{"id":20010,"date":"2011-03-09T08:45:07","date_gmt":"2011-03-09T13:45:07","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=20010"},"modified":"2011-03-09T08:45:07","modified_gmt":"2011-03-09T13:45:07","slug":"forex-daily-market-commentary-the-dollar-continues-to-strengthen-gradually","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/03\/09\/forex-daily-market-commentary-the-dollar-continues-to-strengthen-gradually\/","title":{"rendered":"Forex Daily Market Commentary: The dollar continues to strengthen gradually"},"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 dollar continued to strengthen gradually during the Asia session. The absence of news, combined with the prevalence of short dollar positions, suggests that an unwind of overstretched positions was likely at work over the past 24 hours. EURUSD traded between 1.3873 and 1.3924 and USDJPY between 82.61 and 82.94. Asian equities are marginally ahead at the time of writing, while the S&P 500 had closed up 0.89%.
\nThere are no top-tier releases in the US ahead so positioning and external factors will likely continue to drive currencies. Our 1m forecasts, which we revised earlier in the week, reflect that sentiment favours the currencies of hawkish central banks in the near term, but we maintain our 3m forecasts on the basis of an improving US economy and continuing Eurozone debt worries.
\n
\nEUR<\/em><\/strong><\/p>\n

Greek and Irish bonds remain under pressure, with their 2y spreads relative to Germany well above the rest of the Eurozone. S&P said it also sees more downgrades for Eurozone countries, though the ratings agency did not elaborate.
\nGerman factory orders grew faster than expected in January at +16.0% y\/y and +2.9% m\/m, compared to consensus expectations of +15.6% y\/y and +2.5% m\/m respectively.
\nECB Governing Council member Nowotny said that the ECB is strictly keeping to the goal of price stability. Inflation is not seen as a threat if second-round price effects can be contained. He also said that the ECB never pre-commits to interest rates, although did acknowledge that \u201cstrong vigilance\u201d is seen as a code word in the markets.
\n
\nCHF<\/em><\/strong><\/p>\n

After the unemployment rate fell for February, the upcoming CPI release now takes centre stage. We look for an increase in both m\/m and y\/y CPI, though slightly below consensus (0.2% m\/m vs. cons. 0.3% m\/m, 0.3% y\/y vs. cons. 0.4% y\/y). An upward surprise on CPI could lend support to CHF but might not be enough to shake the SNB out of their current stance. Relative central bank tightening expectations continue to favour EURCHF upside.
\n
\nAUD<\/em><\/strong><\/p>\n

More Australian economic data from January was released overnight. The latest data show more signs of strain as a result of the flooding in Queensland. Our Australian economists note that consumer confidence has fallen to a nine- month low, and the value of housing finance (excluding refinancing) dropped by 6.4% \u2013 the sharpest fall since March 2008.
\n
\nNZD<\/em><\/strong><\/p>\n

Our analysts expect the RBNZ to cut the OCR by 50bp. Given that the consensus is only looking for a smaller 25bp cut, the NZD is likely to come under selling pressure immediately after the policy announcement. Clearly the policy statement is also likely to be highly influential, and any suggestion from Governor Bollard that he might consider easing policy further in the future is likely to add to any downside pressure on NZD.<\/p>\n

TECHNICAL OUTLOOK<\/strong>
\nEURGBP 0.8654\/72 resistance.
\nEURUSD BULLISH Focus is on 1.3989 yesterday\u2019s high, move above this would open up 1.4036\/86 area next. Support is defined at 1.3833.
\nUSDJPY NEUTRAL Recovery from 81.57 signals potential for gains towards 83.07\/41 zone. Short-term support defined at 81.95.
\nGBPUSD NEUTRAL Pull back from 1.6344 has turned the model to neutral; break of this level is required for resumption of uptrend. Near-term support is at 1.6072.
\nUSDCHF BEARISH Support at 0.9200 holds, move below this would open 0.8951 next. Near-term resistance at 0.9392.
\nAUDUSD NEUTRAL Initial resistance is at 1.0202, break of this would expose key resistance 1.0256. Near-term support is at 1.0002.
\nUSDCAD BEARISH Bearish outlook is intact; support zone is at 0.9700\/0.9684. Resistance is defined at 0.9776.
\nEURCHF BULLISH Focus is on 1.3138, break of this level would expose 1.3205. Support at 1.2788 holds.
\nEURGBP BULLISH Outlook remains bullish with focus on 0.8654\/72 resistance area. Near-term support is at 0.8566.
\nEURJPY BULLISH While support at 114.19 holds, the cross targets 116.00\/65 resistance zone.<\/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":"

The dollar continued to strengthen gradually during the Asia session. The absence of news, combined with the prevalence of short dollar positions, suggests that an unwind of overstretched positions was likely at work over the past 24 hours. <\/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-20010","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/20010","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=20010"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/20010\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=20010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=20010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=20010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}