Normal 0 false false false EN-US X-NONE X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:Table Normal;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:none;
mso-hyphenate:none;
text-autospace:ideograph-other;
font-size:12.0pt;
font-family:Times New Roman,serif;
mso-bidi-font-family:Tahoma;
mso-font-kerning:1.5pt;}

U.S. Dollar Trading (USD) volatility dominated the markets yesterday with the Moody European downgrades causing risk aversion in Asia and this rolled into the US session after economic data missed expectations. January Retail Sales came in at 0.4% vs. 0.7% forecast. Markets did bounce off lows into the close of the US session however after the announcement all the Greek leaders had signed up to implementing agreed Austerity commitments after the upcoming elections. The Euro (EUR) the EUR/USD staged a slight recovery in Europe after the German February ZEW survey improved to 5.4 vs. -21 previously. The Rally was short-lived as the Greece drama rolled on and the Moody’s downgrades encouraged fresh selling above 1.3200. In US stocks, DJIA +4 points closing at 12878, S&P -1 points closing at 1350 and NASDAQ +1 points closing at 2931. Looking ahead, Q4 EU GDP forecast at -0.3% vs. 0.2% previously. Also US FOMC minutes released from previous meeting where they extended low interest rate expectation period to late 2014.

The Japanese Yen (JPY) broke to fresh year highs and the highest since the interventions back in November to above Y78.30 resistance. The USD/JPY rally is receiving attention from many analysts with some calling the low in place and the improving US data the catalyst for a potential trend change. Many have been burnt buying the USD/JPY in the past decade but the bottom we have seen in the previous 6 months does help make the case that the downtrend is over. The Sterling (GBP) was on the back foot all day as the Moody’s negative watch on the cherished AAA rating of the UK reminded investors that the European crisis affects its close neighbor. Support is seen at 1.5600 and 1.55000 if the selloff continues. Australian Dollar (AUD) the Aussie fell out of favor in Asia with the technical picture growing more and more bearish in recent trading sessions. The break to fresh lows under 1.0640 proved short-lived however and reminders traders that buyers still exist on dips for the Chinese linked commodity powerhouse. Looking ahead, BOE Governor King speaks in the European session today.

Oil & Gold (XAU) was contained to a very tight range pivoting the $1720 level all day supported from sovereign risk but contained by USD strength. OIL/USD remained above the key $100 level as Middle Eastern tensions countered the general investor risk aversion.

Pairs to watch

EUR/USD Range Trading in 1.3000-3300

AUD/USD still supported of dips intraday - 1.0500 bears target

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3089

1.3128

1.3130

1.3323

1.3386

USD/JPY

76.71

77.36

78.45

78.50

79.00

GBP/USD

1.5582

1.5664

1.5685

1.5771

1.5849

AUD/USD

1.0570

1.0640

1.0690

1.0739

1.0791

XAU/USD

1702.00

1710

1719

1734

1752

OIL/USD

98.50

100.00

100.50

101.00

103.00