Yen the Currency of Choice

U.S. Dollar Trading (USD) in a volatile day of trading the dollar gained heavily against risk currencies as concerns about Greece debt resurfaced and US economic data disappointed. Weekly Jobless Claims were at 496k vs. 455k forecast and Core Durable Goods fell -0.6% in December. The late rally in US stocks helped to pare back these gains but markets are becoming increasingly jittery. In US stocks DJIA -53 points closing at 10321, S&P -2 points closing at 1102 and NASDAQ -1 points closing at 2234. Looking ahead, February Chicago PMI is forecast at 60 vs. 61.5 previously. February Consumer Sentiment is forecast at 74 vs. 74.4. Preliminary Q4 GDP is forecast to remain at 5.7% Q/Q annualized.

The Euro (EUR) was very weak in Asia as the market fears on Greece debt sent the Euro through 1.3500 to test year lows at 1.3450. In Europe risk aversion and weak US data sent the EUR/JPY plummeting through the key Y120 level before the market bounced with US stocks into the close. Overall the EUR/USD traded with a low of 1.3450 and a high of 1.3573 before closing at 1.3560. Looking ahead, January Inflation is forecast at -0.8% vs. 0.3% m/m.

The Japanese Yen (JPY) was pressured by crosses though the Y89 level and remained under pressure for most of the day. Bernanke reiterated that US rate rises were a long way off and this hurt the USD against its main safe haven competitor. Overall the USDJPY traded with a low of 88.78 and a high of 90.31 before closing the day around 89.20 in the New York session. Update January Industrial Output at 2.5% vs. 1.1% previously.

The Sterling (GBP) risk aversion and heavy GBP/JPY selling pushed cable over 200 pips lower. Support was finally found below 1.5200 before the market recovered slightly. The pair fell quickly in Europe as the BOE reiterated that the QE door is not closed. Overall the GBP/USD traded with a low of 1.5187 and a high of 1.5424 before closing the day at 1.5275 in the New York session. Looking ahead, Q4 GDP forecast at 0.2% vs. 0.1% previously.

The Australian Dollar (AUD) was under pressure as commodities fell and AUD/JPY broke through Y80. Q4 Capex was at +5.5% vs. 2.0%. In the US session the 0.8800 level was tested before a late rally in stocks helped the pair to recover. Overall the AUD/USD traded with a low of 0.8799 and a high of 0.8954 before closing the US session at 0.8870.

Oil & Gold (XAU) found support at $1090 before rallying on rumors that china may buy IMF gold and closed above $1100. Overall trading with a low of USD$1089 and high of USD$1108 before ending the New York session at USD$1098 an ounce. Fell nearly $2 as the weaker economic outlook weighed. Crude Oil was down -$1.71 ending the New York session at $78.30.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3444

1.3497

1.3560

1.3692

1.3788

USD/JPY

88.56

88.80

89.40

90.36

91.29

GBP/USD

1.5117

1.5189

1.5255

1.5477

1.5575

AUD/USD

0.8786

0.8801

0.8875

0.8956

0.9071

XAU/USD

1071.00

1078

1105.00

1109

1121.00

OIL/USD

77.00

78

78.20

80.00

82.00

Euro - 1.3560

Initial support at 1.3497 (Feb 23 low) followed by 1.3444 (Feb 19 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high)

Yen - 89.40

Initial support is located at 88.80 (Feb 25 low) followed by 88.56 (Feb 4 low). Initial resistance is now at 90.36 (Feb 24 high) followed by 91.29 (Feb 23 high).

Pound - 1.5255

Initial support at 1.5189 (Feb 25 low) followed by 1.5117 (May 18 low). Initial resistance is now at 1.5477 (Feb 24 high) followed by 1.5575 (Feb 23 low).

Australian Dollar - 0.8875

Initial support at 0.8801 (Feb 25 low) followed by the 0.8786 (Feb 12 low). Initial resistance is now at 0.8956 (Feb 24 high) followed by 0.9071 (Feb 23 high).

Gold - 1105

Initial support at 1078 (Feb 12 low) followed by 1071 (Feb 11 low). Initial resistance is now at 1109 (Feb 25 high) followed by 1131 (Feb 22 high).

Oil - 78.20

Initial support at 78.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 80.00 (Intraday Resistance) followed by 82.00 (Intraday Resistance).