weak US data brought dollar down

Yen came down to a low of 83.63 after the disappointing US data last night. The Tankan that was released this morning reported big Japanese manufacturers were looking at the dollar averaging at 89.66 JPY for 2010/2011.

After the UK GDP data, the sterling dealt up to 1.5896. But after BOE member Posen argued a case for further quantitative easing, we saw the pound drop to 1.5718.

Aussie is still pushing up to a high of 0.9687.

Data today

Euro-zone consumer confidence – 9am

UK net consumer/ mortgage credit – 8.30am

Morning Update

I’ve been MIA since Friday because it was an insane weekend with the Singapore F1 night race, which was of course fabulous! I needed some time to recover from the madness of the weekend, but I’m back so let’s see what happened last night on the markets.

It looks like the dollar has weakened further and doesn’t seem like rates will be hiked anytime soon by the feds.

Euro came under pressure after Moody’s downgrade on senior debt of a prominent Irish bank which highlights the uncertainty of banking strength in Ireland. Better keep an eye out on the Euro, I do think it’s slightly on the higher side at the moment.

Sterling rose to a high of 1.5867! I’m not sure whether it will last at these levels, but let’s see how the GDP turns out this evening.

Aussie ran all the way up to 0.9645!  The next high is at 0.9870 which occurred 13^th July 2008. I would be extremely cautious of buying around these levels!

Data today:

German GFK consumer confidence survey – 6am GMT

German CPI – 6am GMT

UK GDP – 8.30am GMT

US consumer confidence – 2pm GMT

US Richmond Fed Manufacturing index

Trade Ideas - 23/9/10

Euro

Looking at the weekly chart we see that the next resistance level is at 1.3491 which is also the Fibonacci level of 50%. We will have to see whether the resistance level holds. If it doesn’t I would look to selling around those levels.

GBP

The resistance of 1.5727 is still holding quite strong and on the bottom the support level 1.5624 is holding up. I would look to sell around 1.5727 if the resistance holds and to look at buying at 1.5624 if the support holds.

Aussie

Looks quite range bound, so I think I would play the range. I would look to sell around 96.00 (if not broken), and buy around 0.9525. 

Yesterday Trade review

Euro

Euro broke the 1.3331 resistance level and ran up above 1.3415. Due to this, I didn’t enter any Euro trades and was waiting for a retracement which didn’t quite happen.

GBP

Sterling didn’t manage to reach 1.5727 yesterday and was pretty much ranging around 1.5646 Fibonacci levels of 50%. I didn’t get any trades on the sterling either, so let’s see if anything works out today.

Aussie

I didn’t get a chance to get into a long position in the Aussie, as it never quite reached 0.9500 levels. It did breach close to 0.9600 but bounced off quickly. It seems like 0.9600 is holding up as a strong resistance.

Tokyo and Hongkong out

So not much action last night apart from the Euro smashing above 1.3400!

Japanese PM Kan comments that intervention is “unavoidable” so looks like there is fear of an intervention. Will keep a close watch, considering Tokyo and Hong Kong are on a break today so looks like Asian session is going to be quiet until Europe comes in.

Euro on the other hand broke 1.3340 levels all the way up to 1.3400. Portugal had a good debt auction yesterday but yields still seem to be widening, so fundamentally Europe still has some sovereign issues to consider. But the Euro looks to be ignoring this at the moment, which I find a little worrisome as Euro could change directions at any point. So I’m a little uncomfortable buying at these high levels. I may just wait it out here until I see that change in direction, or a retracement.

Aussie traded higher last night to 0.9601 on option expires, but came down to a low of 0.9508. I think it’s going to be quiet on this front too during the Asian session.

Data Today:

-         US Initial jobless claims – 12.30pm GMT

-         US leading indicators – 2pm GMT

-         US existing home sales – 2pm GMT

Trade ideas

Euro

Resistance level of 1.3161 has been broken so I would look at this level now a support. The next resistance is around 1.3331 level which was just below the high of August 6^th.

I would watch this level and see whether it breaks or not.

If it doesn’t I’d look to sell here at 1.3330.

GBP

The daily Fibonacci level of 50% at 1.5646 has been broken. The next resistance level is the 61.8% Fibonacci level at 1.5727. On the support side the first support to watch for is at the 38.2% Fibonacci level at 1.5565. As this has been broken I would watch this level. The stronger support is at 1.5504 which is around yesterday’s low.

I would look to sell at 1.5727 if it doesn’t break.

Aussie

Upward trend is still intact so I would only look at starting my position with a buy. The resistance level of 0.9500 has been broken so I would look at this as a support level. If 0.9500 holds, I would look to buy here.

JPY

I’m still going to keep quiet here, until I figure out which direction yen is going in.

Trade Review

Unfortunately I did not get any trades in, as I was a little worried about what would happen at the FOMC.

Euro never did quite reach 1.3035 levels last night but on the other hand it did break the 1.3161 levels. Several stop losses were triggered above 1.3200 levels. It looks like a new strategy has to be placed on the Euro as it has broken the range.

Sterling on the other hand did manage to push down to 1.5538 and below. At that point of time though, cable looked extremely bearish, so I decided to not buy at that level. Looks like a missed trade, as I would be in profit at the moment. The level of 1.5675 still holds, but I’m going to watch that level and see if it gets broken, as sterling looks bullish.

The Aussie never reached 0.9328 levels and instead broke the resistance level of 0.9489. I didn’t get a trade in here either; I guess I’ll have to pull up a new strategy here to.