Today’s US Dollar Trading
• USD finds stops above yesterday’s highs
• Holds gains into the close
• Volumes on the lighter side
Overnight Preview
• Look for the USD to retrace a bit
• Quiet ahead of the rate announcements
Looking Ahead
All times EASTERN (-5 GMT)
• 8:30am USD Unemployment Claims
• 10:00am USD Pending Home Sales m/m
• 10:35am USD Natural Gas Storage
• 3:00pm USD Consumer Credit m/m
Rate announcements due from overseas also, could be a big day for the USD.
Summary
On a day with no economic news the USD has advanced and held gains after starting weaker in Asia overnight. Traders note that volumes were low-to modest and the expected volatility from breaching areas of known large stops was minimal. After scoring a new high at 108.60 in early New York the USD/JPY continued to advance as light stops were triggered absorbing offers layered to the 109.10 area. Once over the 109.10 area the market became quiet but ground higher as US equities remained firm and oil continued under pressure. Analysts are skeptical that the USD can continue to advance without solid economic news as the underlying fundamentals are still negative for the Greenback but traders say they are seeing solid bids on a regular basis today. Technical factors in Yen suggest the rate will challenge the 2008 highs around the 110.80 area but in my view that is a tough call without some help from the fundamental front. I personally think the advance is due to correct and the USD will give back these gains but so far today the USD remains firm. GBP has fallen to a low print at 1.9465 and attracted good bids but has not been able to recover as of yet despite the EURO putting on some weight after the break in that pair stalled at 1.5397. Both pairs have fallen hard the past three days and a rotation higher is due soon especially ahead of the ECB and BOE rate announcements out tomorrow; a round of profit taking by the shorts would be a reasonable expectation for tomorrow. USD/CAD has also rallied to a high print at 1.0491 before dropping back to the 1.0450 area suggesting the top is near in that pair as well; traders report model and macro accounts buying USD against offers from semi-official and sovereign names. On the day, the USD’s advance might not be as solid as some expect. Volumes have been on the lighter side and traders have reported “smarter” names and real money on the offer into the highs. Look for the USD to give back some of these gains the next 24 hours; tomorrow’s rate announcements might be the catalyst for a retracement.
GBP/USD Daily
Resistance 3: 1.9620
Resistance 2: 1.9600
Resistance 1: 1.9550
Latest New York: 1.9470
Support 1: 1.9450/60
Support 2: 1.9410/20
Support 3: 1.9380
Comments
Rate goes two-way overnight, follows EURO lower. Good buying seen from large names at 1.9550 area the past 24 hours. Fails to hold early gains on lighter volumes. Rate has likely flushed out weak early longs and shorts will likely take gains soon leaving the rate vulnerable to a rally. Possible buying from semi-official names so watch the news. Offers above the market mixed with stops from late shorts so be ready for whipsaw the next few days. Traders expect GBP to track EURO through this week. Continue to expect a lot of cross-trading.
Data due Thursday: All times EASTERN (-5 GMT)
Tentative GBP Halifax HPI m/m
Tentative GBP MPC Rate Statement
7:00am GBP Official Bank Rate
EURO/USD Daily
Resistance 3: 1.5680
Resistance 2: 1.5620
Resistance 1: 1.5580
Latest New York: 1.5408
Support 1: 1.5400
Support 2: 1.5380
Support 3: 1.5350
Comments
Rate dips further into support at 1.5400; volumes only moderate with larger names buying traders say. Likely the rate has flushed early longs. Macro accounts seen selling on the break suggesting the rate will find a bottom soon around current levels. Rate feels like it wants to rally off these lows. Aggressive traders can buy this dip for a return to resistance although we were stopped out of first attempt at a long. Rate continues to track Cable and vice-versa. Now that stops are cleared a rotation higher is coming.
Data due Thursday: All times EASTERN (-5 GMT)
2:00am EUR German Trade Balance
2:45am EUR French Trade Balance
4:00am EUR Italian Industrial Production m/m
6:00am EUR German Industrial Production m/m
7:45am EUR Minimum Bid Rate
8:30am EUR ECB Press Conference
Analysis by: Forexpros.com written by Jason Alan Jankovsky
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