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European Session: BoJ Holds Rates Steady

Fri, Nov 20 2009, 11:06 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Market Brief

Risk appetite stayed weak in the Asian session, after Wall Street closed lower but, overall, most of the trading in currencies and commodities was well in their ranges. The EURUSD traded between 1.4880 and 1.4940, while spot Gold traded between $1140 and $1147. With no first tier economic releases scheduled today, we don't expect any one way trade of break out of the monthly ranges. But ranges can also be very profitable, especially the EURCHF. The USDJPY remains heavy below 90.61 high, with the break of 88.74 low opening the 88.01 key support.

As was universally expected, the BoJ held its uncollateralized overnight cash rate at 0.1%. The decision was unanimous and the BoJ statement stated that the domestic economy was improving but would continue with its "extremely accommodative" monetary policy. Finance Minister Fujii warned about the dangers of rising bond yields, which could counteract the ultra loose monetary policy and small business improvement initiatives.

Today, China's Central Bank Governor, Zhou Xiao Chuan, said “It’s like watching a tournament,...We just watch the game. Regardless who wins or loses, the issue of whether the winner or loser benefits the spectator doesn’t arise." In short, don't expect pressure from the West to have any influence on China's exchange rate mechanism.

There is little economic data of note today. More significantly, speakers in Frankfurt today include ECB President Trichet and Bundesbank President Weber. Outside the euro area, SNB President Roth will speak in Fribourg.

Currency Tech

AUDUSD
R 2: 0.9405
R 1: 0.9335
CURRENT: 0.9185
S 1: 0.9130
S 2: 0.9095

USDCAD
R 2: 1.0780
R 1: 1.0689
CURRENT: 1.0647
S 1: 1.0545
S 2: 1.0450

EURJPY
R 2: 134.45
R 1: 134.02
CURRENT: 132.46
S 1: 131.75
S 2: 131.00

USDMXN
R 2: 13.135
R 1: 13.088
CURRENT: 13.044
S 1: 12.999
S 2: 12.945

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

Published on  Fri, Nov 20 2009, 11:06 GMT

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