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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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USD/CAD looks weak, though supported

 

 

USD/CAD has opened the second week with a gap down, though the smaller one than last week. The pair found some support at 0.9825 (bottom of the daily Ichimoku Cloud).

 

US dollar’s fluctuating around 0.9845 (50% retracement of the advance from September to November). If it slips below the recent minimums of 0.9825, it may slide to 0.9775 (61.8% retracement). Below 0.9800 (psychological level) selling will likely intensify.

 

USD/CAD is now just below the Ichimoku Cloud at H4, which provides resistance for the pair ahead of the next obstacle at 0.9887 (100-day MA). Only above this level the bulls will be able to breathe a bit more freely. The next resistance lies at 0.9925 (50-day MA, top of the Cloud).

 

The outlook for USD/CAD is neutral/bearish for now. You may try selling on rallies as long as the pair is below 0.9900. If the fiscal deal is made in the US, CAD may strengthen more on improved risk sentiment.

 

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Chart. Daily USD/CAD

 

 

 

 

 

 

 

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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Dec. 19: European session

 

 

EUR/USD is testing fresh highs around $1.3280. The single currency is supported after positive euro zone’s releases. German Ifo business climate rose to 102.4 in December (forecast: 101.9; previous: 101.4), while current account surplus widened. Note that EUR/USD is strongly overbought. Euro is up on good risk sentiment, though Fitch rating agency said that US AAA credit rating is at risk in case of failure of solving the “fiscal cliff” crisis. Euro Stoxx 50 is up by 0.59%.

 

GBP/USD is testing the $1.6300 resistance. BoE meeting minutes showed that MPC voted 8-1 to keep QE total at 375 bln pounds, 9-0 to keep interest rates at 0.5%. The regulator forecasts the economy to contract in Q4.

 

USD/JPY is once again at multi-month high at 84.40 tested earlier today. USD/CHF slid to new 7-month low at 0.9100.

 

AUD/USD rose by 20 pips above today’s minimum of $1.0504. NZD/USD is trying to return above 0.8400. New Zealand releases Q3 GDP tonight. USD/CAD is consolidating around 0.9850. The pair is tickling the 50-period MA on the H4 chart.

 

Later today watch US housing market data – building permits and housing starts.

 

 

 

 

 

 

 

 

 

 

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RBC: bearish view on USD/JPY

 

 

 

It may be surprising, but there are some specialists who remain bearish on USD/JPY. Analysts at RBC Capital Markets expect the USD/JPY to slide to 77.00 in Q1 2013.

 

In their view, political inertia will hinder the revolutionary change in policy. Japan is still running a current account surplus. What’s more, JPY shorts have reached a record high, so there’s a chance of massive short covering on any event that diverts from what investors are expecting in Japan.

 

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Chart. Weekly USD/JPY

 

 

 

 

 

 

 

 

 

 

 

 

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Dec. 21: Asian session

 

 

The market’s risk sentiment worsened as US lawmakers delayed a budget vote spurring concern the so-called fiscal cliff will drive the world’s biggest economy into recession. Plan B prepared by the Republican leadership in the House of Representatives failed to pass. According to the official announcement, the chamber will hold no more votes until after the Christmas holiday.

 

Asian shares declined, as well as Aussie and kiwi. AUD/USD slid to $1.0440. NZD/USD weakened to $0.8300. USD/JPY eased down to 83.85, while USD/CHF is trying to rise from the recent lows and is fighting with resistance at 0.9155.

 

EUR/USD slid from the daily high of $1.3250 and is now consolidating around the $1.3200 mark. The pair is down from the 8-month high around $1.3305, tested on Dec. 19. The only important release scheduled in the euro zone for today is the GfK German consumer climate at 7:00 GMT.

 

GBP/USD slid by 40 pips to $1.6240. The pair is trading slightly below the strong resistance of $1.6300. Watch the current account, public sector net borrowing and final Q3 GDP data at 9:30 GMT. USD/CAD is trading on the upside. The pair rose above the 100-day MA and is testing 0.9900. Canada will release November CPI and October GDP figures at 13:30 GMT. Later during US session pay attention to durable goods orders.

 

 

 

 

 

 

 

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USD/JPY: a sideways week

 

 

 

USD/JPY is trading around the daily lows at 83.90. The pair is down from the recent 8-month high at 84.60.

 

This week the pair is consolidating in the 83.80/84.60 sideways range, but the pair seemingly has some more room for growth. The next upside target lies at the 85.00 handle (200-week MA).

 

The current correction looks quite natural after the last week’s decisive upward move from 82.00. USD/JPY is now taking the lead from the H4 MACD bullish divergence. The pair still remains overbought on the weekly and daily charts. The pair opened this week with a gap up and still didn’t cover it, so we concede a retracement to the Friday’s close at 83.50.

 

Resistance: 84.11, 84.45, 84.60, 85.00, 85.50

Support: 83.80, 83.50, 83.00

 

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Chart. H4 USD/JPY

 

 

 

 

 

 

 

 

 

 

 

 

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AUD/USD extends the downside

 

 

 

AUD/USD broke below $1.0450 and tested the fresh weekly lows, following the decline in US Congress of Republican's 'Plan B' for 'fiscal cliff'.

 

Aussie is now cramped between the two trend lines. The pair is supported by the line, ascending from $1.0150, which is currently around $1.0400. On the upside growth is limited by the 2011-2012 trend line resistance at $1.0550.

 

The technical picture shows that the decline is likely to extend to $1.0400. We concede a break below this level - it would actually signal a trend reversal and open the way to $1.0150.

 

Support: $1.0415, $1.0400, $1.0390, $1.0360,

Resistance: $1.0500, $1.0550, $1.0585, $1.0600

 

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Chart. Daily AUD/USD

 

 

 

 

 

 

 

 

 

 

 

 

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Gold: forecasts for 2013

 

 

 

Gold spent the 2012 year in the sideways $1800-1515 channel. The yellow metal resumed the downtrend in the end of November after a previous upward move and has recently touched a fresh 4-month low of $1635 an ounce.

 

The improved global market sentiment trimmed demand for safe-haven gold. Investors appreciated the progress in resolution of the euro zone’s crisis (Grexit looks much less likely, Spanish yields are down and European integration is tightening). The positive US GDP reading lowered the expectations of infinite QE and, therefore, also reduced demand on safe gold.

 

Despite the recent slide, most analysts remain bullish toward gold in 2013.

 

ANZ: In the next weeks prices could slide to $1630. The decline will be short-term and will create a good buying opportunity over the medium term.

 

Capital Economics: Central banks will probably continue buying. Finally, a re-escalation of the crisis in the euro zone should boost the demand for gold as a safe haven. In 2013 gold will rise to $2200 an ounce.

 

Commerzbank: Central banks in emerging countries will play a considerable part in the price increase we envisage in 2013.

 

Some analysts believe the bullion’s price gains will be limited.

 

Goldman Sachs: We expect to see gold at $1825 a troy ounce in 3 months, at $1805 in 6 months and at $1800 in a year.

 

Kotak Mahindra Asset Management: Gold may still give a positive return in 2013, but it may not be able to match up its own performance in the last five years. Uncertainty in the global financial market has receded significantly and that will affect gold demand as a safe haven asset.

 

 

 

 

 

 

 

 

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Rabobank: GBP 2013 forecast

 

 

 

Analysts at Rabobank expect EUR/GBP to rise to 0.8300 by the end of 2013. In their view, pound may win some ground vs. the euro at the beginning of the year as tensions in euro zone may resume. However, by the end of the year the single currency will get it under control.

 

GBP/USD is expected to reach $1.6300 by the end of 2013 because of the US dollar will remain weak.

 

 

 

 

 

 

 

 

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RCommerzbank: economy will weight on EUR/USD

 

 

Commerzbank expects EUR/USD to depreciate next year from $1.32 to $1.23 as US economy will do much better than the one of the euro area. Euro zone’s economy contracted for two straight quarters and there are signs of further slowdown, while US economic growth was revised up in Q3 from 2.7% to 3.1% and the unemployment in America is falling.

 

 

 

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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Dec. 26: Asian session

 

 

Market is open in Japan and the US. Europe, Australia and Canada keep enjoying bank holidays. AUD/USD is consolidating above $1.0350. NZD/USD is flat in the $0.8210 area. USD/CHF is little changes around 0.9150.

 

USD/JPY rose above 85 yen for the first time since April 2011. Shinzo Abe is sworn in today as Japanese Prime Minister. Abe is expected to push the Bank of Japan to do more easing. Yesterday the leader of Liberal Democratic Party agreed with the New Komeito Party on a policy package that includes a 2% inflation target.

 

EUR/USD keeps consolidating around $1.3180. GBP/USD strengthened to $1.6120 (38.2% Fibo). USD/CAD is around session highs of 0.9925. The pair remains below the 50-day MA.

 

Investors focusing on the fate of US negotiations to avert a budget crunch looming at the end of the year. The talks are to resume tomorrow. Activity is likely to remain subdued, with volume low and without major economic news.

 

 

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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USD/JPY surged to fresh 85.35 highs

 

 

 

USD/JPY rose to 85.35 (highest since April 2011) as Japan is forming a new government today.

 

In the early Asian trade USD/JPY jumped from the daily lows of 84.75 and is now consolidating around the daily highs. The pair rose above the 200-week MA (84.95) and is testing the 50-month MA (85.40).

 

The new Prime Minister Shinzo Abe keeps talking about the necessity of monetary measures. On Sunday he said Japan must defend itself against attempts by other governments to depreciate their currencies at the yen's expense. Minutes of the BOJ November meeting, released today, showed that some members said the regulator must act without ruling out any policy options if the economic and inflation outlook will keep worsening.

 

Barclays: A small flow of money can cause a big move in the yen. The market will be volatile until investors return from holidays.

 

BNP Paribas: Further gains for the pair are likely to slow considerably as the dovish BOJ view is already well priced in. We suspect that both overstretched technicals and positioning are playing a sizable role

 

Citigroup: If the only thing that's driving the yen now is verbal intervention, we've just about reached the limit.

 

Resistance: 85.50, 85.90, 87.10

Support: 85.00, 84.00, 83.50, 82.80

 

 

 

 

 

 

 

 

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AUD/CAD: bearish view

 

 

 

Those who aren’t short on AUD/CAD yet should consider looking for opportunities to join in. The pair’s trading within long-term downtrend and it’s correction from October lows seems to have finished. As a result, sell on the close below 1.0260 (Fibo level) or, if we’re lucky, on the rallies towards 1.0350. Target is at 1.0100. There may be some support at 1.0200.

 

 

 

 

 

 

 

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Dec. 27: Asian session

 

 

USD/JPY keeps climbing higher and higher. Today the pair reached new multi-month high of 85.87 as data released tonight may show a decline in Japan’s consumer prices, fanning speculation that Prime Minister Shinzo Abe will push the central bank to increase monetary stimulus. Yesterday Abe said ‘bold’ monetary policy is one of the 3 pillars of his economic measures.

 

Asian stocks rose. AUD/USD is trading on the downside in the $1.0380/50 area. NZD/USD went higher testing the levels above $0.8200. USD/CHF is trading in the 0.9130 area, not far from the recent lows.

 

EUR/USD is consolidating around $1.3230 after yesterday’s growth. Today the pair is in the narrow $1.3220/40 range. There are no important releases on the European agenda. Watch the US fiscal cliff negotiation updates. America will also release unemployment claims figures (13:30 GMT), CB consumer confidence & new home sales (15:00 GMT).

 

GBP/USD is consolidating at $1.6130. Britain will release BBA Mortgage Approvals data at 9:30 GMT. USD/CAD declined to 0.9930. Yesterday the pair rose above the 50-day MA, but today slid from these levels.

 

 

 

 

 

 

 

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USD/JPY extended gains to 85.85

 

 

 

USD/JPY continues the sharp rally and today tested fresh highs of 85.85 (highest since July 2010). The pair is tickling the 200-week EMA (85.75). Such strong bullish moves became possible due to the thin Christmas market as the volatility is very high. These days the market’s behavior is quite unpredictable, but the overall trend is clearly bullish. The next targets are seen at 86.50 (50-month EMA), 87.00 (23.6% Fibo) and 88.00.

 

FX Concepts: In 2013 USD/JPY will reach 90.00 before resumption in risk aversion prompts investors to return to traditional refuge currencies. Further depreciation of the yen versus the U.S. dollar is one of the surest bets going into the next year.

 

The pair is currently overbought (weekly RSI rose to 72). Any pullback is seen as a buying opportunity ahead of the Jan. 21 BoJ meeting. It is now important for the pair to close above the 200-week MA.

 

Tonight at 23:30 GMTJapan will release CPI data which may show the deflation is deepening.

 

 

Chart. Weekly USD/JPY

 

 

 

 

 

 

 

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GBP/CHF: long-term bearish forecast

 

 

 

GBP/CHF has been trading in a descending channel since July 2012. We maintain a long-term bearish view on the pair with a target of 1.4200.

 

On a weekly chart one may see a head-and shoulders pattern (head at 1.5480). Last week GBP/CHF slid below the neckline and confirmed the pattern. The pair fixed below the 50-week MA and is trading in the negative territory this week.

 

 

Сhart. Weekly GBP/CHF

 

 

 

 

 

 

 

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NZD/USD: bullish in 2013

 

 

 

2012 was a hard year for New Zealand’s exporters as NZD/USD strengthened making their profits in the national currency lower. The pair spent about 70% of time above $0.8000. Yet, kiwi may keep appreciating in 2013 if commodities prices remain strong and monetary conditions in New Zealand remain firm (the new governor of the Reserve bank of New Zealand is considered to be a hawk).

 

Westpac: New Zealand’s economic recovery should gain momentum next year, which will encourage the RBNZ to raise its official cash rate in September. As USD will be under pressure because of the Fed’s QE, NZD/USD may rise to $0.8845 (2011 high).

 

BNZ: the pullbacks below $0.8000 are going to be quite limited and shallow. NZD/USD will trade in the $0.8000/8500 range.

 

 

Chart. Weekly NZD/USD

 

 

 

 

 

 

 

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Dec. 28: Asian session

 

 

USD/JPY rose to 28-month high at 86.63 as data showed a decline in Japanese consumer prices (Tokyo core CPI fell by 0.6% this month, national core CPI dropped by 0.1% in November after staying unchanged in October). The expectations of more easing from the central bank strengthened.

 

EUR/USD is consolidating at $1.3240. The pair is trading close to the highest levels since April. France will publish consumer spending data at 7:45 GMT. Italy holds a 10-year bond auction.

 

AUD/USD is consolidating in $1.0390/45 area. NZD/USD is fluctuating in the $0.8200 zone. USD/CHF is trading sideways in the 0.9170/9090 region. GBP/USD rebounded to $1.6120 after having tested the 50-day MA yesterday. USD/CAD is consolidating around 0.9950. Yesterday the pair approached the 200-day MA, but failed to overcome it.

 

US President Barack Obama and Vice President Joe Biden will meet congressional leaders from both parties at the White House today. US House Republican leaders announced that the chamber will meet on Dec. 30 – its first Sunday session in more than 2 years. American lawmakers are seeking to resolve their impasse over spending cuts and tax increases worth more than $600 billion (“fiscal cliff”).

 

 

 

 

 

 

 

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EUR/USD: news from the battlefield

 

 

 

EUR/USD went up yesterday aiming for highs around $1.3300, but stopped around $1.3280 and slid to $1.3200. Today, however, the bulls once again started pushing euro up. The pair is currently testing resistance of $1.3250.

 

Market players wait for the news about the fiscal cliff – things remain quite uncertain. EUR/USD sits in the $1.3300/3150 area. Technical outlook for the next sessions seems neutral. The pair’s broader prospects will remain bullish until we see a daily close below $1.3140.

 

In Europe watch for Italian 10-year bond auction – important event taking into account the upcoming general elections uncertainty surrounding Italian Prime Minister Mario Monti. In US watch Chicago PMI and pending home sales. Data released in America yesterday showed that the housing sector keeps improving, though at a slower pace, while consumer confidence dropped to 4-month low in December.

Chart. H1 EUR/USD

 

 

 

 

 

 

 

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JPMorgan: USD/JPY targets 90.00 in 2013

 

 

 

Analysts at JPMorgan forecast USD/JPY to rise to 90.00 in 2013. Their end-2013 forecast for the dollar was recently revised to 87.00, up from 79.00.

 

In their view, the yen weakness will continue until Japan's upper house elections in July as Abe will keep the market hoping for more changes. These days the investors really believe that the Japanese politics and policies had changed. Analysts also underline that the growing Japanese trade deficit will influence the yen.

Chart. Weekly USD/JPY

 

 

 

 

 

 

 

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Jan. 7: Asian session

 

 

 

USD/JPY is trading just below 88.00. The pair slightly declined after reaching yesterday more than 2-½-year high of 88.41. Yen weakened on the increased speculation that Japan’s Prime Minister Shinzo Abe will do more to spur the nation’s growth. According to the Yomiuri newspaper, Japanese government will announce around 12 trillion yen ($136 billion) in fiscal stimulus this month.

 

EUR/USD opened the week not far from Friday’s post-NFP close of $1.3080, but then slid into the $1.3040 area. The pair slid from the $1.3300 highs despite the positive fiscal cliff agreement. Euro keeps depreciating, but for now the losses are limited by the 50-day MA at $1.3030.

 

US dollar has strengthened so far as the minutes of the Fed’s December meeting released last week showed that the policymakers may end $85 billion in monthly bond purchases (QE3 and 4) sometime in 2013. Watch Richmond FRB President Jeffrey Lacker speak tomorrow.

 

AUD/USD is moving sideways with resistance at $1.0500 and support around $1.0400. NZD/USD is trading around $0.8300. GBP/USD continues a three-day drop. The pair is now testing the 100-day MA at $1.6020. Note that on Friday the pair opened with a gap down, closed it and resumed the decline. USD/CAD is trading around 0.9880. The pair keeps consolidating below 0.9900 after the Jan. 2 drop. USD/CHF rose from 0.9090 to 0.9280 and halted there.

 

 

 

 

 

 

 

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Market Analytics:FBS Markets Inc.

 

 

 

 

 

 

 

 

 

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EUR/USD: news from the battlefield

 

 

EUR/USD slid from the levels in the $1.3300 area and touched $1.3000 on Friday – this is a good support (psychological level; 55-week MA). The selling signals may be false as $1.3000 held initial bearish attack on Friday making EUR/USD bounce up to $1.3090.

 

If euro fails to hold above this level, it will become extremely vulnerable for a decline to $1.2950, $1.2920/2880, $1.2800 and $1.2660. Main resistance lies at $1.3125 (Dec. 5 high) and $1.3150 (the bottom the previous consolidation range). There may be quite many selling orders up there (potential good entry for bears).

 

Today have a look at Sentix Investor Confidence (9:30 GMT) and European PPI. There will be no releases in the US. In addition, demand for euro is limited ahead of euro zone’s employment data (jobless rate may have increased from 11.7% to 11.8% as the forecasts say) and German factory orders released tomorrow.

 

Watch for the ECB meeting on Thursday. It seems that the central bank policy is the most important driver of EUR for now.

 

Chart. Daily EUR/USD

 

 

 

 

 

 

 

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CFTC: US Dollar shorts at highest since October

 

 

 

Here are the essentials of the latest Commitments of Traders (COT) report, released on Friday, January 4, by the Commodity Futures Trading Commission (CFTC) for a week ended December 31.

 

The USD net short positions increased to $9 bln in the week ended Dec. 31 from a net short position of $6.49 bln the previous week.

 

It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.

 

 

 

 

 

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Comment here: http://www.fbs.com/analytics/2012-10-08/19460-cftc-trader-positioning-data

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USD: estimating NFP results

 

 

 

US Non-Farm Payrolls increased by 155K in December (forecast: 150K; previous: 161K). There were minor upward revisions to the readings of the prior 2 months. The unemployment rate rose from 7.7% to 7.8%.

 

The fact that the Fed members are starting to consider ending QE3 in 2013 may be a big driver for USD. Investors will likely be paying more and more attention to US economic releases. If American fundamentals keep improving, the possibility of an end to QE may be taken more seriously. The trade will likely to be quite volatile.

 

Pimco: US jobs report is “solid, but not great”.

 

Capital Economics: The overall picture is that the labor market remains lackluster. If this state of affairs continues throughout most of this year, as we expect, then it is hard to see the Fed dialing back or stopping its quantitative-easing purchases as some officials currently envisage.

 

 

Photo: THINKSTOCK

 

 

 

 

 

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Jan. 8: Asian session

 

 

 

USD/JPY retreated from the 2-1/2-year highs reached on Friday (88.41) to the levels in the 87.50 rea. Yen gained on speculation recent declines were excessive.

 

AUD/USD slid after data showed the nation’s trade deficit widened to A$2.64 billion, the most since 2008. Aussie’s capped by $1.0500.

 

EUR/USD is trading up for a third day in a row. The pair rebounded to $1.3130 after having tested the levels below $1.3000 last Friday. Euro found support as the Japanese Finance Minister Taro Aso said Japan will buy bonds issued by the euro zone’s ESM bailout fund. Today watch the German and French trade balance data (07:00 and 07:45 GMT respectively), euro zone’s November retail sales and unemployment rate (10:00 GMT) and German factory orders (11:00 GMT).

 

EUR/JPY is rather steady today having bounced from earlier lows after Japanese Finance Minister Taro Aso said Japan will buy bonds issued by the euro zone's ESM bailout fund.

 

GBP/USD is consolidating around $1.6110. USD/CAD remains in the same 0.9840/85 range. Today the pair rose to 0.9870. Yesterday Canada published a more positive than expected Ivey PMI. USD/CHF was almost unchanged in Asia (0.9210).

 

 

 

 

 

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USD/CHF: Commerzbank, FBS

 

 

 

USD/CHF has reached resistance line of 6-month downtrend so far. The pair dipped below 0.9100 for several times, but didn’t close below there. The recent minor new low of 0.9083 francs was not confirmed by the daily or weekly RSI.

 

Technical analysts at Commerzbank suspect that the market is attempting to base – this idea will be confirmed if US dollar closes above resistance of 0.9280/0.9300. If it happens, initial target on the upside will be situated at 0.9430 (200-day MA). Support is at 0.9215/0.9190 and at 0.9090 (recent lows, 100-week MA).

 

We’d like to add that the pair’s still within the weekly Ichimoku Cloud which makes it vulnerable for a potential decline to its bottom (at least around 0.8840), so the bulls will need great effort to break the downtrend.

 

Chart. Daily USD/CHF

 

 

 

 

 

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Comment here: http://www.fbs.com/analytics/2013-01-08/20863-usdchf-commerzbank-fbs

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