Forex News and Events:
FX trading continues to be defined more by pre-holiday, thin liquidly and choppy trading than by any core themes or drivers. Risk appetite was stable in the Asian session, as equity markets rallied back, with Shanghai's composite up 2.59% and the Nikkei up 1.53%. However, for FX traders there has been a noticeable shift from the year long risk appetite trade to the historical trend of USD gaining on positive domestic economic data and US yields. Yesterdays US home sales data seem to have dealt a blow to the USD was seeing broad based selling. But with the shadow of sovereign debt weakness hanging over markets, it will be interesting to see if correlation shift holds in the New Year. Greek parliament approved their 2010 budget, which goal is to reduce the fiscal deficit from 12.7% to 9.1% of GDP in 2010. DCS spreads between Greece and Germans have narrowed in recent days, reflecting subsiding fears but still remain significantly elevated. Declining worries and string of disappointing US data this week altered the DXY direction. Yet overall lingering worries of Greece and other member countries should be a driving factor to EUR pricing in the coming year. In Japan, the minutes for the November 19-20 meeting contained no real insights other than the BoJ is concerned over the word deflation and no mention of buying more JGBs as a possible strategy to halt the continued decline in prices. Afterwards, BoJ Governor Shirakawa stated the yen's rise was one factor behind Japan 's weak economic condition since the financial crisis began. After yesterday's weak US economic data (New home sales in November fell 11.3% to 355k) markets (whoever still around) will be watching today prints carefully. Durable good and Initial Jobless claims are due and as stated earlier, a stronger than expected print should be USD positive.
Today's Key Issues (time in GMT):
13:30 USD Durable goods orders, % m/m (y/y) Nov 0.4 (-7.6) exp, -0.6 (-11.6) prior
13:30 USD Core capital goods orders, % m/m (y/y) Nov 2.0 (-13.0) exp, -3.4 (-13.0) prior
13:30 USD Initial jobless claims, thous (4wk mvg avg) 19-Dec 470 (469) exp, 480 (468) prior
18:00 EUR France: Unemployment rate, (ooo's) Nov 2627.3 prior
23:30 JPY Tokyo CPI, % y/y Dec -2.1exp
23:30 JPY Tokyo CPI ex. Perishables, % y/y Dec -1.8 exp
23:30 JPY Nationwide CPI, % y/y Nov -2.0 exp
23:30 JPY Nationwide CPI ex. Perishables, % y/y Nov -1.6 exp
23:30 JPY Unemployment rate, % Nov 5.2 exp
23:30 JPY Job-applicant ratio (x) Nov 0.45 exp
23:30 JPY Real household consumption, % y/y Nov 0.4 exp
The Risk Today:
EurUsd For another very light data calendar we are anticipating continued choppy trading in thin liquidity. Todays clear break of 1.4350 will put the focus on1.4515 now acting as decent resistance. Any break above there would face a major hurdle rallying higher at 1.4685. However, momentum indicators have turned bearish in the short term and on the downside the psychological 1.4200 and 200dma should provide near term support.
GbpUsd The pair was able to reverse yesterdays losses trading well above 1.5994 day highs. To early to tell if this is short term correction or just holiday volatiltiy. First resistance stands at 1.6033 5dma, 1.6100 horizontal resistance then critical upper band of bearish trend at 1.6170. Support can be found 1.5903 ahead of the 1.5708 pivotal low.
UsdJpy The uptrend that has been in play since 27th Nov (where we bottomed at 84.81) remains intact, and Friday's rally took us to highs of 90.91 before the 9 month downtrend came into play and slowed any further gains. The 4-week uptrend coupled with major resistance at 92.30 is now creating a very clear ascending triangle pattern, and a break to the upside would look to target 97.00 levels. In the meantime however, expect lite supply above 92.00 and getting heavy around 92.30. Support stand at 91.00 low.
UsdChf Yesterdays move clipped near term support and slowing upside momentum will presure downside. 1.0508 forms first resistance, with next levels above there at 1.0625, and beyond there the 1.0700 major resistance and 38.2% correction of the move from 1.1970 down to 0.9918. Near term support stands at 1.0296 ahead of 1.0219 low.
Resistance and Support:
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot|