","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

Risk appetite declined sharply during the Asia session as tensions \t\t\tin Libya increased, New Zealand was struck by another powerful \t\t\tearthquake, and Moody’s lowered the outlook on Japan’s sovereign \t\t\trating from stable to negative. Sentiment was not helped by a sudden \t\t\t(but brief) 30-pip spike in USDJPY as the Asia session got underway. \t\t\tEURUSD has traded 1.3563-1.3685, and USDJPY 82.84-83.54. Asian \t\t\tstocks are down about 1-2%, and US stock futures are also pointing \t\t\tlower. After first breaking above $1410\/oz, gold slipped as the \t\t\trisk-averse mood took hold, and is trading back below $1400\/oz at \t\t\tthe time of writing. Signs of growing unrest in the Middle East kept \t\t\tthe price of crude elevated, despite the risk-off backdrop. In the \t\t\tUS, Minneapolis Fed President Kocherlakota, often seen as a \t\t\treluctant supporter of QE2, is due to speak later today. Our US \t\t\teconomists are broadly in line with the consensus and expect \t\t\tFebruary consumer confidence to come in virtually unchanged. They \t\t\talso expect the latest S&P\/Case-Shiller survey to register a further \t\t\tfall in US house prices.
\n EUR<\/span><\/em><\/strong><\/p>\n

Portugal’s Finance Minister dos Santos said the country already has \t\t\tenough cash to cover two-thirds of the bond redemptions due in April \t\t\tand June. He added that 70% of this cash came from overseas \t\t\tinvestors, and that 10% of this cash was of Chinese origin.
\nECB Executive Board member Stark said that, although inflation \t\t\texpectations are still well anchored, the ECB is prepared to act \t\t\t“quickly and decisively” on inflation if necessary. He said the key \t\t\tquestion now is to decide whether Europe is facing a temporary \t\t\tinflation “hump”, or a more protracted period of inflation. He \t\t\twarned too that if second-round effects do materialize, the current \t\t\tmonetary policy setting would put the ECB behind the curve.
\nStark dismissed the idea that last week’s surge in emergency ECB \t\t\tlending might influence the ECB’s decision on whether to phase out \t\t\tnon-standard liquidity provision. He described the sharp increase in \t\t\tusage of the ECB’s marginal lending facility as a “very short-lived \t\t\tevent mainly due to developments in Ireland”.
\nStark went on to say that the EFSF, and its proposed successor (the \t\t\tESM), should be allowed to purchase bonds in the secondary markets, \t\t\tbut that this would not necessarily mean an end to ECB bond \t\t\tpurchases, given that the latter is a monetary policy decision. \t\t\tThese comments suggest that the ECB’s Securities Markets program \t\t\tcould remain in place for quite some time to come, although Stark \t\t\tdid add that the program should not continue any “longer than \t\t\tabsolutely necessary”. The ECB settled ?711 mn worth of bond \t\t\tpurchases last week, after three weeks of inactivity.
\nGreek Prime Minister Papandreou described as “unsustainable” the \t\t\tinterest rates charged on rescue loans to Greece. He repeated that \t\t\tGreece would not default on, or restructure, its debt. He added that \t\t\tit is not an option for individual member states to leave the \t\t\tEurozone as it would be negative for everyone.
\nOutgoing ECB Governing Council member Weber compared the process of \t\t\tfiscal consolidation to marathon running and predicted that the \t\t\thardest part of the journey lay ahead for fiscally vulnerable member \t\t\tstates. Weber sensationally added that fiscal austerity measures \t\t\t“have shaken and fundamentally damaged the foundations of monetary \t\t\tunion.” He also voiced his opposition to the concept of fiscal union \t\t\tat least for now, stressing that “the crisis mechanism should not \t\t\tbecome the gateway for institutionalised transfer payments within \t\t\tthe currency union”.
\n JPY<\/span><\/em><\/strong><\/p>\n

Moody’s lowered its outlook for Japan’s sovereign rating to negative \t\t\tfrom stable, citing “heightened concern that economic and fiscal \t\t\tpolicies may not prove strong enough to achieve the government’s \t\t\tdeficit reduction target and contain the inexorable rise in debt”. \t\t\tMoody’s went on to say that a JGB funding crisis is unlikely in the \t\t\tnear to medium term, and that it sees no immediate change in JGB \t\t\tinvestor behaviour.
\nBefore the outlook change, Economy and Fiscal Reform Minister Yosano \t\t\tpointed to an advantage of a strong yen, noting that it provides \t\t\tsome insulation against the rise in oil prices.
\n GBP<\/span><\/em><\/strong><\/p>\n

BoE MPC member Weale noted the UK is at risk of stagflation, and \t\t\tagain made the case for an early rate hike, predicting that a small \t\t\trise now would reduce the need for an even larger hike later. Both \t\t\tWeale and MPC member Sentance voted for a 25bp rate hike at the \t\t\tJanuary meeting, and the market continues to speculate about whether \t\t\tanother hawkish MPC member has since come forward to cast his vote. \t\t\tHence, the release of the minutes of the Feb. 10 policy meeting will \t\t\tbe key for sterling on Wednesday.
\nMPC member Posen, who voted for an expansion of Gilt purchases in \t\t\tJanuary, is due to speak at 1700 GMT. Any indication that he is \t\t\treconsidering his stance would be seen as further evidence of a \t\t\thawkish shift in thinking on the MPC, and would likely be \t\t\tsterling-positive.
\n NZD<\/span><\/em><\/strong><\/p>\n

The NZD sold off heavily after another strong earthquake hit \t\t\tChristchurch. Extensive destruction was reported. Fitch said that \t\t\tthe impact of the earthquake by itself is not expected to lead to a \t\t\tsovereign downgrade.<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong>
\nEURCHF 1.2867 support.
\nEURUSD BULLISH A move above 1.3744 would expose 1.3826. Near-term \t\t\tsupport at 1.3546.
\nUSDJPY BULLISH As long as 82.34 continue to cap the downside risks, \t\t\texpect recovery towards 83.98.
\nGBPUSD BULLISH Upside gains are stalled at 1.6279\/99 resistance \t\t\tzone. Support is defined at 1.6076.
\nUSDCHF BEARISH Currently holds support at 0.9425, a move below this \t\t\twould expose 0.9329\/01 support area. Initial resistance at 0.9539.
\nAUDUSD BULLISH Break of 1.0018 exposes 0.9944, but overall focus in \t\t\ton the upside with initial resistance at 1.0158 ahead of 1.0200.
\nUSDCAD BEARISH Move below 0.9816 would expose 0.9745\/12 area. \t\t\tNear-term resistance at 0.9905.
\nEURCHF NEUTRAL A break below 1.2867 would trigger negative tone. \t\t\tInitial resistance is at 1.3029.
\nEURGBP BEARISH Break of 0.8356 would lead to the extension of losses \t\t\ttowards 0.8332\/13 support zone. Near-term resistance is at 0.8450.
\nEURJPY BULLISH Look for a break above114.94 for extension of the \t\t\tbull trend towards 115.42\/68. Near-term support holds at 112.09.<\/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":"

Risk appetite declined sharply during the Asia session as tensions in Libya increased, New Zealand was struck by another powerful earthquake, and Moody’s lowered the outlook on Japan’s sovereign rating from stable to negative.<\/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-19734","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19734","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=19734"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19734\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=19734"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=19734"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=19734"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}