U.S. Dollar Trading (USD) with little movement seen in the markets overnight the Dollar finished roughly where it began against most pairs. Weekly Jobless Claims were strong at 421k vs. 435k forecast. In US stocks, DJIA -2 points closing at 11370, S&P +4 points closing at 1233 and NASDAQ +7 points closing at 2616. Looking ahead, November Trade Balance is forecast at -43.5bn vs. -44bn previously.

The Euro (EUR) fell from day highs above 1.3300 after Ireland was downgraded by Fitch and Standard & Poors. The market slid below 1.3200 but when US stocks remained supported by strong data the Euro bounced back to the mid 1.3200 region. EUR/USD traded with a low of 1.3163 and a high of 1.3324 before closing at 1.3240. Looking ahead, November WPI is previously at -0.3%.

The Japanese Yen (JPY) struggled to push above multimonth resistance at Y84.40 and spent most of the day with a slight downside bias. Support was found at Y83.50. Q3 GDP at 1.1% vs. 1.0% forecast y/y.  Overall the USDJPY traded with a low of 83.50 and a high of 84.13 before closing the day around 83.70 in the New York session.

The Sterling (GBP) The BoE meeting was a non event with the central bank holding at 0.5% as expected and leaving the Asset Purchase Program at 200bn. Cable fell tracking the Euro lower but found support at 1.5700, finishing in the middle of the recent range. Overall the GBP/USD traded with a low of 1.5710 and a high of 1.5844 before closing the day at 1.5765 in the New York session. Looking ahead, November PPI forecast at 0.4% vs. 0.6% previously.

The Australian Dollar (AUD) the Aussie jumped on very strong November Jobs Numbers at +54k vs. +20k  forecast. The Unemployment rate fell to 5.2% vs. 5.4% previously. AUD/USD found solid resistance at 0.9880 and eased back to 0.9820. Overall the AUD/USD traded with a low of 0.9778 and a high of 0.9886 before closing the US session at 0.9840.

Oil & Gold (XAU) edged higher orbiting around the $1390 level. Overall trading with a low of USD$1380 and high of USD $1394 before ending the New York session at USD$1388 an ounce. Traded in a 200 point range but finished only slightly higher. WTI Oil Closed +$0.29 at $88.57 a barrel.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.2969	1.3165	1.3245	1.3323	1.3401
USD/JPY	82.32	83.46	83.80	84.41	85.40
GBP/USD	1.5581	1.5669	1.5770	1.5841	1.5965
AUD/USD	0.9625	0.9739	0.9855	0.9939	1.000
XAU/USD	1362.00	1371	1389	1404	1438
OIL/USD	87.0	88.00	88.75	90.00	91.00

Euro – 1.3245

Initial support at 1.3165 (Dec 9 low) followed by 1.2969 (Nov 30 low). Initial resistance is now located at 1.3323 (Dec 9 high) followed by 1.3401 (Dec 7 high)

Yen – 83.80

Initial support is located at 83.46 (Dec 8 high) followed by 82.32 (50% retrace of 80.22-84.41). Initial resistance is now at 84.41 (Nov 29 high) followed by 85.40 (Sept 24 high).

Pound – 1.5770

Initial support at 1.5669 (Dec 8 Low) followed by 1.5581 (Dec 3 low). Initial resistance is now at 1.5841 (Dec 9 high) followed by 1.5965 (Nov 23 high).

Australian Dollar – 0.9855

Initial support at 0.9739 (Dec 3 low) followed by the 0.9625 (Dec 2 low). Initial resistance is now at 0.9939 (Dec 3 high) followed by 1.0000 (Psychological Resistance).

Gold – 1389

Initial support at 1371 (Dec 3 low) followed by 1362 (Nov 30 low). Initial resistance is now at 1404 (Dec 8 high) followed by 1438 (1329.70 plus 1315.45-1424.60).

Oil – 88.40

Initial support at 88.00 (Intraday Support) followed by 87.00 (Intraday Support). Initial resistance is now at 90.00 (Intraday Resistance) followed by 91.00 (Intraday Resistance).

Written by Anthony Darvall

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

The Fed’s decision Wednesday to keep monetary policy steady and maintain the language in its policy statement that interest rates will remain low for an extended period was widely expected. The Fed’s decision to make no change in the extended period language in the policy statement suggests that the Fed still does not see the US recovery self-sustaining and that the US economy requires continued Fed support. In its policy statement however the Fed did change its language about the strength of the US economy and the labor market and said equipment and software spending increased significantly. The Fed says the US economy continues to strengthen and the labor market has stabilized. This language is a bit more upbeat than the prior policy statement and may encourage analysts to look for the Fed to drop the extended period language possibly as soon as April policy meeting. Dropping the extended period language would set the stage for future Fed rate hikes and the end of easy money. Much of the recent recovery of the US economy has been attributed to fiscal and monetary stimulus. Fiscal stimulus is expected to diminish into year end and a shift in Fed policy may emerge in Q4 2010.

The debate continues over whether the US is on a sustainable recovery path and what the shape of that recovery may be, V-shaped or U-shaped. In the V-shaped camp are economists Brian Wesbury and Robert Stein. These economists see strong consumption in February despite the blizzards, a bottom in the housing market, increased business investment and a shrinking trade deficit which they think points to V-shaped recovery for the US economy. In the U-shaped recovery camp is New York University economist Roubini. Roubini says that recent US economic data has been weak. Consumer confidence, home sales, construction and employment have been coming in weaker than expected. He also says the real disposable income was negative in January and the expansion in manufacturing PMI has lost momentum. According to Roubini this data suggests that there are downside risks to the already anemic levels of growth in the US economy and challenges in the second half of the year include the removal of fiscal stimulus and tightening of Fed policy which will increase the risk of a double dip recession.

The timing of withdrawal of stimulus remains the key to whether the US experiences a V-shaped or U-shaped recovery. The Fed’s March policy statement confirms that there was one dissenter to maintaining the extended period language. That dissenter was Hoenig. Hoenig said that low rates for extended period is no longer warranted. His main concern is the massive expansion of the Fed’s balance sheet raises the risk of inflation if the Fed does not begin to withdraw liquidity. Hoenig’s dissent may bring the Fed closer to a decision to withdraw stimulus and tighten monetary policy. In the Mach policy statement the Fed said the housing market remains weak. Nobel laureate Joseph Stiglitz says that the Fed’s decision to allow the mortgage purchase programs to end this month could contribute to a worsening of the US housing market crisis. According to Stiglitz the Fed has misjudged things and he sees the main danger to the US and global recovery a too quick exit of monetary stimulus by central banks sparked by an irrational fear of inflation risk. He went on to note that China is taking action to tighten monetary conditions try to prevent asset bubbles. Tightening in China means that the global economy will unlikely return to robust growth anytime soon. Stiglitz says that double dip recessions tend to be rare but he sees a significant risk of a slowdown in global growth and that the US economy will likely see growth weakening at the end of the year. If the Fed tightens policy too soon it may tip the scales in the direction of the double dip recession. Based on the strength of global equity markets which are trading at a 19 month high and the Fed policy statement it appears that economic optimism trumps fear the economy will relapse.

Source: Easy Forex

My recommended Forex Broker is Forex Yard.

FX Highlights

• The USD is trading higher to start the week supported by a spike in risk aversion on concern about the outlook for China’s economy and uncertainty about a Greek rescue plan, some EU finance ministers rule out aid for Greece at this time, USD is also supported by safe haven demand as Moody’s warns that the US and UK are moving closer to losing their AAA debt ratings, GBP pressured by UK election polls which suggest that no parliamentary majority will emerge after the May general election, commodity currencies are trading mixed with CAD higher and the AUD lower
• Focus turns to today’s release of US Empire manufacturing index, industrial production, capacity use and NAHB index
• China’s PM Wen warns of possible double dip for the global economy and warned Washington not to meddle with China’s currency policy, Wen says the Yuan is not undervalued
• Japan’s February consumer confidence index rose 39.8 from 39 last month, JPY lower
• Reuters reports that French Finance Minister Lagarde says she is happy the EUR weakened and there is no need to bailout Greece at this time, EU Q4 employment fell by 0.2%, EUR lower
• Swiss February producer import prices declined by 0.3%, CHF lower and trades at a 17 month high versus the EUR
• UK Finance Minister Darling said that he will not rule out tax hikes to try to reduce the UK budget deficit, BOE’s Barker sees possibility of another negative quarter of UK GDP, she ruled out the risk of a double dip recession for the UK, GBP lower
• RealtyTrac reports that borrowers continued to fall behind in their payments and 5mln to 7mln properties may be eligible for foreclosure, a new wave of housing troubles may be coming soon
• US sales tax rates are at a record high with the top tax at 12%
• CFTC commitment of traders for last week shows spec accounts cut US long positions for the second week in a row but added to EUR short positions
• US equity markets set to open lower, European equities 0.25% lower, Nikkei closed 72 points higher

Upcoming Events

• US - Monday, March Empire manufacturing survey will be released expected at 22 compared to 24.9 last month along with February industrial production expected at 0.1% compared to 0.9% last month and February capacity use expected unchanged at 72.6 and March NAHB index expected unchanged at 17
• CAN - Monday, no major Canadian economic data is due for release today

Source: Easy Forex

My recommended Forex Broker is Forex Yard.

Fed President Evans says extended period means 3-4 policy meetings!

• Yesterday was a light day in terms of financial data with no major economic reports released from the US. Overall the USD traded weaker, equity markets almost unchanged and commodities such as OIL and Gold closed at $81 and $1115. Fed President Evans was in the spot light and was reportedly commenting about the state of the economy and said that if economic circumstances change quickly then a change in policy could be very likely. He said that ‘extended period’ means 3-4 policy meetings. 2 year US Treasury yields traded between 0.89% and 0.87% yesterday and the USDJPY traded in a tight range as well between 90.45 – 89.75.
• In Europe we had more news coming from Fitch, a rating agency, saying that its negative outlook of Portugal remains and that a possible default should not be ruled out. Greek prime minister made a visit to Washington and met with US President Barack Obama. The meeting was not intended to ask for financial aid from the US however he did express to the President that Greece cannot continue to borrow at the current yields. IMF also said that the meeting with Papandreou was to discuss technical assistance; this can only add pressure to Germany as outside help may be considered as a blow of confidence against European solidarity. EURUSD price action yesterday was between 1.3636 – 1.3536.
• In the UK we had Fitch again express concerns over the UK’s deficit profile however said that it still remains within the AAA rating. They also expressed concerns about UK banks and that a wave of defaults may occurs if Government support is withdrawn. BoE Posen also spoke yesterday saying that QE has helped the UK economy and that if the need arises again further operations may be resumed.
• Today’s the focus will turn to Germany’s consumer price index expected to drop to 0.4 yy. Manufacturing production will be released in UK where 1.4% growth is expected for the month of January. In the US we have a number of mortgage related data, the Fed budget for February expected at $-222bln and Crude Oil Inventories for the week expected to drop to 2.1 mln barrels.

Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3650 with a preference to enter into short positions at 1.3640
• § The USDJPY pivot point is at 89.70 with a preference to enter long positions at 89.75

Today’s calendar and market movers:

• § Germany Consumer Price index expected to drop to 0.4% for the year
• § UK Manufacturing Production for year expected to grow 1.4%
• § US Crude Oil Inventories for the week expected to be 2.1 bln barrels

Equity Markets:

• US equities closed positive yesterday with the DJIA and the SP500 closing 0.11% and 0.17% respectively.  The European bourses were mixed yesterday with the FTSE down -0.08% the DAX and the CAC closing positive at 0.17% and 0.17% respectively.  The NIKKEI and the HSI at the time of writing is -0.04% and 0.06% respectively.

Source: Easy Forex

My recommended Forex Broker is Forex Yard.

CURRENCY TRADING SUMMARY – 4th March (00:30GMT)

U.S. Dollar Trading (USD) the market reacted well to the new Greece Austerity measures in Europe and the Euro led the majors higher against the greenback. Adding to the positive sentiment was the February ISM Services PMI at 53 vs. 51 forecast. February ADP Employment report was a relief at -20k as forecast. In US stocks, DJIA -9 points closing at 10396, S&P +1 points closing at 1118 and NASDAQ -1 points closing at 2280. Looking ahead, Weekly Jobless Claims are forecast at 470k vs. 496k previously. January Factory Orders are forecast at 1.8% vs. 1.0% previously. Finally, January Pending Home Sales are forecast at 1%.

The Euro (EUR) with over $6bn in new budget cuts announced from Greece the market took another leg higher breaking above resistance at 1.3700. EUR/GBP was volatile as the market rejected 0.9100 and Pound found strength on good data. Overall the EUR/USD traded with a low of 1.3591 and a high of 1.3737 before closing at 1.3700. Looking ahead, ECB Rate Announcement forecast to remain at 1.0%.

The Japanese Yen (JPY) Euro inspired USD weakness hurt the major as it broke below support at 88.50 and the gradual decline continued. Crosses held their ground and most finished with small gains. AUD/JPY continues to hold above Y80 and is one of the most closely watch trades for overall investor risk appetite. Overall the USDJPY traded with a low of 88.30 and a high of 89.02 before closing the day around 88.45 in the New York session.

The Sterling (GBP) broke above 1.5000 in Asia as the recovery continued and Europe continued with the theme as Economic data impressed. February Services PMI jumped to 58 vs 55. Also strong, February Nationwide Consumer Confidence at 80 vs. 71 previously. Overall the GBP/USD traded with a low of 1.4974 and a high of 1.5134 before closing the day at 1.5100 in the New York session. Looking ahead, BOE rate Announcement.

The Australian Dollar (AUD) was quiet as profit taking on the major in the high 0.90′s capped gains and traders looked to the crosses for action. AUD/NZD broke to fresh decade highs above 1.3000 and quickly ran up to the 1.31 level. Q4 GDP came in at 0.9% q/q as forecast. Overall the AUD/USD traded with a low of 0.9007 and a high of 0.9088 before closing the US session at 0.9035. Looking ahead, January Trade Balance is forecast at -1.5bn vs. -2.25bn.

Oil & Gold (XAU) took advantage of USD weakness to trade above $1140 for the first time since January. Overall trading with a low of USD$1131 and high of USD$1145 before ending the New York session at USD$1139 an ounce. Crude Oil broke above $80 on Bullish US inventories data. Crude Oil was up +$1.27 ending the New York session at $80.95.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3424	1.3436	1.3705	1.3788	1.3839
USD/JPY	87.37	88.25	88.45	89.50	90.36
GBP/USD	1.4784	1.4855	1.5100	1.5209	1.5317
AUD/USD	0.8863	0.8936	0.9055	0.9093	0.9147
XAU/USD	1104.00	1111	1139.00	1146	1161.00
OIL/USD	78.00	80	80.80	82.00	82.50

Euro – 1.3705

Initial support at 1.3436 (Mar 2 low) followed by 1.3424 (may 18 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high)

Yen – 88.45

Initial support is located at 88.25 (0.618 of 84.83-93.77) followed by 87.37 (Dec 9 low). Initial resistance is now at 89.50 (Feb 26 high) followed by 90.36 (Feb 23 high).

Pound – 1.5100

Initial support at 1.4855 (Mar 2 low) followed by 1.4784 (Mar 1 low). Initial resistance is now at 1.5209 (Mar 1 high) followed by 1.5317 (Feb 26 low).

Australian Dollar – 0.9055

Initial support at 0.8936 (Mar 1 low) followed by the 0.8863 (Feb 26 low). Initial resistance is now at 0.9093 (Jan 25 high) followed by 0.9147 (Jan 21 high).

Gold – 1139

Initial support at 1111 (Mar 1low) followed by 1104 (Feb 26 low). Initial resistance is now at 1146 (Jan 14 high) followed by 1161 (Jan 11 high).

Oil – 80.80

Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Source: Easy Forex

My recommended Forex Broker is Forex Yard.