Forex Insight: 01/2011

Monday, January 31, 2011

31st of January 2011 - Technical Forex Market Overview

DAILY MARKET COMMENTARY
31 January 2011 – 8:00 GMT
Monday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

TECHNICAL DATA

USDCHF pressures 0.9390 support

EURUSD BULLISH Resistance at 1.3786 holds while support zone is at 1.3573/41.

USDJPY BEARISH Break of 81.85 has exposed 81.61 ahead of 81.23. Resistance at 82.93 Friday's high.

GBPUSD BULLISH Support at 1.5752 holds, focus is on 1.6017 ahead of 1.6059 next.

USDCHF BEARISH Pressure on 0.9390, breach of this level would expose 0.9301 key low. Initial resistance is at 0.9523.

AUDUSD BEARISH Support zone at 0.9833/04 holds. Near-term resistance is at 1.0022.

USDCAD NEUTRAL 1.0067 and 0.9838 mark the near term directional triggers.

EURCHF NEUTRAL Pressure builds on initial support 1.2774, near term resistance lies at 1.3002.

EURGBP BULLISH Focus is on 0.8672/91 resistance zone. Initial support lies at 0.8529.

EURJPY BULLISH Upside potential with resistance at 114.01/94, breach of this zone would expose 115.68 next. Initial support lies at 110.51.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.

31st of January 2011 - Fundamental Forex Market Overview

DAILY MARKET COMMENTARY
31 January 2011 – 8:00 GMT
Monday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

FUNDAMENTAL ANALYSIS at 0800 GMT

USD

A distinct risk-off mood took hold at the Asia open after civil unrest in Egypt escalated over the weekend. Both the dollar and the yen initially found support on safe-haven demand, but sentiment soon steadied when no signs of a further deterioration in the political situation materialised. EURUSD traded 1.3571-1.3615, USDJPY 81.78-82.23. Non-Chinese Asian equities lost ground after the S&P 500 finished -1.79% lower on Friday. The VIX also rose 24% to 20.04, it's highest close since Dec. 1. WTI crude remains elevated although it has slipped back below $90/bbl at the time of writing. Although US Q4 GDP fell short of consensus expectations, it still managed to accelerate to a +3.2% annualised rate (cons. 3.5%) from a pace of 2.6% in Q3. Our analysts see cause for optimism in the composition too, noting that the private demand component has surged ahead, easily surpassing their expectations. The University of Michigan confidence report came in above consensus at 74.2 (cons. 73.3). Elevated geopolitical tensions will likely continue to lend the dollar some near-term support while, over the medium term, we see further dollar strength coming through as the US recovery accelerates.

EUR

German Finance Minister Schaeuble gave a relatively upbeat assessment of the current phase of the Eurozone's sovereign debt crisis. He said he did not expect any further "major shocks", and predicted the euro would be "stable". He added the Eurozone would learn lessons from the crisis and "create instruments to defend the whole Eurozone". France's Finance Minister Lagarde took a similar view, saying the Eurozone has "turned the corner".

Reuters, citing unnamed sources, said a proposal is being considered to extend the maturity of rescue loans offered to both Greece and Ireland. The timeline allegedly being discussed is 30 years.

Greek Prime Minister Papandreou said that Eurozone governments are considering a proposal to allow EU institutions to recapitalize banks.

Austrian Chancellor Faymann indicated he would prefer a speedy conclusion to discussions surrounding a re-design of the EFSF. He said: "The problem must be solved in March, the sooner the better&Continual discussions about this are anything other than helpful."

Irish Prime Minister Cowen said he would dissolve parliament on Tuesday and call a general election. Both the upper and lower houses of parliament have now passed the key Finance Bill that gives legal effect to the budget proposals announced in December.

JPY

Senior Vice Finance Minister Igarashii described the yen as "overvalued" on the basis of "Japan's price levels and other factors". He warned that Japan will "take decisive steps if there is speculative, excessive movement" in the exchange rate.

AUD

Private sector credit growth rose only +0.2% m/m in December (cons. 0.3%), but the annualized figure was in line at +3.4% y/y. Our Australian economics team think this latest data point challenges the notion that the domestic economy is "strong", and they expect the RBA to lower its near-term GDP and underlying inflation forecasts on Friday. Our analysts still look for the next RBA hike to come in H2.

CAD

Bank of Canada Governor Carney said that "persistent strength" in the CAD is a threat to Canada's economic growth.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

Friday, January 28, 2011

28th of January 2011 - Technical Forex Market Overview

DAILY MARKET COMMENTARY
28 January 2011 – 8:00 GMT
Friday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

TECHNICAL DATA

EURGBP targets 0.8672/91.

EURUSD BULLISH Targets the upper boundary of the 1.3741/86 resistance zone; break through this would expose 1.3825. Support at 1.3637.

USDJPY BEARISH Rise through 82.67 and 83.13 has exposed 83.68. Near term support is at 81.85.

GBPUSD BULLISH The pair eyes initial resistance 1.6017 ahead of 1.6059. Support comes in at 1.5843.

USDCHF BEARISH Focus is on 0.9390 ahead of 0.9301 key low. Initial resistance is at 0.9523.

AUDUSD BEARISH Momentum has shifted downside towards 0.9833/0.9804 support zone. Near-term resistance is at 1.0022.

USDCAD NEUTRAL 1.0004 and 0.9889 mark the near term directional triggers.

EURCHF BULLISH Break of 1.3069 would expose 1.3118. Near term support is defined at 1.2827.

EURGBP BULLISH Remains bullish targeting 0.8672/91 resistance zone. Initial support lies at 0.8582.

EURJPY BULLISH Positive momentum; initial resistance is at 114.94, breach of this would expose 115.68 next. Initial support lies at 112.45.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

28th of January 2011 - Fundamental Forex Market Overview

DAILY MARKET COMMENTARY
28 January 2011 – 8:00 GMT
Friday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

FUNDAMENTAL ANALYSIS at 0800 GMT

USD

Activity in FX markets was fairly subdued given the lack of news flow. The yen used the opportunity to claw back some of yesterday's downgrade-driven losses against the dollar. EURUSD traded 1.3696-1.3744, USDJPY 82.58-82.98. The Nikkei 225 is -1.1% lower at the time of writing. Earlier the S&P 500 breached the 1300 level for the first time since Sept. 2008, but closed just below. Headline durable goods unexpectedly dropped but the ex-transportation figure increased, albeit by less than anticipated. Jobless claims jumped due to inclement weather and the Martin Luther King Day holiday, which indicates the jump does not reflect a material weakening in the labor market. Q4 GDP and the University of Michigan confidence index are due. Treasury Secretary Geithner speaks on the economy at Davos.

EUR

The euro benefited from hawkish remarks by ECB Executive Board member Bini-Smaghi. He highlighted his concerns over the effects of imported inflation in the Eurozone, noting that second-round effects can only be avoided if domestic inflation is "significantly lower than 2%".

Greek Prime Minister Papandreou said Greece would not need to restructure its debt, but acknowledged that extending the maturity of EU/IMF loans would be beneficial and would help to calm financial markets. ECB President Trichet said a strong economic union is needed to strengthen EU ties and to keep those nations that exceed deficit and debt limits accountable.

We maintain our EURUSD forecasts as our analysts do not envisage an ECB rate hike until Q4. We also believe that over-optimism on a solution to Eurozone sovereign worries could ultimately lead to disappointment when any changes to the EFSF are finally announced.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

Thursday, January 27, 2011

27th of January 2011 - Technical Forex Market Overview

DAILY MARKET COMMENTARY
27 January 2011 – 8:00 GMT
Thursday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

TECHNICAL DATA

GBPUSD support at 1.5752.

EURUSD BULLISH Big external resistance zone is at 1.3741/86; break through this would expose 1.3825. Support at 1.3573.

USDJPY BEARISH Remains bearish with focus on 81.85; breach of this level would expose 81.61 ahead of 80.93. Near-term resistance is at 82.67.

GBPUSD BULLISH Next support below 1.5752 lies at 1.5702. Initial resistance is at 1.6017.

USDCHF BEARISH Negative momentum with focus on 0.9301 key low. Initial resistance is at 0.9523.

AUDUSD NEUTRAL 1.0077 and 0.9804 mark the near-term directional triggers.

USDCAD NEUTRAL While initial resistance is at 1.0031 support lies at 0.9909.

EURCHF BULLISH Positive momentum with resistance at 1.3069 ahead of 1.3118. Near term support is defined at 1.2815.

EURGBP BULLISH Momentum is constructive with focus on resistance at 0.8691 Fibonacci level. Initial support lies at 0.8529.

EURJPY BULLISH Stalled in front of 113.03; breach of this level would expose 113.59 Fibonacci level next. Initial support lies at 111.64.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

27th of January 2011 - Fundamental Forex Market Overview

DAILY MARKET COMMENTARY
27 January 2011 – 8:00 GMT
Thursday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

FUNDAMENTAL ANALYSIS at 0800 GMT

USD

The dollar was largely unchanged against the euro during the Asia session, but relinquished some ground to the yen. EURUSD traded 1.3641-1.3714. USDJPY traded 82.02-82.61. The FOMC kept current policy unchanged, given it still has concerns about low inflation and a weak labour market. No dissenting votes were cast. Clearly, although regional Fed Presidents Plosser and Fisher have publicly expressed some misgivings about QE2, they are willing to go along with the existing asset purchase program for now at least. Intriguingly, the policy statement appeared to signal a possible slowdown in the pace of UST purchases before the end of June, which would result in a more gradual end to the program. Any decline in the pace of purchases likely reduces the risk of an extension of the program beyond the end of June. This is entirely consistent with the views of our analyst team who continue to expect an end to asset purchases in June, followed by the first rate hike in Q1 2012. Elsewhere, the CBO markedly increased its budget deficit forecast for the current fiscal year to $1.5 trn from $1.06 trn.

EUR

ECB's Nowotny said that markets were "too euphoric" about possible changes to Europe's financial rescue mechanisms. He added that even if a Eurozone country were to restructure its sovereign debt, "the country would still remain in the Eurozone".

ECB President Trichet said he would not exclude the possibility of a revamped financial rescue mechanism having the right to buy bonds, as this would be "useful in certain circumstances". ECB Governing Council member Noyer agreed, noting that having the capacity "to intervene in secondary markets" would be "an interesting feature in some cases". Both Trichet and Noyer stressed however that any enhancement to the rescue facility is ultimately a decision for governments.

ECB Executive Board member Stark said that, although interest rates are currently appropriate, the ECB "are ready to act at any moment, should it become necessary". ECB Governing Council member Quaden said he is concerned about Belgian inflation and the ECB would "follow closely the evolution of the situation and we will evaluate and react if it is necessary". Noyer and that he was "quite confident that we will be able to keep inflation at bay" adding that he was not signaling that the ECB is "going to raise interest rates”.

GBP

The minutes of the BoE's Jan. 13 policy meeting revealed a further shift towards the hawkish end of the policy spectrum. Two votes were cast in favour of a policy rate hike, up from one previously: MPC member Weale now joins MPC member Sentence in calling for a 25bp hike. Also, some of those who had concerns over inflationary pressures but still voted for no change, said their decisions were 'finely balanced'. Clearly such hawkish sympathies could easily translate into dissenting votes at a future meeting. MPC member Posen continued to vote for a resumption of the QE program and, as before, advocated a further ?50 bn in asset purchases. However, when the vote was taken, it was not yet known that GDP had suffered a -0.5% q/q contraction in Q4. This new piece of data would likely have surprised the MPC, and may give hawkish members some grounds to reconsider their stance.

AUD

The AUD fell after Australian Prime Minister Gillard announced the introduction of a new tax to fund reconstruction projects in the wake of the extensive floods. She hopes that the tax will ultimately raise A$1.8 bn. She estimated the total direct costs of the clean-up operation to the federal government would run to A$5.6 bn.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

Wednesday, January 26, 2011

26th of January 2011 - Technical Forex Market Overview

DAILY MARKET COMMENTARY
26 January 2011 – 8:00 GMT
Wednesday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

TECHNICAL DATA

USDCHF 0.9301 key support.

EURUSD BULLISH Outlook is bullish; rise through 1.3741/86 resistance zone would expose 1.3825. Support at 1.3541.

USDJPY BEARISH The pair eyes 81.85; Move below the level would expose 81.61 ahead of 80.93. Near-term resistance at 82.67.

GBPUSD BULLISH Next support below 1.5752 lies at 1.5702. Resistance at 1.6017 yesterday's high.

USDCHF BEARISH Violation of 0.9415 favors extension of losses towards 0.9301 key low. Initial resistance is at 0.9523.

AUDUSD NEUTRAL Motion is sideways; 1.0077 and 0.9804 mark the near-term directional triggers.

USDCAD NEUTARL Initial resistance at 1.0031; support at 0.9909.

EURCHF BULLISH As long as support at 1.2815 holds view pullback as correction. Resistance at 1.3069.

EURGBP BULLISH Recovery has scope for 0.8691 next. Initial support lies at 0.8529.

EURJPY BULLISH Recovery stalled below 113.03; break of this would expose 113.59 Fibonacci level next. Initial support lies at 111.64.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

26th of January 2011 - Fundamental Forex Market Overview

DAILY MARKET COMMENTARY
26 January 2011 – 8:00 GMT
Wednesday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

FUNDAMENTAL ANALYSIS at 0800 GMT

USD

President Obama's State of the Union address was a focal point during the Asia session. Expectations had been building in the market, that Obama might incentivise US multinationals to repatriate their overseas earnings. The dollar was bought ahead of the speech on this, but sold off again when it became clear that no such proposal was in the pipeline. EURUSD traded 1.3633-1.3704, USDJPY 81.98-82.39. The USD also enjoyed a temporary bounce earlier after a much stronger than expected January consumer confidence reading. The Conference Board consumer confidence index rose 7.3 points to 60.6 in January (cons 54.0). US equities finished essentially flat on the day. The focus will now shift to the upcoming FOMC statement. Our analysts do not think that the FOMC statement will suggest a near-term change in monetary policy. However, investors will be focused on the inflation outlook language and whether any of the new voters on the committee dissent in a hawkish direction.

EUR

The first issuance of an EFSF bond saw strong demand. Orders of EUR44.5 bn were received for only EUR5 bn in issuance. EFSF CEO Regling expressed the hope that the bond issue could well be a turning point in the sovereign debt crisis. By contrast, our European rates strategists continue to expect to see an escalation of the crisis.

ECB Governing Council member Honohan said he would not expect an "abrupt response" in terms of the ECB's monetary policy given that inflation expectations remain well-anchored. ECB Governing Council member Nowotny said he does not expect a change in the policy rate in the first half of the year.

GBP

The GDP print for Q4 was poor, declining by 0.5% versus consensus at +0.5%. The ONS has said that the reading is due largely to the adverse weather conditions impacting the services sector, and without this effect, the print would have been largely flat. However, even with this temporary weather effect, the number was disappointing and casts doubt about the sustainability of the recovery in the UK.

BoE Governor King downplayed the significance of the weak GDP number and stressed the MPC's commitment to low and stable inflation. He did not seem in any hurry whatsoever to hike the policy rate. Our UK economist does not expect the first hike come until Q3.

Today's BoE minutes will likely sound more hawkish, simply because the MPC will have had the high inflation print at that meeting, but they will not have had today's GDP data.

CAD

Canada inflation readings came in a bit under expectations for the headline and core inflation readings, weakening the Canadian dollar for the session. Headline CPI rose 2.5% y/y vs. expectations of 2.5% y/y and core inflation rose 1.5% y/y vs. expectations of 1.6% y/y. While headline inflation is now above the mid-point of the Bank of Canada's 1% - 3% inflation target range, core inflation remains safely below, where it has resided for most of the past 3 years.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

Tuesday, January 25, 2011

25th of January 2011 - Technical Forex Market Overview

DAILY MARKET COMMENTARY
25 January 2011 – 8:00 GMT
Tuesday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

TECHNICAL DATA

USDCHF clears 0.9521/0.9486 zone.

EURUSD BULLISH While support holds at 1.3541, expect gain towards 1.3741/86 resistance zone ahead of 1.3825.

USDJPY BEARISH Break of 81.85 would open 80.94 while resistance at 83.68 holds.

GBPUSD BULLISH Focus is on 1.6059/94 resistance zone. Initial support defined at 1.5838.

USDCHF BEARISH Breach of 0.9521/0.9486 has exposed 0.9415 ahead of 0.9301 key low. Initial resistance is at 0.9623.

AUDUSD BEARISH Move below 0.9804 would expose 0.9753. Resistance is at 1.0077.

USDCAD BEARISH Remains below 1.0034 as focus is on 0.9889/0.9838 support zone.

EURCHF BULLISH Bullish outlook with focus on 1.3069 ahead of 1.3122. Initial support is defined at 1.2815.

EURGBP BULLISH Break of 0.8563 would open up the way towards 0.8648. Initial support lies at 0.8461.

EURJPY BULLISH The cross has potential to climb to 113.03 ahead of 113.59 Fibonacci level next. Initial support lies at 112.19.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

25th of January 2011 - Fundamental Forex Market Overview

DAILY MARKET COMMENTARY
25 January 2011 – 8:00 GMT
Tuesday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

FUNDAMENTAL ANALYSIS at 0800 GMT

USD

A disappointing Australian CPI reading allowed the dollar to advance against its Australian counterpart in an otherwise quiet Asia trading session. The BoJ opted to keep policy unchanged. EURUSD traded 1.3628-1.3684, and USDJPY 82.34-82.64. The Nikkei-225 is 1.1% firmer at the time of writing, and the S&P 500 finished +0.58% ahead. President Obama is due to deliver his State of the Union address tonight, a speech in which job creation is expected to feature prominently. At the margin, this could support the US dollar, but its main drivers this week are more likely to be the FOMC announcement and the Q4 GDP data. Our analysts do not think that the FOMC statement will suggest a near-term change in monetary policy. Both the consensus and our US economists are expecting a strong rise of 3.5% q/q annualised rate for Q4 GDP.

EUR

Newswires, citing an unnamed Eurozone source, said EU leaders will have an informal discussion on the Eurozone crisis at the Feb. 4 summit and that formal decisions are expected at the late March summit.

The ECB settled only €146 mn worth of bond purchases last week under its Securities Markets Program, down from €2.313 bn the week before.

The Irish finance minister said the finance bill would pass through parliament by Saturday and the main opposition party said an election is likely in the last week of February. The passage of the finance bill removes the worry that parliament would be dissolved without reaching a final agreement on the last piece of budget legislation.

French President Sarkozy said that the dominating theme of France's chairmanship of the G20 would revolve around FX reforms and highlighted a code of conduct on capital controls as one of his goals.

JPY

The Bank of Japan kept policy unchanged and continues to target a 0-0.1% range for the overnight call rate. No additional measures were announced. The bank revised up its CPI forecast for the fiscal year 2011 to +0.3% y/y from the earlier estimate of +0.1% y/y. Our Japan economics team does not anticipate a BoJ hike until 2013.

GBP

BoE MPC member Andrew Sentence maintained his hawkish stance and said the BoE risks its credibility by failing to tackle inflation. He said the time has come for action and he sees CPI rising to at least 4% during 2011 as it is boosted by global factors, a weaker exchange rate and healthy domestic demand. MPC member Posen has recently affirmed his dovish stance, and the Jan. 13 BoE minutes, due for release on Wednesday, will show if any other MPC member has sided with either of these two non-consensus views.

The consensus expects Q4 GDP to weaken to +0.5% q/q. A stronger print is likely to be sterling-positive, as it may stoke expectations of an early BoE hike.

AUD

The AUD weakened after CPI for Q4 failed to live up to consensus expectations, rising only +0.4% q/q (cons. +0.7%) and +2.7% y/y (cons. +3.0%). Our analysts stick to their view that the next RBA rate hike will not happen until H2 this year.

CAD

The BoC revised down its 2011 core inflation outlook though it still it reaching the 2% target by end-2012. The y/y readings for both headline and core CPI for December are expected to increase, though any rate hikes by the BoC are expected to be gradual this year.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

Monday, January 24, 2011

24th of January 2011 - Technical Forex Market Overview

DAILY MARKET COMMENTARY
24 January 2011 – 8:00 GMT
Monday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

TECHNICAL DATA

EURUSD clears 1.3575.

EURUSD BULLISH Break of 1.3575 has exposed 1.3741/86. Near-term support lies at 1.3449 Friday's low.

USDJPY BEARISH Focus is on 81.85, break of this level would confirm the bear trend and expose 81.58 next. Initial resistance is at 83.68.

GBPUSD BULLISH Momentum is positive with focus on the 1.6059/94 resistance zone. Initial support defined at 1.5838.

USDCHF BEARISH Support is at 0.9521, break of this level would expose 0.9486 Fibonacci level. Near term resistance is at 0.9784.

AUDUSD BEARISH The pair eyes 0.9804, breach of this level would expose 0.9753 while resistance is at 1.0009.

USDCAD NEUTRAL Move below 0.9912 would trigger resumption of bear trend towards 0.9838; initial resistance at 0.9988.

EURCHF BULLISH Focus is on 1.3122, break here would expose 1.3206; initial support at 1.2815.

EURGBP BULLISH Positive momentum; recovery found resistance at 0.8563, break of which would confirm bull trend. Support lies at 0.8461.

EURJPY BULLISH Remains positive and focus is on 113.03 ahead of 113.67; initial support is at 110.32.

SCHEDULE

Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

24th of January 2011 - Fundamental Forex Market Overview

DAILY MARKET COMMENTARY
24 January 2011 – 8:00 GMT
Monday

____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

FUNDAMENTAL ANALYSIS at 0800 GMT

USD

The dollar stabilised during the Asia session after sustaining heavy losses against its G10 peers on Friday. EURUSD traded 1.3586-1.3647, setting a new 8-week high. USDJPY traded 82.53-82.81. There was a good deal of news out over the weekend, but FX markets seemed unconcerned. The latest reports appear to confirm that European officials are inching closer to a more comprehensive solution to the Eurozone sovereign debt crisis, although a final design still seems to be several weeks away. Asian stocks were mixed overnight, although the S&P 500 finished 0.24% ahead on Friday. The AUD slipped slightly on a weaker than expected PPI, but soon recovered. There were no tier-one US economic data releases on Friday, and none are scheduled for today either. As a result, investors are likely to focus more intensely on the two-day FOMC meeting which begins on Tuesday. Our analysts team expects that no near-term change in Fed policy will be signalled in the policy statement, and they anticipate the current program of QE purchases will run to completion as scheduled in June.

EUR

Over the weekend ECB Executive Board member Stark said he "could imagine the EFSF recapitalising banks or buying sovereign debt", although he emphasised that any extension of the EFSF's capabilities would be a political decision. He also indicated his opposition to any joint issue of e-bonds on the grounds that it would "blur the responsibility for every government to be held liable for its own debt".

Weekend comments from Eurogroup Chairman Juncker focused on the size of the EFSF, and how to boost its effective lending capacity to match the headline figure of ?440 bn promised last May. He said changes to the current design were now "inevitable" and that he was "confident" the German government "will not ignore this common European goal".

Juncker said a comprehensive response to the debt crisis could emerge in a few weeks. Significantly, German Finance Minister Schaeuble also indicated the German government wants to produce a "complete package in the next weeks" which would include redesigning the EFSF so that ?440 bn "is actually available on demand".

ECB President Trichet said the bank's monetary policy stance and its emergency measures are "decoupled" and can be adjusted independently. The comments suggest that it is logistically possible for the ECB to hike interest rates even if emergency measures have not been fully unwound.

Trichet said he did not expect a Eurozone country would restructure its debt this year. ECB Governing Council member Provopoulos, also the head of the Greek central bank, indicated his opposition to debt restructuring, saying "the political and economic impact of debt restructuring would far exceed the short-term pain of fiscal adjustment. On Friday, Greece's Deputy Finance Minister Sachinidis said "the Greek government did not discuss and is not discussing the possibility of debt restructuring".

The junior party in Ireland's ruling coalition withdrew from government. Ireland's Prime Minister Cowen now leads a minority government. Earlier, Cowen resigned as head of the Fianna F?il political party, but he stays on as prime minister.

JPY

Finance Minister Noda said that he must pay heed to the yen's rise, and to downside economic risks. He repeated his willingness to work with the BoJ to beat deflation. Economy Minister Yosano warned that long-term JGB yields could spike if new JGB issuance continues to exceed tax revenue. Prime Minister Kan said the government will reveal its proposals for tax reform by June.

GBP

Bank of England MPC member Posen maintained his dovish stance saying his "position is unchanged" regarding underlying inflation in the UK, at least as far as domestic influences are concerned. But he noted that "positive surprises abroad, particularly in the euro area&could influence not just demand for UK goods and services, but also the exchange rate". Regarding the recent increase in rate hike expectations, Posen said that "just because the markets price in a rate increase or a rate cut at any time doesn't necessarily mean it will occur".

CAD

Finance Minister Flaherty said the CAD "is not likely to go back to the days of being relatively cheap" with respect to the USD, noting there would be no return to what he called "the Canadian peso".

A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com

Friday, January 21, 2011

21st of January 2011 - Technical Forex Market Overview

DAILY MARKET COMMENTARY
21 January 2011 – 8:00 GMT
Friday

_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________

TECHNICAL DATA

EURJPY pressure on 112.19.

EURUSD BULLISH Sustained break through 1.3539/75 would expose 1.3741. Near-term support lies at 1.3369.

USDJPY NEUTRAL Spiky rise through 82.98 has turned the model to neutral; while support holds at 81.85/61, resistance is at 83.49.

GBPUSD BULLISH Push through 1.6059/94 resistance zone would open up the way towards 1.6184. Initial support defined at 1.5810.

USDCHF BULLISH While support holds at 0.9521, break of 0.9647 has exposed the next level of resistance at 0.9722 ahead of 0.9764.

AUDUSD BEARISH Abrupt decline through 0.9856 puts pressure on 0.9804, breach of this level would expose 0.9753. Near-term resistance at 1.0009 yesterday's high.

USDCAD NEUTRAL 1.0034 and 0.9912 mark the near term directional triggers.

EURCHF BULLISH Rise through 1.3038 has exposed 1.3122 next ahead of 1.3206; initial support at 1.2815 yesterday's low.

EURGBP NEUTRAL Focus is on initial resistance 0.8499 while support holds at 0.8377.

EURJPY BULLISH Pressure on 112.19, break of this level would expose 113.03; initial support is at 110.32.

SCHEDULE

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A. M. Negrin Bautista, CFA

Chief Analyst at Fibosignals.com