The USD is modestly offered in the US session with price action driven by resurgence in risk appetite, aided by the talk of a Chinese stimulus plan. But things haven’t been all rosy on Wednesday with GE shares plummeting some 14% following a WSJ article suggesting that capital concerns are threatening the firm’s AAA credit rating. Treasury Secretary Geithner has been testifying on the federal budget in front of the Senate Budget Committee and says that ensuring that banks are well capitalized is the first step to getting the credit markets back in shape. Fed Fisher was on the wires earlier saying that the economy’s drop could be more severe in the current quarter. On the data front, not a whole lot to move markets with ADP coming in weaker and ISM non-manufacturing more or less in-line. Fed Lockhart is due to speak at the top of the hour (17:00GMT), while the Beige Book is scheduled for release at 19:00GMT. All major US equity indices are up some 2.50% at midday, while oil has surged up 7.50%. Gold trades down a mild 0.50%.
Gbp/Chf – The cross is in the process of bouncing off of a major confluence of technical support in the form of a rising trend-line, 50-Day SMA, and 61.8% fib retracement. A fresh higher low is now sought out by 1.6375 (2Mar low) to be confirmed on a break back above 1.7490 (10Feb high). Wednesday’s bullish reversal day confirms outlook and we recommend looking to buy the cross by 1.6600 for a move back towards 1.7490 over the coming days/weeks. Only back below 1.6375 negates and give reason for pause. Fundamentally, any sign of stabilization within global equities should help to rally the cross. Additionally, data out of the UK has been consistently better than expected, including today’s stronger consumer confidence and PMI releases, while concerns over the state of the Swiss economy have begun to offset the lure of the Swissy safe haven status. Strategy: BUY @1.6600 FOR A 1.7490 OBJECTIVE, STOP @1.6290. Stops to be trailed to cost on a break above 1.6775.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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