Dukascopy Afternoon Forex Overview – Oct 21 2009

Previous session overview

The USD is mixed this morning to start New York after pressing slightly higher to start Asia; lower commodities pricing and weaker equities weighed on the risk trade putting the majors on the defense early.

The pound is substantially stronger against the dollar Wednesday morning after bullish minutes from the Bank of England, while the euro is flat after relinquishing earlier gains as stock markets retreat.

The pound hit a high of USD1.6592 overnight, its highest level since mid-September, after the minutes from the Bank of England’s last meeting suggested it may not extend its GBP175 billion asset-purchase program next month, as had been widely expected.

The euro slipped as low as CHF1.5097, close to the levels that could trigger intervention from the Swiss National Bank, which has moved twice earlier this year to halt the franc’s advance.

EURO failed to follow GBP higher; low prints at USD1.4887 fond technical buyers with rumors of an Asian sovereign covering short from the highs yesterday. High prints at USD1.4967 failed to find stops said to be in the USD1.4970 area from early shorts.

Market expectation

EURUSD unsubstantiated chatter linking euro demand to a hedge fund that has been in the news of late regarding insider trading concerns. Talk in FX and elsewhere suspects that account may be liquidating positions, though this remains to be verified. EURUSD high prints now at USD1.4995 as pair tops Tuesday high and as barrier at USD1.5000 looks vulnerable, ahead of significant expiry. Stops placed atop USD1.5000 although offers mentioned earlier USD1.5005/10.

Pound trades to USD1.6628, just above earlier mentioned near term tech target at USD1.6627 (1.618% swing USD1.6592/35). Offers noted to USD1.6630, a break to open a move on toward USD1.6650/60.

EURJPY feeling the effect of a firmer euro-dollar as option plays in that pair push the rate above USD1.5000. High in the cross so far confirmed at JPY136.46, topping out pretty much in line with earlier noted Fibonacci resistance.

There are no significant economic releases scheduled for Wednesday in North America, suggesting overall risk appetite will continue to be the key driver for currencies.

Movers & Shakers:

USD/CAD +2.13%
EUR/CAD +1.77%
GBP/JPY +1.47%
GBP/CHF +0.84%
USD/JPY +0.84%
GBP/USD +0.63%
CHF/JPY +0.61%
EUR/JPY +0.49%
USD/NOK +0.44%
AUD/JPY +0.25%
EUR/CHF -0.13%
NZD/USD -0.21%
EUR/USD -0.35%
AUD/NZD -0.36%
USD/SEK -0.42%
AUD/USD -0.58%
EUR/GBP -0.96%
CAD/JPY -1.28%

Important levels:

Support Resistance
EUR/USD
1.4877 1.4990
1.4823 1.5049
1.4764 1.5103
GBP/USD
1.6309 1.6470
1.6239 1.6561
1.6148 1.6631
USD/CHF
1.0083 1.0168
1.0041 1.0211
0.9998 1.0253
USD/JPY
90.235 91.225
89.665 91.645
89.245 92.215

Source: Dukascopy