Sterling Surges In Asian Session

Posted on Tuesday, January 19th, 2010 and is filed under Forex School. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Tue, Jan 19 2010, 08:23 GMT
The USD drifted lower in yesterday’s thin holiday markets but has since recovered to almost flat on the day (DXY 77.00) after news of another hike in the yield of Chinese 1-year bills and confirmation of the long-speculated filing for bankruptcy protection from troubled Japanese airline JAL. Further denting risk sentiment, Japan Consumer Confidence released today slumped to 37.6 in December; down from November’s 39.5 – a revelation that caused a quick knee-jerk sell-off in USDJPY from 90.70 levels down to 90.36 (due to the unwind of carry-trades, rather than genuine speculative demand for JPY). Precious metals have benefitted, with gold above $1140 levels (+0.70% on the day) and silver at $18.80 (+0.90% on the day).
Comments continue to trickle from EU members as they remained engaged in discussion about their strategy for dealing with Greece; latest remarks from the EU members Almunia and Juncker suggested Greece’s proposals were ambitious, and should help rebalance public finances. This reassurance has allowed EURUSD to consolidate above 1.4400 levels, but there still remains significant supply around 1.4480 levels to overcome the recent bearish trend.
This morning’s main data release will be UK CPI expected to climb 0.3% MoM, bringing annualized CPI up to 2.6% from last month’s 1.9% reading. GBPUSD remains well-supported above the 1.6250 pivot level, and overnight has climbed above the 1.6400 resistance level after Goldman Sachs upgraded their assessment for UK growth; suggesting the UK may grow faster than other economies.
The Bank of Canada rate announcement is due at 14:00 CET, where it is expected rates will be left unchanged at 0.25%, and furthermore it is likely that BoC members will affirm commitment to loose monetary policy until the end of the second quarter. It is likely the statement will acknowledge an improvement in global economic conditions, but as one of the more cautious central banks in the G10, they will also probably emphasize that significant uncertainty in the outlook remains (particularly with regards to the country’s biggest trading partner, the US). Nevertheless, Canadian fundamentals are looking stronger, and any significant revisions higher to the inflation or growth forecasts would be positive for CAD. Although we see only a slim risk at this meeting, any discussion of possible exit strategies in the coming year would also be a new and hawkish development.
R 2: 133.65
R 1: 132.40
CURRENT: 130.30
S 1: 129.95
S 2: 128.95
R 2: 12.825
R 1: 12.778
CURRENT: 12.645
S 1: 12.575
S 2: 12.487
R 2: 0.9405
R 1: 0.9325
CURRENT: 0.9265
S 1: 0.9170
S 2: 0.9125
R 2: 1.0425
R 1: 1.0324
CURRENT 1.0255
S 1: 1.0220
S 2: 1.0205
S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

fxstreet.com

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