$ Dollar American price Action to be taken with a Grain of salt in the Session of holiday

Technical Strategist 06 April 2012 05: 23 GMT Economic calendar very thin in holiday session. US NFPs key standout Euro expected to find solid bids towards the 1.3000 area Razor thin trade could prompt unwelcome choppiness SNB will be watching closely with EUR/CHF floor being challenged All is expected to be very quiet today with most markets closed for Good Friday, and many traders having already exited for the long weekend. The European calendar is extremely light with no meaningful economic data releases, while things could get a bit more interesting into North America with the US monthly employment report NFP. Still, with equity markets closed and razor thin conditions, any movement on the back of the jobs number will need to be taken with a grain of salt until normal market conditions resume next week. Markets are forecasting a healthy print just over 200 k, with no Exchange anticipated to the 8.3% unemployment rate. Any significant departure from the consensus estimate will likely make for some choppy trade on the thin conditions.
We would look for more USD bids with an as expected or better than expected showing, while a disappointing result could weigh a bit on the Greenback. Nevertheless, given the Fed's recent shift away from additional stimulus, it would probably take a really bad number to rock the boat and open a resurgence in broad based US Dollar weakness. Truthfully, even a bad number could be positive USD if markets take it as a global macro risk off sign and feel that more liquidation of risk correlated assets is warranted in favor of the safer buck. Technically, there is some solid internal support from February and March down by 1.3000 in EUR/USD, and the risks are for some form of a consolidation or bounce once this level is retested. Meanwhile, on the other side of the ocean, economic data has been less than impressive to say the least, and the ongoing struggles in both the Eurozone and UK economies do not support the notion of wanting to be long the Euro or Pound against the buck. Elsewhere, the Franc has started to find some relative bids, and the price action here has been most compelling with the EUR/CHF cross rate testing the highly publicized 1.2000 floor that the SNB has said they would defend aggressively. The risk liquidation theme that has taken hold of markets this week has not been a welcome development for the SNB (the risk off price action makes the Franc naturally attractive given its traditional attributes), and if the central bank is going to act, it might have to be very soon. Otherwise, a sustained break below 1.2000 would seriously undermine the SNB's credibility and open a rapid deterioration in the cross rate. At this point however it would be surprising to see such a scenario play out and we suspect that the SNB will be very ready to back up its talk with action.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: A break of some multi-session consolidation is significant in the short-term and could now open the door for deeper setbacks over the coming sessions. The latest break and close below some key short-term support at 1.3250 highlights this fact, and now exposes a fresh drop towards medium-term support by 1.3000 further down. Back above 1.3400 would be required to negate bearish outlook and put pressure back on topside. However, the market is well supported in the 1.3000 area and it will take a meaningful break below to convince us of continued bearish price action to challenge the 2012 lows in the 1. 2600's. 

USD/JPY: Has been locked in some consolidation since the market broken to fresh 2012 highs beyond 84.00 with technical studies unwinding from overbought levels before consideration is to be given for the next major upside extension. The key levels to watch above and below come in at UST and 81.50 and a break on either end will be required for regional short term directional bias. However, given the bullish breakout in 2012, all signs point to a major structural shift which favors additional upside beyond UST and into the 85 00-90. 00 area further up. Ultimately, only back under 80.00 would give reason for concern.

GBP/USD: Failure to establish any fresh momentum following the break above 1.6000, followed by an aggressive bearish reversal now suggests that the market could finally be looking to carve a top in favor of a more significant decline over the coming sessions. Look for a break and closed below next support at 1.5830 to reaffirm outlook, while back above 1.6065 would be required to negate.

  USD/CHF: Our core constructive outlook remains well intact with the latest setbacks very well supported by psychological barriers at 0.9000. It now looks as though the market could be looking to carve a fresh higher low, and we will be looking for additional upside back towards the recent range highs at 0.9335 over the coming sessions. Above 0.9335 should then accelerate gains towards the 2012 highs by 0.9600 further up. Ultimately, only back under 0.9000 delays and gives reason for pause.

FOREX NEWS - euro wobbles on Greek setback; subdued in holiday trade

* Euro under pressure the first in Asia

* No clear result in Greek debt swap deal

* Public holidays in Asia make for subdued trading

 

SYDNEY, Jan 23 Reuters) - the euro began the week in Asia with a negative tone as investors cautiously to Athens and to some of its creditors on a debt swap deal, to avert the vital chaotic default value for Greece is.

Euro was $1.2882, below are some 40 pips from $1.2930 late in New York on Friday. It fell as low as $1.2856 in thin early dealings. Trade is expected to be in Asia with many centres including China, Hong Kong and Singapore closed on the Lunar New Year holiday are subjected to.

"There was no clear outcome to the talks on the restructuring of the Greek debt over the weekend and that pressure has euro probably lower," said Andrew Salter, strategist at ANZ in Sydney.

Dealers said that a clear break of $ 1.2870/80 tested could see great support at $1,2800 / 10. Last Friday the single currency hit a 2-1/2 weeks up to $1.2985, that just under 3 percent rise from a 17 months trough $1.2623 on Jan. 13 geplumbt (enabled).

Nevertheless, euro increased speculators net shortly to a fourth straight record week 17, ended Jan suggests the downward trend remained intact to the single currency.

Against the yen, the euro at 99.11 was far below from last week Summit around 100.32. It caught up with the Australian dollar $ 1.2281, not far off a record low for a$ 1.2220 on Jan. 17 set.

Private creditors said on Sunday they put the ball in the Court by the EU and the IMF until the limits losses which had come the, which could admit it in a Greek debt swap.

Much attention is Finance Minister now a meeting of the euro on Monday, and that States and the IMF, that the plan, which Athens and private bond holders is collected enough, cut Greece debt payments.

Renewed weakness of the euro helped to 80.387 increase the dollar index 0.2 per cent. Against the yen, the greenback bought 76.95, that withdrawal from last week 77.31 high.

Despite the dollar in the General fixed sound commodity currencies like the Australian dollar could their. The Aussie was $1.0480, not far from an early 11-week peak of $1.0495.

"The AUD interval of 1.0450 Friday maintains the positive momentum since mid-December and today suggests an upward trend with little resistance at 1.0500," said Besa Deda, Chief Economist at St. George Bank.

The Aussie immediate focuses on producer prices around 0030 GMT due, but the key data this week on Wednesdays consumer inflation is report. Quite a few would tame expectations for an interest rate cut the Central Bank Feb 7 policy meeting cement.

For the wider market the Federal Reserve are two-day policy meeting on Tuesday begins the big event. Although no change in policy is expected, the Fed could the historic step of announcing an explicit target for inflation as part of the new communication strategy.

 

FOREX NEWS - Euro wobbles on Greek setback; subdued in holiday trade

* Euro under pressure first thing in Asia

* No clear outcome on Greek debt swap deal

* Holidays in Asia make for subdued trade

By Ian Chua

SYDNEY, Jan 23 (Reuters) - The euro started the week in Asia with a negative tone as investors turned wary after Athens and its creditors failed to agree on a debt swap deal that is vital to avert a chaotic default for Greece.

The euro stood at $1.2882, down some 40 pips from $1.2930 late in New York on Friday. It fell as low as $1.2856 in thin early dealings. Trading is expected to be subdued in Asia with many centres including China, Hong Kong and Singapore closed for the Lunar New Year holidays.

"There was no clear outcome on the talks about the restructuring of Greek debt over the weekend and that's probably pressured the euro lower," said Andrew Salter, strategist at ANZ in Sydney.

Traders said a clear break of $1.2870/80 could see major support at $1.2800/10 tested. Last Friday, the single currency hit a 2-1/2 week high around $1.2985, having risen nearly 3 percent from a 17-month trough at $1.2623 plumbed on Jan. 13.

Still, speculators boosted net euro shorts to a fourth straight record in the week ended Jan 17, suggesting the downtrend for the single currency remained intact.

Against the yen, the euro was at 99.11, well down from last week's peak around 100.32. On the Australian dollar, it fetched A$1.2281, not far off a record low around A$1.2220 set on Jan. 17.

Private creditors said on Sunday they had come to the limits of what losses they could concede in a Greek debt swap, putting the ball in the court of the EU and the IMF.

Much of the attention will now turn to a meeting of euro zone finance ministers on Monday, and to whether EU states and the IMF consider that the plan that is being put together by Athens and private bondholders does enough to cut Greece's debt payments.

Renewed euro weakness helped the dollar index climb 0.2 percent to 80.387. Against the yen, the greenback bought 76.95, having retreated from last week's high of 77.31.

Despite the dollar's generally firmer tone, commodity currencies like the Australian dollar held their ground. The Aussie stood at $1.0480, not far off an early 11-week peak of $1.0495.

"The AUD's break above 1.0450 on Friday maintains the positive momentum since the middle of December and suggests an upward bias today with minor resistance at 1.0500," said Besa Deda, chief economist at St. George Bank.

The Aussie's immediate focus is on producer prices due at 0030 GMT, but the key data this week is Wednesday's consumer inflation report. A tame number would cement expectations for an interest rate cut at the central bank's Feb 7 policy meeting.

For the wider market, the Federal Reserve's two-day policy meeting starting on Tuesday will be the major event. Although no policy change is expected, the Fed could take the historic step of announcing an explicit target for inflation as part of its new communication strategy.

© Thomson Reuters 2011. All rights reserved.

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TheNews.com Asian Market Update: Cautious trading ahead of long Chinese holiday and EU debt auction

- (CN) CHINA DEC ACTUAL FOREIGN DIRECT INVESTMENT (FDI) Y/Y: -12.7% V -9.8% PRIOR; 2011 FDI: +9.7% to $116B (record high)
- (CN) CHINA DEC NEW HOME PRICES DECREASE M/M IN 52 OF 70 CITIES V 49 CITIES PRIOR; Y/Y PRICES DECREASED IN 8 CITIES OUT OF 70 V 66 PRIOR
- (AU) AUSTRALIA DEC NEW MOTOR VEHICLE SALES M/M: -2.9% V -0.6% PRIOR (7-month low and 2nd consecutive decline); Y/Y: -3.0% V +2.6% PRIOR (5-month low)
- (AU) AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE M/M: +2.4% V -8.3% PRIOR; INDEX: 97.1 V 94.7 PRIOR
- (KR) SOUTH KOREA DEC DEPARTMENT STORE SALES Y/Y: +11.0% V -0.5% PRIOR; DISCOUNT STORE SALES Y/Y: +3.7% V -0.5% PRIOR
- (JP) JAPAN NOV FINAL INDUSTRIAL PRODUCTION M/M: -2.7% V -2.6% PRELIM; Y/Y: -4.2% V -4.0% PRELIM (6-month low); CAPACITY UTILIZATION M/M: -2.9% V 4.1% PRELIM
***Markets Snapshot (as of 05:30GMT)***
- Nikkei225 +1.2%
- S&P/ASX +0.1%
- Kospi -0.3%
- Taiwan Taiex +0.2%
- Singapore Straits Times Index +0.1%
- Shanghai Composite -0.3%
- Hang Seng +0.2%
- S&P Futures +0.3% at 1,292
- Feb Gold unchanged at $1,655/oz
- March Crude +0.6% at $101.27
***Overview/Top Headlines***
- Asian equity markets traded mixed after yesterday's rally and ahead of Portugal debt sale later in the EU session. Concerns over Greece debt negotiations returns to the forefront with talks resuming Wednesday. PM Papademos said he will consider legislation that would force creditors to take losses on their holdings if no agreement can be reached. Today was the last day of trade in China before a 7-day break for the Lunar New Year, this will keep most traders on the sidelines with the anticipated thinning liquidity as other countries in the region join for shorter breaks to celebrate. There is still heavy chatter that there could be up to a 50bps rate cut to the RRR heading into the holiday as this is typically a cash crunch time for banks with demand soaring for the holiday. China Business News reported today that the PBoC has set a lower RRR for banks in Guizhou. All this caution held the euro steady around $1.2765, yen gained against the USD to ¥76.80, EUR/JPY stayed in a smaller range testing ¥97.85. Copper rose to $3.75, +0.5% and silver followed to $30.40. Spreads in Asia were pretty subdued with 10-yr JGBs mostly unchanged.
- World Bank Updates 2012 GDP Forecasts cutting 2012 global GDP forecast to 2.5% from 3.6%, 2013 cut to 3.1% from 3.6%. Key comments included the EU crisis, weaker developing country growth could become reinforcing and cause an even sharper downturn. There is a risk of freezing up capital markets and a Lehman like crisis are contained at the moment but not impossible.
***Speakers/Geopolitical/In the press***
- (CN) China Academy of Social Sciences (CASS): Sees 2012 GDP falling to 8.5% from 9.2% in 2011; Sees 2012 CPI at 3.6-4.0% - Chinese press
- (CN) China Commerce Ministry Spokesperson Shen: China faced with severe foreign trade environment in Q1; Imports growth may continue to decelerate in Jan
- (PH) Philippines Central Bank Gov Tetangco: Will adjust policy rate in Q1, will encourage investment; Can be accommodative on policy right now due to inflation
- (AU) Westpac chief economist: Sees "ample scope for the RBA to go further given the benign outlook for inflation"; Expects next RBA meeting to produce another rate cut - Sydney Morning Herald
- EUR/JPY: (JP) Japan Fin Min Azumi: It is difficult for Japan to intervene in the forex markets like Switzerland did, hard to draw a line in fx rates
***Equities***
- Nanya Technology, 2408.TW: Reports Q4 Net loss NT$10.99B v loss NT$10Be
- TSM: Reports Q4 Net profit NT$31.6B v NT$31.2Be
- TM: Will add Sat shift at truck plant in San Antonio, TX in the US for the next 3-months to be able to boost dealer inventory which was depleted after the earthquake - financial press
- LYC.AU: Raises mineral resource estimate at Mt Weld to 23.9M tons, +37% from prior estimate Sept 2010 - The Australian
- BHP: Reports Q2 Iron Ore Production 41.1M tons v 39.6M q/q, +22% y/y; FY12 iron ore output will marginally exceed guidance
***US Equities***
- RIMM: Samsung Electronics spokesperson: Not interested in buying RIMM and had never considered it - financial press; -5.6% afterhours
- YHOO: Founder and former CEO Jerry Yang resigns effective immediately; +2.7% afterhours
- CE: Lowers FY11 EPS to $4.45 v $4.71e (prior guidance $4.60-4.70); Sees FY12 EPS above average consensus estimates of $4.70; flat afterhours
***FX/Fixed Income/Commodities***
- XAU/USD: In 2011, central banks increased their gold lending for the first time in 10 years - FT
- (CN) Chinese Academy of Sciences (CAS): 2012 grain harvest to rise for the 9th consecutive year, increasing around 4M tons to 575M tons - China Daily
- (KR) According to the Korea Center for International Finance, South Korea firms will have to borrow funds overseas to pay over $26.6B in maturing debt in 2012 - Korean press
- (RU) Russia Agricultural Min Skrynnik: To harvest at least 90M tons of grain in 2012 v 93.8M in 2011 - Russian press
- GLD: SPDR Gold Trust ETF daily holdings rise by 1.2 tons to 1,255.7 tons (highest since 1,267.9 on Dec 21st; First increase since Nov 30th)