[B]MORNING SLICES (Abridged) [/B]
[B]Fundys –[/B] Although the USD was sold early on, to post fresh yearly lows against many of the major currencies, including the Euro, the buck has since made a recovery heading into the US open. The question now becomes whether the USD rally can last. Over the past few sessions, any USD buying into New York has been met with very good sized offers to inevitably open another decline for the greenback. On the day, [B]Sterling has been the outperformer [/B]after recovering quite nicely from the [B]weaker than expected retail sales[/B] release. The retail sales disappointment was offset by a [B]CBI distributive trends survey that managed to exceed expectations[/B]. The [B]New Zealand Dolla[/B][B]r[/B] has been the laggard on the session, with the single currency finding some offers after rallying to fresh 2009 highs. The recent [B]weaker business PMI[/B] could be attributed to the relative underperformance. Elsewhere, [B]Kremlin[/B] officials have been out talking about the prospects for several reserve currencies going forward which also would include the USD. Finally[B] Canada CPI[/B] has come in as expected with the market failing to react to the news. Looking ahead, all eyes turn to the [B]SNB[/B] at 12:00GMT. The [B]Swiss central bank[/B] is widely expected to leave rates on hold at 0.25%, but traders will be looking for any indication from the central bank on their [B]policy towards devaluing the local currency[/B]. [B]Canada leading indicators[/B] (0.5% expected) and [B]US housing starts[/B] (598k expected) follow at 12:30GMT, along with[B] initial jobless claims[/B] (557k expected) and [B]continuing claims[/B] (6100k expected). The[B] Philly Fed [/B](8 expected) caps things off at 14:00GMT. [B]US equities [/B]point to a slightly higher open, while [B]commodities[/B] are mildly offered.
[B]Techs -[/B] [B]EUR/USD[/B] The daily RSI is now above 70 warning of a near-term pullback. But the market still shows willingness to race higher after taking out 1.4720 on Wednesday. Next key resistance comes in by 1.4870, with any gains on Thursday seen stalling out well shy of this level in the 1.4825 area. We do not recommend selling at current levels and instead will continue to look for overdone intraday rallies to consider a short trade. [B]USD/JPY[/B] Just missed our buy entry at 90.00 on Wednesday with the market stalling shy of the psychological support before racing higher back above 91.00. While the overall trend remains grossly bearish, there is some scope from here for a decent corrective bounce back towards 93.30. A break above 91.65 will be required to confirm recovery bias and trigger a double bottom exposing 93.30. Back under 90.00 negates. [B]GBP/USD[/B] We continue to maintain a sell on rallies approach to this market with the view that the pair has made a meaningful high above 1.7000 this year. The ensuing price action is more choppy consolidation than any threat of a fresh upside extension beyond 1.7000. Arguably, the market could even be in the process of carving the right shoulder of a head & shoulders top that ultimately would project setbacks to 1.5000 over the coming weeks. Friday’s 1.6745 high is expected to cap any additional intraday rallies, while back under 1.6520 should accelerate declines. Only a close above 1.6745 would give reason for concern. [B]USD/CHF[/B] We continue to maintain a sell on rallies approach to this market with the view that the pair has made a meaningful high above 1.7000 this year. The ensuing price action is more choppy consolidation than any threat of a fresh upside extension beyond 1.7000. Arguably, the market could even be in the process of carving the right shoulder of a head & shoulders top that ultimately would project setbacks to 1.5000 over the coming weeks. Last Friday’s 1.6745 high is expected to cap any additional intraday rallies, while back under 1.6400 should accelerate declines. Only a close above 1.6745 would give reason for concern.
[B]
Flows –[/B] Option barrier at 1.0600 in [B]Usd/Cad[/B]. US prime name and real money accounts bidding [B]Aussie[/B]. Stops building in [B]Eur/Usd [/B]below 1.4700.
[B]Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel’s reports in a more timely fashion, e-mail [/B][B][email protected][/B] [B]and you will be added to the [/B][B]“distribution” [/B][B]list.[/B]
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