Overnight Asia/Europe

€¢ USD starts firm in Asia, weakens into Europe

€¢ G-20 seen as a disappointment

€¢ Volumes light and technical trade continues

Today€™s Economic Reports

All times EASTERN (-4 GMT)

€¢ 8:30am USD Empire State Manufacturing Index

€¢ 9:00am USD TIC Long-Term Purchases

€¢ 9:15am USD Capacity Utilization Rate

€¢ 9:15am USD Industrial Production m/m

€¢ 1:00pm USD NAHB Housing Market Index

Looking Ahead to Tuesday

All times Eastern (-4 GMT)

€¢ 8:30am USD Building Permits

€¢ 8:30am USD PPI m/m

€¢ 8:30am USD Core PPI m/m

€¢ 8:30am USD Housing Starts


The USD is mixed to open New York today after starting mildly better in Asia overnight; traders note initial disappointment from the G-20 meeting which announced nothing new and appeared to be simply a re-hash of the current economic situation created a brief push higher for the Greenback. After testing previous resistance levels across the board the USD began a slide through European trade and is weak at the start of New York with the exception of USD/JPY. The rate is still holding the 98.00 handle after testing the 98.50 area of reported supply with stops noted above but offers continue to hold the rate back into an inside-range day so far. Traders note firmer equities were adding a bit of lift to the pair but overall volumes are light. High prints at 98.51 with lows on support at 97.54; option expires today may be helping to hold the rate around 98.00 area. USD/CHF is lower with lows at 1.1809 and holding 1.1820 area in early New York; high prints at 1.1915 were offered by technical traders in light volume. Should the rate fail to hold the 1.1800 handle the next 24 hours I think a case can be made that the rally to 1.1970 was a false break-out as there has been no follow-through. USD/CAD is weaker holding 1.2660 area after low prints at 1.2643; traders note stops under the market were around the 1.2650 area but bids supported suggesting buyers are still there on dips. High prints at 1.2797 were under the 1.2820 resistance area suggesting more technical trade in the pair. EURO has rallied steadily overnight with high prints in early New York at 1.3047 triggering stops above the weekly high around 1.2960 area with aggressive buyers helping the rate firm above the 1.3000 area; traders note large names on the bid on the dips suggesting more accumulation. Aggressive traders can look to lighten up on open longs for a possible correction from the 1.3030 area. GBP high prints at 1.4232 lifting to overhead resistance around 1.4250 before falling back a bit; traders note cross-spreaders for GBP crosses adding to the upside momentum. If the rate can hold above 1.4200 analysts suggest a test of the 1.4400 area is in view. In my view, the USD continues to work on a top but with the major pairs now trading at or through overhead initial resistance a correction would be reasonable to expect. Aggressive traders can sell a rally in the USD this week if economic news is seen as USD-supportive; I don€™t think the Greenback has enough bid interest to hold onto this 3-year high. Flight-to-quality buying is beginning to lighten up as progress is being made on the economic issues and sentiment is beginning to change. Although the economic solutions probably won€™t make a real difference in the long run I think the perception that work is getting done is helping to alleviate fear and panic buying of USD. Look for the Majors to continue two-way but pullbacks should be brief and hold above support areas.

Forex Analysis written by Jason Alan Jankovsky, featured by forexpros.com