In the news:
Yesterday in New York the stock indices closed marginally higher (Dow +38.48), as existing home sales post an unexpected gain, surprising the markets. It appears that investors are beginning to take advantage of the lower mortgage rates and the decline in home prices. This data will need to continue to beat expectations in order for us to see a move from the lows and see a recovery in the real estate markets. In other headlines, Tim Geithner won confirmation from the senate, with a 60-34 vote. As the new U.S. Treasury Secretary, Geithner has a big task ahead of him and plans to take action immediately. On the back of the marginal gains in the U.S. markets, the Asian markets did a little better, with the Nikkei back above 8,000. Overnight the European markets finished the day marginally lower, however. The British pound continued to gain ground against the Dollar in early London hours touching a high of 1.4240-45.
Our Focus Today:
Sterlings rally was capped by a descending support line from November 13, which was visited again in mid and late December. This should cap ahead of HPI tonight, especially as we are closing about 80 pips below that line. With the mixed results vs. expected UK data in the past week, we may have seen a bottom for now. HPI should give us a good hint of the Pounds direction at least for the week (have we seen the worst?). Depending on the HPI results, we would look to sell rallies to 1.4220-30, with a stop above 14260-65.