CROSS COUNTRY: MIDDAY SNAPSHOT AND ANALYSIS OF SELECTED CROSS RATES
With little in the way of any event risk this morning, the market has been left trading on broader global macro fundamentals. One market which has been influencing price action today has been oil, with the commodity tracking significantly higher on the day on the back of rumors of more production cuts from OPEC. Officials within the group have expressed concern over the unusually low price of oil and this has been seen generating some fresh bids. Also seen propping has been talk of a massive purchase in raw materials from China. Stocks have bounced out from their lows into flat to positive territory, while the Euro has been well bid since the US open. Usd/Cad has also reversed course in the US session with the higher oil prices helping to weigh on the pair and force a retreat from the multi-year highs above 1.3020 at 1.3065 set earlier on. Unquestionably, Sterling has been the weakest by far on the session, down well over 2% against the buck as fears have escalated over the state of the local financial system and ability for the government to properly and effectively deal with the financial market turmoil. Eur/Gbp has skyrocketed into the upper 0.9100’s and through our “trade of the day” stop to disregard any intraday overbought readings. In other news, Fed Chair Bernanke is reported to be attending a White House briefing today, while Moodys has just cut HSBC’s financial strength rating to C+ from B.
Chf/Jpy – The cross has now broken above the previous weekly high and latest consolidation and looks set for the next upside extension to challenge critical double bottom neckline resistance by 87.05 (29Dec high) over the coming days. Above 87.05 would trigger a major double bottom formation and ultimately project gains over the longer-term back towards the 100.00 area. In the interim, look for dips to now be well supported ahead of 82.40 (2/3March lows).
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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Joel Kruger publishes 6 daily pieces:
“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
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“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
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“Daily Classical” – A Daily Technical Overview of the Major Currencies.
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