Japan Jobless Rate Improves & CPI Slightly Lower

Job-to-Applicant Ration:  Survey: 0.60  Actual: 0.63  Prior: 0.62 

Overall Household Spending:  Survey: -7.0%  Actual: -8.5%  Prior: -0.2   Revised:

Jobless Rate:  Survey: 4.8%  Actual: 4.6%  Prior: 4.6% 

Tokyo CPI (YoY):   Survey: 0.0%  Actual: -0.1%  Prior: -0.3%  Revised: -0.2%

Tokyo CPI Ex-Fresh Food (YoY):  Survey: 0.2%  Actual: 0.2%  Prior: -0.3%

Tokyo CPI Ex-Fresh Food (YoY):  Survey: 0.1%  Actual: 0.0%  Prior:  -0.3%

National CPI (YoY):   Survey: 0.0%  Actual: 0.0%  Prior:  0.0%

New Zealand Interest Rate Stays Unchanged

New Zealand has left the interest rate at 2.50%. NZD/USD trading lower on the news.

New Zealand Interest Rate Decision at 5PM

EURUSD continues squeeze higher

Dollar selling continues after Bernanke comments failed to appease the markets and shorts get squeezed. The price moved above the 1.4712 level which was key trendline resistance off the daily chart. Momentum developed and the dollar selling was underway.

The 1.4770 level was the first target.  That level corresponded with the Fibo extension.  The next level is being tested now at comes in at 1.4793 level.  This level coincides with the parellel trendline off the recent lows on the hourly chart. 

The next level come in at 1.4800 and 1.4815. These levels correspond price levels that were a floor level in December 2009 – the last time the price was at these lofty levels.

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EURUSD moves above trendline resistance at 1.4712

The EURUSD has moved above channel resistance at the 1.4712 level and has moved to new highs since December 2009.  At that time the market was finishing a trend move and consolidating. The key levels at the time were the 1.4778, 1.4800 and 1.4815 (see chart below). These will be target levels for the next move to the upside. 

Another target for the pair would be measuring a Fibonacci Extension. The below chart targets the 61.8% extension of move up from yesterdays low to the high today. That level comes in at 1.4770.  A 100% extension would have the price extend to 1.4855 (not shown below). These are other target levels to the upside.

Gold rallies to $1521.50 channel resistance

Bernanke Comments from press conference

• Inflation to come down with commodity rates
• Fed will monitor inflation
• Fed will tighten when warranted.  They will consider both parts of mandate at that time

Q and A

• GDP is expected to be weaker in 1Q, less than 2%. Lower defense spending will add to GDP going forward. Construction is weak and may have implications going forward, but most weakness in GDP is transitory and likely not to continue.
• We are in a moderate recovery. Will see if recovery is stable. Watch labor market as well. Want to see more job creation and inflation to come down toward more normal level. Will also watch inflation expectations.
• How long is “extended period of time?”. Could be a couple of meetings but does not know the certainty so they use the vague language
• The US treasury is in charge of the dollar. He adds it is in the interest to have a strong dollar. 
• Trying to maintain low inflation which is good for the dollar
• A strong economy is good for the dollar as well
• So by following mandate of full employment and low inflation will be good for the dollar.
• Higher gas prices add to inflation and drain funds/purchasing power from consumers. So it is a double whammy
• Not much the Fed can do about gas prices
• View is gas prices will come down and provide some relief
• Seen a reasonable amount of job creation and decline in the unemployment
• Labor market is improving gradually
• Pace of labor improvement is slow and 7 million jobs still below the high
• Continue the QE program. Will let the purchases end at that time.
• The end is unlikely to have significant effects on the economy. 
• The reason little effect because the Fed has telegraphed the ending.