Morning Forex Briefing
The USD remained in tight ranges
overnight in solid two way trade as traders waited for the rate announcements
from the BOE and the ECB. As expected the BOE left rates alone and is
expected to continue on hold through the first quarter of 2007. Analysts put the
chance of a 25 BP rate hike in February at 15%; citing the higher-than-expected
inflation numbers and slowing housing numbers in the UK. THE ECB hiked rates 25
BP as widely expected; attention now turns to the statement and press conference
at 7:30 AM CST for additional clues as to the ECB’s policy moving forward.
All the major pairs have remained in established ranges after
the news and traders note that with both of these fundamentals widely expected
and well-factored in, it is unlikely that the USD will move much ahead of US NFP
data on Friday morning. The greenback is trading in a solid two-way range and
offering short-term traders a lot to work with but traders caution that the
majors still appear “toppy†and should something surprise the markets it is very
likely the USD will rally significantly to correct the oversold sentiment.
Cable is under a bit of pressure to start New York after
trading in an established inside-range overnight; a rally above the 1.9700
handle fizzled quickly after the BOE announcement and GBP remains near the lows
so far today; low print 1.9645. EURO is also under near-term pressure, low
prints at 1.3276 and the rate is struggling to hold the 1.3300 handle in thinner
trade.
USD/JPY is firm at 115.00 area after attempting to clear stops
above the 115.30 area; high print overnight 115.39 but exporter offers in
thinner trade capped the move. Analysts say that the pair has significant offers
at 115.40/50 area with stops layered above suggesting that a rally could involve
some larger volume as offers are absorbed; a move to the 116.60 area might be in
the cards at that point. In my view, the USD is setting up to rally to finish
the week. Tomorrows’ data is widely expected to be USD bearish and most likely
factored in; look for a buy the rumor/sell the fact scenario after the release.
GBP/USD Daily
R3: 1.9850
R2: 1.9780
R1: 1.9720
Current Price : 1.9677
S1: 1.9640
S2: 1.9580
S3: 1.9500
Pair continues in two-way trade but appears to be topping in
my view, look for a large volume sell-off as long liquidate by the end of the
week. Tomorrow’s NFP data likely to inspire some profit-taking by the bulls in
any case. Stops said to be building under the 1.9580 area and offers said to be
resting at the 1.9780 area. Close under 1.9580 likely to inspire further long
liquidation. Close above the 1.9780 area brings 1.9900 into view analysts say.
EURO/USD Daily
R3: 1.3400
R2: 1.3350
R1: 1.3320/30
Current Price : 1.3299
S1: 1.3270
S2: 1.3250
S3: 1.3200
Pair showing no reaction to ECB rate announcement as traders
are heavily focused on the wording of the statement and the press conference.
Look for volatility after Trichet begins speaking. Stops said to be large under
the 1.3250 area and if triggered brings 1.3200 into view. Offers above at
1.3320/30 area and 1.3350.Close below 1.3250 likely to inspire a
long-liquidation break.
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Jason Alan Jankovsky
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