Forex trading system

Forex day trading system

Into the NY close watching for 1.3628 support then 1.3586 for a sell off support if we move to 1.3740 on news driven data.  PIIGS are getting hit.  London is closing soon so Euro might stop slide on volume drop off.

Yesterday’s trading took a dramatic turn late in the European session as the weight of sovereign debt concerns (primarily the possibility that Portugal may pose a greater threat to Eurozone stability than Greece) coupled with higher than expected US claims data knocking the prospects for today’s non-farm payrolls led to a spectacular bout of risk aversion and positions unwinds. Initial claims came in at 480k (vs. 460k expected) and there were slight upward revisions to last week’s data (from 470k to 472k). Continuing claims were also higher (at 4602k vs. 4580k expected) which has negated the positive sentiment from Wednesday’s better that expected ADP employment report.

Not long after the release of the US claims figures, EURJPY was steadily trading around 125.70 levels, but as the momentum of negative sentiment gained (stocks lower, yields on European debt jumping) the pair tumbled to breach 125.00 support and quickly plunged through 124.40 interim support before an outright collapse to 121.58 – a level not seen since Feb 2009. In unison, EURUSD was dragged down through the critical 1.3750 support level, a development which now opens up a look at 1.3450 below.

The moves were echoed by commodity markets as oil witnessed its biggest one day drop since July last year, touching intraday lows of $72.42 before closing down over 5%. Gold also breached major $1074 support and now eyes a move to next technical levels below at $1035 and $985.

The Asian open resulted in another immediate slump for EURUSD down to lows of 1.3674, but more significant was the plunge in EURCHF down through 1.4636 prior lows to touch 1.4559 levels. The real fireworks occurred a couple of hours later as the SNB stepped in to the market to sell CHF with ferocity; sending the pair rocketing to highs of 1.4855, and pushing USDCHF up to highs of 1.0796. At the time of writing, Asian indices are down around 3% on the day, and it is likely that risk aversion is likely to dominate the day’s trading ahead of non-farm payrolls. Reuters consensus is looking for a +5k reading this month; and it will be critical for investor sentiment that the US employment change is positive if belief in the global recovery is to stay on the rails.

€

The euro depreciated sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3725 level and was capped around the $1.3900 figure.  Several factors contributed to common currency’s weakness and the dollar’s strength.  First, there is growing concern that eurozone debt will continue to weaken.  Credit default swaps in the so-called “PIIGS” countries – Portugal, Ireland, Italy, Greece, and Spain – blew out 15 – 40 pips further today.  Second, the European Central Bank kept its benchmark interest rate at 1.0%, as expected.  ECB President Trichet said the ECB is “confident the Greek government will take all the decisions that will permit” Greece to reduce its budget deficit, including tax rises, public-sector wage freezes, and pension reform.  Third, dealers are nervous ahead of tomorrow’s U.S. January non-farm payrolls report amid reports there will be a sizable downward revision to previous calculations.  Fourth, G7 officials are convening in northern Canada from tomorrow and it is not known if officials will address the ballooning deficits in many countries or exchange rate misalignments.  Fifth, New York State Attorney General Cuomo announced lawsuits against Bank of America and former CEO Ken Lewis regarding its acquisition of Merrill Lynch.  Sixth, there have been some notable credit downgrades including one impacting Warren Buffett and warnings about the U.S.’s credit outlook.  Data released in the eurozone today saw German factory orders decrease 0.2% m/m and climb 8.4% y/y.  In U.S. news, data released today saw Q4 non-farm productivity up 6.2%, down from a revised 7.2%, while Q4 unit labour costs came off 4.4%, down from a revised -1.5%.  Additionally, weekly initial jobless claims worsened to 480,000 from a revised 472,000 and continuing jobless claims increased to 4.602 million from a revised 4.600 million.  Also, December factory orders printed at 1.0%, unchanged from the revised November print.  In addition to tomorrow’s non-farm payrolls data, December consumer credit data will be released.  Euro bids are cited around the US$ 1.3530 level.

¥/ CNY

The yen appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.55 level and was capped around the ¥91.05 level.  The yen moved sharply higher across the board as traders shunned risk following a major sell-off in international equities markets, gold, crude oil, and other commodities.  Bank of Japan Governor Shirakawa will attend the Group of Seven meeting from tomorrow in northern Canada and will likely team up with finance minister Kan to express Japan’s dissatisfaction with China’s yuan currency policy.  BoJ Policy Board member Nakamura today called on the government to improve the country’s fiscal health and said it would be “disastrous” if interest rates move higher on debt woes.  Furthermore, Nakamura reported the downward pressure on prices in Japan will continue.  Data released in Japan yesterday saw January PMI services decline to 54.5 from 56.8 in December.  The Nikkei 225 stock index lost 0.46% to close at ¥10,355.98.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥121.55 level and was capped around the ¥126.45 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥139.35 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.95 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8268 in the over-the-counter market, up from CNY 6.8266. Beijing reacted coolly today to pressure from the Obama administration regarding its yuan currency, saying “it is China’s own business.” Li also said there “will not be any sudden or major yen appreciation.”  It was reported that new Chinese loans last month exceeded CNY 1.5 trillion.

₤

The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5730 level and was capped around the $1.5920 level.  As expected, Bank of England’s Monetary Policy Committee voted to keep its benchmark Bank Rate unchanged at 0.50% and decided to pause its ₤200 billion asset purchase program for the first time since March 2009.  BoE kept the door open to enact more purchases if need be in the future.  Dealers are increasingly concerned about the growing level of U.K. deficits and debt.  Data released in the U.K. overnight saw Halifax house prices up 0.6% m/m and 3.6% y/y.  Cable bids are cited around the US$ 1.5720 level.  The euro moved lower vis-à-vis the British pound as the single currency tested offers around the ₤0.8710 level and was capped around the ₤0.8755 level.

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Thursday, 4 February 2010

all times GMT   (last release in parentheses)

0030   Australia        December retail sales (1.40% m/m)

0030   Australia        December building approvals (5.9% m/m)

0030   Australia        December building approvals (33.3% y/y)

0030   Australia        Reserve Bank of Australia quarterly monetary policy statement

0045   Eurozone      European Central Bank interest rate decision

0130   Japan             Bank of Japan Policy Board member Nakamura speaks

0715   CH                  December trade balance (CHF 2.14 billion)

1100   Germany        December factory orders (0.2% m/m)

1100   Germany        December factory orders (1.8% y/y)

1200   UK                  Bank of England interest rate decision

1200   UK                  Bank of England asset purchase target

1330   Canada                      December  building permits (-4.6% m/m)

1330   US                  Q4 non-farm productivity (8.1%)

1330   US                  Q4 unit labour costs (-2.5%)

1330   US                  Weekly initial jobless claims

1330   US                  Continuing  jobless claims

1500   US                  December factory orders (1.10%)

1500   Canada                      January Ivey purchasing managers index (49.4)

2230   Australia        January performance of construction index (49.3)

Friday, 5 February 2010

all times GMT

(last release in parentheses)

N/A     UK                  January Halifax house prices (1.0% m/m)

N/A     UK                  January Halifax house prices

0500   Japan             December leading index

0500   Japan             December coincident index

0745   France                       December trade balance

0900   Eurozone      Consumer price inflation basket adjustments

0930   UK                  January producer price index, input (0.1% m/m)

0930   UK                  January producer price index, input (6.9% y/y)

0930   UK                  January producer price index, output (0.5% m/m)

0930   UK                  January producer price index, output (3.5% y/y)

0930   UK                  January PPI, core (0.7% m/m)

0930   UK                  January PPI, core (2.6% y/y)

1000   Italy                 January consumer price inflation

1000   Germany        December industrial production (0.7% m/m)

1000   Germany        December industrial production (-8.0% y/y)

1200   Canada                      January employment, net change (-2,600)

1200   Canada                      January unemployment rate (8.5%)

1330   US                  January non-farm payrolls, net change (-85,000)

1330   US                  January unemployment rate (10.0%)

1330   US                  January average hourly earnings (0.2% m/m)

1330   US                  January average hourly earnings (2.2% y/y)

1700   Canada                      Group of Seven officials convene

2000   US                  December consumer credit (-US$ 17.5 billion)

2215   US                  Federal Reserve Bank of St. Louis President Bullard speaks

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Forex day trading course EURUSD

FX markets were choppy in the Asian session but little changed, as traders await a slew of economic data and events.The NZD/USD was range-bound between 0.710-35 range for the early part of the session, before risk was sold off as concerns over Chinese banks and worries over European Commission assessment of Greece’s deficit-cutting plan spread. Markets become temporarily risk averse, as news that Fitch Rating warned that banks in China faced the greatest “bubble risk” of any Asian country. “The agency views ‘bubble risk’ as greatest for Chinese banks given their 32 percent loan growth in 2009; this looks likely to be followed by a further 20 percent in 2010,” Fitch said in a statement. The USDJPY had climbed to 90.58, but fell swiftly to 90.30. A day after the RBA shock the market by holding rates at 3.75%, Australian trade deficit widened to A$2.25bn vs. -A$2.5bn exp in December from A$1.7bn in November, illustrating a strong recovery in both imports and exports. We still believe the RBA will hike in March and AUD should be well supported near term.

The highlight of the day should be the EC assessment of Greece’s deficit-cutting plan, and then European Union Economy and Monetary Affairs Commissioner Joaquin Almunia will hold a press conference. We doubt that EC officials will want to fan any fears and cause Greek spread to widen further. However, a large portion of the problem is credibility which is hard to regain with rhetoric and empty strategies. On the straight economic data front, Final PMI surveys in the Eurozone, Germany and France are scheduled and no revisions to the earlier flash estimates are expected. Eurozone retail sales is expected to print a monthly gain of 0.4% m/m, which should be mildly positive for the EUR.

The Norges Bank is expected to keep rates on hold at 1.75% at this meeting, after raising rates at the previous two consecutive meetings (the last on 16 Dec). After the surprise hike of 25bps the last time around that caught many analysts wrong-footed, there is certainly a possibility that the consensus may have underestimated the Norwegian economy once more; recent retail sales figures have been strong at 1.1% MoM, and PMI data for January at 50.1 was also indicative of further improvement in the economy. Nevertheless, we would align ourselves with the majority in believing rates will be kept on hold this month; consistent with the prediction offered by the Norges Bank Deputy Governor in December that he expected rates to be at 1.75% in March, and also compatible with the rationale that the Executive Board will want to see the contents of the next Monetary Policy Report published on 24 March before deciding on further tightening.

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Forex trading EURUSD Euro strengthening

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The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3935 level and was supported around the $1.3850 level.  The common currency followed U.S. equities markets higher as increased risk demand jumped on speculation the global economic recovery will continue.  Dealers also lifted the common currency as it was reported that EMU-16 PMI improved to 52.4 in January from 51.6 in December, following Germany’s lead with its PMI improvement to 53.7.  A draft copy of the upcoming Group of Seven communiqué reports “Market volatility, in particular in the foreign exchange market, could destabilize the nascent global recovery by placing growth on an unbalanced path and trigger unwelcome protectionist reactions.”  G7 finance ministers will convene in northern Canada in early February and two hot topics are expected to be exit strategies from the provision of global stimulus and China’s currency.  ECB President Trichet this weekend said policymakers “will do whatever is necessary to give all our citizens…price stability.”  Trichet also noted U.S. policymakers have reassured him that they favour a strong U.S. dollar.  In U.S. news, President Obama released details of his latest US$ 3.8 trillion budget today and it calls for a broad US$ 1.9 trillion tax increase by returning to pre-2001 ordinary income tax rates for higher earners.  A US$ 1.5 trillion deficit is expected to materialize by the end of the next fiscal year and the budget also includes a US$ 100 billion job stimulus package that has not yet been passed by Congress.  The Federal Reserve today reported that fewer banks tightened lending standards in Q4 2009 as the economy continued to recover.  Data released in the U.S. today saw December personal income print at +0.4%, down from the revised +0.5% November reading, while personal spending fell to +0.2% from a revised +0.7%.  Also, the December PCE deflator came in at +2.1% y/y while the core PCE reading was up 0.1% m/m.  Additionally, the January headline ISM manufacturing index improved to 58.4 from the prior reading of 55.9, the sixth consecutive monthly increase, while the ISM prices paid sub-index rallied to 70.0 from the previous reading of 61.5.  Moreover, December construction spending was off 1.2% m/m.  Traders await the release of December pending home sales data tomorrow.  Euro bids are cited around the US$ 1.3740 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥90.95 level and was supported around the ¥89.85 level.  Bank of Japan Chief Economist Momma reported “the risk that the Japanese economy will fall off from a cliff is small, but there is still a long way to go.  Even if the global economy continues to recover, the spread of that to capital spending and the labour market will be limited.”  Momma also indicated capital spending will not indicate signs of a rebound until the fiscal year beginning in April 2011 and said the labour market will also remain weak.  Core consumer prices data that were recently released confirmed a 1.2% decline in December, the latest evidence of entrenched deflationary pressures. Momma predicted the pace of the decline in CPI will be around 1% for some time.  Many BoJ-watchers believe the central bank will introduce new emergency liquidity provision programs in Q1 or early Q2, possibly including an increase in its purchase of Japanese government bonds.  The markets continue to speculate that the downward trajectory of Japanese interest rates will continue with March 2010 Euroyen futures contracts indicating a rate of 0.420%, compared with 0.360% for September 2010.  The Nikkei 225 stock index climbed 0.07% to close at ¥10,205.02.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥126.50 level and was supported around the ¥124.65 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥144.80 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.90 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8269.  People’s Bank of China adviser Fan Gang reported China’s “real worry” remains asset bubbles that could emerge as China’s economy emerges from a crisis period into a “boom time.”  Fan also noted moves by PBoC to reduce liquidity last month were “timely and necessary.”  There is speculation that PBoC may hike rates when consumer price inflation rises above 2.5%.  Data released in China today saw January PMI recede to 55.8 from 56.6 in December.

₤

The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5850 level and was capped around the $1.5975 level.  Many data were released in the U.K. today. First, January manufacturing PMI improved to 56.7 from 54.6, a fifteen-year high.  Second, December mortgage approvals decreased to 59,020.  Third, net lending to individuals rose by ₤1.2 billion in December.  Fourth, Hometrack January house prices were up +0.1%.  Bank of England is expected to keep interest rate policy unchanged this week.  There is some speculation, however, that Bank of England may pause its ₤200 billion bond purchase plan but maintain the option to extend it further.  Cable bids are cited around the US$ 1.5720 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8765 level and was supported around the ₤0.8680 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0565 level and was capped around the CHF 1.0625 level.   The media reported Swiss National Bank is unlikely to abandon its policy to keep a lid on the Swiss franc even though the domestic economy continues to improve.  Data released in Switzerland today saw January PMI improve to 56.0 from 53.7 in December.  Data released in Switzerland last week saw the December UBS consumption indicator fall to 1.2 from 1.26 in November.  Swiss National Bank President Hildebrand recently reported he is “extremely interested” in the Obama administration’s bank proposals.  The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.4735 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.6785 level.

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Forex trading jan 29 monthly retracement

Asian stocks are lower today, weighed by tech stocks and lingering fears about the state of Greece and Portugal’s economic problems. The USD has strengthened on these fears, and also gleaned some support from the reassurance than Federal Reserve Chairman Bernanke was confirmed for a second term – eliminating the uncertainty of an interim period at Fed with only temporary leadership.

Overnight, Japan’s core CPI fell 1.3% YoY in December; smaller than the drop in November – but the narrowest measure of inflation (so-called core-core CPI which strips out the volatile food and energy components) had its biggest drop since records began in 1970. This is likely to put further pressure on policymakers to do more to try and support the economy and prevent another slump ahead of summer elections. The reading may also threaten the credibility of the BoJ who stated in their policy meeting on Tuesday that deflation was likely to be milder than anticipated; and will strengthen their conviction in possible FX intervention should current JPY strength persist. USDJPY has climbed back above 90.00 and is now trading around the highs at 90.25.

GBPUSD is still trading choppily after yesterday’s negative statement from ratings agency S&P; who have stopped classifying the UK among the most stable, low-risk banking systems. So far, GBPUSD has found a near-term base at 1.6111, but with market sentiment increasingly swayed by the prospect of ratings downgrades, we feel that GBP will be vulnerable along with the EUR.

Today, Norway Retail Sales, Eurozone Unemployment and CPI, plus Swiss KoF leading indicators will dominate the focus in the morning session – but the major events for FX markets will come this afternoon. US advance Q4 GDP is expected to show the economy expanded at an annualized rate of 4.6% QoQ, much larger than the 2.2% growth seen in Q3. Chicago PMI is forecast to moderate to 57.4 from last month’s 58.7 reading (though if realized, it would still be a strong number in absolute terms), and U.Mich Consumer Confidence is due to tick slightly higher to 73.0. Also expected will be Canadian GDP.

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27 January 2010

Wednesday  London desk closing.

Fundamental Outlook at 1500 GMT (EDT + 0500)

€  Forex day trading Euro

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4020 level and was capped around the $1.4095 level.  The common currency moved lower following talk that Greece was looking to China to purchase as much as €25 billion in debt, a couple of days after Greece raised €8 billion in a sovereign bond offering to refinance its mountain of fiscal debt.  Credit market spreads reacted negatively to the Greece news – later denied by Beijing and Athens – and this story was negative for the euro because it could render it more difficult for Greece to return to the capital markets during a year when it is estimated the country will need to raise upwards of €50 billion.  Additionally, any negative perception about eurozone credit spreads could make it difficult for Portugal, Ireland, and other countries to raise capital this year if necessary.  European Union’s Juncker said there is “no risk” of a sovereign bankruptcy in Greece.  Data released in the eurozone today saw the French December jobless rate off 18,700 at 2.61 million while Germnan consumer prices were off more-than-expected in some German states this month.  ECB member Weber said Greece and other governments must address large budget deficits “head-on” and said the ECB will only “gradually” phase our its special liquidity provision programs this year.  In U.S. news, traders will pay very close attention to the Federal Reserve’s interest rate decision today.  The Fed is expected to keep interest rates unchanged but there is intense chatter the Fed may adopt a new short-term benchmark rate on banks’ interest reserves instead of relying on its federal funds target rate, a rate the Fed has found it difficult to control.  Dealers are also paying close attention to any news on the Senate vote regarding Bernanke’s second term at the Fed.  Data released in the U.S. today saw MBA mortgage applications reverse and decline 10.9% while December new home sales came in lower-than-expected at 342,000, down 7.6% from a revised 370,000.  Euro bids are cited around the US$ 1.3885 level.

¥/ CNY  Forex day trading Yen Yuan

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥89.15 level and was capped around the ¥89.70 level.  Traders moved back into lower-yielding currencies today on some weakness in global equity markets and other factors.  News that North Korea and South Korea exchanged fire off their coast led to some reduction in long yield trades overnight and this led to a stronger yen.  Bank of Japan kept its monthly economic assessment unchanged and noted the economy is “picking up,” adding it will continue to improve at a moderate pace.  The central bank also said the decline in consumer prices is moderating and housing investment has “stopped falling.” As expected, Bank of Japan’s Policy Board yesterday kept its overnight call rate unchanged at 0.1% and kept its economic assessment intact.  The central bank upwardly revised its deflation forecast for the fiscal year that begins in April and is now eyeing a decline of 0.5%, better than the 0.8% decline in prices it predicted in October.  The yen yesterday shook off a report from Standard & Poors that it placed a negative outlook on Japan’s ‘AA’ sovereign long-term credit rating from stable and noting it may issue a downgrade to AA-.  S&P expressed concern with Japan’s falling economic policy flexibility, escalating debt levels, and growing deflationary pressures.  Finance minister Kan reacted by saying “”I am aware that it is extremely important to maintain fiscal discipline and move ahead with fiscal reforms to retain the trust of international markets.”  The Lower House of Parliament enacted a ¥7.2 trillion supplementary budget on Monday to bolster the weak economy and the measure will likely be voted on by the Upper House tomorrow.  Kan also said he “still wants more” from the BoJ to support economic growth.  The Nikkei 225 stock index lost 0.71% to close at ¥10,252.08.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥125.20 level and was capped around the ¥126.35 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥145.55 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.05 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8269 in the over-the-counter market, down from CNY 6.8268.  Deputy People’s Bank of China Governor Zhu reported “A stable yuan is also good for both China and the world.”  Data released in China last week saw inflation accelerate 1.9% in December with gross domestic product climbing to 10.7% and this renders it likely People’s Bank of China will tighten monetary policy this year.  PBoC this week reported it asked lenders to avoid excessive credit concentration and manage the pace of loan growth.  Bank of China and Construction Bank of China have started restricting new loans.  People’s Bank of China is said to have lifted some Chinese banks – possibly including China Citic Corp and Industrial and Commercial Bank of China – to lift their reserve ratios by an additional 50bps today, following a decision on 12 January for all banks to lift by 50bps to 16.00%.

₤  Forex day trading GBP

The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6245 level and was supported around the $1.6105 level.  Sterling shook off weaker-than-expected CBI January distributive trades data that saw the retail trades survey print at -8, down from +13 in December.  Sterling picked up ground on comments from Bank of England Monetary Policy Committee member Sentance who said it will be difficult to keep inflation on target given sterling’s depreciation.  He also said data suggests the U.K. economy expanded more in Q4 than reported at +0.1%.  Cable bids are cited around the US$ 1.6030 level.  The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8655 level and was capped around the ₤0.8730 level.

CHF  Forex day trading Swiss Franc

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0505 level and was supported around the CHF 1.0445 level.  Data released in Switzerland yesterday saw the December UBS consumption indicator fall to 1.2 from 1.26 in November.  Swiss National Bank President Hildebrand recently reported he is “extremely interested” in the Obama administration’s bank proposals.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4710 level while the British pound moved higher vis-à-vis the Swiss franc and tested bids around the CHF 1.7005 level.

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Dealing desk insight

The yen and the dollar dropped against higher-yielding currencies as stocks rose after the Federal Reserve said in its statement that the U.S. economy is in a recovery. The yen weakened most against the New Zealand and Australian dollars while the Dollar Index broke a 2 day advance after yesterday’s Fed assessment and President Barack Obama’s proposal on tax incentives to boost the economy. The yen weakened to 90.34 per dollar as of 8:12 a.m. in London from 90 in New York yesterday, when it appreciated to 89.14, the strongest level since Dec. 18. Japan’s currency was at 126.94 per euro from 126.25.

The euro was little changed against the dollar after dropping below $1.40 for a second day as a former adviser to China’s central bank said the nation should not buy Greek debt. The dollar traded at $1.4046 per euro from $1.4015, after strengthening to $1.3938, its highest since July 14th. The Fed’s Open Market Committee (FOMC) yesterday upgraded its economic outlook and reaffirmed it will end a $1.25 trillion program to buy mortgage-backed securities. Policy makers reiterated that rates will stay low for an “extended period” and held the target rate at zero to 0.25 percent. The Fed’s Kansas City President Thomas Hoenig said yesterday it is time to change the promise to keep interest rates low.

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The dollar weakened for a second day against the yen on concern the Federal Reserve will maintain its pledge to keep interest rates near zero for an “extended period” when it ends a two-day policy meeting today. Japan’s currency advanced to 89.25 per dollar from 89.65, after reaching 89.14, the strongest since Dec. 18. The euro was little changed at $1.4059 from $1.4072.

The Fed should keep its key overnight rate in a range of between zero and 0.25 percent today. Futures in Chicago show traders have been cutting bets the Fed will raise its target rate by June. The odds for an increase of at least 25 basis points were 21 percent, down from 26 percent odds a week ago.

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Yesterday’s US data was encouraging on the whole; the Case Shiller home price index showed a modest gain (albeit lower than forecasts), consumer confidence rose significantly to 55.9 against expectations for a 53.5 reading, and the Richmond Fed clawed its way up to -2 from last month’s -4 level. Fed policy makers are extremely unlikely to make any change to the current level of Fed Funds tonight, but clearly it will be important to see whether they signal a future policy path that is misaligned with current market pricing. Today we will also get Barack Obama’s scheduled State of the Union address; likely to garner increased attention given the profound impact on financial markets he had last week when announcing plans for reforming the banking system.

In the morning session we will get the latest German CPI figures for January; expected to rise once again to +1.0% YoY (from 0.9% last month). It has been suggested that markets are starting to speculate that the ECB may begin monetary tightening before the Fed, and any economic data to support this scenario is likely to be supportive of EURUSD going forward. The only other release of the morning will be UK CBI distributive trades data; but otherwise expect flows to be light.

Forex trading london open to NY open Jan 27 is a post from: Forex trading - Live trade room Costa Rica Forex Currencies Futures Gold and Oil

In Japan, the BoJ voted unanimously to keep the policy rate unchanged at 0.1%. The meeting went widely as expected with no new policies or adjustments to existing schemes/operations being announced. Core CPI forecast was revised higher for fiscal 2010 to -0.5% y/y from -0.8% y/y previously, which was followed up by FM Kan stating that Japan could be clearly out of a deflationary environment in 2-3 years with the BoJ help. While he didn’t elaborate on what monetary policy tools the BoJ has to achieve this feat, they could include increasing the central banks monthly purchases of JGB. Later in the day the S&P inexpertly lowered Japan’s sovereign rating outlook from ‘stable‘ to ‘negative’. Japan’s rating remains at AA, fiscal outlook is unlikely to improve as the new government spending plans restrict any positive adjustment to surge debt and we would expect other rating agencies to also lower in the near term.

UK GDP just sqeeked out recession with today q/q print of 0.1% vs. 0.4% exp , -0.2% prior read (y/y -3.2% vs. -3.0% exp). Perhaps Chancellor Darling comments on today’s GDP data that he remains ‘cautious’ was more than just easing the markets optimism (however, historically UK GDP are revised upwards). The economic data was very close to the bone and can easily be revised down. The disappointing report causedthe GBPUSD to collapse to 1.6150 from 1.6230.

Forex investing – Jan 26 live trading room news is a post from: Forex trading - Live trade room Costa Rica Forex Currencies Futures Gold and Oil