Currency Tech

AUDUSD
R 2: 0.9405
R 1: 0.9325
CURRENT: 0.9085
S 1: 0.8960
S 2: 0.8900

USDCAD
R 2: 1.0580
R 1: 1.0525
CURRENT 1.0475
S 1: 1.0220
S 2: 1.0205

EURJPY
R 2: 132.40
R 1: 131.00
CURRENT: 128.95
S 1: 126.56
S 2: 124.40

USDMXN
R 2: 12.150
R 1: 13.100
CURRENT: 12.925
S 1: 12.575
S 2: 12.487

Market Brief

Risk appetite is still lurching lower after yesterday's speech by US President Barack Obama that outlined dramatic reforms of the banking system; most notably the proposal to limit the extent banks can engage in proprietary trading and prevent banks from investing in hedge funds and private companies. Confusion is still rife as to how the definition of proprietary trading will be applied, and whether some of the largest financial institutions in the US will now face break-up to separate their commercial and investment activities, but investors reacted emphatically with an aggressive equity sell-off that saw $30bn wiped off America's top shares in two minutes. EURJPY plunged from 129.50 levels before the news to overnight lows of 126.56 - the strongest level of the JPY seen in over 9 months. Overnight, Asian indices have joined the equity market rout, with the Nikkei down over 2.5% and the Hang Seng down around 1.5%, with the misery compounded by renewed fears that China is moving towards tighter monetary policy. The flight to safe-haven assets such as the JPY will be an unwelcome development for newly appointed Japanese Finance Minister Naoto Kan who will now have his resolve tested after being quoted as favouring USDJPY in a range of 90 to 95. USDJPY has already dipped to lows of 89.79 in overnight trading, and if it falls further it is likely to dent Kan's credibility and prompt a scramble to verbally intervene and weaken the JPY.Meanwhile, Greek Finance Minister Papaconstantinou denied speculation Greece would require aid in its mission to handle the current budget concerns, stating We are not expecting anyone to come to our rescue. Greece has not asked for it, not is it expecting anything of that sort. This followed an IMF spokesperson that was quoted yesterday as saying there was no expectation for Greece to request financial help from the IMF, appeasing concerns of sovereign default for the time being. EURUSD has recovered from its 1.4028 lows to 1.4135 at the start of the European session - helped predominantly by the huge USD selling from leveraged investors liquidating equity positions.

Today's session will almost certainly be defined by the performance of equity markets, but there are a few data releases expected in the morning session; including UK Retail Sales (expected to grow 1.1% MoM after last month's -0.3% drop) and Eurozone Industrial Order (0.5% MoM expected, -2.2% prior).

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