EUR/USD Testing Resistance Again

The EUR/USD is again has tested the descending trendline resistance we examined yesterday on the 4-hr chart, with the 4-200hr moving average directly above that line and the 1.37 handle.  The trendline had held yesterday and the pair is continuing to test it early in the Asian session. The signals on this chart might suggest a break through as the moves lower from the last few hits have been less significant than the ones before.

However on the daily chart we this is the 10 daily attempt at the trendline with some bearish signals as the 100 day moving average is about to move below the 200 day mavg.

Forex Midday Report - March 11

Forex Morning Report - March 11

Bobbys Corner-Open Market-March.11.2010

Good Morning:

The EUR/USD pair was little changed in the overnight session.  Very narrow range bound trading with no clear direction evident.
GBP had a good day as it jumped over the 1.50 mark versus the USD, and rose across the board.

Greek unions protested against the government’s budget cuts and closed hospitals,airports, and schools.  Workers walked off their jobs to protest the 4.8 Bil Euro budget cuts.  These measures will include wage cuts and tax increases.  These drastic measures are necessary to get Greece out of the worst sovereign debt crisis to hit the European marketplace.

In China,  retail sales jumped over 20%, and industrial production also rose higher than expected.  The Chinese economy is racing forward after last years fiscal stimulus packages.  The economy is not only export focused, but has been pushing hard for domestic demand in the past 12 months.

World equity markets were mixed-and US Futures are mostly flat at this time.

Oil:$82.05                                           Gold:$1106.40

HAVE A GREAT DAY & GOOD LUCK

SNB at 8:00 AM. US and Canada Trade data due at 8:30

The SNB will announce their interest rate decision at 8:00 AM. The expectation is for unchanged rates. What will be of interest is if they change the wording on the value of the Swiss Franc.  Will they keep the wording the same at “it would prevent an ‘excessive’ rise in the franc” . The EURCHF is down at 1.4600 level - testing the SNB to address the currency in the comments.  The EURCHF had been using 1.4630 as the floor previously.  If they keep the language look for a further bias to the downside for EURCHF and possibly USDCHF.  The central bank is concerned about too strong a currency being deflationary but if global growth is rebounding,  it may be ok at this moment.  If they keep the language, look for 1.4630 to cap the topside for the EURCHF. The bottom will be explored to see how low it can go.

At 8:30 the US Trade Deficit will be released. The expectation is for a $41.0 billion gap versus $40.2B last month.  The Trade Deficit has been getting larger again. This is a drain on GDP growth (the inflation adjusted Trade Balance is the one that is used for GDP).   A larger deficit should lead to a weaker dollar.

Also at 8:30 will be the weekly Unemployment Claims. The expectations for Claims is for a slight fall to 460 K from 469 K.  Continuing Claims are expected to come in at 4500K unchanged from last week.   The employment picture has stabilized from an Initial Claims standpoint over the last month or so. Some suggest it may be weather related.  If so, we should start to see the thaw soon.

Canada will release their Trade Balance with a 0.2B surplus expected after a -0.2B deficit last month.  They also release Capacity Utilization which is expected to rise to 70.0% from 67.5%.  The New Housing Price index is expected to show a 0.4% rise, the same as last months rise.

UK Consumer Inflation Expectations

The GBP gained mildly against the USD after the release of a slightly better than expected consumer inflation expectation which read 2.5% versus its prior reading of 2.4%.

ECB Monthly Bulletin

The following are statements released from the ECB’s monthly bulletin:

• Euro zone recovery has begun, but likely to be uneven.
• ECB believes risks are broadly balanced with persistent uncertainty.
• They will continue progressive ending of exceptional support measures.
• Abundant liquidity will be absorbed when the time is right.
• ECb says recovery remains on track.

China’s Industrial Production Weaker YoY

China’s Industrial Production for February came in significantly weaker year over year at +12.8% versus the expectation of +19%, although the YTD release was marginally firmer than expected (20.7% vs. 19.5%.) Producer Prices were also higher than expected, all of which has helped the USD continue its bid this Asian session. On the EUR/USD chart below we see the negative bias against the Euro gradually continue to give the pair lower highs. We will look to see if the trendline resistance shown below can once again hold the pair and whether the mid 1.34 figure will keep on supporting the pair, a break either way could provide a new short-term dynamic for the pair.