Today’s US Dollar Trading

• USD starts lower in Asia, rallies in Europe

• Rallies on Durables data then fades

• Ends New York Mixed

Overnight Preview

• Look for the USD to continue under pressure ahead of GDP tomorrow

• Volumes should drop off also

Looking Ahead

All times EASTERN (-5 GMT)

• 8:30am USD Prelim GDP q/q 0.9%

• 8:30am USD Prelim GDP Price Index q/q 2.6%

• 8:30am USD Unemployment Claims 370K

• 10:30am USD Crude Oil Inventories

• 10:30am USD Natural Gas Storage

• 2:30pm USD Fed Chairman Bernanke Speaks

• 7:00pm USD Fed Vice Chairman Kohn Speaks


The USD ends the day mixed after a slow start in Asia; initial early strength after Durable Goods data hit the street fades into the London Fix. The USD went nowhere after the fix and traders complained of low volumes, thin conditions and dull ranges. After the better-than-expected Durables data provided a solid rally the sellers came out at expected resistance and the USD never challenged those prices again all day making for a toppy chart formation. Model and Momentum accounts were seen in some pairs on the bid for USD suggesting that the potential top may actually be in place across the board. Some price action after the best levels of the day for the USD offer compelling reasons to stay on the short side through the end of the week. Cable advanced to the 1.9830 area overnight Asia only to be met with selling that found close-in stops at the 1.9770 area and below for a low print after durables at 1.9703; bids lifted the rate back over the 1.9800 handle to trade firm all day in less than two hours. A 100 point move in both directions whipsawing both sides to finish higher on the day; not a good sign for the bears. EURO also stopped short on support, holding the 1.5600 handle after a sharp stop-driven break for a low print at 1.5603 before sovereign names were seen on the bid. The 50 bar MA comes in as support at the 1.5661 and although a technical sign of potential slippage; the fact that the rate found no real stops in size on a break below the MA suggests that there is no one willing to sell under the 1.5660 area. Now that weak longs have been cleared, all the remains is to see if late shorts sold EURO into the hole today. Should that be the case; expect a rally the next 24-48 hours. USD/JPY rallied through stops and resistance for a high print at 105.33 clearing all the weak shorts out before dropping back to trade 104.60 area most of the afternoon. A very long selling wick on USD/JPY today suggests that the rate is due for a retest of the near-term lows under the 103.00 area; some desks report that selling interest at the highs was from exporters and semi-official names. Swissy had a similar day but finished off the highs and nowhere near the real resistance numbers the active bears would like to see. Highs at 1.0426 were never challenged and the rate fell back to under the 1.0390 breakdown number. A close below the 1.0390 area argues for a test of the 1.0280 area again as volumes on the rally were light. Look for a quiet evening ahead of GDP tomorrow.

Analysis by: written by Jason Alan Jankovsky


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