Fundys - Data in the overnight session was on the whole weaker, with the standout releases coming in the form of below expectation UK Nationwide house prices and record low EU sentiment and business climate numbers. However, this failed to materially factor into price action with both the Euro and Sterling content on consolidating in tight ranges ahead of the more lively US session. News that RBS had posted the largest corporate losses in UK history was seen weighing on Sterling somewhat, but this had been expected to a degree, and combined with the added government measures and interest in RBS, proved to be offsetting. Also in the UK, BoE King was on the wires expressing concern over the lack of growth in the money supply, while more details on the government bank rescue pacage are expected to be released later today. Generating some attention overnight were comments from ex-Bundesbank President Pohl who said that the survival of the Euro is under threat . Aussie was once again showing better bid following the impressive overnight capex figures shocked to the upside, and the markets are now talking about the potential for an unchanged verdict at the upcoming RBA meeteing. Usd/Jpy continued to surge, disregarding the broader market consolidation, on the back of huge demand following the technical break above 94.60 earlier in the week. Ever weakening Japanese fundamentals have resulted in a breakdown in familiar correlations, to fuel the recent moves. Global equities have held up quite well and track higher despite the overnight data, while on the commodity front oil continues to be the standout after rallying yet again with the news of reduced exports from Abu Dhabi Oil Corp helping to bolster the black gold. Looking ahead to the North American calendar, US durable goods (-2.5% expected) and initial jobless claims (625k expected) are due at 13:30GMT, followed by new home sales (324k expected) at 15:00GMT.

Quant -


Techs - EUR/USD price action has been quiet thus far with the market still caught within the tight weekly consolidation. It remains too difficult to establish clear intraday directional bias. Key levels to watch over the coming session come in by 1.2905 and 1.2660. USD/JPY continues to surge since breaking out from the major double bottom neckline at 94.60 on Monday. However, shorter-term technicals continue to warn of a pullback given the stretched nature of daily oscillators and we recommend looking to fade rallies into the 98.85-99.00 area today. Key levels to watch over the coming session come in by 99.00 and 97.30. GBP/USD is only trading marginally higher on the day and looks to be attempting to test the recent 1.4095 (18Feb low) range lows. Key support now comes in by 1.4055-95 with a break below to accelerate setbacks and expose the critical 1.3500 trend lows. Only back above 1.4665 (23Feb high) delays. USD/CHF remains locked in tight multi-day consolidation, with no clear directional bias. Key levels to watch above and below over the coming session come in by 1.1745 and 1.1550 respectively.

Flows - US prime names bidding Usd/Jpy; option at 98.00. Japanese insurance company buying Eur/Jpy. Talk of good demand for Aussie into the London fix. Decent two-way flows in Usd/Cad; German bank on the bid; French bank on the offer; M&A related demand for Eur/Cad.

Trade of the Day - GBP/CHF: The market has been trending higher since basing by the historic 1.5125 lows back in late December (29De low). We have already seen once confirmed higher low by 1.5650 (21Jan low) after the price rallied to fresh multi day highs by 1.7490 (10Feb high), and a fresh higher low is now sought out above 1.5650 ahead of the next bounce and bull trend resumption. The market has been pulling back over the past several days in search of this higher low and looks to be eying a major confluence of technical support to establish this low. A closer look at the chart below shows a combination of a rising trend-line, 50-Day SMA, Lower Bollinger, 61.8% fib retracement, and ATR projected low, all coming in within pips of one another. As such, we will use this highly compelling confluence as an entry level for fresh longs if tested today. Stops will be placed below the 50% fib retrace of the entire move, which comes in by 1.6300. Strategy: BUY @ 1.6365 FOR A 1.7040 OBJECTIVE, STOP @1.6190. Stops to be trailed to cost on a break back above 1.6500. Trade recommendation to be removed if not triggered by NY close (5pm EST) on Thursday.


Fundamental Catalyst - Data and news out of the UK overnight has been less than encouraging following the weaker Nationwide house prices and disclosure of RBS losses which were the largest corporate losses in UK history. That being said, both events can easily be discounted, as the Nationwide was only one release of many, while the RBS losses were hardly that shocking considering the state of the global economy and financial sector. Data out of the UK has on the whole over the past several weeks exceeded expectations and points to a potential bottoming in the economy. Additionally, the UK government is expected to unveil further details to its UK bank rescue plan today, which should helped to find some renewed optimism after investors were skeptical with the initial vagueness of the plan. Meanwhile in Switzerland, we continue to see deterioration within the local economy, which has accelerated of late, as fears escalate over the soundness and safety of the local banking system. This has detracted from the flight to safety lure of the Swissy, with this familiar correlation starting to break down. While we can not say that SNB intervention is imminent, there has also been plenty of talk amongst the locals about such intervention.



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