Kamis, 24 Maret 2011

FOREX INTRADAY SNAPSHOT

EUR/USD
Support in the 1.4035/50 region is under threat, having completed a near-term head-and-shoulders top on the intraday chart on Wednesday. However, the dominant uptrend will remain intact whilst projected support at 1.3965 holds. Regaining ground above 1.4130 would lift the tone, and above 1.4215 would bring this week's high at 1.4249 back into focus.

GBP/USD
Corrective weakness has room to extend below Wednesday's 1.6218 low, towards the 1.6175/90 area. The 50% Fibonacci retracement level of the 1.5978/1.6401 rally resides in this area, and backup support lies at 1.6125. Keeping 1.6218 intact, combined with a clean break above 1.6272 would lift the tone, prompting a recovery back towards the 1.6386.

USD/JPY
Remains trapped within a tight 80.52/81.32 range, and more of the same is expected during Thursday's current session. However, the main threat is for a bearish resolution, and a break below 80.70 would expose the 80.52 low. Downside projections suggest there is room for 80.00 and the significant 79.75 level in the coming sessions. Only a break above 81.32 would create room for further gains towards the March 18 reaction high at 82.00.

AUD/USD
The powerful short-term uptrend remains intact, as the March 11 high at 1.0160 comes under pressure. The key lower high at 1.0203 from March 1 would come within striking distance on a break through 1.0160, as the recovery off the March 17 reaction low at 0.9705 strengthens. Corrective weakness is limited to the 1.0035 area.

FOREX FOCUS
This could finally be the time to take up short positions in the yen. The G-7 intervention Friday may have helped to halt the Japanese currency's rally, but the loss of haven status as well as post-quake policies will likely ensure the yen turns down. In the days immediately after the tsunami and nuclear crisis in Japan, the yen appeared unstoppable, surging on global uncertainty and widespread talk of heavy repatriation flows for reconstruction. Fears that the yen's strength would damage the Japanese economic recovery prompted G-7 central banks to step in, their first coordinated intervention in over 10 years, driving the dollar from well under Y79 to back up over Y80, where it has remained relatively stable ever since. The funny thing is, the upward pressures on the yen may not have been so strong after all. Not only has the currency failed to resume its rally after the G-7 intervened, but the whole exercise now looks to have been much smaller than initially thought. The finance ministry in Tokyo suggests that Bank of Japan sales last Friday amounted to only about Y0.53 trillion, well below the market's estimate of at least Y2 trillion. As March, and Japan's fiscal year, draws to a close, there could be some increased flows from Japanese investors bringing their money home. But the wave of the repatriation the market so feared immediately after the earthquake shows little sign of materializing. For the yen's longer-term performance, Japan policies in the months ahead will make all the difference.

EUROPE
The euro pushed higher across the board in European trading hours Thursday despite peripheral concerns re-emerging ahead of the European Union summit as the prospect of interest rate rises from the European Central Bank continued to provide support for the single currency. The 17-country currency is higher against the dollar, yen, pound and regional currencies of Switzerland and Sweden despite the collapse of Portugal's government and news that Moody's had taken multiple rating actions on Spanish banks. "This year interest rate differentials have been the overwhelming factor behind moves in the euro against the dollar and looking at today's activity that is very much still the case," said Jane Foley, a foreign-exchange analyst at Rabobank in London. The euro has been favoured over the dollar ever since the European Central Bank indicated interest rate rises are on the horizon. In the near term though, the euro could see some volatility with the two-day European Union summit due to kick-off later Thursday. "The real issue facing the euro today and tomorrow remains the EU summit and more specifically the ability of Eurozone officials to reach a compromise on the extension of the European Financial Stability Fund and the creation of the European Stability Mechanism--the two bailout facilities which are needed to provide insurance against potential further problems in the euro zone periphery," a strategist covering the Group of 10 industrial nations at Citigroup said.

ASIA
The euro pared earlier gains against the dollar in Asian trading Thursday as concerns over sovereign debt problems in the euro zone prompted traders to take profits, but the single currency found support as traders here downplayed the risk that the European debt woes will keep worsening. "It isn't a situation where the European debt problem will continue to worsen. So the euro is unlikely to fall further," said Dai Sato, vice president of the foreign exchange division at Mizuho Corporate Bank. Portugal's parliament rejected on Wednesday new budget curbing measures proposed by Prime Minister Jose Socrates, who immediately tendered his resignation. "The news itself did not have a lasting impact here as the outcome was mostly anticipated," Sato added. During morning trade, the euro fell against the dollar on an Expansion report in its Internet edition Thursday that Moody's will downgrade the credit ratings of Spanish banks today. The euro was further dragged down by comments from a Swedish official on the likelihood of a "number" of banks failing the forthcoming EU stress test. Swedish FSA Official Lars Frisell tells Dow Jones "there will be a number of banks failing the stress test."

WORLD
The euro slid Wednesday in New York, as a rejection of austerity measures by Portugal's parliament provided a harsh reminder to investors that the euro-zone's fiscal woes remain unresolved. Portugal's government was thrown into uncertainty after the parliament rejected new budget-curbing measures proposed by Prime Minister Jose Socrates, who immediately tendered his resignation. Analysts have warned that the government's collapse could greatly increase pressure on the country to take an international bailout. Portugal is one of the euro zone's most financially vulnerable economies. As such, analysts fear that the "no" vote will incur the wrath of bond investors that have sent yields on Portuguese debt soaring to unsustainable levels. "The political situation in Portugal ... has taken the shine off the euro," said Joe Manimbo, senior market analyst at Travelex Global Business Payments. Over the last few weeks, the euro has surged as investors chased expectations of higher returns ahead of an expected interest rate hike by the European Central Bank, perhaps as soon as next month. Expectations of an ECB rate hike "will help limit the downside, but a weaker euro story has further room to run if concerns continue to escalate about the health of euro-zone nations," he added. All eyes are on a key European Union summit scheduled for this week. Analysts expect a blueprint for a bailout mechanism for the 17-nation currency bloc's most financially strapped members.