Kamis, 17 Maret 2011

FOREX INTRADAY SNAPSHOT

EUR/USD
Continues to consolidate between 1.3855 and 1.4013, but downside risk is considered limited at this stage. Resistance at 1.3969 is likely to face renewed bull pressure, and a break through there would re-open Tuesday's high at 1.4013. The key Mar. 7 reaction high at 1.4036 would then come within striking distance. Loss of 1.3866 and 1.3855 would prompt a deeper corrective setback towards the Mar. 11 reaction low at 1.3752.

GBP/USD
Bear pressure is building on last week's 1.5978 low, as a bearish head-and-shoulders top is close to completion. A push below the neckline near 1.5978 is likely to attract a powerful wave of weakness towards a downwave equality target at 1.5835, but there is scope for 1.5771 and the Jan. 25 low at 1.5752. Regaining ground above Wednesday's high at 1.6123 is required to provide respite, but Monday's high at 1.6199 is expected to cap gains.

USD/JPY
A record low at 76.25 was reached during Asia's current trading session, but a recovery is underway towards solid resistance between 79.75 and 80.25. This week's completion of a four-month bear pennant suggests this recovery off 76.25 is corrective, and the main threat is for a return to the all-time low at 76.25. There is more room to the downside towards 75.00 in the coming sessions.

AUD/USD
A good recovery is underway off a 15-week low at 0.9705, and more gains are threatened above resistance at 0.9850. A clean break would extend the recovery towards Wednesday's high at 0.9964, but there is scope for a retest of parity before peaking. Failure to keep 0.9705 intact would put bears back in control, prompting a downtrend extension towards 0.9670 and 0.9537.


FOREX FOCUS
In dangerous times, only the safest of safe havens will do. And these days, that's the Swiss franc. Over the last week or two, the Swiss franc has proven considerably more popular than the other two traditional safe havens: the yen and the dollar. With investors spooked first by the unrest in the Middle East and then the devastating tsunami in Japan, the Swiss currency has climbed to a new all-time high against the dollar. Not only is the currency benefit ting from Switzerland's longtime reputation as a good place to be in troubled times, but it is also getting a boost from the country's robust economic recovery and expectations that Swiss interest rates could rise sooner than those in other major economies. In other words, not only are funds parked in Switzerland safer--they are also likely to earn more. Investors' preference for the franc over the yen is hardly surprising, given the continued threat of a nuclear meltdown in Japan and the uncertain state of the country's economy and fiscal health in the months to come. The yen is still getting support from expectations of repatriation flows but all bets could soon be off if the yen gets too strong. A strong currency is the last thing Japan needs right now, and currency markets are already speculating that other central banks would help the Bank of Japan keep the dollar from falling under Y80. The dollar itself also appears to have lost its edge as a safe haven, at least relative to the franc. The Fed confirmed this week that despite an upturn in inflation and an economy that has found a "firmer footing," it isn't about to deviate from its program of quantitative easing. Investors are probably also put off by the prospect of the U.S. becoming involved in any military action in the Middle East.


EUROPE
The yen inched higher against both the dollar and the euro in European trading hours Thursday as markets remained on high alert for any signs of intervention by Japanese authorities to weaken the yen. The dollar had plummeted to an all-time low against the yen of Y76.25 in very early Asian trading but recovered to stabilise around Y79 on expectations the Bank of Japan would step into the market. The euro also sank to as low as Y106.60 but also clawed back most of its losses to trade at around Y110. But intervention had not materialized in European hours with most strategists arguing that such action is unlikely to happen ahead of the Group of Seven emergency conference call to discuss Japan at 2200 GMT. "The market will be worried all day that [the G-7] are going to come to some agreement that may lend the dollar some support against the yen," said Jane Foley senior currency strategist at Rabobank in London. "There is almost certainly going to be some degree of rhetoric and the risk of actual intervention has risen during the week," she added. Japanese economy minister Kaoru Yosano helped lay the groundwork for intervention, saying that speculative yen purchases in the European market were "groundless". Crucially, Finance Minister Yoshihiko Noda also said he was watching the market closely.


ASIA
The yen pulled back from record highs reached against the dollar earlier in the Asian session Thursday, as markets braced for potential intervention by the Japanese government to force the yen lower. Japanese Finance Minister Yoshihiko Noda said he is closely watching the yen given "nervous movements" and "speculations" in the market. Other Japanese officials also claimed the overnight spike in the yen was driven by speculators, not by repatriation flows in the wake of last Friday's devastating earthquake. However, while the greenback has recovered some its losses against the yen, there are concerns markets are yet to see to the end of the headline-driven panic. "The next few days will be crucial with the nuclear reactor situation," Mitsuru Sahara, a senior FX dealer at Bank of Tokyo-Mitsubishi UFJ, said. "If current efforts to cool the reactors fail and there are meltdowns, there could be panic early next week that would drive the dollar down below Y76 and possibly to Y75." The U.S. dollar plummeted to a record-low of Y76.250 in early Asia trade, but had nosed up to Y78.82 by late Thursday on expectations that the Bank of Japan might intervene. "At the moment, the market is front-running a possible intervention" by the Finance Ministry, said David Forrester, a currency strategist at Barclays Capital. "We think the yen is in a place where such intervention is warranted."


WORLD
The dollar hit its weakest ever level against the yen Wednesday in New York, as Japan's unfolding nuclear crisis prompted speculators to bet that heavy repatriation flows will likely be needed to respond to a deepening disaster. Overall, safe-haven currencies--paradoxically including the yen--soared in extremely volatile trading as traders took in new warnings about possible catastrophic events at Japan's crippled nuclear power plant. The dollar fell as low as Y79.22 according to EBS via CQG, falling below its previous low of Y79.75, hit in April 1995. The dramatic move prompted traders to warn that the likelihood of currency intervention by Japan to curb yen strength had increased sharply. Traders responded en masse to dire warnings from U.S. Energy Secretary Steven Chu who said he believed a "partial meltdown" occurred at the Japanese nuclear power plant damaged by explosions, malfunctions and radiation leaks following the earthquake. Chu added, however, that Japan's Fukushima Daiichi nuclear power plant has containment systems to prevent leaks and that a partial meltdown doesn't mean the "containment systems will fail." "That (caused) a bit of panic," said Paresh Upadhyaya, head of Americas G10 FX strategy at Bank of America Merrill Lynch.