News and Events
The yen weakened for a second day against the dollar and the euro as the tightness in risk proxies extended on the news from the weekend that the Japanese government is looking to offer public funds to non financial firms. We saw the EUR rallied more than 100 pips from its low. The yen declined to 89.93 against the dollar as of 7:42 a.m. in London from 89.10 late yesterday in New York. Japan's currency weakened to 119.22 per euro from 117.51. AUDJPY considered as the barometer of risk, rallied 70 pips. DXY hit an 8 day low and the Nikkei rallied 5.5%.
Today the EUR is expected to rally to 1.3450 even if the German IFO indicator is expected to show that the euro zone situation is still frightening, the business confidence index is expected to fall to 81.0, the lowest since the metric was introduced in 1991.
US consumer confidence data are released today, if the consensus view a deterioration of it, we could probably see a rebound due to lower mortgage rates and first effects of the fiscal support package.
The RBNZ will probably cut rates by 125bps during its meeting on Thursday (please note the announcement takes place on Wednesday 8 PM London time).
Finance Minister Bill English said that the economic outlook had deteriorated since the government's December forecasts, and the economy now looked to be closer to the Treasury Department's 'worst case scenario', it suggested recession continuing through to 2010.
Today Key Issues:
* 09:00 EUR German IFO (Jan)
* 09:00 CHF UBS Consumption Indicator (DEC)
* 11:00 GBP CBI Distributive Trades Survey (Jan)
* 15:00 USD Consumer Confidence (Jan)
* 15:00 USD Richmond Fed (Jan)
The Risk Today:
EurUsd is seen between 1.3140and 1.3315, before challenging a bullish break of 1.3390, as the next key level on the upside. A rebound above that level would argue for an upward correction of the fall seen during the past few weeks, with the next target seen at 1.3790. The first key support is at 1.3140, with 1.3085 as pullback level.
GbpUsd is seen between 1.3920 and 1.4130, testing further resistance, before 1.4245 as the next target. Above that level, the main resistance is at 1.4355. The daily indicators are doing a slight rebound from their former trough. The hourly ones are positive, on their former high.
UsdJpy the resistance was at 89.70, next resistance at 90.15. Support is at 89.10 (on the downside, the key level is at 88.00). Above 90.15, the next target is 91.00, before 91.30 (bullish break point).
UsdChf a fall below 1.1280 (former bullish point) would argue for a return towards 1.1125, as the next target. Above 1.1425, the main resistance is at 1.1510. We see 1.1280 and 1.1425, in consolidation of yesterday's fall.