Daily Analysis


·         USD consolidates·         Mixed against the majors·         UK data boosts GBP


Today’s Economic Reports
All times EASTERN (-5 GMT)
•8:30am USD Unemployment Claims 373K
•9:00am USD Fed Governor Kroszner Speaks
•10:00am USD House Price Index m/m

Looking Ahead to Friday
All times EASTERN (-5 GMT)
•10:00am USD Existing Home Sales 4.86M
•Half Day, markets close early
•No PM Broadcast or Newsletter, back on Tuesday after holiday

The Greenback opens New York mixed this morning after a solid two-way overnight session saw the majors consolidating recent strength. Initially starting flat in Asia the USD had some early pressure as follow-on selling from a dismal stock market Wednesday leaked into Asian trade. Bouncing back to post early highs at the start of European trade the USD found light stops in most pairs as late shorts were caught wrong-footed in Europe. Better-than-expected UK retail trade data and a well-received Gilts auction drew buying in Cable after trading the 1.9600 handle most of the day; stops were triggered above the 1.9720 area and the GBP steadily advanced for highs above the 1.9800 handle making the GBP the big mover on the board overnight. A surprise CBI survey caused a flurry of active buying as the market got short into the highs putting the GBP at 1.9819 high prints ahead of early NY trade; CBI the highest since 1995 making a case for no more BOE rate cuts. Traders note that the cross-spreaders were active in EURO-Sterling and Sterling-Yen overnight and they GBP has a very buoyant tone this morning. Contrasting that action is EURO which attracted sellers into the highs at 1.5815 as it tracked GBP higher, traders note prop accounts selling into the highs after stops drove the rate above the 1.5750 area in Europe. EURO has a “buy on dips” mentality today traders say and that means stops will be set close in; the rate could have a stop-driven sell-off to end the week and I would hold open shorts through the day. USD/JPY is firming to start NY after a brief dip to the 102.70 area; low prints at 102.72 on light volume in Asia. Traders note model accounts selling USD overnight and that means close-in stops as well likely in the 103.50 area; highs to start New York at 103.49 but offers are thin. In my view the USD is starting to make the turn for the rest of the week. The lows were in overnight and most of the positions we have on are working. The early short in GBP was stopped out overnight but aggressive traders can re-short the rate anywhere above the 1.9800 handle for today. With crude oil above $135.00 this morning it appears there could be some euphoria-demand for the European crosses so be sure to place your stops; anything can happen when emotional traders make their move. Look for equities to remain weak today and that might pressure USD/JPY.


Resistance 3:  1.5880

Resistance 2:  1.5850
Resistance 1:  1.5820
Latest New York:  1.5750
Support 1:  1.5740
Support 2:  1.5680
Support 3:  1.5650



Irate rallies on stops but then falls back, close over the 50 bar MA likely to draw buyers but offers are absorbing so far.  Higher Oil prices are underpinning and the first correction in Oil prices will likely take the EURO with it. “Buy on dips” mentality active which means stops will be rolled up in range and the potential for a stop-driven rally is high. Look for support on dips near the 1.5550 area. Longs likely to have rolled up stops under the 1.5650 today so volatility possible. Looking for selling pressure at the London fix today.

Data due Friday: All times EASTERN (-5 GMT)

2:45am EUR French Consumer Spending m/m 0.4%
3:30am EUR German Manufacturing PMI 53.3
3:30am EUR German Services PMI 54.0
4:00am EUR Manufacturing PMI 50.5
4:00am EUR Services PMI 51.7
5:00am EUR Italian GDP q/q 0.2%




Resistance 3:  104.50

Resistance 2:  104.00/10
Resistance 1:  103.70/80
Latest New York:  103.33
Support 1:  102.80
Support 2:  102.50
Support 3:  102.20/30



Rate is firming up and the late sellers are likely in. Traders not model accounts buying USD in Asia so likely their stops will drive trade off the lows and into the 103.70 area near-term. Upside will continue to be labored but a retracement is coming. Traders note that the market continues to trade technically and expect stops to be run in both directions near-term; Day traders continue to get a lot of opportunity as the rate will likely cover a lot of the same ground twice on the hourly time frame. Resistance at 104.80 area remains significant now and rallies should be sold.

Data due Friday: All times EASTERN (-5 GMT)