EUR Extends Gains Vs USD
EUR has extended its gains vs USD and notched a session high at 1.3627, according to EBS via CQG, although it remains within recent ranges. USD is being pressured by indications from Fed Chairman Ben Bernanke that the US central bank remains sidelined in terms of monetary tightening. EUR has since slipped to $1.3615. GBP at 1.5459
Bernanke : Budget Deficit Of Around 2.5-3.0% Of GDP Sustainable
Bernanke Says Budget Path "Not Sustainable"
In answer to sustainability of budget path, Bernanke notes the forecasts of structural deficit range from 4% to 7% of GDP and are unsustainable. Under current projections, he says "we need to look at path of trajectory of deficit."
Bernanke Does Not Expect Federal Debt Default
In answer to Rep Frank question on federal debt, Bernanke says does not anticipate of US defaulting on debt or a ratings downgrade.
Bernanke Says Stimulus Did Help Job Situation
Rep Frank asks Bernanke about importance of stimulus policy to growth and jobs. Bernanke says most economists would agree stimulus policy did add jobs above what the baseline trend would suggest
Rabu, 24 Februari 2010
Bernanke Says about Reserve Rate USA
Bernanke says rates to stay low for long time
Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that a weak job market and low inflation would likely allow the central bank to keep interest rates at very low levels for a long time.
Bernanke Says Reserve Rate Change Will Effect Longer Yields
Bernanke said, "By increasing the interest rate on reserves, the Federal Reserve will be able to put significant upward pressure on all short-term interest rates. Actual and prospective increases in short-term interest rates will be reflected in turn in longer-term interest rates and in financial conditions more generally."
Bernanke: Discount Rate Hike Was Move Toward Normalizing
Bernanke said the increase in the discount rate was made "to discourage banks from relying on the discount window rather than private funding markets for short-term credit." He views this as a move to normalizing lending to commercial banks through the discount window. (KGM)
EUR Settles Down In Wake Of Bernanke Comments
After some choppy trading that saw it rise to a session high of 1.3597 on Fed Chairman Ben Bernanke's testimony, EUR has settled back to the 1.3560 area. The biggest impact of Bernanke's message of continued low rates was on the USD/JPY pair, which slipped to a session low at 89.78, according to EBS via CQG, before rebounding to current level at 89.84. (DBC)
Rate Futures Prices Up On Bernanke, Weak Data
U.S. rate futures prices hit intraday highs across the curve, reflecting expectations for lower yields. Move occurs as Bernanke says rates need to stay very low, that inflation will remain subdued for a while, and as data shows new home sales plunging to record low. Quarterly 2010-12 Eurodollar futures recently up as much as 6 BP. Mar 10-yr Tsy notes take out Tues' high, reaching 118-11. Resistance at last week's top of 118-13+. Mar 30-yr Tsy bonds hit 2-week high of 118-09 as 30-yr cash yield equivalent falls below 4.625%.
New York Funding Rates Set Lower
ICAP's US quotes on interbank lending are set lower Wednesday morning, with the 1-mo New York funding rate at lower 0.2156% from 0.2175% Tuesday and the 3-mo rate lower to 0.2512% from 0.2569%. Earlier Tuesday, the BBA quoted the benchmark 3-mo dollar Libor rate unchanged at 0.25194% from Tuesday
Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that a weak job market and low inflation would likely allow the central bank to keep interest rates at very low levels for a long time.
Bernanke Says Reserve Rate Change Will Effect Longer Yields
Bernanke said, "By increasing the interest rate on reserves, the Federal Reserve will be able to put significant upward pressure on all short-term interest rates. Actual and prospective increases in short-term interest rates will be reflected in turn in longer-term interest rates and in financial conditions more generally."
Bernanke: Discount Rate Hike Was Move Toward Normalizing
Bernanke said the increase in the discount rate was made "to discourage banks from relying on the discount window rather than private funding markets for short-term credit." He views this as a move to normalizing lending to commercial banks through the discount window. (KGM)
EUR Settles Down In Wake Of Bernanke Comments
After some choppy trading that saw it rise to a session high of 1.3597 on Fed Chairman Ben Bernanke's testimony, EUR has settled back to the 1.3560 area. The biggest impact of Bernanke's message of continued low rates was on the USD/JPY pair, which slipped to a session low at 89.78, according to EBS via CQG, before rebounding to current level at 89.84. (DBC)
Rate Futures Prices Up On Bernanke, Weak Data
U.S. rate futures prices hit intraday highs across the curve, reflecting expectations for lower yields. Move occurs as Bernanke says rates need to stay very low, that inflation will remain subdued for a while, and as data shows new home sales plunging to record low. Quarterly 2010-12 Eurodollar futures recently up as much as 6 BP. Mar 10-yr Tsy notes take out Tues' high, reaching 118-11. Resistance at last week's top of 118-13+. Mar 30-yr Tsy bonds hit 2-week high of 118-09 as 30-yr cash yield equivalent falls below 4.625%.
New York Funding Rates Set Lower
ICAP's US quotes on interbank lending are set lower Wednesday morning, with the 1-mo New York funding rate at lower 0.2156% from 0.2175% Tuesday and the 3-mo rate lower to 0.2512% from 0.2569%. Earlier Tuesday, the BBA quoted the benchmark 3-mo dollar Libor rate unchanged at 0.25194% from Tuesday
New Home Sales Tumble to Record Low in January
Sales of newly built U.S. single-family homes unexpectedly fell to a record low in January, according to government data on Wednesday that hinted at potential trouble for the fragile housing market recovery. New home sales plummeted 11.2 percent in January.
The Commerce Department said sales dropped 11.2 percent to a 309,000 unit annual rate, the lowest level since records started in January 1963, from an upwardly revised 348,000 in December.
It was the third straight month that new home sales fell and the percentage decline in January was the largest in a year.
Analysts polled by Reuters had expected new home sales to increase to a 360,000 unit annual pace from December's previously reported 342,000 units.
The January decline will heighten fears about the fledgling recovery in housing. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.
The Commerce Department said sales dropped 11.2 percent to a 309,000 unit annual rate, the lowest level since records started in January 1963, from an upwardly revised 348,000 in December.
It was the third straight month that new home sales fell and the percentage decline in January was the largest in a year.
Analysts polled by Reuters had expected new home sales to increase to a 360,000 unit annual pace from December's previously reported 342,000 units.
The January decline will heighten fears about the fledgling recovery in housing. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.
Bernanke: Discount Rate Hike Shouldn't Raise Borrowing Costs
In his preapred testimony, Fed chairman Bernanke said last week's increase in the emergency lending rate to banks doesn't mean wider borrowing costs for consumers and companies will also rise any time soon
Outlooks for nine major currency pairs today
Following are expected trading ranges and outlooks for nine major currency pairs today:
Immediate Range Larger Range
USD/JPY 89.90-90.55 89.69-91.29
EUR/USD 1.3494-1.3589 1.3442-1.3691
AUD/USD 0.8877-0.8975 0.8845-0.9071
NZD/USD 0.6894-0.6995 0.6803-0.7058
GBP/USD 1.5392-1.5474 1.5345-1.5575
USD/CHF 1.0786-1.0848 1.0710-1.0898
USD/CAD 1.0500-1.0578 1.0379-1.0631
EUR/JPY 121.55-122.70 121.37-124.56
EUR/GBP 0.8745-0.8791 0.8699-0.8836
(Ranges are calculated using recent high and lows, information on the placement of option strikes, and technical analysis - Fibonacci levels, trendlines and moving averages.)
USD/JPY - to consolidate with bearish bias. Pair undermined by unwinding of JPY-funded carry trades amid higher investor risk aversion (VIX fear gauge up 7.17% at 21.37) as U.S. stocks fell overnight (DJIA off 0.97%, Nasdaq off 1.28%), economic optimism deflated after unexpectedly large drop in U.S. Conference Board consumer confidence index (declined to 46.0 in February from revised 56.5 in January, vs forecast for 54.8), news Greece's top banks had been downgraded. USD/JPY also undermined by Japan exporter sales, lower U.S. Treasury yields. But USD/JPY losses tempered by USD demand for import settlements, caution heading into 1500 GMT Fed Chairman Bernanke's Senate testimony which market participants watching for clues on Fed's plans to exit stimulus policy. Other data focus: 2350 GMT Japan January provisional trade statistics, January corporate service price index, 1500 GMT U.S. January new home sales. USD/JPY daily chart negative-biased as spot broke below uptrend line from Feb. 4 low of 88.54 (now at 90.55, matching previous base set Thursday), stochastics falling from overbought, positive MACD histogram bars contracting. Support at 89.90 (yesterday's low); breach would target 89.69 (Feb. 16 low), then 89.56 (Feb. 12 low), 89.12 (Feb. 8 low) and 88.54 (Feb. 4 reaction low). Resistance at 90.55; breach would expose upside to 91.29 (yesterday's high), then 91.90 (Monday's high), 92.14 (Friday's high, just below 200-day moving average) and 92.43 (Jan. 12 high).
EUR/USD - to trade with risks skewed lower. Pair undermined by unwinding of long-EUR carry trades on higher risk aversion, surprise drop in German Ifo German business climate index to 95.2 in February from 95.8 in January (vs forecast for rise to 96.4), persistent worries over euro-zone fiscal problems, Fitch Ratings' downgrade of 3 Greek banks' covered bonds; BOE Gov. King's comment that recovery in euro zone "appears to have stalled." Data focus: 0700 GMT Germany revised 4Q GDP, 0710 GMT Germany March GfK consumer climate survey, 1000 GMT euro-zone December new industrial orders, 1000 GMT ECB's Smaghi speaks. EUR/USD daily chart mixed as MACD in bullish mode, but stochastics bearish at oversold. Support at 1.3494 (yesterday's low); breach would expose downside to 1.3442 (9-month low hit Friday), then 1.3420 (May 18 reaction low), psychological 1.3400 and 1.3315 (projected base of descending channel formed with Dec. 3 high of 1.5141 and Dec. 22 low of 1.4216). Resistance at 1.3589 (hourly chart); breach would expose upside to 1.3691 (yesterday's high), then 1.3789 (Feb. 17 reaction high), 1.3801 (Feb. 11 high) and 1.3839 (Feb. 9 reaction high).
AUD/USD - to trade with risks skewed lower. Pair undermined by unwinding of long-AUD carry trades on heightened risk aversion, softer commodity prices (CRB spot index closed down 4.68 yesterday at 272.1). But AUD/USD losses tempered by Aussie-U.S. yield gap, expectations for further rate hikes by RBA this year. Data focus: 0030 GMT Australia 4Q labour price index, 4Q construction work done. AUD/USD daily chart negative-biased as stochastics bearish at overbought, positive MACD histogram bars contracting, bearish key-reversal-day pattern completed yesterday. Support at 0.8877 (yesterday's low, matching Feb. 16 & Friday's low); breach would target 0.8845 (Feb. 15 low), then 0.8781 (Feb. 12 low) and 0.8707 (Feb. 10 low). Resistance at 0.8975 (hourly chart); breach would expose upside to 0.9071 (yesterday's high, coinciding with 100-day moving average), then 0.9152 (76.4% Fibonacci retracement of 0.9330-0.8576 Jan.14-Feb.5 decline).
NZD/USD - to trade with risks skewed lower. Pair undermined by unwinding of long-NZD carry trades on stronger risk aversion, softer commodity prices. But NZD/USD losses tempered by Kiwi-U.S. yield advantage. NZD/USD daily chart negative-biased as stochastics bearish, positive MACD histogram bars contracting. Support at 0.6894 (yesterday's low, matching Feb. 12 low); breach would expose downside to 0.6803 (5-month low hit Feb. 5), then psychological 0.6700 level and 0.6682 (Sept. 2 reaction low). Resistance at 0.6995 (hourly chart); breach would expose upside to 0.7058 (yesterday's high), then 0.7079 (Feb. 16 and Feb. 17 high), 0.7122 (50% Fibonacci retracement of 0.7441-0.6803 Jan. 14-Feb. 5 decline) and 0.7138 (55-day moving average).
GBP/USD - to trade with risks skewed lower. Pair undermined by capital flight to safe-haven USD amid inflamed investor risk aversion, official nod for weaker GBP, persistent investor concerns over weak UK fiscal situation; very dovish delivery yesterday from MPC members before UK Treasury Select Committee: BOE Gov. King offered very cautious outlook for UK economy with risks to downside, leaving door open to eventual resumption of central bank's quantitative-easing program, while BOE's Miles said, "If the news is that the economic outlook seems even weaker, inflation pressures lower... I think there's a strong case then for expanding further the asset purchases." GBP/USD daily chart negative-biased as MACD bearish, while stochastics stay suppressed at oversold, suggesting sideways or lower GBP/USD trading near-term . Support at 1.5392 (yesterday's low); breach would target 1.5345 (9-month low hit Friday), then psychological 1.5300 and 1.5271 (50% Fibonacci retracement level of advance from Jan. 23, 2009 low of 1.3500 to Aug. 5 high of 1.7042). Resistance at 1.5474 (hourly chart); breach would expose upside to 1.5575 (yesterday's high), then 1.5687 (Thursday's high), 1.5816 (Feb. 17 high), 1.5830 (previous base set Dec. 30) and 1.5848 (previous base set Feb. 1).
USD/CHF - to consolidate with risks skewed higher. Pair underpinned by broadly stronger USD undertone, fears of more CHF-selling FX intervention by SNB: traders suspect central bank yesterday bought EUR/CHF during Asian & European trading near 1.4650. But USD/CHF topside limited by unwinding of short-CHF carry trades on higher risk aversion. Daily chart mixed as stochastics stay elevated at overbought, MACD neutral. Resistance at 1.0848 (yesterday's high); breach would expose upside to 1.0898 (7-month high hit Friday), then 1.0934 (July 30 reaction high) and 1.1020 (June 24 reaction high). Support at 1.0786 (hourly chart); breach would expose downside to 1.0710 (yesterday's low), then 1.0644 (Feb. 17 low), 1.0623 (Feb. 11 low) and 1.0605 (Feb. 9 reaction low).
USD/CAD - to trade with risks skewed higher. Pair underpinned by increased investor risk aversion, stronger global USD, weaker commodity and oil prices (Nymex crude settled down $1.45 yesterday at $78.86/barrel). USD/CAD daily chart positive-biased as stochastics rising from oversold; negative MACD histogram bars contracting. Resistance at 1.0578 (yesterday's and Feb. 12 high); breach would expose upside to 1.0631 (Feb. 11 high), then 1.0707 (Feb. 10 high), 1.0780 (Nov. 6 & Feb. 5 high, near 200-day moving average) and 1.0869 (Nov. 2 reaction high). Support at 1.0500 (hourly chart); breach would expose downside to 1.0379 (yesterday's low), then 1.0368 (Monday's low), 1.0301 (Jan. 20 low) and 1.0246 (Jan. 19 low).
EUR/JPY - to trade with risks skewed lower. Cross undermined by unwinding of carry trades amid increased risk aversion, persistent worries over euro-zone sovereign debt problems; but downside limited by caution before U.S. Fed Chairman Bernanke's Senate testimony today. EUR/JPY daily chart mixed as MACD bullish, but stochastics turned bearish. Support at 121.55 (yesterday's low), then at 121.37 (Feb. 12 reaction low); breach would expose downside to 120.67 (1-year low hit Feb. 5), then psychological 120.00 level. Resistance at 122.70 (hourly chart); breach would expose upside to 124.56 (yesterday's high), then 125.23 (Monday's high), 125.91 (38.2% Fibonacci correction of 134.39-120.67 Jan. 11- Feb. 5 decline) and 126.97 (Feb. 3 reaction high).
EUR/GBP - to consolidate with risks skewed lower. Daily chart mixed as MACD bullish, but stochastics turning bearish; bearish key-reversal-day pattern completed yesterday. Support at 0.8745 (previous cap set Feb. 16); breach would expose downside to 0.8699 (Friday's low), then 0.8656 (Feb. 12 low) and 0.8627 (Jan. 29 low). Resistance at 0.8791 (hourly chart); breach would target 0.8836 (yesterday's high, coinciding with 55-day moving average), then 0.8846 (Feb. 11 high), 0.8933 (100-day moving average) and 0.9028 (Jan. 12 reaction high).
-By Jerry Tan, Dow Jones Newswires; (65) 6415-4046; Jerry.tan@dowjones.com
Immediate Range Larger Range
USD/JPY 89.90-90.55 89.69-91.29
EUR/USD 1.3494-1.3589 1.3442-1.3691
AUD/USD 0.8877-0.8975 0.8845-0.9071
NZD/USD 0.6894-0.6995 0.6803-0.7058
GBP/USD 1.5392-1.5474 1.5345-1.5575
USD/CHF 1.0786-1.0848 1.0710-1.0898
USD/CAD 1.0500-1.0578 1.0379-1.0631
EUR/JPY 121.55-122.70 121.37-124.56
EUR/GBP 0.8745-0.8791 0.8699-0.8836
(Ranges are calculated using recent high and lows, information on the placement of option strikes, and technical analysis - Fibonacci levels, trendlines and moving averages.)
USD/JPY - to consolidate with bearish bias. Pair undermined by unwinding of JPY-funded carry trades amid higher investor risk aversion (VIX fear gauge up 7.17% at 21.37) as U.S. stocks fell overnight (DJIA off 0.97%, Nasdaq off 1.28%), economic optimism deflated after unexpectedly large drop in U.S. Conference Board consumer confidence index (declined to 46.0 in February from revised 56.5 in January, vs forecast for 54.8), news Greece's top banks had been downgraded. USD/JPY also undermined by Japan exporter sales, lower U.S. Treasury yields. But USD/JPY losses tempered by USD demand for import settlements, caution heading into 1500 GMT Fed Chairman Bernanke's Senate testimony which market participants watching for clues on Fed's plans to exit stimulus policy. Other data focus: 2350 GMT Japan January provisional trade statistics, January corporate service price index, 1500 GMT U.S. January new home sales. USD/JPY daily chart negative-biased as spot broke below uptrend line from Feb. 4 low of 88.54 (now at 90.55, matching previous base set Thursday), stochastics falling from overbought, positive MACD histogram bars contracting. Support at 89.90 (yesterday's low); breach would target 89.69 (Feb. 16 low), then 89.56 (Feb. 12 low), 89.12 (Feb. 8 low) and 88.54 (Feb. 4 reaction low). Resistance at 90.55; breach would expose upside to 91.29 (yesterday's high), then 91.90 (Monday's high), 92.14 (Friday's high, just below 200-day moving average) and 92.43 (Jan. 12 high).
EUR/USD - to trade with risks skewed lower. Pair undermined by unwinding of long-EUR carry trades on higher risk aversion, surprise drop in German Ifo German business climate index to 95.2 in February from 95.8 in January (vs forecast for rise to 96.4), persistent worries over euro-zone fiscal problems, Fitch Ratings' downgrade of 3 Greek banks' covered bonds; BOE Gov. King's comment that recovery in euro zone "appears to have stalled." Data focus: 0700 GMT Germany revised 4Q GDP, 0710 GMT Germany March GfK consumer climate survey, 1000 GMT euro-zone December new industrial orders, 1000 GMT ECB's Smaghi speaks. EUR/USD daily chart mixed as MACD in bullish mode, but stochastics bearish at oversold. Support at 1.3494 (yesterday's low); breach would expose downside to 1.3442 (9-month low hit Friday), then 1.3420 (May 18 reaction low), psychological 1.3400 and 1.3315 (projected base of descending channel formed with Dec. 3 high of 1.5141 and Dec. 22 low of 1.4216). Resistance at 1.3589 (hourly chart); breach would expose upside to 1.3691 (yesterday's high), then 1.3789 (Feb. 17 reaction high), 1.3801 (Feb. 11 high) and 1.3839 (Feb. 9 reaction high).
AUD/USD - to trade with risks skewed lower. Pair undermined by unwinding of long-AUD carry trades on heightened risk aversion, softer commodity prices (CRB spot index closed down 4.68 yesterday at 272.1). But AUD/USD losses tempered by Aussie-U.S. yield gap, expectations for further rate hikes by RBA this year. Data focus: 0030 GMT Australia 4Q labour price index, 4Q construction work done. AUD/USD daily chart negative-biased as stochastics bearish at overbought, positive MACD histogram bars contracting, bearish key-reversal-day pattern completed yesterday. Support at 0.8877 (yesterday's low, matching Feb. 16 & Friday's low); breach would target 0.8845 (Feb. 15 low), then 0.8781 (Feb. 12 low) and 0.8707 (Feb. 10 low). Resistance at 0.8975 (hourly chart); breach would expose upside to 0.9071 (yesterday's high, coinciding with 100-day moving average), then 0.9152 (76.4% Fibonacci retracement of 0.9330-0.8576 Jan.14-Feb.5 decline).
NZD/USD - to trade with risks skewed lower. Pair undermined by unwinding of long-NZD carry trades on stronger risk aversion, softer commodity prices. But NZD/USD losses tempered by Kiwi-U.S. yield advantage. NZD/USD daily chart negative-biased as stochastics bearish, positive MACD histogram bars contracting. Support at 0.6894 (yesterday's low, matching Feb. 12 low); breach would expose downside to 0.6803 (5-month low hit Feb. 5), then psychological 0.6700 level and 0.6682 (Sept. 2 reaction low). Resistance at 0.6995 (hourly chart); breach would expose upside to 0.7058 (yesterday's high), then 0.7079 (Feb. 16 and Feb. 17 high), 0.7122 (50% Fibonacci retracement of 0.7441-0.6803 Jan. 14-Feb. 5 decline) and 0.7138 (55-day moving average).
GBP/USD - to trade with risks skewed lower. Pair undermined by capital flight to safe-haven USD amid inflamed investor risk aversion, official nod for weaker GBP, persistent investor concerns over weak UK fiscal situation; very dovish delivery yesterday from MPC members before UK Treasury Select Committee: BOE Gov. King offered very cautious outlook for UK economy with risks to downside, leaving door open to eventual resumption of central bank's quantitative-easing program, while BOE's Miles said, "If the news is that the economic outlook seems even weaker, inflation pressures lower... I think there's a strong case then for expanding further the asset purchases." GBP/USD daily chart negative-biased as MACD bearish, while stochastics stay suppressed at oversold, suggesting sideways or lower GBP/USD trading near-term . Support at 1.5392 (yesterday's low); breach would target 1.5345 (9-month low hit Friday), then psychological 1.5300 and 1.5271 (50% Fibonacci retracement level of advance from Jan. 23, 2009 low of 1.3500 to Aug. 5 high of 1.7042). Resistance at 1.5474 (hourly chart); breach would expose upside to 1.5575 (yesterday's high), then 1.5687 (Thursday's high), 1.5816 (Feb. 17 high), 1.5830 (previous base set Dec. 30) and 1.5848 (previous base set Feb. 1).
USD/CHF - to consolidate with risks skewed higher. Pair underpinned by broadly stronger USD undertone, fears of more CHF-selling FX intervention by SNB: traders suspect central bank yesterday bought EUR/CHF during Asian & European trading near 1.4650. But USD/CHF topside limited by unwinding of short-CHF carry trades on higher risk aversion. Daily chart mixed as stochastics stay elevated at overbought, MACD neutral. Resistance at 1.0848 (yesterday's high); breach would expose upside to 1.0898 (7-month high hit Friday), then 1.0934 (July 30 reaction high) and 1.1020 (June 24 reaction high). Support at 1.0786 (hourly chart); breach would expose downside to 1.0710 (yesterday's low), then 1.0644 (Feb. 17 low), 1.0623 (Feb. 11 low) and 1.0605 (Feb. 9 reaction low).
USD/CAD - to trade with risks skewed higher. Pair underpinned by increased investor risk aversion, stronger global USD, weaker commodity and oil prices (Nymex crude settled down $1.45 yesterday at $78.86/barrel). USD/CAD daily chart positive-biased as stochastics rising from oversold; negative MACD histogram bars contracting. Resistance at 1.0578 (yesterday's and Feb. 12 high); breach would expose upside to 1.0631 (Feb. 11 high), then 1.0707 (Feb. 10 high), 1.0780 (Nov. 6 & Feb. 5 high, near 200-day moving average) and 1.0869 (Nov. 2 reaction high). Support at 1.0500 (hourly chart); breach would expose downside to 1.0379 (yesterday's low), then 1.0368 (Monday's low), 1.0301 (Jan. 20 low) and 1.0246 (Jan. 19 low).
EUR/JPY - to trade with risks skewed lower. Cross undermined by unwinding of carry trades amid increased risk aversion, persistent worries over euro-zone sovereign debt problems; but downside limited by caution before U.S. Fed Chairman Bernanke's Senate testimony today. EUR/JPY daily chart mixed as MACD bullish, but stochastics turned bearish. Support at 121.55 (yesterday's low), then at 121.37 (Feb. 12 reaction low); breach would expose downside to 120.67 (1-year low hit Feb. 5), then psychological 120.00 level. Resistance at 122.70 (hourly chart); breach would expose upside to 124.56 (yesterday's high), then 125.23 (Monday's high), 125.91 (38.2% Fibonacci correction of 134.39-120.67 Jan. 11- Feb. 5 decline) and 126.97 (Feb. 3 reaction high).
EUR/GBP - to consolidate with risks skewed lower. Daily chart mixed as MACD bullish, but stochastics turning bearish; bearish key-reversal-day pattern completed yesterday. Support at 0.8745 (previous cap set Feb. 16); breach would expose downside to 0.8699 (Friday's low), then 0.8656 (Feb. 12 low) and 0.8627 (Jan. 29 low). Resistance at 0.8791 (hourly chart); breach would target 0.8836 (yesterday's high, coinciding with 55-day moving average), then 0.8846 (Feb. 11 high), 0.8933 (100-day moving average) and 0.9028 (Jan. 12 reaction high).
-By Jerry Tan, Dow Jones Newswires; (65) 6415-4046; Jerry.tan@dowjones.com
USD/JPY May Fall; But May Hold Above 89.90-Dealer
USD/JPY biased down as weaker-than-expected U.S. consumer confidence data overnight damp investors' risk-taking appetite as suggests U.S. consumer spending to remain weak, which could in turn hurt jobs market; still, pair looks supported around 89.90 by importers' orders as many want to settle their accounts ahead of month-end, says Tokyo Forex and Ueda Harlow senior dealer Masanobu Ishikawa. "Sentiment-wise, the dollar should continue falling, but Japanese firms' account-settling orders should slow the move, at least." Adds, market paying attention to Fed Bernanke's semi-annual testimony later in day; he's likely to again signal Fed won't hike rates near term, which should be USD-negative. Another focus would be U.S. January new home sales (tipped +3.8% from 7.6% fall previously.) USD/JPY may trade in 89.90-90.50 range vs 90.20 last; EUR/USD may trade in 1.3420-1.3560 range vs 1.3513 last. EUR/JPY may trade in 121.40-122.40 range, Ishikawa says; pair last at 121.88
ASIA OUTLOOK:
Risk aversion likely the theme for regional stock markets, after Wall Street falls on weaker-than-expected consumer confidence data. JPY strength could mean exporters particularly hard hit in Japan. FX markets likely to stay in range as traders watch for Fed chief Bernanke's testimony for any clues on Fed's plans to exit stimulus policy. USD/JPY at 90.20 vs 90.18 in late NY trade, EUR/USD at 1.3509 vs 1.3496, EUR/JPY at 121.86 vs 121.93. On the data slate: Japan corporate services price index, provisional trade at 2350 GMT, Australia labor price index, construction work done at 0030 GMT, HK GDP at 0830 GMT, Malaysia CPI at 0900 GMT, Malaysia GDP at 1000 GMT, India railway budget, Vietnam industrial output. Later there's German Gfk consumer climate survey, EU industrial orders. ECB member Smaghi speaks, U.S. mortgage applications, new home sales, Treasury Secretary Geithner testifies, Fed chief Bernanke testifies, U.S. oil inventories.
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