CROSS COUNTRY: MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES

It has been a wild morning of trade in the US with the majority of the whipsaw price action resulting from comments from Treasury Secretary Geithner who initially sent the USD into a tailspin after saying that he was quite open to China's suggestion of moving to an SDR-linked currency system. However, minutes later Geithner was quick to mitigate impact from the comments after reaffirming the USDs place as the world's reserve currency for a long time to come. The morning event risk has also no doubt impacted on the broader markets with much stronger than expected US durable goods orders and new home sales data bolstering global equity prices and higher yielding currencies. The ongoing debate between the US and the Eurozone seems to be escalating with the Czech EU President describing the US stimulus measures as a way to hell. However, UK PM Brown remains firmly in-line with the US approach and calls for a coordinated approach to fiscal and monetary policy while also saying that the UK will do whatever it takes to restore growth. Meanwhile, in Norway, the Norges Bank has caught many traders off guard after releasing an accompanying statement to their as expected 50bp cut to 2.00% that left the door open to further rate cuts back towards 1.00% over the coming months. Analysts had been looking for a signal of an end to the easing cycle. This has left the Nok as the weakest currency on the day down some 1.70% against the USD and -2.50% against the Euro. All major US equity indices are up some 2.00% on the day thus far.

ANALYSIS OF SELECTED RATES

Usd/Nok: has found some support by the 200-Day SMA on Monday/Tuesday and could be attempting to carve out a medium-term higher low with Monday's bullish outside day showing good follow through into Tuesday. Daily studies are also oversold and as per our commentary from Tuesday, we established fresh longs on the break back above 6.40 (Friday's high) for a move back towards 6.60-6.70. Only below the 200-Day will negate. Stops have been trailed to below Wednesday's low at 6.36.


Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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