The dollar maintained its strength as Egyptian President Hosni Mubarak's resignation helped to take interest in risk-sensitive currencies. US trade deficit widens $2.3bn to $40.5bn in Dec. The US 10yr treasury yield closed 6bp lower at 3.63%. The Euro fell to 1.35 levels and then bounce on that major psychological support as risk aversion cools after the tension eases in Egypt. EUR French Prelim Non-Farm Payrolls q/q came out stronger at 0.2% vs 0.1% previously. GBP PPI Input m/m came out better than expected. Japanese economic growth saw the first decline in last five quarters as the nation's exports declines as compared to imports but the expectations are that the demand from China and U.S. will help Japanese exports to bounce back again. JPY Prelim GDP q/q came out better than expectations at -0.3%. AUD Home Loans m/m came out better this morning at 2.1% vs 2.5% previously. Meanwhile, New Zealand Retail Sales m/m came out weaker at -1.1% vs 1.2% previously.
EUR/USD: The Eurusd had tested the key support levels of 1.3500 but retreated to trade near 1.3540 levels. There were some gains seen during early morning post Egypt tensions easing. If Euro stays below 1.3510 levels, we expect further downside towards 1.3410 levels. Immediate resistance comes at 1.3650 (21 Daily EMA) while immediate support is seen at 1.3475 levels. Looking ahead, Industrial Production m/m is due today. EURINR (61.70) exporters can cover partially towards 62 levels and very near term importers can cover near 61.50 levels. EUR/INR is likely to trade in the range of 61.55-61.85 today. Short term: Slight bullish and Medium term: Bearish.
GBP/USD: The Pound has breached the support levels and is trading near 1.6065 levels. If it closes below 1.6000 levels then there are chances the pair to reach towards 1.5850 levels. Immediate support is at 1.6020 (21 Middle Bollinger) while resistance comes at 1.6135 (21 Upper Bollinger). GBPINR (73.22) Exporters should partially cover at current levels and importers hold for cover. GBPINR is likely to trade in the range of 73.10 - 73.45 levels today. Short term: Neutral and Medium term: Bearish.
USD/JPY: After testing 83.50 resistance levels, the pair is currently trading at 83.15 levels. Prelim GDP q/q came at -0.3%, first contraction during fourth quarter of 2010. Till the pair stays below 83.50, the bias remains bearish with strong support seen at 82.98 levels. Yen importers can cover Feb month's exposure at current levels and exporter hold for cover. Medium Term: Maintain Bearishness for the pair targeting 80.
AUD/USD: The Aussie is currently trading above parity at 1.0055 after Home Loans m/m increased to 2.1% as compared to previous at 1.8%. Resistance is at 1.0065 levels followed by 1.0150, while support at 0.9980 support zone. Exporters are suggested to book partially above 1.0050 levels and Importers can cover their exposure on dips. Medium term: Bullish.
Gold: GOLD ($1357) was trading near last week's closing levels. The yellow metal is likely to resume its weakness after tensions in Egypt eased. Support for gold is near $1352 levels (100 daily EMA) followed by $1345 (Daily 20 Middle Bollinger) while immediate resistance is at 1360 levels. As suggested earlier, Buying on dips is recommended. Medium term: Maintain bullishness.
Dollar Index: Dollar Index had broken above major resistance at 78.35 levels and held the gains after the Egypt news. DI is currently trading at 78.44 up by 0.24%. Immediate support comes at 78.23 levels, while resistance at 78.53 levels Medium Term: Slight Bullish
These views/ forecasts/ suggestions, though proffered with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.