Closed in NY at 1 3962 off post Trichet highs of 1 3976
EUR/USD Range: 1.3950 – 1.3970 Support: 1.3880 Resistance: 1.4000 Closed in NY at $1.3962, off post Trichet highs of $1.3976, after comments in his ECB […]
EUR/USD
Range: 1.3950 – 1.3970
Support: 1.3880
Resistance: 1.4000
Closed in NY at $1.3962, off post Trichet highs of $1.3976, after comments in his ECB presser boosted market expectations that the bank could hike in April. Early Asian demand was seen well supplied in the $1.3965/70 area, the rate topping out at $1.3970 before it settled back between $1.3950/60 post Tokyo fix. Rate currently trades around $1.3958 in early European dealing. Markets in Asia were generally subdued, slipping into the usual pre NFP lethargy. Market forecasts have been moved higher, some seeing 200k plus for the headline NFP at this afternoon’s release of the US employment report. A lot of ECB speakers on the calendar today as well and should be of interest. Euro-dollar resistance said to remain in place between $1.3970/80, tech traders noting trend resistance coming through this area, drawn off highs from Dec 2009 and Nov 2010, a break above to expose $1.4000, with offers seen layered ahead.
GBP/USD
Range: 1.6270 – 1.6287
Support: 1.6200
Resistance: 1.6330
Looking at the fundamental developments behind the sterling; the service sector activity report printed weaker than expected, comparisons between oil prices and interest rate pressures eased with crude’s price and BoE Deputy Governor Bean delivered a less than hawkish assessment of the current conditions in the UK. Despite that round of questionable events, though, the 12-month rate forecast for the Bank of England jumped nearly 12 basis points to bring the figure to 87 bps. Rate speculation has been the pound’s speculation foundation; so this could have acted as a launching ground for the sterling. Instead, GBPUSD slid through the session – which is even more unusual given risk trends.
USD/CHF
Range: 0.9314 – 0.9332
Support: 0.9250
Resistance: 0.9400
There are two unique reactions from the franc to the hawkish ECB rate event. First, the historical correlation between the policy efforts of the European and Swiss central banks would bolster the SNB’s 12-month interest rate forecast (12 bps) to 50 basis points. However, this was not a bullish enough shift to keep the Swiss currency buoyant. The more remarkable effect of this interest rate shift is that there is suddenly greater return to offset perceived risk in the euro-region which temporarily reverses the flow of capital towards the safe haven Swissie.
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