EUR/USD
The powerful uptrend remains intact, and further gains above Monday's current session high at 1.4200 are expected. The Nov. 4 reaction high at 1.4283 is the main target, which is straddled by two 1.618 Fibonacci extension targets. Corrective weakness will attract support while above 1.4115, and solid support at 1.4050 provides backup.
GBP/USD
The recovery extends to put key resistance in the 1.6277 area under threat. This rally off 1.5978 is forming the right-hand shoulder of a head-and-shoulders top formation, which suggests a peak in the 1.6277 area should be expected. Projected support at 1.6130 needs to be broken in order to attract further weakness towards 1.6061 and the March 15 reaction low at 1.5978. A clean break through 1.6277 would question the six-week uptrend reversal pattern, and open the March 2 reaction high at 1.6344 again.
USD/JPY
The setback off 82.00 is likely to attract fresh pressure on support at 80.52. The dominant bear trend is likely to test the 79.75 area, although there is scope for 79.17 before the likelihood of finding a near-term base. Regaining ground above 81.26 is required to open the 82.00 high again.
AUD/USD
The recovery is expected to extend to the 1.618 Fibonacci target at 1.0057 at least, as bulls look to regain a foothold above parity. A clean break through 1.0057 would bring the focus on to the March 11 high at 1.0160, and strengthen the March 17 reaction low at 0.9705 in the process. Good support lies in the 0.9875/0.9905 area, which is protected by 0.9941.
FOREX FOCUS
China's policy moves are often unpredictable and Friday's decision to raise its bank reserve requirement ratio was no different. Coming only hours after the Group of Seven leading industrial nations had launched a historic coordinated exercise to weaken the yen and help Japan recover from last week's catastrophic earthquake, the announcement triggered a stream of speculation over China's intentions. China does have form in this department. Last year, it chose to raise rates for the first time in about three years soon after Japan had launched its own massive intervention to drive the yen lower. The exercise wasn't particularly successful, but China was soon at it again--raising interest rates when most of the rest of the world was out celebrating Christmas Day. Certainly, the move by G-7 to weaken the yen will not have been popular in Beijing, which has been keeping a very careful cap on the strength of its own currency, the yuan, to keep it competitive. Also, with vast holdings of Japanese government bonds, picked up when it was diversifying its foreign-exchange reserves in the last year or two, the last thing the People's Bank of China wants is a weak yen. However, there is no obvious reason why a move to make bank lending in China more difficult, and thus slow economic activity, would in any way offset a more competitive yen.
EUROPE
The euro was a touch lower in European trading Monday but well supported above the $1.41 level against the dollar as the European Central Bank is thought to be on track to lift interest rates despite the ongoing troubles in Japan and the Middle East. Bombing by allied forces in Libya and protests in Bahrain have propelled oil prices higher and put worries about spiralling inflation levels back at the top of the agenda. But investors' willingness to embark on relatively risky bets, and to buy relatively high-risk currencies, is undimmed. That is supporting the euro and the Australian dollar, for example, while it dents currencies seen as safe retreats, like the yen and the Swiss franc. In all, the market is dominated by a significantly calmer tone than has been seen over the past week or so, particularly when compared to frantic trading conditions as the Group of Seven largest industrialized nations launched its rare coordinated action to weaken and stabilize the yen last Friday. "The two dollar spike in oil is capturing attention but otherwise there is some calm overall," said Simon Derrick, currency strategist at Bank of New York Mellon.
ASIA
Japanese markets are closed for Vernal Equinox Day.
WORLD
The Federal Reserve intervened in the currency market Friday, buying dollars and selling yen as part of a coordinated effort by Group of Seven nations to weaken Japan's currency. It was the first coordinated currency intervention since 2000 and started overnight in Tokyo when the Bank of Japan initiated a promised "battle" against currency speculators by the Ministry of Finance. The Bank of England, Bundesbank, Banque de France and Bank of Italy all then intervened during European trading, and the Bank of Canada also acted.
Nomura Securities estimated Y2 trillion for the BOJ intervention and another $5 billion across Europe. Those coordinated efforts helped send the dollar shooting up as high as Y82 from Y78.93 late Thursday in New York. The initial intervention from the Fed came right at 8 a.m. EDT, the start of the New York trading day. Traders in New York estimated that orders were placed in mostly $50 million blocks with multiple banks and that the Fed likely traded about $600 million. The intervention showed the world's central banks stood with the BOJ in a coordinated effort to push back against speculators who had ridden down the dollar against the yen to record levels early Thursday. The strength of the yen has been a long-time problem for Japanese officials even before this week, as it makes it difficult for its high-tech and auto components export-driven economy to compete in the global market. Japan's strong currency has contributed to deflationary conditions which have proven hard to shake for the world's third-largest economy
Senin, 21 Maret 2011
Jumat, 18 Maret 2011
FOREX INTRADAY SNAPSHOT
EUR/USD
Further gains are expected above 1.4088 as the powerful two-month uptrend threatens to extend. A wave equality target lies at 1.4125, but there is scope for 1.4165 based on the recent intraday higher low at 1.3980. Sterner resistance lies at the top end of the monthly Ichimoku cloud at 1.4185. Congestion between 1.3980 and 1.4036 will attract support, and only below the latter would concern USD bears.
GBP/USD
The corrective recovery extends to put resistance at 1.6199 under threat. This rally off 1.5978 is forming the right-hand shoulder of a head-and-shoulders top formation, which suggests a peak in the 1.6277 area should be expected. A clean break through 1.6277 would question the six-week uptrend reversal pattern, and re-open the Mar. 2 reaction high at 1.6344. A push below 1.6099 would prompt a return to the week's low at 1.5978, where the neckline lies.
USD/JPY
Central banks are manufacturing the recovery off this week's record low at 76.25, and resistance at 82.00 is being challenged. However, the technical bear trend remains intact while the Feb. 16 reaction high at 83.98 holds, and this high is protected by resistance at 83.30. A break below 79.17 is required to attract fresh bear pressure towards 78.26.
AUD/USD
Resistance at 0.9952 is under threat, as the recovery off the week's low at 0.9705 looks to extend. The intraday higher low at 0.9782 suggests a break through 0.9964 should be expected, opening 0.9995 initially, but creating scope for further gains towards the 1.618 Fibonacci extension target at 1.0057. Only a reversal below 0.9782 would bring the 0.9705 low back into the picture.
FOREX FOCUS
The Bank of Japan had better be braced for a big battle as it tries to stop the yen from rising to new record highs against the dollar. Currency intervention only works at the best of times and these are not the best of times for the yen. There is little doubt that the strength of the yen is unwarranted. The currency was overvalued by as much as 6% even before the earthquake in Japan last Friday prompted buying, as the market began to anticipate the repatriation of funds. Also, with Japanese interest rates down at virtually zero and the Bank of Japan pouring in an additional Y31 trillion of liquidity in the last four days alone, yields on the yen can hardly be described as attractive. Nonetheless, as the Bank of Japan found to its cost last September, international support for the Japanese currency remains strong. Back then, the central bank launched its largest ever solo intervention exercise, spending Y2.13 trillion in a futile attempt to stop the dollar from falling under Y85. Needless to say, the dollar kept on falling and a strong yen remained a problem for Japanese exporters as the country struggled to stop slipping back into recession. By the time the earthquake - and then the tsunami - hit Japan's north-east coast nearly a week ago, the dollar was still down at Y83. If anything, the need for a weaker yen now has become even more acute than it was last September. Since the earthquake, the currency has rallied another 8%, breaking to a new record high of Y76.25 against the dollar late on Wednesday. And the growth prospects for the Japanese economy have deteriorated rapidly. For the moment, though, the Bank of Japan is nowhere to be seen. This could be because the bank is choosing to play a cat-and-mouse game that leaves the market guessing over just what it plans to do. Or, it could be because the Japanese are hoping to get international support as the ongoing threat of nuclear contamination from the damaged nuclear reactors at Fukushima still poses a risk for financial markets in general. A weaker yen will then be in the self-interest of other major economies as much as it is now for Japan.
EUROPE
It was an extraordinary trading session in Europe, as several European central banks were seen intervening in a bid to tame the sky-high yen, but after an initial skid lower in yen crosses, the Japanese currency has regained momentum and clawed back some of its losses. Intervention from the Bundesbank, the Banque of France, the Bank of England and later the Bank of Italy came after the Bank of Japan intervened on behalf of the Japanese Ministry of Finance overnight, spending around Y1 trillion to Y2 trillion buying dollars against the yen. The European Central Bank also confirmed that it had participated in selling the Japanese currency. The central banks' efforts managed to push the euro and the dollar higher against the yen at the London open, pushing the euro to Y115.56, a two week-high, and the dollar to Y82. But the Japanese currency later pushed back up to stronger levels than it held before the European central banks' action. "Europe walked in to find the dollar close to Y82.00 against the yen," said Citibank in a note to clients, adding that this spurred speculation whether euro-area banks would step in to currency markets. "The Banque de France appeared to be first out of the gates buying the euro against the yen. [This] was followed by the ECB and Bundesbank and later the Banca d'Italia; the BOE also waded in to buy sterling against the yen." But as the yen bounced back against these currencies immediately after the intervention, Citigroup noted that "the lack of follow through has drawn a lot of 'sniggering' about the effectiveness of intervention." The yen was pushing higher as investors continued to pile into the relative safety of the currency after the Japanese Nuclear Agency said it had raised the accident scale level of the quake-damaged Fukushima Daiichi nuclear plant to level 5, similar to the severity of the accident at Three Mile Island in 1979. The agency said the increased safety warning was due to "serious damage" to the plant's reactors.
ASIA
The U.S. dollar and euro surged against the yen Friday after the Group of Seven finance ministers agreed to joint intervention to weaken the yen, as Japan struggles with multiple natural disasters and an ongoing nuclear emergency. The dollar spiked as high as Y81.84 from around Y79.50 earlier, as G-7 finance ministers issued a communique following a conference call. The dollar was recently at Y81.64. Traders said the united stand added "clout" to the announcement. It marked the first joint G-7 intervention since 2000. "We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector," the communique said. "We will monitor exchange markets closely and will cooperate as appropriate." Japan's finance minister told reporters that market intervention that occurred from 0000 GMT was from authorities in Japan, and each G-7 country would intervene in their own market. "At a time when Japan is in a difficult situation, it is extremely significant that G-7 authorities agreed to act in concert and cooperate for the stability of the markets," Yoshihiko Noda said. Dealers said the U.S. dollar was likely to continue rising against the yen over the next 24 hours as central banks take their turn at providing support.
WORLD
The yen fell from a record high against the dollar Thursday, as demand for the currency in the wake of Japan's nuclear crisis was temporarily squelched by fears that officials may sell yen to curb its strength. In a seemingly counterintuitive move, demand for the yen has surged as Japan's natural disaster has rapidly transformed into a nuclear crisis that has roiled markets worldwide. On Thursday, the yen's broad strength hammered the dollar to a historical low at Y76.25, and sent the euro to its lowest level since September at Y106.50. In the last week alone, the currency has appreciated by more than 8% amid speculation that Japanese institutions were selling foreign assets in order to send money back to the disaster-stricken country. On Thursday, those flows gave way to concerns that Japan might intervene--perhaps with the help of the world's largest industrialized nations. Analysts, however, are sharply divided on the nature of the investment flows behind the surging yen. While most acknowledge that Japanese repatriation is supporting the yen, they add that widespread risk aversion was leading some investors to unwind "carry trades" that use the low-yielding Japanese currency to fund high-return, riskier positions elsewhere
Further gains are expected above 1.4088 as the powerful two-month uptrend threatens to extend. A wave equality target lies at 1.4125, but there is scope for 1.4165 based on the recent intraday higher low at 1.3980. Sterner resistance lies at the top end of the monthly Ichimoku cloud at 1.4185. Congestion between 1.3980 and 1.4036 will attract support, and only below the latter would concern USD bears.
GBP/USD
The corrective recovery extends to put resistance at 1.6199 under threat. This rally off 1.5978 is forming the right-hand shoulder of a head-and-shoulders top formation, which suggests a peak in the 1.6277 area should be expected. A clean break through 1.6277 would question the six-week uptrend reversal pattern, and re-open the Mar. 2 reaction high at 1.6344. A push below 1.6099 would prompt a return to the week's low at 1.5978, where the neckline lies.
USD/JPY
Central banks are manufacturing the recovery off this week's record low at 76.25, and resistance at 82.00 is being challenged. However, the technical bear trend remains intact while the Feb. 16 reaction high at 83.98 holds, and this high is protected by resistance at 83.30. A break below 79.17 is required to attract fresh bear pressure towards 78.26.
AUD/USD
Resistance at 0.9952 is under threat, as the recovery off the week's low at 0.9705 looks to extend. The intraday higher low at 0.9782 suggests a break through 0.9964 should be expected, opening 0.9995 initially, but creating scope for further gains towards the 1.618 Fibonacci extension target at 1.0057. Only a reversal below 0.9782 would bring the 0.9705 low back into the picture.
FOREX FOCUS
The Bank of Japan had better be braced for a big battle as it tries to stop the yen from rising to new record highs against the dollar. Currency intervention only works at the best of times and these are not the best of times for the yen. There is little doubt that the strength of the yen is unwarranted. The currency was overvalued by as much as 6% even before the earthquake in Japan last Friday prompted buying, as the market began to anticipate the repatriation of funds. Also, with Japanese interest rates down at virtually zero and the Bank of Japan pouring in an additional Y31 trillion of liquidity in the last four days alone, yields on the yen can hardly be described as attractive. Nonetheless, as the Bank of Japan found to its cost last September, international support for the Japanese currency remains strong. Back then, the central bank launched its largest ever solo intervention exercise, spending Y2.13 trillion in a futile attempt to stop the dollar from falling under Y85. Needless to say, the dollar kept on falling and a strong yen remained a problem for Japanese exporters as the country struggled to stop slipping back into recession. By the time the earthquake - and then the tsunami - hit Japan's north-east coast nearly a week ago, the dollar was still down at Y83. If anything, the need for a weaker yen now has become even more acute than it was last September. Since the earthquake, the currency has rallied another 8%, breaking to a new record high of Y76.25 against the dollar late on Wednesday. And the growth prospects for the Japanese economy have deteriorated rapidly. For the moment, though, the Bank of Japan is nowhere to be seen. This could be because the bank is choosing to play a cat-and-mouse game that leaves the market guessing over just what it plans to do. Or, it could be because the Japanese are hoping to get international support as the ongoing threat of nuclear contamination from the damaged nuclear reactors at Fukushima still poses a risk for financial markets in general. A weaker yen will then be in the self-interest of other major economies as much as it is now for Japan.
EUROPE
It was an extraordinary trading session in Europe, as several European central banks were seen intervening in a bid to tame the sky-high yen, but after an initial skid lower in yen crosses, the Japanese currency has regained momentum and clawed back some of its losses. Intervention from the Bundesbank, the Banque of France, the Bank of England and later the Bank of Italy came after the Bank of Japan intervened on behalf of the Japanese Ministry of Finance overnight, spending around Y1 trillion to Y2 trillion buying dollars against the yen. The European Central Bank also confirmed that it had participated in selling the Japanese currency. The central banks' efforts managed to push the euro and the dollar higher against the yen at the London open, pushing the euro to Y115.56, a two week-high, and the dollar to Y82. But the Japanese currency later pushed back up to stronger levels than it held before the European central banks' action. "Europe walked in to find the dollar close to Y82.00 against the yen," said Citibank in a note to clients, adding that this spurred speculation whether euro-area banks would step in to currency markets. "The Banque de France appeared to be first out of the gates buying the euro against the yen. [This] was followed by the ECB and Bundesbank and later the Banca d'Italia; the BOE also waded in to buy sterling against the yen." But as the yen bounced back against these currencies immediately after the intervention, Citigroup noted that "the lack of follow through has drawn a lot of 'sniggering' about the effectiveness of intervention." The yen was pushing higher as investors continued to pile into the relative safety of the currency after the Japanese Nuclear Agency said it had raised the accident scale level of the quake-damaged Fukushima Daiichi nuclear plant to level 5, similar to the severity of the accident at Three Mile Island in 1979. The agency said the increased safety warning was due to "serious damage" to the plant's reactors.
ASIA
The U.S. dollar and euro surged against the yen Friday after the Group of Seven finance ministers agreed to joint intervention to weaken the yen, as Japan struggles with multiple natural disasters and an ongoing nuclear emergency. The dollar spiked as high as Y81.84 from around Y79.50 earlier, as G-7 finance ministers issued a communique following a conference call. The dollar was recently at Y81.64. Traders said the united stand added "clout" to the announcement. It marked the first joint G-7 intervention since 2000. "We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector," the communique said. "We will monitor exchange markets closely and will cooperate as appropriate." Japan's finance minister told reporters that market intervention that occurred from 0000 GMT was from authorities in Japan, and each G-7 country would intervene in their own market. "At a time when Japan is in a difficult situation, it is extremely significant that G-7 authorities agreed to act in concert and cooperate for the stability of the markets," Yoshihiko Noda said. Dealers said the U.S. dollar was likely to continue rising against the yen over the next 24 hours as central banks take their turn at providing support.
WORLD
The yen fell from a record high against the dollar Thursday, as demand for the currency in the wake of Japan's nuclear crisis was temporarily squelched by fears that officials may sell yen to curb its strength. In a seemingly counterintuitive move, demand for the yen has surged as Japan's natural disaster has rapidly transformed into a nuclear crisis that has roiled markets worldwide. On Thursday, the yen's broad strength hammered the dollar to a historical low at Y76.25, and sent the euro to its lowest level since September at Y106.50. In the last week alone, the currency has appreciated by more than 8% amid speculation that Japanese institutions were selling foreign assets in order to send money back to the disaster-stricken country. On Thursday, those flows gave way to concerns that Japan might intervene--perhaps with the help of the world's largest industrialized nations. Analysts, however, are sharply divided on the nature of the investment flows behind the surging yen. While most acknowledge that Japanese repatriation is supporting the yen, they add that widespread risk aversion was leading some investors to unwind "carry trades" that use the low-yielding Japanese currency to fund high-return, riskier positions elsewhere
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.
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.
Rabu, 16 Maret 2011
FOREX INTRADAY SNAPSHOT
EUR/USD
Tuesday's strong recovery off 1.3855 brings the focus back onto the Mar. 7 reaction high at 1.4036. A break through 1.4036 is expected to attract further gains to 1.4085, and the monthly Ichimoku cloud resistance level at 1.4185. Corrective weakness has limited scope to the 1.3900 area, which protects the 1.3855 low.
GBP/USD
The corrective recovery off 1.5978 is set to extend above 1.6101 towards 1.6140 and Monday's high at 1.6199. However, this rally is forming the right-hand shoulder of a larger bearish head-and-shoulders top, and corrective upside risk is limited to the 1.6277 area. A return to support would threaten a neckline break, exposing 1.5837 initially, but with scope for 1.5770 on a slightly longer-term basis.
USD/JPY
The USD is back on its knees, as bears pile pressure on Monday's 2011 low at 80.60. A four-month bear pennant continuation pattern has been completed, and the base of the pattern at 80.21 is likely to be challenged. The key April 1995 all-time low at 79.75 is also vulnerable on concerted weakness. Short-term pivotal resistance lies at 81.22, and only above there would provide temporary respite, opening 81.55.
AUD/USD
The recovery off 0.9815 is expected to extend above 0.9953, and retrace most of Tuesday's wide-ranging down-day. A sustained push above 0.9953 would re-open parity and the 1.0062 resistance area, as part of an eleven-week lateral consolidation phase between 0.9804 and 1.0258. Failure to keep Tuesday's low at 0.9815 would create scope for bull flag support at 0.9743.
FOREX FOCUS
Last Friday and Saturday brought some good news for the euro zone and horrific news for Japan. Yet, in the aftermath, the euro has not only fallen against the yen but failed to make any headway against the dollar. Go figure. If anything, the compromise decision by European Union leaders to extend the European Financial Stability Facility and perhaps bring an end to the sovereign-debt crisis should make an early rise in euro-zone interest rates more likely. With the funding costs of peripheral debtor nations on the slide since the compromise was reached, the European Central Bank will be far less worried about increasing rates by 25 basis points next month. Higher rates, along with the reduced risk of a sovereign-debt default, should make the euro more attractive. But there are three reasons why this may not be happening. First is that compromise agreement. Despite initial optimism over the accord, there are reports of disagreement among finance ministers about implementation and concerns that the whole package still lacks any real teeth to stop member nations from falling short of achieving their fiscal goals. In fact, a certain amount of skepticism has gradually crept in. The strategy team at Commerzbank sums it up: "It seems increasingly likely that the measures (to be) announced on March 24/25 will not really satisfy the foreign exchange markets. Instead it can be expected that there will be more quantity than quality."
EUROPE
The euro took in its stride a ratings downgrade of Portugal overnight but attempts to push it past the $1.40 level against the dollar are proving difficult, while the yen remained steady as some semblance of normality returned to financial markets after share prices in Tokyo recovered some of their losses since the start of the week. That said, the outlook in Japan is still marked by uncertainty after the earthquake Friday and news on the escalating nuclear crisis in the country continues to keep investors on edge. "My suspicion is that this is temporary respite," Neil Mellor, currency strategist at Bank of New York Mellon said of the relative calm in the currency market. Analysts at BNP Paribas too noted some stabilization in confidence levels overall, but said that although the euro is finding decent support, the news surrounding the currency is still negative after Moody's downgraded Portugal by two notches to A3, making it hard for the single currency to pierce through $1.40. "Some of the shine has also been taken off the agreement made at the EU Summit and the Ecofin meeting, with Trichet criticizing the agreement for dealing with countries that have high debt levels as not being tough enough," they said in a note to clients, adding that the euro may dip towards $1.3860. Mellor at Bank of New York Mellon said he expects the dollar to emerge as the safe haven of choice despite the fiscal and monetary policy troubles in the U.S. As the yen continues to find safe-haven buying demand, it has been able to rise against the euro, he added
ASIA
The euro was slightly weaker in early afternoon Asian trading Wednesday after Moody's earlier announced a downgrade of Portugal's long-term government bond ratings. However, the selloff wasn't extensive, with most traders treating it as a distraction to bigger issues still ongoing in Japan. Some traders said the downgrade was simply "Moody's playing catch up" with other ratings agencies. "This doesn't represent a new wave of downgrades," said Sean Callow, currency strategist at Westpac Banking Corp. Moody's downgraded its ratings by two notches, to A3, saying the country will continue to face low growth and funding pressure for years, even if it taps the European Union's bailout fund. "Accessing the European Financial Stability Facility may lead to a reduction in financing costs, but questions would remain as to when the government would be able to re-access the capital markets and on what terms," Moody's said. The rating is now four levels into investment-grade territory, and is on negative outlook, meaning future downgrades are possible. At 0450 GMT, the euro was at $1.3970 from $1.4000 late Tuesday in New York. It traded hands at Y112.94 compared with Y114.22. The dollar was at Y80.82 from Y80.93. Japan's benchmark Nikkei Stock Average was up 3.4% in afternoon trade, giving up some earlier gains after an aftershock shook Tokyo. Despite the rise, share prices remain down sharply on the week. "There is a lot of bad news already in that price," Callow said.
WORLD
Nervous traders jumped into perceived safe havens such as the yen and Swiss franc Tuesday in New York as reports of further explosions at Japan's Fukushima nuclear power plant sent currencies tied to global growth sharply lower across the board. A full-blown nuclear disaster could put pressure on global energy supplies, stoke more oil-driven inflation and have a profound effect in slowing global growth. While higher oil prices typically feed headline inflation, which is normally positive for growth-tied currencies when central banks have to hike rates, these price pressures are also a longer-term drag on economic growth, said currency analysts. A case in point is the commodity-driven, export-tied Australian dollar, which is heavily dependent on exports to Japan, the world's third-largest economy, said Steven Englander, head of G10 strategy at Citigroup in New York. The Australian dollar fell by nearly 2% against the U.S. dollar Tuesday, the worst-performing G10 currency. "The Aussie does really well when conditions are good, and does badly when times are bad," exactly for these reasons, he said. Separately, the euro defied the safe-haven trend by surging still higher against the U.S. dollar, lifted by expectations of a rate hike come April that would burnish the currency's yield appeal. The single currency traded up past $1.4000 in late afternoon trade to its second-highest level all year.
Tuesday's strong recovery off 1.3855 brings the focus back onto the Mar. 7 reaction high at 1.4036. A break through 1.4036 is expected to attract further gains to 1.4085, and the monthly Ichimoku cloud resistance level at 1.4185. Corrective weakness has limited scope to the 1.3900 area, which protects the 1.3855 low.
GBP/USD
The corrective recovery off 1.5978 is set to extend above 1.6101 towards 1.6140 and Monday's high at 1.6199. However, this rally is forming the right-hand shoulder of a larger bearish head-and-shoulders top, and corrective upside risk is limited to the 1.6277 area. A return to support would threaten a neckline break, exposing 1.5837 initially, but with scope for 1.5770 on a slightly longer-term basis.
USD/JPY
The USD is back on its knees, as bears pile pressure on Monday's 2011 low at 80.60. A four-month bear pennant continuation pattern has been completed, and the base of the pattern at 80.21 is likely to be challenged. The key April 1995 all-time low at 79.75 is also vulnerable on concerted weakness. Short-term pivotal resistance lies at 81.22, and only above there would provide temporary respite, opening 81.55.
AUD/USD
The recovery off 0.9815 is expected to extend above 0.9953, and retrace most of Tuesday's wide-ranging down-day. A sustained push above 0.9953 would re-open parity and the 1.0062 resistance area, as part of an eleven-week lateral consolidation phase between 0.9804 and 1.0258. Failure to keep Tuesday's low at 0.9815 would create scope for bull flag support at 0.9743.
FOREX FOCUS
Last Friday and Saturday brought some good news for the euro zone and horrific news for Japan. Yet, in the aftermath, the euro has not only fallen against the yen but failed to make any headway against the dollar. Go figure. If anything, the compromise decision by European Union leaders to extend the European Financial Stability Facility and perhaps bring an end to the sovereign-debt crisis should make an early rise in euro-zone interest rates more likely. With the funding costs of peripheral debtor nations on the slide since the compromise was reached, the European Central Bank will be far less worried about increasing rates by 25 basis points next month. Higher rates, along with the reduced risk of a sovereign-debt default, should make the euro more attractive. But there are three reasons why this may not be happening. First is that compromise agreement. Despite initial optimism over the accord, there are reports of disagreement among finance ministers about implementation and concerns that the whole package still lacks any real teeth to stop member nations from falling short of achieving their fiscal goals. In fact, a certain amount of skepticism has gradually crept in. The strategy team at Commerzbank sums it up: "It seems increasingly likely that the measures (to be) announced on March 24/25 will not really satisfy the foreign exchange markets. Instead it can be expected that there will be more quantity than quality."
EUROPE
The euro took in its stride a ratings downgrade of Portugal overnight but attempts to push it past the $1.40 level against the dollar are proving difficult, while the yen remained steady as some semblance of normality returned to financial markets after share prices in Tokyo recovered some of their losses since the start of the week. That said, the outlook in Japan is still marked by uncertainty after the earthquake Friday and news on the escalating nuclear crisis in the country continues to keep investors on edge. "My suspicion is that this is temporary respite," Neil Mellor, currency strategist at Bank of New York Mellon said of the relative calm in the currency market. Analysts at BNP Paribas too noted some stabilization in confidence levels overall, but said that although the euro is finding decent support, the news surrounding the currency is still negative after Moody's downgraded Portugal by two notches to A3, making it hard for the single currency to pierce through $1.40. "Some of the shine has also been taken off the agreement made at the EU Summit and the Ecofin meeting, with Trichet criticizing the agreement for dealing with countries that have high debt levels as not being tough enough," they said in a note to clients, adding that the euro may dip towards $1.3860. Mellor at Bank of New York Mellon said he expects the dollar to emerge as the safe haven of choice despite the fiscal and monetary policy troubles in the U.S. As the yen continues to find safe-haven buying demand, it has been able to rise against the euro, he added
ASIA
The euro was slightly weaker in early afternoon Asian trading Wednesday after Moody's earlier announced a downgrade of Portugal's long-term government bond ratings. However, the selloff wasn't extensive, with most traders treating it as a distraction to bigger issues still ongoing in Japan. Some traders said the downgrade was simply "Moody's playing catch up" with other ratings agencies. "This doesn't represent a new wave of downgrades," said Sean Callow, currency strategist at Westpac Banking Corp. Moody's downgraded its ratings by two notches, to A3, saying the country will continue to face low growth and funding pressure for years, even if it taps the European Union's bailout fund. "Accessing the European Financial Stability Facility may lead to a reduction in financing costs, but questions would remain as to when the government would be able to re-access the capital markets and on what terms," Moody's said. The rating is now four levels into investment-grade territory, and is on negative outlook, meaning future downgrades are possible. At 0450 GMT, the euro was at $1.3970 from $1.4000 late Tuesday in New York. It traded hands at Y112.94 compared with Y114.22. The dollar was at Y80.82 from Y80.93. Japan's benchmark Nikkei Stock Average was up 3.4% in afternoon trade, giving up some earlier gains after an aftershock shook Tokyo. Despite the rise, share prices remain down sharply on the week. "There is a lot of bad news already in that price," Callow said.
WORLD
Nervous traders jumped into perceived safe havens such as the yen and Swiss franc Tuesday in New York as reports of further explosions at Japan's Fukushima nuclear power plant sent currencies tied to global growth sharply lower across the board. A full-blown nuclear disaster could put pressure on global energy supplies, stoke more oil-driven inflation and have a profound effect in slowing global growth. While higher oil prices typically feed headline inflation, which is normally positive for growth-tied currencies when central banks have to hike rates, these price pressures are also a longer-term drag on economic growth, said currency analysts. A case in point is the commodity-driven, export-tied Australian dollar, which is heavily dependent on exports to Japan, the world's third-largest economy, said Steven Englander, head of G10 strategy at Citigroup in New York. The Australian dollar fell by nearly 2% against the U.S. dollar Tuesday, the worst-performing G10 currency. "The Aussie does really well when conditions are good, and does badly when times are bad," exactly for these reasons, he said. Separately, the euro defied the safe-haven trend by surging still higher against the U.S. dollar, lifted by expectations of a rate hike come April that would burnish the currency's yield appeal. The single currency traded up past $1.4000 in late afternoon trade to its second-highest level all year.
Selasa, 15 Maret 2011
FOREX Intraday snapshot
EUR/USD
Remains capped beneath 1.4000 as support at 1.3892 is tested. A push below 1.3892 is expected to extend the corrective bull pennant, creating scope for more downside consolidation towards projected support at 1.3785. However, the Mar. 11 reaction low at 1.3752 is secure. A push through Monday's 1.4003 high is required to re-open last week's 1.4036 reaction high.
GBP/USD
Suffers a setback off resistance at 1.6200, and more weakness is expected to the 1.6029 area. This 1.6029 area needs to hold in order to protect the Mar. 11 reaction low at 1.5978, and strengthen the key Mar. 2 reaction high at 1.6344. Only a push above 1.6200 would put bulls in control of the near-term, opening 1.6242.
USD/JPY
A recovery off 81.22 is underway towards the 82.05 intraday lower high. A push through 82.05 would confirm 81.22 as a near-term bear failure, and attract further strength to 82.30 and Monday's peak at 82.46. Failure to force a break through 82.05 would prompt a return to the 81.22 low, as part of a wider bearish continuation pattern.
AUD/USD
A downside probe to 0.9925 through the recent range floor threatens further weakness towards higher lows at 0.9866 and 0.9832. However, the Jan. 12 reaction low at 0.9804 needs to be broken in order to concern longer-term bulls. Regaining ground above 1.0062 is required to lift the tone and re-open 1.0110.
FOREX Focus
Japan should get the weak yen it needs. Certainly, there will be some yen-positive flows as Japanese insurers and Japanese companies repatriate overseas holdings to help with the relief effort after Friday's earthquake. But, it is the government's and the Bank of Japan's fiscal and monetary response to the devastation that will ultimately dictate the downward path of the Japanese currency, and ensure that it loses the safe-haven status that has been helping it in recent months. For Japan, and its recovery, this could be key. Finance Minister Yoshihiko Noda has already made this crystal clear, warning financial markets that he is willing to intervene to push the value of the yen down, given how vital exports will be for the country's recovery from this crisis. The recent strength of the yen had been looking questionable even before the sirens went off Friday in north-east Japan, warning that an underwater earthquake had sent a 10-meter-high wave hurtling towards the coast. The Japanese economy was already virtually on its knees. Repeated spending programs aimed at pulling the economy out of recession had pushed the country's debt-to-GDP ratio to a global record-busting 200%. The Bank of Japan, which had long ago slashed its interest rates to virtually zero, had provided its monetary help through repeated increases in its asset-purchase programs. While the fiscal profligacy left the country's credit rating tumbling, the monetary easing left the yield premium offered by other countries rising. Yet, in a world troubled by the spring uprising in the Middle East and North Africa as well as the sovereign debt crisis in the euro zone, the yen was still clinging on to its traditional reputation as safe haven. This, however, should now come to an end. European Union leaders appear to have finally come up with a compromise solution that should help prevent any serious sovereign default there, and despite continued concerns about the monarchies in Bahrain and Saudi Arabia, the Middle East crisis so far hasn't erupted as violently as many had feared. The yen's initial reaction to the earthquake was a knee-jerk fall, but this quickly went into reverse as financial markets started to anticipate repatriation flows and looked at the 18% rally the yen staged after a massive earthquake in the city of Kobe in 1995.
Europe
The dollar rallied in European trading hours against the euro and higher-yielding Asian currencies amid wild trade Tuesday as panic gripped investors on mounting worries over Japan's escalating nuclear emergency. Investors have sought refuge in safe-haven currencies such as the greenback and Swiss franc while the yen ended largely unchanged as market participants remained uncertain about the unit's prospects.
Asia
The yen stabilized Monday morning in Asia after a choppy start to the day, as the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. In announcements throughout the morning, the BOJ offered to inject a record 18 trillion yen into money markets -- Y15 trillion in same-day funds through three separate operations, plus three trillion yen in repurchase agreements. The yen had spiked sharply upward in early trading on expectations of repatriation flows, but soon erased those gains and traded in a tight band from around 0100 GMT. As of 0450 GMT, the U.S. dollar was trading around Y82.12, up from an earlier low of Y80.60, the greenback's lowest level against the yen since Nov. 9. While repatriations would tend to buoy the yen, the BOJ liquidity injections, combined with signals from Japanese officials that they could intervene in currency markets if necessary, kept the U.S. dollar supported for now. A strengthening yen could hurt Japan's export-dependent economy. Meanwhile, Chinese Premier Wen Jiabao, in closing remarks to China's annual legislative gathering, stressed that the yuan's appreciation must be gradual. Wen said the government needs to consider the impact on employment, business and overall social stability. That could point to a slower pace of appreciation, especially after China posted a trade surprise deficit of $7.3 billion in February. The dollar/yuan central parity rate was set Monday at $6.5701, vs 6.5750 on Friday. In Japan, Finance Minister Yoshihiko Noda said Monday morning that authorities will monitor yen levels for now. A senior Finance Ministry official warned Monday morning of the possibility of intervention to stem a strong yen rise. Authorities "will take decisive steps if necessary," he told reporters at the Finance Ministry.
World
Japan's yen surged against other major currencies Friday in New York after a devastating earthquake set off expectations that companies will repatriate yen to help pay for rebuilding efforts. Traders swiftly sold the yen just after the earthquake before reversing course. The dollar fell about 1.4% against the yen on the day, while the euro was down about 0.5% against the yen. "Speculation in advance of repatriation, that's what is driving the yen up right now," said Jeffrey Young, head of North American FX Research at Barclays Capital in New York. Traders are betting that insurers with exposure to Japan and companies based in the country will soon need to buy large quantities of yen to cover damages and pay out insurance claims. They would be forced to exchange foreign currencies for yen, further hurting the dollar, euro and other major units. But it is still too early to assess the extent of the damage and how much money may be needed to rebuild parts of the country that were destroyed by the earthquake and tsunami it triggered, leading to some uncertainty about longer term currency moves. "I'm personally not expecting a huge yen appreciation, but the net impact is probably negative for dollar/yen," said a portfolio manager at a London-based hedge fund. This source expects some Japanese firms to repatriate cash, but only gradually - and he doesn't expect a massive flow of yen back into Japan. The long-term effects on Japan's economy and the yen were still not known. But Moody's Investors Service said it was highly unlikely the country's debt rating would be affected by the earthquake.
Remains capped beneath 1.4000 as support at 1.3892 is tested. A push below 1.3892 is expected to extend the corrective bull pennant, creating scope for more downside consolidation towards projected support at 1.3785. However, the Mar. 11 reaction low at 1.3752 is secure. A push through Monday's 1.4003 high is required to re-open last week's 1.4036 reaction high.
GBP/USD
Suffers a setback off resistance at 1.6200, and more weakness is expected to the 1.6029 area. This 1.6029 area needs to hold in order to protect the Mar. 11 reaction low at 1.5978, and strengthen the key Mar. 2 reaction high at 1.6344. Only a push above 1.6200 would put bulls in control of the near-term, opening 1.6242.
USD/JPY
A recovery off 81.22 is underway towards the 82.05 intraday lower high. A push through 82.05 would confirm 81.22 as a near-term bear failure, and attract further strength to 82.30 and Monday's peak at 82.46. Failure to force a break through 82.05 would prompt a return to the 81.22 low, as part of a wider bearish continuation pattern.
AUD/USD
A downside probe to 0.9925 through the recent range floor threatens further weakness towards higher lows at 0.9866 and 0.9832. However, the Jan. 12 reaction low at 0.9804 needs to be broken in order to concern longer-term bulls. Regaining ground above 1.0062 is required to lift the tone and re-open 1.0110.
FOREX Focus
Japan should get the weak yen it needs. Certainly, there will be some yen-positive flows as Japanese insurers and Japanese companies repatriate overseas holdings to help with the relief effort after Friday's earthquake. But, it is the government's and the Bank of Japan's fiscal and monetary response to the devastation that will ultimately dictate the downward path of the Japanese currency, and ensure that it loses the safe-haven status that has been helping it in recent months. For Japan, and its recovery, this could be key. Finance Minister Yoshihiko Noda has already made this crystal clear, warning financial markets that he is willing to intervene to push the value of the yen down, given how vital exports will be for the country's recovery from this crisis. The recent strength of the yen had been looking questionable even before the sirens went off Friday in north-east Japan, warning that an underwater earthquake had sent a 10-meter-high wave hurtling towards the coast. The Japanese economy was already virtually on its knees. Repeated spending programs aimed at pulling the economy out of recession had pushed the country's debt-to-GDP ratio to a global record-busting 200%. The Bank of Japan, which had long ago slashed its interest rates to virtually zero, had provided its monetary help through repeated increases in its asset-purchase programs. While the fiscal profligacy left the country's credit rating tumbling, the monetary easing left the yield premium offered by other countries rising. Yet, in a world troubled by the spring uprising in the Middle East and North Africa as well as the sovereign debt crisis in the euro zone, the yen was still clinging on to its traditional reputation as safe haven. This, however, should now come to an end. European Union leaders appear to have finally come up with a compromise solution that should help prevent any serious sovereign default there, and despite continued concerns about the monarchies in Bahrain and Saudi Arabia, the Middle East crisis so far hasn't erupted as violently as many had feared. The yen's initial reaction to the earthquake was a knee-jerk fall, but this quickly went into reverse as financial markets started to anticipate repatriation flows and looked at the 18% rally the yen staged after a massive earthquake in the city of Kobe in 1995.
Europe
The dollar rallied in European trading hours against the euro and higher-yielding Asian currencies amid wild trade Tuesday as panic gripped investors on mounting worries over Japan's escalating nuclear emergency. Investors have sought refuge in safe-haven currencies such as the greenback and Swiss franc while the yen ended largely unchanged as market participants remained uncertain about the unit's prospects.
Asia
The yen stabilized Monday morning in Asia after a choppy start to the day, as the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. In announcements throughout the morning, the BOJ offered to inject a record 18 trillion yen into money markets -- Y15 trillion in same-day funds through three separate operations, plus three trillion yen in repurchase agreements. The yen had spiked sharply upward in early trading on expectations of repatriation flows, but soon erased those gains and traded in a tight band from around 0100 GMT. As of 0450 GMT, the U.S. dollar was trading around Y82.12, up from an earlier low of Y80.60, the greenback's lowest level against the yen since Nov. 9. While repatriations would tend to buoy the yen, the BOJ liquidity injections, combined with signals from Japanese officials that they could intervene in currency markets if necessary, kept the U.S. dollar supported for now. A strengthening yen could hurt Japan's export-dependent economy. Meanwhile, Chinese Premier Wen Jiabao, in closing remarks to China's annual legislative gathering, stressed that the yuan's appreciation must be gradual. Wen said the government needs to consider the impact on employment, business and overall social stability. That could point to a slower pace of appreciation, especially after China posted a trade surprise deficit of $7.3 billion in February. The dollar/yuan central parity rate was set Monday at $6.5701, vs 6.5750 on Friday. In Japan, Finance Minister Yoshihiko Noda said Monday morning that authorities will monitor yen levels for now. A senior Finance Ministry official warned Monday morning of the possibility of intervention to stem a strong yen rise. Authorities "will take decisive steps if necessary," he told reporters at the Finance Ministry.
World
Japan's yen surged against other major currencies Friday in New York after a devastating earthquake set off expectations that companies will repatriate yen to help pay for rebuilding efforts. Traders swiftly sold the yen just after the earthquake before reversing course. The dollar fell about 1.4% against the yen on the day, while the euro was down about 0.5% against the yen. "Speculation in advance of repatriation, that's what is driving the yen up right now," said Jeffrey Young, head of North American FX Research at Barclays Capital in New York. Traders are betting that insurers with exposure to Japan and companies based in the country will soon need to buy large quantities of yen to cover damages and pay out insurance claims. They would be forced to exchange foreign currencies for yen, further hurting the dollar, euro and other major units. But it is still too early to assess the extent of the damage and how much money may be needed to rebuild parts of the country that were destroyed by the earthquake and tsunami it triggered, leading to some uncertainty about longer term currency moves. "I'm personally not expecting a huge yen appreciation, but the net impact is probably negative for dollar/yen," said a portfolio manager at a London-based hedge fund. This source expects some Japanese firms to repatriate cash, but only gradually - and he doesn't expect a massive flow of yen back into Japan. The long-term effects on Japan's economy and the yen were still not known. But Moody's Investors Service said it was highly unlikely the country's debt rating would be affected by the earthquake.
FOREX Intraday snapshot
EUR/USD
Remains capped beneath 1.4000 as support at 1.3892 is tested. A push below 1.3892 is expected to extend the corrective bull pennant, creating scope for more downside consolidation towards projected support at 1.3785. However, the Mar. 11 reaction low at 1.3752 is secure. A push through Monday's 1.4003 high is required to re-open last week's 1.4036 reaction high.
GBP/USD
Suffers a setback off resistance at 1.6200, and more weakness is expected to the 1.6029 area. This 1.6029 area needs to hold in order to protect the Mar. 11 reaction low at 1.5978, and strengthen the key Mar. 2 reaction high at 1.6344. Only a push above 1.6200 would put bulls in control of the near-term, opening 1.6242.
USD/JPY
A recovery off 81.22 is underway towards the 82.05 intraday lower high. A push through 82.05 would confirm 81.22 as a near-term bear failure, and attract further strength to 82.30 and Monday's peak at 82.46. Failure to force a break through 82.05 would prompt a return to the 81.22 low, as part of a wider bearish continuation pattern.
AUD/USD
A downside probe to 0.9925 through the recent range floor threatens further weakness towards higher lows at 0.9866 and 0.9832. However, the Jan. 12 reaction low at 0.9804 needs to be broken in order to concern longer-term bulls. Regaining ground above 1.0062 is required to lift the tone and re-open 1.0110.
FOREX Focus
Japan should get the weak yen it needs. Certainly, there will be some yen-positive flows as Japanese insurers and Japanese companies repatriate overseas holdings to help with the relief effort after Friday's earthquake. But, it is the government's and the Bank of Japan's fiscal and monetary response to the devastation that will ultimately dictate the downward path of the Japanese currency, and ensure that it loses the safe-haven status that has been helping it in recent months. For Japan, and its recovery, this could be key. Finance Minister Yoshihiko Noda has already made this crystal clear, warning financial markets that he is willing to intervene to push the value of the yen down, given how vital exports will be for the country's recovery from this crisis. The recent strength of the yen had been looking questionable even before the sirens went off Friday in north-east Japan, warning that an underwater earthquake had sent a 10-meter-high wave hurtling towards the coast. The Japanese economy was already virtually on its knees. Repeated spending programs aimed at pulling the economy out of recession had pushed the country's debt-to-GDP ratio to a global record-busting 200%. The Bank of Japan, which had long ago slashed its interest rates to virtually zero, had provided its monetary help through repeated increases in its asset-purchase programs. While the fiscal profligacy left the country's credit rating tumbling, the monetary easing left the yield premium offered by other countries rising. Yet, in a world troubled by the spring uprising in the Middle East and North Africa as well as the sovereign debt crisis in the euro zone, the yen was still clinging on to its traditional reputation as safe haven. This, however, should now come to an end. European Union leaders appear to have finally come up with a compromise solution that should help prevent any serious sovereign default there, and despite continued concerns about the monarchies in Bahrain and Saudi Arabia, the Middle East crisis so far hasn't erupted as violently as many had feared. The yen's initial reaction to the earthquake was a knee-jerk fall, but this quickly went into reverse as financial markets started to anticipate repatriation flows and looked at the 18% rally the yen staged after a massive earthquake in the city of Kobe in 1995.
Europe
The dollar rallied in European trading hours against the euro and higher-yielding Asian currencies amid wild trade Tuesday as panic gripped investors on mounting worries over Japan's escalating nuclear emergency. Investors have sought refuge in safe-haven currencies such as the greenback and Swiss franc while the yen ended largely unchanged as market participants remained uncertain about the unit's prospects.
Asia
The yen stabilized Monday morning in Asia after a choppy start to the day, as the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. In announcements throughout the morning, the BOJ offered to inject a record 18 trillion yen into money markets -- Y15 trillion in same-day funds through three separate operations, plus three trillion yen in repurchase agreements. The yen had spiked sharply upward in early trading on expectations of repatriation flows, but soon erased those gains and traded in a tight band from around 0100 GMT. As of 0450 GMT, the U.S. dollar was trading around Y82.12, up from an earlier low of Y80.60, the greenback's lowest level against the yen since Nov. 9. While repatriations would tend to buoy the yen, the BOJ liquidity injections, combined with signals from Japanese officials that they could intervene in currency markets if necessary, kept the U.S. dollar supported for now. A strengthening yen could hurt Japan's export-dependent economy. Meanwhile, Chinese Premier Wen Jiabao, in closing remarks to China's annual legislative gathering, stressed that the yuan's appreciation must be gradual. Wen said the government needs to consider the impact on employment, business and overall social stability. That could point to a slower pace of appreciation, especially after China posted a trade surprise deficit of $7.3 billion in February. The dollar/yuan central parity rate was set Monday at $6.5701, vs 6.5750 on Friday. In Japan, Finance Minister Yoshihiko Noda said Monday morning that authorities will monitor yen levels for now. A senior Finance Ministry official warned Monday morning of the possibility of intervention to stem a strong yen rise. Authorities "will take decisive steps if necessary," he told reporters at the Finance Ministry.
World
Japan's yen surged against other major currencies Friday in New York after a devastating earthquake set off expectations that companies will repatriate yen to help pay for rebuilding efforts. Traders swiftly sold the yen just after the earthquake before reversing course. The dollar fell about 1.4% against the yen on the day, while the euro was down about 0.5% against the yen. "Speculation in advance of repatriation, that's what is driving the yen up right now," said Jeffrey Young, head of North American FX Research at Barclays Capital in New York. Traders are betting that insurers with exposure to Japan and companies based in the country will soon need to buy large quantities of yen to cover damages and pay out insurance claims. They would be forced to exchange foreign currencies for yen, further hurting the dollar, euro and other major units. But it is still too early to assess the extent of the damage and how much money may be needed to rebuild parts of the country that were destroyed by the earthquake and tsunami it triggered, leading to some uncertainty about longer term currency moves. "I'm personally not expecting a huge yen appreciation, but the net impact is probably negative for dollar/yen," said a portfolio manager at a London-based hedge fund. This source expects some Japanese firms to repatriate cash, but only gradually - and he doesn't expect a massive flow of yen back into Japan. The long-term effects on Japan's economy and the yen were still not known. But Moody's Investors Service said it was highly unlikely the country's debt rating would be affected by the earthquake.
Remains capped beneath 1.4000 as support at 1.3892 is tested. A push below 1.3892 is expected to extend the corrective bull pennant, creating scope for more downside consolidation towards projected support at 1.3785. However, the Mar. 11 reaction low at 1.3752 is secure. A push through Monday's 1.4003 high is required to re-open last week's 1.4036 reaction high.
GBP/USD
Suffers a setback off resistance at 1.6200, and more weakness is expected to the 1.6029 area. This 1.6029 area needs to hold in order to protect the Mar. 11 reaction low at 1.5978, and strengthen the key Mar. 2 reaction high at 1.6344. Only a push above 1.6200 would put bulls in control of the near-term, opening 1.6242.
USD/JPY
A recovery off 81.22 is underway towards the 82.05 intraday lower high. A push through 82.05 would confirm 81.22 as a near-term bear failure, and attract further strength to 82.30 and Monday's peak at 82.46. Failure to force a break through 82.05 would prompt a return to the 81.22 low, as part of a wider bearish continuation pattern.
AUD/USD
A downside probe to 0.9925 through the recent range floor threatens further weakness towards higher lows at 0.9866 and 0.9832. However, the Jan. 12 reaction low at 0.9804 needs to be broken in order to concern longer-term bulls. Regaining ground above 1.0062 is required to lift the tone and re-open 1.0110.
FOREX Focus
Japan should get the weak yen it needs. Certainly, there will be some yen-positive flows as Japanese insurers and Japanese companies repatriate overseas holdings to help with the relief effort after Friday's earthquake. But, it is the government's and the Bank of Japan's fiscal and monetary response to the devastation that will ultimately dictate the downward path of the Japanese currency, and ensure that it loses the safe-haven status that has been helping it in recent months. For Japan, and its recovery, this could be key. Finance Minister Yoshihiko Noda has already made this crystal clear, warning financial markets that he is willing to intervene to push the value of the yen down, given how vital exports will be for the country's recovery from this crisis. The recent strength of the yen had been looking questionable even before the sirens went off Friday in north-east Japan, warning that an underwater earthquake had sent a 10-meter-high wave hurtling towards the coast. The Japanese economy was already virtually on its knees. Repeated spending programs aimed at pulling the economy out of recession had pushed the country's debt-to-GDP ratio to a global record-busting 200%. The Bank of Japan, which had long ago slashed its interest rates to virtually zero, had provided its monetary help through repeated increases in its asset-purchase programs. While the fiscal profligacy left the country's credit rating tumbling, the monetary easing left the yield premium offered by other countries rising. Yet, in a world troubled by the spring uprising in the Middle East and North Africa as well as the sovereign debt crisis in the euro zone, the yen was still clinging on to its traditional reputation as safe haven. This, however, should now come to an end. European Union leaders appear to have finally come up with a compromise solution that should help prevent any serious sovereign default there, and despite continued concerns about the monarchies in Bahrain and Saudi Arabia, the Middle East crisis so far hasn't erupted as violently as many had feared. The yen's initial reaction to the earthquake was a knee-jerk fall, but this quickly went into reverse as financial markets started to anticipate repatriation flows and looked at the 18% rally the yen staged after a massive earthquake in the city of Kobe in 1995.
Europe
The dollar rallied in European trading hours against the euro and higher-yielding Asian currencies amid wild trade Tuesday as panic gripped investors on mounting worries over Japan's escalating nuclear emergency. Investors have sought refuge in safe-haven currencies such as the greenback and Swiss franc while the yen ended largely unchanged as market participants remained uncertain about the unit's prospects.
Asia
The yen stabilized Monday morning in Asia after a choppy start to the day, as the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. In announcements throughout the morning, the BOJ offered to inject a record 18 trillion yen into money markets -- Y15 trillion in same-day funds through three separate operations, plus three trillion yen in repurchase agreements. The yen had spiked sharply upward in early trading on expectations of repatriation flows, but soon erased those gains and traded in a tight band from around 0100 GMT. As of 0450 GMT, the U.S. dollar was trading around Y82.12, up from an earlier low of Y80.60, the greenback's lowest level against the yen since Nov. 9. While repatriations would tend to buoy the yen, the BOJ liquidity injections, combined with signals from Japanese officials that they could intervene in currency markets if necessary, kept the U.S. dollar supported for now. A strengthening yen could hurt Japan's export-dependent economy. Meanwhile, Chinese Premier Wen Jiabao, in closing remarks to China's annual legislative gathering, stressed that the yuan's appreciation must be gradual. Wen said the government needs to consider the impact on employment, business and overall social stability. That could point to a slower pace of appreciation, especially after China posted a trade surprise deficit of $7.3 billion in February. The dollar/yuan central parity rate was set Monday at $6.5701, vs 6.5750 on Friday. In Japan, Finance Minister Yoshihiko Noda said Monday morning that authorities will monitor yen levels for now. A senior Finance Ministry official warned Monday morning of the possibility of intervention to stem a strong yen rise. Authorities "will take decisive steps if necessary," he told reporters at the Finance Ministry.
World
Japan's yen surged against other major currencies Friday in New York after a devastating earthquake set off expectations that companies will repatriate yen to help pay for rebuilding efforts. Traders swiftly sold the yen just after the earthquake before reversing course. The dollar fell about 1.4% against the yen on the day, while the euro was down about 0.5% against the yen. "Speculation in advance of repatriation, that's what is driving the yen up right now," said Jeffrey Young, head of North American FX Research at Barclays Capital in New York. Traders are betting that insurers with exposure to Japan and companies based in the country will soon need to buy large quantities of yen to cover damages and pay out insurance claims. They would be forced to exchange foreign currencies for yen, further hurting the dollar, euro and other major units. But it is still too early to assess the extent of the damage and how much money may be needed to rebuild parts of the country that were destroyed by the earthquake and tsunami it triggered, leading to some uncertainty about longer term currency moves. "I'm personally not expecting a huge yen appreciation, but the net impact is probably negative for dollar/yen," said a portfolio manager at a London-based hedge fund. This source expects some Japanese firms to repatriate cash, but only gradually - and he doesn't expect a massive flow of yen back into Japan. The long-term effects on Japan's economy and the yen were still not known. But Moody's Investors Service said it was highly unlikely the country's debt rating would be affected by the earthquake.
Senin, 14 Maret 2011
FOREX INTRADAY SNAPSHOT
EUR/USD
Extends the strong recovery off 1.3752 to bring the 1.4000 level back into focus. This rally keeps the dominant uptrend intact, and a break through 1.3988 would re-open last week's high at 1.4036, threatening further gains towards the 1.4100 level. The 1.3860 area will look to contain weakness, to protect the 1.3752 low.
GBP/USD
Stages a corrective recovery off 1.5978 towards 1.6125. However, the 50% Fibonacci retracement level of the 1.6344/1.5978 setback at 1.6160 is likely to limit corrective strength. Friday's weakness confirmed a bull failure at the 1.6344 high, and a return to retest the 1.5978 low cannot be ruled out. Only a sustained break above 1.6160 would lift the tone.
USD/JPY
Drifts lower off 82.46 to put pressure on support at 82.04. Further weakness is expected to retrace the rally off the current session's 2011 low at 80.60, exposing 81.79 and the 81.53 area, which incorporates both a 1.618 Fibonacci extension target and the 50% Fibonacci retracement level. A push above 82.22 is required to lift the tone and open the 82.46 high.
AUD/USD
Friday's powerful bullish outside day gives the near-term a positive tone, and a retest of resistance at 1.0164 is expected. The Mar. 1 reaction high at 1.0203 is also vulnerable, and the threat is for further gains towards the key December 2010 reaction high at 1.0258. Corrective weakness will attract support while above 1.0015, and only below there would Friday's low at 0.9960 be exposed again.
FOREX FOCUS
Buying time was never a good idea for the euro and now it looks as if time has run out. For months, the single currency has found support, not only from hopes that the European Central Bank will remain hawkish on monetary policy but also from hopes that European Union leaders would come up with a longer-term solution to the sovereign-debt crisis. However, the longer the leaders have waited to negotiate a compromise between the 'peripheral' debtors and the core countries, the more difficult the whole process has become. Instead of the passing months bringing an economic upturn that would ease the financial stresses, the gap between the richer and the poorer countries has widened and political positions on both sides have more than just hardened. In the case of Ireland, the government has fallen and in Germany a new law could be passed by the Bundestag next week that will further limit Chancellor Angela Merkel's ability to negotiate. The gradual realization in the global investment community that the debt problems of the euro zone could still get worse can be tracked through the steady rise in the cost of insuring the debts of peripheral debtors as well as even some of the core countries. As EU leaders gather in Brussels for their latest round of talks on the issue, the rise in Portuguese bond yields close to their record highs suggest just how much disappointment in the political process has been built in to financial markets. So far, the euro itself has performed remarkably well, rising against the dollar for most of this year both on hopes that the politicians will pull some last-minute rabbit out of the hat and that the hawkish ECB will start raising interest rates, making the euro more attractive, as early as next month. This has helped push the single currency up to just under $1.40.
EUROPE
The yen stabilized in European trading Monday, after the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. Meanwhile, the euro remained well supported against the dollar after news over the weekend that euro-zone leaders agreed to expand their temporary bailout fund to EUR500 billion. Data-wise, euro-zone industrial production data are due for release at 1000 GMT. Markets are also set to keep a close eye on the meeting of euro-zone finance ministers and the ongoing situation in Japan and Libya.
ASIA
The yen stabilized Monday morning in Asia after a choppy start to the day, as the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. In announcements throughout the morning, the BOJ offered to inject a record 18 trillion yen into money markets -- Y15 trillion in same-day funds through three separate operations, plus three trillion yen in repurchase agreements. The yen had spiked sharply upward in early trading on expectations of repatriation flows, but soon erased those gains and traded in a tight band from around 0100 GMT. As of 0450 GMT, the U.S. dollar was trading around Y82.12, up from an earlier low of Y80.60, the greenback's lowest level against the yen since Nov. 9. While repatriations would tend to buoy the yen, the BOJ liquidity injections, combined with signals from Japanese officials that they could intervene in currency markets if necessary, kept the U.S. dollar supported for now. A strengthening yen could hurt Japan's export-dependent economy. Meanwhile, Chinese Premier Wen Jiabao, in closing remarks to China's annual legislative gathering, stressed that the yuan's appreciation must be gradual. Wen said the government needs to consider the impact on employment, business and overall social stability. That could point to a slower pace of appreciation, especially after China posted a trade surprise deficit of $7.3 billion in February. The dollar/yuan central parity rate was set Monday at $6.5701, vs 6.5750 on Friday. In Japan, Finance Minister Yoshihiko Noda said Monday morning that authorities will monitor yen levels for now. A senior Finance Ministry official warned Monday morning of the possibility of intervention to stem a strong yen rise. Authorities "will take decisive steps if necessary," he told reporters at the Finance Ministry. A separate government official told Dow Jones Newswires that he was concerned about speculative moves in the yen. Some investors seem to "want to push the yen higher at all costs," he said.
WORLD
Japan's yen surged against other major currencies Friday in New York after a devastating earthquake set off expectations that companies will repatriate yen to help pay for rebuilding efforts. Traders swiftly sold the yen just after the earthquake before reversing course. The dollar fell about 1.4% against the yen on the day, while the euro was down about 0.5% against the yen. "Speculation in advance of repatriation, that's what is driving the yen up right now," said Jeffrey Young, head of North American FX Research at Barclays Capital in New York. Traders are betting that insurers with exposure to Japan and companies based in the country will soon need to buy large quantities of yen to cover damages and pay out insurance claims. They would be forced to exchange foreign currencies for yen, further hurting the dollar, euro and other major units. But it is still too early to assess the extent of the damage and how much money may be needed to rebuild parts of the country that were destroyed by the earthquake and tsunami it triggered, leading to some uncertainty about longer term currency moves. "I'm personally not expecting a huge yen appreciation, but the net impact is probably negative for dollar/yen," said a portfolio manager at a London-based hedge fund. This source expects some Japanese firms to repatriate cash, but only gradually - and he doesn't expect a massive flow of yen back into Japan. The long-term effects on Japan's economy and the yen were still not known. But Moody's Investors Service said it was highly unlikely the country's debt rating would be affected by the earthquake. Japan is trying to emerge, like much of the world, from an economic downturn. Analysts said money spent to rebuild the parts of the country affected by the earthquake and tsunami could spur growth. However, it could add to the country's already high debt burden.
Extends the strong recovery off 1.3752 to bring the 1.4000 level back into focus. This rally keeps the dominant uptrend intact, and a break through 1.3988 would re-open last week's high at 1.4036, threatening further gains towards the 1.4100 level. The 1.3860 area will look to contain weakness, to protect the 1.3752 low.
GBP/USD
Stages a corrective recovery off 1.5978 towards 1.6125. However, the 50% Fibonacci retracement level of the 1.6344/1.5978 setback at 1.6160 is likely to limit corrective strength. Friday's weakness confirmed a bull failure at the 1.6344 high, and a return to retest the 1.5978 low cannot be ruled out. Only a sustained break above 1.6160 would lift the tone.
USD/JPY
Drifts lower off 82.46 to put pressure on support at 82.04. Further weakness is expected to retrace the rally off the current session's 2011 low at 80.60, exposing 81.79 and the 81.53 area, which incorporates both a 1.618 Fibonacci extension target and the 50% Fibonacci retracement level. A push above 82.22 is required to lift the tone and open the 82.46 high.
AUD/USD
Friday's powerful bullish outside day gives the near-term a positive tone, and a retest of resistance at 1.0164 is expected. The Mar. 1 reaction high at 1.0203 is also vulnerable, and the threat is for further gains towards the key December 2010 reaction high at 1.0258. Corrective weakness will attract support while above 1.0015, and only below there would Friday's low at 0.9960 be exposed again.
FOREX FOCUS
Buying time was never a good idea for the euro and now it looks as if time has run out. For months, the single currency has found support, not only from hopes that the European Central Bank will remain hawkish on monetary policy but also from hopes that European Union leaders would come up with a longer-term solution to the sovereign-debt crisis. However, the longer the leaders have waited to negotiate a compromise between the 'peripheral' debtors and the core countries, the more difficult the whole process has become. Instead of the passing months bringing an economic upturn that would ease the financial stresses, the gap between the richer and the poorer countries has widened and political positions on both sides have more than just hardened. In the case of Ireland, the government has fallen and in Germany a new law could be passed by the Bundestag next week that will further limit Chancellor Angela Merkel's ability to negotiate. The gradual realization in the global investment community that the debt problems of the euro zone could still get worse can be tracked through the steady rise in the cost of insuring the debts of peripheral debtors as well as even some of the core countries. As EU leaders gather in Brussels for their latest round of talks on the issue, the rise in Portuguese bond yields close to their record highs suggest just how much disappointment in the political process has been built in to financial markets. So far, the euro itself has performed remarkably well, rising against the dollar for most of this year both on hopes that the politicians will pull some last-minute rabbit out of the hat and that the hawkish ECB will start raising interest rates, making the euro more attractive, as early as next month. This has helped push the single currency up to just under $1.40.
EUROPE
The yen stabilized in European trading Monday, after the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. Meanwhile, the euro remained well supported against the dollar after news over the weekend that euro-zone leaders agreed to expand their temporary bailout fund to EUR500 billion. Data-wise, euro-zone industrial production data are due for release at 1000 GMT. Markets are also set to keep a close eye on the meeting of euro-zone finance ministers and the ongoing situation in Japan and Libya.
ASIA
The yen stabilized Monday morning in Asia after a choppy start to the day, as the Bank of Japan took unprecedented steps to boost market liquidity following Friday's earthquake and tsunami. In announcements throughout the morning, the BOJ offered to inject a record 18 trillion yen into money markets -- Y15 trillion in same-day funds through three separate operations, plus three trillion yen in repurchase agreements. The yen had spiked sharply upward in early trading on expectations of repatriation flows, but soon erased those gains and traded in a tight band from around 0100 GMT. As of 0450 GMT, the U.S. dollar was trading around Y82.12, up from an earlier low of Y80.60, the greenback's lowest level against the yen since Nov. 9. While repatriations would tend to buoy the yen, the BOJ liquidity injections, combined with signals from Japanese officials that they could intervene in currency markets if necessary, kept the U.S. dollar supported for now. A strengthening yen could hurt Japan's export-dependent economy. Meanwhile, Chinese Premier Wen Jiabao, in closing remarks to China's annual legislative gathering, stressed that the yuan's appreciation must be gradual. Wen said the government needs to consider the impact on employment, business and overall social stability. That could point to a slower pace of appreciation, especially after China posted a trade surprise deficit of $7.3 billion in February. The dollar/yuan central parity rate was set Monday at $6.5701, vs 6.5750 on Friday. In Japan, Finance Minister Yoshihiko Noda said Monday morning that authorities will monitor yen levels for now. A senior Finance Ministry official warned Monday morning of the possibility of intervention to stem a strong yen rise. Authorities "will take decisive steps if necessary," he told reporters at the Finance Ministry. A separate government official told Dow Jones Newswires that he was concerned about speculative moves in the yen. Some investors seem to "want to push the yen higher at all costs," he said.
WORLD
Japan's yen surged against other major currencies Friday in New York after a devastating earthquake set off expectations that companies will repatriate yen to help pay for rebuilding efforts. Traders swiftly sold the yen just after the earthquake before reversing course. The dollar fell about 1.4% against the yen on the day, while the euro was down about 0.5% against the yen. "Speculation in advance of repatriation, that's what is driving the yen up right now," said Jeffrey Young, head of North American FX Research at Barclays Capital in New York. Traders are betting that insurers with exposure to Japan and companies based in the country will soon need to buy large quantities of yen to cover damages and pay out insurance claims. They would be forced to exchange foreign currencies for yen, further hurting the dollar, euro and other major units. But it is still too early to assess the extent of the damage and how much money may be needed to rebuild parts of the country that were destroyed by the earthquake and tsunami it triggered, leading to some uncertainty about longer term currency moves. "I'm personally not expecting a huge yen appreciation, but the net impact is probably negative for dollar/yen," said a portfolio manager at a London-based hedge fund. This source expects some Japanese firms to repatriate cash, but only gradually - and he doesn't expect a massive flow of yen back into Japan. The long-term effects on Japan's economy and the yen were still not known. But Moody's Investors Service said it was highly unlikely the country's debt rating would be affected by the earthquake. Japan is trying to emerge, like much of the world, from an economic downturn. Analysts said money spent to rebuild the parts of the country affected by the earthquake and tsunami could spur growth. However, it could add to the country's already high debt burden.
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