Currency Tech

R 2: 0.9010
R 1: 0.8927
CURRENT: 0.8905
S 1: 0.8735
S 2: 0.8645

R 2: 1.0635
R 1: 1.0577
CURRENT: 1.0420
S 1: 1.0405
S 2: 1.0270

R 2: 133.60
R 1: 132.70
CURRENT: 132.25
S 1: 130.55
S 2: 129.95

R 2: 13.094
R 1: 12.973
CURRENT: 12.969
S 1: 12.849
S 2: 12.767

Market Brief

Tight trading ranges prevailed in the majors overnight with EURUSD’s range 1.4354-1.4419, and USDJPY locked in an even narrower 91.61-91.78 channel. The USD has not shown much reaction to last night’s Fed proposal to set up a term deposit facility (designed to drain excess reserves); the accompanying statement was cautiously worded to underline that the plan had “no implications for monetary policy decisions in the near term”, and with limited market participation during the holiday season we see little scope for a USD-trend to emerge from this news.

Asian equity indices are mostly higher on the day, but the Nikkei has lagged somewhat as Japanese bank stocks traded lower on speculation of further capital raising. Besides the excitement in copper markets – where prices are still elevated on news of strike action in Chile’s mines – the news flow remains light as we complete the final week of 2009.

Today’s morning data includes German regional and national CPI figures for Dec where the EU harmonized figures are expected to tick sharply higher to 0.7% MoM, 0.7% YoY (previous month -0.2% MoM, 0.3% YoY). The other major item on the European docket will be Swedish Retail Sales for Nov which is forecast to continue its strong gains (expected: 0.6% MoM, 4.4% YoY); with EURSEK poised above major support at 10.3500 (currently 10.3770), a significant upside surprise could open up further downside for EURSEK through this level. Today’s US data includes the CaseShiller Home Price Index and US Consumer Confidence, but we doubt much fundamental change to the USD outlook, and expect markets to be largely flow-driven in this thin liquidity.