MORNING BRIEFING:  USD strength takes a breather

What’s new:
Ireland: EU, IMF and ECB officials arrive in Dublin today
FOREX: EUR/USD bearishness eases; pair reaches highs of 1.3611 this morning
Australia: Upbeat comments from RBA deputy governor support the Aussie
Global: Prevailing Chinese tightening, US easing, and Euro Zone debt concerns still expected to weigh on investors’ sentiment.

Today:



Rates in Asia and Indices:
EURUSD: 1.3611 - 1.3525.
USDCHF: 0.9921 – 0.9870.
GBPUSD: 1.5948- 1.5889.
EURJPY: 113.24 – 112.52.
USDJPY: 83.40 – 83.11
DowJones: 11’007.88 -0.14%
NASDAQ:  2’476.01 +0.25%
S & P 500: 1’178.59 +0.02%
Nikkei: 10’013.63 +2.06%
Shanghai: 2865.45 +0.94%
Gold: $ 1'353.50
Crude Oil: $ 81.52

Comments:

EUR/USD recent bearishness takes a breather as the pair manages highs of 1.3611 for the day, up to the time of writing. US Dollar shows some weakness after poor CPI data from the US yesterday probably reduced the shimmer from US’s recently improved data, and reminded investors of the scope and validity of the Fed’s second round of asset buying (QE2).

Although uncertainty over the Irish problems remained, lack of good or bad news probably allowed for some Euro strengthening, apart from the fact that the USD was weaker.  Even given that EU, ECB, IMF went over to Ireland to give a helping hand, and that the EU has shown it is prepared for any possible call for help, has probably allowed for some Euro support this morning.

RTFX Trader Tip’s outlook for the day was correct in envisaging a mover higher for the EUR/USD, although the move to the upside was greater than expected (reaching 1.3611 vs the expected 1.3576). Prevailing market conditions are expected to have the EUR/USD drift lower later on today – with supports expected at 1.3471/1.3414.

Even AUD and NZD were gaining some ground this morning helped by recent developments.  From Australia, RBA deputy governor Battellino made upbeat comments, saying that the stronger AUD is the result of a booming commodity sector and is justified by economic fundamentals - thus foreseeing possible strong future growth. New Zealand registered a rise in consumer confidence and PPI.

Chinese tightening, US further monetary easing and Euro Zone debt concerns expected to remain weighing on the markets.

Good day,


Rudolf Muscat
Trading desk

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