Morning Forex Briefing
The USD is mixed against the majors
this morning, slightly higher against Yen from Monday’s close but weaker against
EURO and GBP. Most traders are waiting for US data this morning and
no surprises are expected from the Balance of Trade numbers but some analysts
are suggesting that our Trade Deficit with China may be focused on due to the
trip overseas by Secretary Paulson and Fed Chair Bernake. China will likely be
pressured to revalue their currency sooner rather than later so the war of
rhetoric will be closely watched moving forward after the China visit.
Cable got a boost overnight on higher-than-expected UK CPI
data; the numbers are some of the highest on record suggesting that the BOE may
have the ammunition for another rate hike in Q1 2007. GBP trades to a high print
at 1.9652 as some close-in stops are elected above the 1.9620 area. Traders also
note some sympathy buying with EURO, EURO enjoying a modest boost as well from
better-than-expected German ZEW sentiment indices. Expecting to show only a
modest improvement from last month, ZEW data surprised to the upside showing
indications of a faster German economic growth potential lifting EURO to a high
print of 1.3269 during European trade. Both the GBP and the EURO have recovered
a significant portion of the decline seen Friday last week; analysts point to
the technicals and suggest that both rates can recover toward their respective
highs by the end of the year.
USD/JPY has seen solid two-way trade overnight but without a
large range. Traders report there was heavy option-related selling of the pair
at 116.95/117.05 area in Asia with some note taken of the weak Capital Goods
Price Inflation data. The BOJ is concerned about inflation prospects but
analysts remind that growth is their central focus; eyes now turn to the Friday
Tankan report for clues to business expectations. A strong Tankan survey will
likely raise the odds of a BOJ rate hike sooner rather than later; some analysts
are projecting a rate hike by the BOJ at their committee meeting next week. In
my view, the USD is set to continue in two-way trade. Some upside exists but the
near-term pressures are still there as we close out the year. Look for the
Greenback to hold current S/R levels through the next 24-48 hours.
USD/JPY Daily
R3:
R2: 117.80
R1: 117.20/30
Current Price : 116.87
S1: 116.50
S2: 116.00
S3: 115.60
Pair consolidating gains but resistance from the 100 bar MA
and the 50% fib defense level suggest that the upside correction may be over.
Additional option related selling is expected ahead of 117.20 area so potential
for additional gains is fading in my view. Stops are reported over 117.40 area
and below 116.50 area. Downside stops are at risk should US data be USD-negative
today.
GBP/USD Daily
R3: 1.9780
R2: 1.9710/20
R1: 1.9670/80
Current Price : 1.9638
S1: 1.9600
S2: 1.9550
S3: 1.9500
Rate lifting higher and recovering from Friday losses. Stops
said to be close-in around the 1.9680 area or so; look for those stops to
trigger should US data be USD negative this morning. Offers said to be at 1.9700
area and option related defense as well. Break back below the 23.6% fib number
likely to discourage the bulls. Close back above 1.9700 opens the door for a
test of the highs.
Join us for the ProEdgeFX Morning FOREX Briefing at 7:45 am CST (GMT -5)
Join us for the Afternoon US Dollar Wrap-Up daily at 3:15 pm CST (GMT -5)
Please see www. ProEdgeFX.com for details
Jason Alan Jankovsky
Trading Futures, Options on Futures, and off-exchange
Foreign Currency transactions involves substantial risk of loss and may not be
suitable for all investors. You should carefully consider whether trading is
suitable for you in light of your circumstances, knowledge, and financial
resources. You may lose all or more of your initial investment. Opinions, market
data, and recommendations are subject to change at any time. The information
contained on this email does not constitute a solicitation to buy or sell by
Infinity Futures, Inc., and/or its affiliates, and is not to be available to
individuals in a jurisdiction where such availability would be contrary to local
regulation or law.
Â