The morning data releases are behind us and the market continues to largely consolidate ahead of the much anticipated G20 meeting on Thursday. On the whole, data out of the US was better then expected with ISM, pending home sales and construction spending all beating forecasts. However, there was room for some concern with the earlier ADP report showing a continued acceleration in job losses.
CROSS COUNTRY: MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
The morning data releasesare behind us and the market continues to largely consolidate ahead of the much anticipated G20 meeting on Thursday. On the whole, data out of the US was better then expected with ISM, pending home sales and construction spending all beating forecasts. However, there was room for some concern with the earlier ADP report showing a continued acceleration in job losses at -742k after analysts had been looking for a -663k print. President Obama and President Hu have finally met for the first time ahead of the G20. The leaders have agreed to establish a “strategic and economic dialogue group.” The group will include Secretary of State Clinton and Treasury Secretary Geithner on the US side. Fed Fisher has been on the wires saying that the GDP contraction in Q1 could be bigger than Q4 which is in contrast to consensus forecasts. Elsewhere, hinting potential bias for the European regulatory approach, Canada PM Harper has said that stimulus alone will not solve the global financial crisis. US equity indices are relatively flat on the day, while oil tracks some 3.0% lower. Gold is only marginally bid. Latam emerging market currencies have been the standouts on the day with the Mexican Peso leading the way, up nearly 2.0% against the USD.
ANALYSIS OF SELECTED RATES
Eur/Gbp: Despite the sharp rebound out from today’s lows, we retain a bearish bias on the cross with a medium-term lower top now being sought out by 0.9495 (18Mar low). The earlier setbacks from today have also resulted in a break of the previous weekly low to end a series of 4 consecutive weekly higher lows. As such, we recommend looking to sell into rallies today in anticipation of deeper setbacks over the coming days. A closer look at the above chart also shows the formation of a head & shoulders top.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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