The U.S. dollar lost ground against most major rivals after Stronger U.K. and German data were the catalysts for British pound and euro outperformance. The euro extended gains by news that Triple-A nations pledged to strengthen the safety net guarding against the debt crisis, including possibly stepping up the EFSF. In additional Spain successfully sold EUR 5.5b of Treasury bills. The Sterling pressed above $1.60 for the first time in nearly two months on much stronger than expected consumer inflation reading. Headline CPI accelerated from 3.3% yoy to 3.7% yoy in December, much stronger than consensus of 3.3% yoy. Canadian dollar is sharply lower after BoC left rates unchanged at 1.00% and did raise growth projection to 2.4% in 2011 and 2.8% in 2012. The Yen was contained to Monday's range with the market moving on US Treasury Yield fluctuations predominately. The Aussies tested resistance at parity for most of the day after tracking higher in Asia on the back of strong risk appetite.
EUR/USD: The Euro currently trading at 1.3452 levels after making a high of 1.3466 levels amid EU Finance Ministers meeting in Brussels to discuss the debt crisis along with strong January German Zew Survey numbers. Looking ahead today EUR Current Account data expected weaker at -10.2B vs. -9.8B previously. Immediate support comes at 1.3400 (55 Weekly EMA) followed by 1.3325 (21 Weekly EMA), while strong resistance comes at 1.3538 levels (100 and 200 Weekly EMA). EURINR (60.88) exporters should cover at current levels and importers cover for Jan and Feb partially towards 59.80 levels. EUR/INR is likely to trade in the range of 60.60- 61.10 today. Short term and Medium term: Neutral to Bullish
GBP/USD: The Pound extended its gains and is currently trading at 1.6010 levels after strong CPI numbers at 3.7% vs. 3.3% previously. Looking ahead today, Claimant count change expected better at -0.3K vs -1.2K previously while Unemployment Rate expected Neutral at 7.9%. Immediate support comes near 1.5947 (100 Weekly EMA) while resistance at 1.6021 (H4 upper Bollinger). GBPINR (72.77) Exporters should partially cover at current levels and importers cover partially for Jan towards towards 71 levels. GBPINR is likely to trade in the range of 72.65 - 72.95 levels today. Short Term and Medium Term: Neutral to Bullish
USD/JPY: USD/JPY is currently trading at 82.21 levels. Immediate resistance is at 82.47 levels (Daily middle Bollinger) while immediate support is at 81.10 (Daily Lower Bollinger). Yen Exporters to book Jan and Feb month's exposure around 81 levels and Yen Importers to cover their exposures near 84 levels. Medium Term: Maintain Bearishness for the pair Target 80 and below.
AUD/USD: The Aussie currently trading at 1.0032 levels on the back of strong risk appetite. Immediate support comes at 1.0009 levels (Daily Middle Bollinger) followed by 0.9958 levels (21 Daily EMA) while immediate resistance is at 1.0086 (Daily Fibo). Exporters are suggested to book Jan and Feb month's exposure towards 1.1000 levels, and Importers can cover their exposure on dips. Medium term: Bullish.
Gold: Gold is currently trading near 1372.90 levels. Support for gold is near 1369.21 levels (21 H4 EMA) and immediate resistance is at 1374.59 (55 H4 EMA) followed by 1376.67 levels (55 daily EMA). Buying on dips is recommended. Medium term: Maintain bullishness.
DOLLAR INDEX: Dollar Index is currently trading at 78.65 levels after TIC Long-Term Purchases came better at 85.1B vs.28.9B previous. Looking ahead today, Building Permits forecasted better at 0.56M vs. 0.54M previous. Immediate Support at 78.57 (Daily Fibo) levels and resistance is at 79.26 levels (Daily Fibo). Staying above 80.00 levels can take the index higher. Medium Term: Neutral
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.