Rabu, 02 Februari 2011

FOREX INTRADAY SNAPSHOT

EUR/USD
The powerful uptrend sets fresh two-month highs, and the next port of call above Wednesday's current session high at 1.3862 is the 1.3950 area. The 76.4% Fibonacci retracement level of the 1.4283/1.2860 bear wave lies at 1.3947, and a measured target based on the recent 190-pip consolidation range highlights 1.3950. Backup resistance lies at 1.4000. Downside risk looks limited to the 1.3750 area, but a lot of work would be required to wrest control from USD bears.

GBP/USD
The bull wave off last week's 1.5752 low is extending strongly into fresh twelve-week highs, and is closing in on the 1.6211 target. The 1.6211 level represents a 1.618 Fibonacci extension target, but the key November reaction high at 1.6298 is now looking vulnerable. Corrective weakness will attract support while above 1.6000, which is protected by 1.6075.

USD/JPY
The support line of a three-month bear pennant is being challenged at 81.31, as the robust downtrend continues to dominate. The sharpness of the decline off the Jan. 27 83.22 high creates room for a break below 81.31 this week, exposing the 2011 low at 80.93 and the bear pennant low at 80.21 from last November. Corrective gains are limited to the 81.92 area, and only above there would provide a near-term boost.

AUD/USD
Corrects off Tuesday's high at 1.0150, with downside risk limited to the 1.0045 area. This week's strong recovery off 0.9866 is likely to keep 1.0045 protected, and prompt a fresh wave of bull pressure to the 1.0150 high. Tuesday's strength also negated a three-week bear pennant, and a return to the Dec. 28-year high at 1.0258 is expected in the coming sessions. Only a break below 1.0045 would question the positive tone, exposing 0.9975.


FOREX FOCUS
Interest rates are once again the only game in town. The political turmoil in Egypt may have shaken the currency kaleidoscope for a short while, and if the political tensions spread to other countries in the Middle East, risk will once again become a currency issue. But risk is not an issue right now. If anything, the impact interest-rate speculation is having on currencies has probably intensified over the past few days. With the European benchmark for crude oil prices rising to over $100 a barrel for the first time in two years and other commodity prices remaining strong, there has been more talk of the need to combat the rise in inflation. At the moment, the euro, the pound and the commodity currencies are among the biggest winners. There is nothing new about the hawkish stance of the European Central Bank. But, for the first time, financial markets might be taking this hawkishness seriously. Up until now, the assumption was that there was little the ECB could do while the funding costs of the euro zone's peripheral debtors was still rising and the risk of a sovereign default remained high. However, recent progress in negotiations within the European Union for a credit rescue package has changed all that. The falling cost of credit default swaps for "peripherals" has helped to raise expectations that the ECB can probably respond to higher inflation pressures with tighter monetary policy if it wants to. Optimism that the European Union is closer to a permanent solution to the sovereign debt crisis is also providing help for the pound, as this helps to remove the threat of default for the U.K.'s highly exposed banks. Again, this will make it easier for the Bank of England to respond to the higher inflation pressures posed by commodity prices, with the National Institute of Economic and Social Research warning early Tuesday that the Bank will end up raising rates three times this year.

EUROPE
The euro has paused Wednesday from the steady gains that took it close to three-month highs against the dollar as the upcoming U.S. ADP jobs report added a note of caution to the day's proceedings, but support for the single currency remains strong. Earlier Wednesday, the euro reached it highest level against the dollar since Nov. 9, stopping short of $1.39 at $1.3862. But despite backing off day highs, its perch above $1.38 remains intact amid solid demand. The euro's gains have been attributed to a confluence of factors. A pickup in economic data from around the world has been followed by tensions easing in Egypt, where President Hosni Mubarak pledged to step down this year, which in turn saw investors move back into assets seen as carrying greater risks. With oil prices remaining elevated, markets are considering which central banks are most likely to make early moves on lifting interest rates, and the European Central bank is tipped to move before the Fed. But at this point, interest-rate expectations are looking over-stretched in the euro's favor, making the currency vulnerable to a reversal in fortunes, Credit Agricole said in a research note. The trigger for such a move may come from the ADP employment report, the bank said. "ADP might provide pressure release valve."

ASIA
The euro and British pound rose to fresh multi-month highs against the dollar in Asia Wednesday, as strong regional equities prodded investors to buy the risk-sensitive currencies. The gains were supported by speculation that rising inflation in the E.U. and the U.K. may lead to nearer-term rate hikes in those areas. Dealers said attention for the rest of the global day will be on the E.U.'s producer price index for December, due at 1000 GMT, and on U.S. jobs data for January from payroll giant Automatic Data Processing Inc. Strength in the E.U. figures could further buoy the euro, although even solid U.S. data may not help the dollar much dealers said, as the job market still has far to go, keeping any Federal Reserve tightening a ways off. Stronger Asian bourses Wednesday prompted short-term investors in Asia to buy risk-sensitive currencies such as the euro and pound against the safe-haven dollar, traders said. The gain in equities was led by Japan's benchmark Nikkei Stock Average, which was up 1.9% in late afternoon trade. Demand for higher-yielding, riskier assets pushed the common currency to a new high of almost three months at $1.3862, its highest mark since Nov. 9. At 0450 GMT, it was at $1.3860, up from $1.3829 late Tuesday in New York.

WORLD
The euro surged to a two-and-a-half month high against the dollar Tuesday in New York as investor appetite for riskier assets increased and expectations for an interest-rate hike in the euro zone grew. The euro climbed above $1.38 for the first time since Nov. 11 and was able to hold above that level as traders opted for riskier assets, pressuring classic safe havens such as the dollar. Analysts said strong economic data globally buoyed expectations for European growth and worries momentarily eased that Egyptian protests would create broader unrest in the Middle East or lead to a shut down of the Suez Canal, a key artery for the transport of oil. Egyptian President Hosni Mubarak said in a televised statement that he will not seek re-election in September. "This morning's data was a big boost to risk appetite," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. Esiner said the manufacturing readings in the 17-nation euro zone, U.K. and U.S. all added to the market's improving risk sentiment. That led to a broad sell-off in the dollar. The dollar fell to its lowest level against the U.K. pound since Nov. 12 and touched a nearly one-month low against the Swiss franc Tuesday. Manufacturing activity in the U.K. expanded at its strongest rate in at least 19 years in January, while euro zone manufacturing activity jumped to a nine-month high. U.S. manufacturing activity last month reached its highest level since 2004. Strong economic readings added to expectations that the European Central Bank will be forced to raise interest rates to fight rising inflation this year. The Bank of England could also contemplate a rate hike to rein in rising inflation.