Morning forex briefing

The USD is trading mixed-to-weaker
this morning after an uneventful overnight session.
Very little in
the way of news available to traders; much of the activity driven by comments
from various officials. US Fed President Fisher remarked at a conference in
Asia that he was unconcerned with USD sales or diversification away from US
assets by Central Banks. He also said he expected the EURO to play a greater
role in reserve status for central banks; remarks that sent the EURO to a high
print at 1.2841 before sellers capped the rally. Also helping the majors to
firm was a glitch in a model system platform causing several large orders to
be missed as the USD fell to overnight lows. Correcting the rates quickly the
Greenback recovered from a slight 20 pip down move and currently trades around
that area to start New York.

BOJ Deputy Governor Muto also in the news overnight saying
that the timing for another BOJ rate hike is completely open including
December and that the BOJ is watching carry trades closely. Traders saw that
as an opportunity to buy JPY but little volume was seen on the move and the
USD soon recovered to Monday’s closing levels. Better-than-expected UK CBI
data gave Cable a push higher but technical resistance remains at the 1.9010
area with offers resting higher traders say; GBP able to post a European high
at 1.9005 before settling back to the 1.8990 area in quiet trade. Across the
board trade remains on the lighter side and with the lack of fundamental news
along with the holiday shortened week, traders are suggesting that the major
pairs will remain in tighter ranges and driven by technical trading. GBP
continues to lead the complex and even with reported offers above the market
expected to cap rallies, cable is firm at the highs and 60 pips better for the
week from Friday’s rally. EURO is also firm above the 1.2800 area and is
tracking GBP higher but less aggressively; dips are being bought by rumored
semi-official names.

USD/JPY is softer at the highs traders say but still holding
the 118.00 handle, high print in Asia at 118.27; still in a tight range and
exporter offers abound on the rallies traders say. In my view the USD is
holding consolidation ranges against the major pairs but due to the holiday
volumes are so light and interest is so light that traders have no reason to
move rates anywhere until everybody is back next week. Expect quiet two-sided
trade until next week; book-squaring likely as die-hards close shop Wednesday.


R3: 118.80

R2: 118.60

R1: 118.20/30

Current Price : 118.05

S1: 117.80

S2: 117.40/50

S3: 117.20

Pair trapped in a tight range, coiling for a sharp move in
either direction. Likely that a rally will be sold; traders expect offers to
cap a move to 118.60 area. Stops building under the 117.80 area with bids
mixed in down to 117.20 area. Look for pair to hold inside range until after
the holiday. Risks is for a rally ahead on book-squaring Wednesday.


R3: 1.2900/10

R2: 1.2880

R1: 1.2840

Current Price : 1.2814

S1: 1.2800

S2: 1.2780

S3: 1.2760

Pair continues to consolidate in a tight range ahead of the
holiday, look for continued technical trade with ranges remaining tight until
next week. Likely for upside to cap on rallies around the 1.2840 area; stops
under the 1.2760 area but bids and semi-official names likely to support on a
break. Risk is for a break lower on book-squaring Wednesday.

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