U.S. Dollar Trading (USD) the Dollar was strong overnight with uncertainty regardingthe Italian election outcome still hurting sentiment and generally upbeat USFED chief Bernanke’s testimony before congress helping support the USD bulls. Bernanketried to calm market unease about the ending of QE3 too soon making the casethat QE so far had been successful in helping the US recovery. December Case ShillerHouse Prices gained 6.8% vs. 6.7% previously. Looking ahead, Fed Chairman continues his testimony. JanuaryDurable Goods forecast at -4.4% vs. 4.3% previously.
The Euro (EUR) tried to rally but was stopped at 1.3120 on two occasionswith the lingering uncertainty from the gridlock in the Italian electionsencouraging sellers. The EUR/JPY downtrend added to the EUR/USD pressure withtraders targeting Y118 and 1.2988 respectively. The Bernanke testimony whileleaving QE3 on the table also highlighted the difference in the strength of thetwo economic powerhouses. The Sterling (GBP) was sold as the downtrend resumed with some verydovish comments from BOE members such as Tucker’s ‘I hope we will think aboutwhether there are constraints to setting negative interest rates’. GBP/JPY isunder heavy selling pressure back under Y140 and searching for support. Looking ahead, Q4 GDP forecast at -0.3% vs. -0.3% previously.
The Japanese Yen (JPY) USD/JPY bounced hard above Y92.50 in Asia after the sharpselloff to Y91 but we found ourselves under pressure in New York once againwith USD/JPY falling once again but this time only to Y91.20 where solid bidshelp the major and Yen crosses consolidate. The outlook is mixed but some feel the market couldfall back to Y90 with Japanese officials more cautious with comments of late. Australian Dollar (AUD)the AUD/USD fellthrough 1.0225 range support but the bears party was stopped at 1.0200 withsome very large orders from local banks and presumed option protection buyersfrom a large sovereign presumed to be china held the figure intact. The markettried for the 1.0200 level again today but ran into the same strong support.S&P affirmed the AAA rating during the Asian session but some focus wasmade on the warnings in the report about looming issues.Looking ahead, Japanese Industrial output forecastat 1.5% vs. 2.4% previously. Also Q4 CAPEX forecast at 1% vs. 2.8% previously.
Oil & Gold (XAU) Gold smashed through the $1600oz level on the proQE3 Bernanke comments and continued sovereign risk out of Europe due to the Italianelection uncertainty. OIL/USD fell back to $92 and found support again with themarket continued to consolidate the recent pullback. The market may resume itsuptrend if Bernanke remains upbeat again in his testimony tonight.
Daily Outlook 00:00 GMT 27-FEB-2013
Fed Chief Bernanke Calms Market
U.S. Dollar Trading (USD) the Dollar was strong overnight with uncertainty regardingthe Italian election outcome still hurting sentiment and generally upbeat USFED chief Bernanke’s testimony before congress helping support the USD bulls. Bernanketried to calm market unease about the ending of QE3 too soon making the casethat QE so far had been successful in helping the US recovery. December Case ShillerHouse Prices gained 6.8% vs. 6.7% previously. Looking ahead, Fed Chairman continues his testimony. JanuaryDurable Goods forecast at -4.4% vs. 4.3% previously.
The Euro (EUR) tried to rally but was stopped at 1.3120 on two occasionswith the lingering uncertainty from the gridlock in the Italian electionsencouraging sellers. The EUR/JPY downtrend added to the EUR/USD pressure withtraders targeting Y118 and 1.2988 respectively. The Bernanke testimony whileleaving QE3 on the table also highlighted the difference in the strength of thetwo economic powerhouses. The Sterling (GBP) was sold as the downtrend resumed with some verydovish comments from BOE members such as Tucker’s ‘I hope we will think aboutwhether there are constraints to setting negative interest rates’. GBP/JPY isunder heavy selling pressure back under Y140 and searching for support. Looking ahead, Q4 GDP forecast at -0.3% vs. -0.3% previously.
The Japanese Yen (JPY) USD/JPY bounced hard above Y92.50 in Asia after the sharpselloff to Y91 but we found ourselves under pressure in New York once againwith USD/JPY falling once again but this time only to Y91.20 where solid bidshelp the major and Yen crosses consolidate. The outlook is mixed but some feel the market couldfall back to Y90 with Japanese officials more cautious with comments of late. Australian Dollar (AUD)the AUD/USD fellthrough 1.0225 range support but the bears party was stopped at 1.0200 withsome very large orders from local banks and presumed option protection buyersfrom a large sovereign presumed to be china held the figure intact. The markettried for the 1.0200 level again today but ran into the same strong support.S&P affirmed the AAA rating during the Asian session but some focus wasmade on the warnings in the report about looming issues.Looking ahead, Japanese Industrial output forecastat 1.5% vs. 2.4% previously. Also Q4 CAPEX forecast at 1% vs. 2.8% previously.
Oil & Gold (XAU) Gold smashed through the $1600oz level on the proQE3 Bernanke comments and continued sovereign risk out of Europe due to the Italianelection uncertainty. OIL/USD fell back to $92 and found support again with themarket continued to consolidate the recent pullback. The market may resume itsuptrend if Bernanke remains upbeat again in his testimony tonight.
Pairs to watch
EUR/USD To test 1.3000?
EUR/JPY To break out ofY120.70-Y119.20 Wedge?
TECHNICALCOMMENTARY
Currency
Sup 2
Sup 1
Spot
Res 1
Res 2
EUR/USD
1.3000
1.3039
1.3085
1.3120
1.3280
USD/JPY
90.29
90.76
91.85
92.17
92.94
GBP/USD
1.4949
1.5073
1.5100
1.5330
1.5395
AUD/USD
1.0150
1.0200
1.0225
1.0314
1.0329
XAU/USD
1595
1600
1610
1620
1633
OIL/USD
90.00
92.00
92.90
93.00
95.00
By Anthony Darvall (TonyD)
Forex trading involves substantial risk of loss, and may not be suitable for everyone.
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