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The dollar was narrowly mixed in early Asian trade Thursday, with major
pairs tied to very tight ranges until coming under late downside
pressure as the market reacted to reported comments from a Greek
official that the 'rift with Germany over debt crisis deepening' and a
DJ report suggesting Greece may seek IMF aid over the April 2-4 weekend.
Euro-dollar was pressed lower on the Greek reports with the pair trading
into early Europe around $1.3675, close to the lows of the $1.3667 to
$1.3741 range.
Dollar-yen is trading close to the lows of the session, last at Y90.15,
having traded a Y90.06 to Y90.46 range. There was little in the way of
flows and traders said the market was bound for now by orders at Y90.00
and Y90.50.
Some risk aversion was prompted overnight by reports of the China
regulator telling banks to suspend loans to property developers, and
that China may conduct more stress tests (linked to yuan appreciation).
Euro-dollar opened Asia at $1.3735 and initially edged to session highs
at $1.3741 on early demand for euro-yen. Japanese supply into the fix
reversed this early move with stops triggered on the break below $1.3720
($1.3727 Wednesday low), the rate then meeting support at $1.3710.
Stronger selling was then prompted as market reacted to DJ report that
Greece could ask for IMF aid on weekend of April 2-4, as well as
reported comments from a 'Greek official' suggesting that the rift with
Germany over the debt crisis was deepening and that Greece not hopeful
of aid from the Mar 25 EU Summit. Rate dropped to $1.3667 before meeting
willing buyers into the dip. Rate has slowly recovered into early
European dealing, currently around $1.3685. Support seen around that
mentioned low, a break to expose a stronger support area which begins
from around $1.3655, strengthening toward $1.3640 with stops below. A
break here to open a deeper move toward $1.3625/20. Asian traders
suggest that stops have been building on the downside and therefore see
it as the weaker side. Resistance $1.3695/00, more at $1.3715/25.
Cable opened Asia around $1.5320, initially edging up to post session
highs at $1.5324 before settling between $1.5310/20 ahead of the Tokyo
fix. Cross yen supply through the fix provided the main weight to take
rate through support at $1.5305/00 and on to an initial low at $1.5289.
Rate recovered and bounced between $1.5297/1.5312 before getting shoved
lower again as rate tracked euro-dollar slippage, as this latter rate
reacted to negative comments from the Greek official. Cable dropped to a
low of $1.5271, finding support from reported demand placed to $1.5270.
Dip again attracted demand, aided by euro-sterling breaking lower into
early Europe (Asian range stg0.8943/73) to stg0.8930 on M&A reports of
Deutsche Bahn looking to buy part of UK Arriva (+E2bln). This M&A was
reported Wednesday but highlighted by an FTD report this morning. Cable
recovered to $1.5315, currently trading around $1.5305. Support now
reported in place between $1.5275/65, more toward $1.5250. Resistance
$1.5325/35 ahead of $1.5350/55 and stronger interest at $1.5380/85.
Turning to the technical picture, the euro tested the top of the daily
Bollinger band, which is now at $1.3780, at the same time as the 10-day
momentum study is fading. This may encourage further profit-taking back
towards the 21-DMA of $1.3625. The daily stochastic is yet to turn lower
but bulls really need to break above $1.3873/94, which includes a 38.2%
retracement of the Jan/Mar decline and the 200-week MA.
Cable's recent bull-divergence in the daily stochastic and momentum
studies has been joined by a bull-cross in the 5 & 21-DMAs as cable
breaks out of the recent flag pattern, which if sustained could imply
gains back to the $1.5633 area. However, bulls need to overcome double
Fibonacci level at $1.5420/22 ahead of there. Euro-sterling slumped
through the 21-day moving average, which turns initial resistance along
with the March 5 low of stg0.8975/82. The move is supported by the
recent turn lower for the stochastic study and a bear-cross in momentum,
which has bears focused on Fibonacci retracements of stg0.8907 (just
under stg0.8915 100-DMA) and stg0.8850, which meets the 200-DMA.
Dollar-yen holds just within the narrow Ichimoku cloud of Y90.00/55,
where the base meets the 21 & 100-DMAs as well as the Tenkan & Kijun
lines within Y90.10/15. This leaves the pair in a potentially pivotal
position as daily studies start to unwind support and the daily
stochastic risks a bear-cross. The daily studies are stalling in
euro-yen with momentum turning lower and the stochastic risking a
bear-cross. This comes as the recovery stalled at the Fibonacci level
and mid-Feb highs of Y125.22/29, turning bear's attention back to
near-term Fibonacci levels from Y123.08.
In Europe today, the European Parliament have a hearing on European
economic governance and EU tools for economic recovery, while the ECB
also holds a Governing Council meeting, although no monetary policy
decision is scheduled at this meeting.
EMU data starts at 0900GMT with the January current account data.
UK data at 0930GMT sees Trends In Lending data from the Bank of England
and also CML Gross Mortgage Lending data, while at the same time,
Provisional M4 Lending and Money Supply data is due along with the
public finances data, where PSNB is expected to grow to stg13.4 billion
and PSNCR is seen st stg11.0 billion.
At 1000GMT, the EMU trade balance is expected to come in at +E1.0
billion for January.
UK data should also see SMMT Car Production, while at 1100GMT, the March
CBI Industrial Trends Survey is expected to see the Total Orders Balance
come in at -32.0 after -36.0 last month.
At 1230GMT, the Federal Reserve Bank presidents of Kansas City (Thomas
Hoenig), Richmond (Jeffrey Lacker) and Cleveland (Sandra Pianalto) are
all due to appear on a panel about the role of banking in local
economic growth at the American Bankers Association conference.
US data also starts at 1230GMT, when initial jobless claims are expected
to decline 7,000 to 455,000 in the week ended March 13. The current
account data is due at the same time, as is CPI, which is expected to
rise 0.1% in February, with gasoline prices down in the month. Core CPI
is also expected to rise 0.1%.
US data continues at 1400GMT, when the Philadelphia Fed index is
forecast to edge up to a reading of 18.0 in March after the modest
increase in February. At the same time, the growth in leading indicators
is expected to slow to 0.2% in February on weaker employment, stock
markets and consumer sentiment. Building permits, vendor performance,
money supply and the yield curve are likely to bring positive
contributions.
US data also sees the 1430GMT release of the weekly EIA Natural Gas
Stocks data.
At 1700GMT, Swiss National Bank board member Jean-Pierre Danthine
speaks, in Zurich.
US data then concludes at 2030GMT with Money Supply (M2) for March.
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