Market Brief
FX markets were choppy in the Asian session, with risk appetite see-sawing. The day started with a risk off tone, as Wall Street plunged due to speculation that FOMC Chairman Bernanke could indicate tightening when he testifies in the House on unwinding Fed liquidity programs this week. The USDJPY fell to 89.20, but failed to pierce daily cloud support at 89.02. The AUDUSD opened at 0.8640 and slipped 0.8616, as China press denied the much celebrated Australia-China coal deal reported yesterday. However, as Asia went to lunch it was reported that European Central Bank President Trichet is prematurely leaving a meeting of central bankers in Sydney to attend a European Council meeting scheduled for Thursday. European Council is holding an informal meeting of officials and Greek members are expecting to come under some heavy fire. The EURUSD traded up to 1.3742 on the first news that officials are recognizing the severity of the sovereign credit situation. Given the markets positive reaction and substantial EUR shorts, which have been building up as of late, we believe the EURUSD is ripe for a short squeeze. Also, the press has been flooding the airwaves with the collapse of the EUR theories and we believe that the retail investor might have bought too heavily into this strategy.
The calendar is relatively empty, with US Wholesale Inventories leading the way. We think the USD will remain supported until we see some rational solution to Eurozone sovereign debt worries. However, we are expecting, in the ultra near term, the USD to unwind for its massively overbought levels.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9,932.90 | -0.19 |
| Hang Seng Index | 19,711.76 | 0.82 |
| Shanghai Index | 2,940.41 | 0.17 |
| FTSE futures | 5,056.00 | 0.6 |
| DAX futures | 5,488.50 | 0.57 |
| SMI Futures | 6,286.00 | 1.71 |
| S&P future | 1,061.30 | 0.51 |
| World Markets | Current Level | % Change |
| Gold | 1,070.45 | 0.71 |
| Silver | 15.24 | 1.6 |
| VIX | 26.51 | 1.53 |
| Crude wti | 72.02 | 0.18 |
| USD Index | 80.13 | -0.21 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Trade balance, £ bn Dec | -6.7 | -6.8 | GBP / 09.30 |
| Wholesale inventories, % m/m Dec | 0.5 | 1.5 | USD / 15.00 |
| CPI inflation (% m/m) Jan | 1.01 | 0.41 | MXN / 16.00 |
| Core machinery orders, % m/m Dec | 8 | -11.3 | JPY / 23.50 |
Currency Tech
AUDUSD
R 2: 0.8755
R 1: 0.8725
CURRENT: 1.3721
S 1: 0.8580
S 2: 0.8545
USDCAD
R 2: 1.0870
R 1: 1.0780
CURRENT: 1.0694
S 1: 1.0645
S 2: 1.0590
EURJPY
R 2: 123.30
R 1: 122.75
CURRENT: 122.90
S 1: 121.55
S 2: 120.70
USDMXN
R 2: 13.345
R 1: 13.255
CURRENT: 13.178
S 1: 13.100
S 2: 12.940
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
