{"id":19927,"date":"2011-03-04T08:15:31","date_gmt":"2011-03-04T13:15:31","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=19927"},"modified":"2011-03-04T08:15:31","modified_gmt":"2011-03-04T13:15:31","slug":"forex-daily-market-commentary-the-dollar-stabilized-against-the-euro-after-yesterdays-heavy-losses","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/03\/04\/forex-daily-market-commentary-the-dollar-stabilized-against-the-euro-after-yesterdays-heavy-losses\/","title":{"rendered":"Forex Daily Market Commentary: The dollar stabilized against the euro after yesterday\u2019s heavy losses"},"content":{"rendered":"

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

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)<\/strong><\/strong>
\n
\nUSD<\/em><\/strong><\/p>\n

The absence of news flow and economic data releases made for a quiet Asia session. The dollar stabilized against the euro after yesterday\u2019s heavy losses in the wake of ECB President Trichet\u2019s hawkish commentary. EURUSD traded 1.3930-1.3972, USDJPY 81.73-82.52. The S&P 500 finished +1.7% higher, and the Nikkei is +1% stronger at the time of writing. The nonmanufacturing ISM index rose to 59.7. Jobless claims fell sharply to 368k and the downtrend continues after having been interrupted by January storms. Our analysts forecast a +235k rise in total nonfarm payrolls (cons. +195k) and a +250k rise in private payrolls (cons. +200k). They also expect the unemployment rate to stay unchanged at 9.0% (cons 9.1%). Before the payrolls report, attention will likely be on today\u2019s speeches from several ECB policymakers, where corroboration of Trichet\u2019s remarks could lead to further euro upside. We still think the dollar could strengthen in the medium term but the latest ECB comments put the dollar on rockier footing in the near term.
\n
\nEUR<\/em><\/strong><\/p>\n

Market participants had been expecting a hawkish tone and ECB President Trichet definitely delivered, noting the need for \u201cstrong vigilance\u201d as risks to the inflation outlook had moved to the upside. The phrase has been used previously to signal an imminent rate hike and Trichet later said that vigilance could mean a rate hike next month, though he stressed this is not certain. The ECB also increased its staff forecasts for inflation in both 2011 and 2012, with the upward revision for 2011 larger than our analysts had expected, to between 2.0% and 2.6% from 1.2% to 2.2% previously. Our European economists now look for a 25bp hike at the April meeting. The ECB kept the rules of the 3m repo operation unchanged at full allocation, a fact which was largely overshadowed by the discussion on rates.
\nThe hawkish comments point to continued euro upside, at least in the near term. But EURUSD failed to go above 1.40 as market participants await the US labour data release. An above-consensus print in the US will likely be needed to help the dollar recover some of its losses versus the euro.
\nThe series of services PMIs was released across the Eurozone, with the composite indicator slightly softer at 58.20. Eurozone Q4 GDP was not revised, as expected.
\nA Spanish auction was well received with a bid-to-cover ratio in the 5y at 2.17, up from 2.11 last time.
\n
\nCHF<\/em><\/strong><\/p>\n

SNB\u2019s Jordan said that the deflation risk in Switzerland has largely disappeared but the question of raising rates is not one for \u201ctoday or tomorrow\u201d.<\/p>\n

TECHNICAL OUTLOOK<\/strong>
\nEURUSD 1.4000 resistance.
\nEURUSD BULLISH The pair targets 1.4000 with scope for 1.4086 next. Near-term support is defined at 1.3833.
\nUSDJPY BEARISH Break of support 81.57 would open the way to 81.13\/80.93 area. Resistance is at 82.89.
\nGBPUSD BULLISH The pair eyes resistance 1.6379, break of this would pave way to 1.6458 next, Support lies at 1.6216.
\nUSDCHF BEARISH Bearish pressure holds above 0.9200, move below this level would expose 0.8951 next. Near-term resistance at 0.9392.
\nAUDUSD BULLISH Climb through 1.0202 would open up key resistance 1.0256. Near-term support at 1.0085.
\nUSDCAD BEARISH Focus is on 0.9684; break below the level would expose 0.9600. Resistance at 0.9800.
\nEURCHF NEUTRAL Abrupt rise through 1.2893 has initial resistance at 1.3138 while support is at 1.2788.
\nEURGBP BULLISH Break of 0.8555 has exposed 0.8593 ahead of 0.8619. Support at 0.8461 holds.
\nEURJPY BULLISH Sharp recovery through 114.19\/94 has exposed 115.42\/68 resistance area. Support defined at 113.10.<\/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 absence of news flow and economic data releases made for a quiet Asia session. The dollar stabilized against the euro after yesterday\u2019s heavy losses in the wake of ECB President Trichet\u2019s hawkish commentary. EURUSD traded 1.3930-1.3972, USDJPY 81.73-82.52.<\/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-19927","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19927","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=19927"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19927\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=19927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=19927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=19927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}