Currencies Well Bid Following Strong Batch of US Data (Midday Snapshot)


The markets have digested this morning’s on the whole stronger data releases out of the US and have chosen to buy back into risk thus far. Although initial jobless claims were marginally weaker, continuing claims and leading indicators came in better than expected. The highlight of the morning came from the Philly Fed which grossly exceeded expectations after come in at -2.2% after forecasts had been calling for a much worse -17.0 print. This was the highest Philly Fed reading since September 2008. The Swiss Franc generated a lot of headlines early on with Eur/Chf rallying over 100 points in early New York after many speculated that the SNB had intervened to defend the 1.5000 level. The central bank has been quite vocal on their efforts to depreciate their currency. In Canada, CPI was released and came in higher than expected but failed to materially factor into price action. Treasury Secretary Geithner is testifying in front of the Senate Banking Committee and is making the case for the need to pass President Obama’s regulatory plan. Senator Shelby has expressed concern over the expanded role of the Fed, while also worrying that that the administration’s plan overestimates Fed capacity. US equities are higher while commodities are relatively flat.


Gbp/Aud: We contend that the market is in the process of carving out a major base since posting fresh multi-year lows by 1.9690 back on May 8, 2009. The formation and subsequent trigger of a double bottom on the daily chart reaffirms our bullish outlook, with the break of neckline resistance at 2.0610 on Tuesday opening the door for a fresh upside extension and measured move objective back towards the 2.1300 area at a minimum over the coming days. The latest pullback should be used as a formidable opportunity to establish fresh longs with any additional setbacks seen limited below 2.0500. Position: LONG @2.0410 FOR AN OPEN OBJECTIVE, STOP @2.0160.

Written by Joel Kruger, Technical Currency Strategist for
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