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[شريف دعبس]

Australia, New Zealand Dollars Fall Versus Yen on Services Data

By David McIntyre

April 19 (Bloomberg) -- The Australian and New Zealand dollars dropped the most in three weeks against the yen after demand for services in Japan rose to a record and central bank Governor Toshihiko Fukui said consumer spending was solid.

Fukui's comments followed the government report and suggest he wants to raise interest rates, which would reduce Australia's 5.75 percentage point rate advantage and New Zealand's 7 point premium. Australia's dollar reached a decade high against the yen yesterday and New Zealand's currency touched the most in 17- years on optimism they were benefiting from so-called carry trades, where traders borrow and sell yen to invest in higher- yielding assets elsewhere.

``There was nothing new in Fukui's comments but the market is very touchy up at these levels,'' said Alex Sinton, a currency trader at ANZ National Bank Ltd. in Auckland. ``This is a correction and today's bottom hasn't been hit yet.''

The Australian dollar fell 0.4 percent to 98.86 yen as of 11:53 a.m. in Sydney from 99.23 yen late in Asia yesterday. It traded at 83.52 U.S. cents compared with 83.66 cents.

New Zealand's dollar dropped 0.5 percent against the yen, the biggest decline among the 16 most traded currencies. It traded at 88:06 yen from 88.54 yen yesterday. The currency was at 74.39 U.S. cents from 74.65.

The two currencies declined against the yen after the trade ministry said the tertiary index, a gauge of money spent on services such as retailing and telecommunications, rose a seasonally adjusted 1 percent. Economists expected a 0.5 percent drop, according to a Bloomberg News survey.

To contact the reporters on this story: David McIntyre in Sydney at [email protected]

Yen Climbs on Bank of Japan Rate Speculation, Asian Stock Drop

By Ron Harui and Kosuke Goto

April 19 (Bloomberg) -- The yen climbed on speculation the Bank of Japan will raise interest rates and as investors sought a haven from slumping Asian stocks.

The currency rose the most this month against the euro after a Japanese government report showed demand for services unexpectedly gained. It also advanced against the Australia and New Zealand dollars after a slide in Chinese stocks caused traders to pare investments in higher-yielding currencies funded in yen, as they did following an equity sell-off on Feb. 27.

China's stock slump ``may lead to risk aversion again, which caused the global downturn in stocks in February,'' said Takashi Miyachi, a senior currency dealer in Tokyo at Mizuho Corporate Bank Ltd. ``Investors are wary of the unwinding of yen carry trades.''

The yen rose to 117.98 at 8:16 a.m. in London after reaching 117.61, the strongest since April 3, compared with 118.68 in New York yesterday. It climbed to 160.25 per euro from 161.51 yesterday and a record low of 162.43 on April 16. Japan's currency may rise to 117.20 a dollar today, Miyachi said.

Chinese stocks declined on speculation the government would report faster first-quarter economic growth than expected, prompting the People's Bank of China to raise interest rates. The yen pared its advance as the statistics bureau said after the Shanghai stock market closed that the economy grew at 11.1 percent, higher than the median estimate in a Bloomberg News survey of 10.4 percent.

``The figures were within a predictable range,'' said Kenta Inoue, economist and currency analyst at Mitsubishi UFJ Securities in Tokyo. ``It was natural for the yen to lose gains after the report.''

China's CSI 300 Index fell 4.7 percent, the biggest drop since Feb. 27. The Japanese currency surged on that day to a three-month high against the dollar as a sell-off in global equities led investors to cut riskier investments.

Consumer Spending

The yen headed for the first three-day gain in six weeks as Japan's tertiary index, a gauge of money spent on services such as retailing and telecommunications, climbed 1 percent in February, the trade ministry said today in Tokyo. The median estimate in a Bloomberg News survey was for a 0.5 percent drop.

The yen has rebounded from a six-week low of 119.87 on April 16, when the government removed a reference to ``weakness in consumer spending'' from its economic evaluation. Bank of Japan Governor Toshihiko Fukui said in a speech today that the longest postwar economic expansion will probably be sustained.

Japan's currency also climbed from the weakest since 1990 against the New Zealand dollar and a decade-low versus Australia's before an inflation report on April 27 that will signal whether the Bank of Japan needs to raise its benchmark interest rate from 0.5 percent.

Bank of Japan

``There have been some rumors since yesterday the BOJ will raise rates even in May, especially among foreigners,'' said Takashi Miyachi, a senior currency dealer in Tokyo at Mizuho Corporate Bank Ltd. ``This is supporting the yen.''

The Bank of Japan's target rate for overnight lending between banks compares with benchmarks of 5.25 percent in the U.S. and U.K., 3.75 percent in countries that use the euro, 6.25 percent in Australia and a record 7.5 percent in New Zealand.

The Japanese government on March 30 said consumer prices fell for the first time in 10 months in February, prompting some traders last week to increase bets the yen will fall on prospects the central bank will keep rates on hold.

``The data may lead to a central-bank rate hike sooner than the market expects,'' said Nobuaki Tani, a senior currency dealer in Tokyo at Resona Bank Ltd. ``It's spurring buying of the yen,'' which may rise to 117.50 per dollar today, he said.

Figures from the Washington-based Commodity Futures Trading Commission show the difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 64,841 on Apr. 10, the highest since Feb. 27.

Entirely Justified

The euro traded near a record high against the dollar on speculation European Central Bank policy makers today will reiterate concern over faster inflation, signaling further interest-rate increases this year.

Council member Miguel Fernandez Ordonez yesterday said the ECB is ``still in an accommodative monetary situation'' and council member Guy Quaden this week said the central bank is ``likely'' to raise borrowing costs to contain inflation.

``We've got very clear fundamental reasons why we see strength in the euro,'' said Kathy Lien, chief currency strategist at DailyFX.com in New York. ``Definitely we'll see all-time highs hit in the euro-dollar over the next few days.''

ECB executive board member Jose Manuel Gonzalez-Paramo speaks at 10 a.m. in Monterrey, Mexico and executive board member Lorenzo Bini Smaghi gives a speech at 11:30 a.m. in Budapest. Interest-rate futures show traders boosted bets the ECB will raise rates to 4.25 percent from 3.75 percent currently.

The yield on the December futures contract was 4.32 percent yesterday, above 4.29 percent a week earlier. The contract settles to the three-month interbank offered rate for the euro, which has averaged about 16 basis points above the ECB's benchmark rate since 1999.

To contact the reporter on this story: Ron Harui in Singapore at [email protected] ; Kosuke Goto in Tokyo at at [email protected] .

[شريف دعبس]

نيوزلندى-دولار بيع

وذلك للاسباب التاليه:

1-دبل توب
2-ديفرجنزسلبى على الشهرى و الاسبوعى و اليومى
3- افراط فى الشراء على جميع المؤشرات (تشبع شراء)

الهدف ونقطه الدخول موضحه بالشارت
تحياتى للجميع
سليل عائله دعبس

دولار- فرنك راس وكتفين
الدخول بيع بكسر خط العنق
هدف اول الجدار السفلى للقناه الصاعده
هدف تانى مفتوح الى ان تتضح الصوره
تحياتى للجميع
سليل عائله دعبس

باوند-ين
بيع

نقطه الدخول و الهدف موضحه بالتشارت
الاسباب
1- وتد صاعد (الدخول بعدكسر الحد السفلى)
2-ديفرجنز سلبى (بيع) على الديلى و الا الاربع ساعات
3- تبعات شراء over bought

تحياتى للجميع
سليل عائله دعبس

رؤيتى للكيبل
من الشهرى الى الساعه
باوند-دولار
بيع من
2.0100-2.0110

الاسباب موضحه بالشارتات

1-تربل توب
2-ديفرجنزسلبى على كل الفريمات
3-اعاده اختبار ترند مكسور
4-تشبعات شراء
5- سعر مغرى من مستوى قوى

تجميع الفرص التى نوهنت عنها من اول ما فتحت الموضوع لافاده
وهذه التشارت ما وصل اليه تللك الفرص
وذللك للتعلم من السلبيات و لايجابيات
تحياتى للجميع
سليل عائله دعبس

[شريف دعبس]

JPY sold-off again

JPY main crosses are breaking back above tendlines they had borken this morning as a new wave of JPY selling crosses the board. The 'carry trade madness' in full force, it seems

Forex Mid-Day Technical Report

Yen Rebound Stalls but Further Rise Still Likely

Japanese Yen's rebound halts and retreats in early US session. But overall risk in yen crosses remains on the downside. Yen rose higher earlier today after GDP data from China confirmed to be higher than consensus at 11.1% with CPI rising 3.3%. Strong data prompted speculation of a rate hike from China which sent the stock markets lower. Yen was benefited as carry trade unwinds on risk aversion. The SNB also announced that it has raised its yen holding at the end of Q1 while dollar holding was reduced. Yen was also supported by speculations of rate hike in May after strong services data.

Though some recovery in yen crosses is seen in early US session, risk remains on the downside. GBP/USD has been retreating since making a new 26 years high yesterday while EUR/USD consolidates after making new two year high. Aussie and Kiwi were both pressured too. Further carry trade unwinding will likely put pressure in these majors and commodity pairs.

Data from US saw jobless claim at 339k, higher than expectation of 323k. Conference Board Leading Indicator rebounded by rising 0.1% in Mar after falling for two consecutive months in Jan and Feb. Philly Fed index will be featured next and is expected to rise from 0.2 to 2.0 in Apr.

Canadian dollar edges higher against dollar in early US session after CPI inflation came in slightly higher than consensus with core inflation staying above BoC's target of 2%. CPI increased 0.8% mom, 2.3% yoy comparing to expectation of 0.7% and 2.2% in Mar. Core inflation increased 0.3% mom, 2.3% yoy. Wholesale trade in Canadian rose 0.8% mom, better than expectation of 0.1%.

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EUR/USD

Daily Pivots: (S1) 1.3570; (P) 1.3593; (R1) 1.3629;

EUR/USD continues to engage in choppy trading in tight range below 1.3618 high today. As discussed before, with bearish divergence conditions in 4 hours MACD and RSI, we maintain that a short term top should be around the corner, if not formed yet. Touching of 1.3525 support will confirm this case and should bring further retreat towards 4 hours 55 EMA (now at 1.3509) or lower. But downside should be contained above 1.3406/10 support and bring rally resumption. Meanwhile, sustained trading above 1.3618 will indicate recent rally has resumed for next upside target of 1.3668 (04 high). However, break of 1.3406/10 will warn that the rise from 1.3253 has completed and put short term rising channel support (now at 1.3338) back into focus.

In the bigger picture, outlook remains unchanged. EUR/USD is still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) and medium term up trend from 1.1639 is still in progress. Such up trend is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483 has made a top at 1.3364 but subsequent correction has completed with three waves down to 1.2865 already. The current rise from 1.2865 should represent resumption of this whole up trend and further rise is still in favor to retest 1.3668 (04 high).

Having said that, on the upside, risk of medium term reversal will increase as EUR/USD approaches 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822 and focus will be then on reversal signals. On the downside, break of the lower support of the short term rising channel (now at 1.3338), will indicates that the rise from 1.2865 has completed. More importantly, this will be the first warning that the rise from 1.2483 has ended and thus the whole up trend from 1.1639 too. Focus will then be back to medium term rising channel (now at 1.2954).

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GBP/USD

Daily Pivots: (S1) 1.0020; (P) 2.0075; (R1) 2.0140;

Cable's treat from 2.0132 continues today. With 4 hours MACD staying below signal line, the fall from 2.0132 should still be in progress and further decline should be seen towards 1.9877 support. Break will put short term rising channel support (now at 1.9752) in focus. On the upside, above 2.0095 minor resistance will indicate correction from 2.0132 has completed and bring retest of this high.

In the bigger picture, rise from 1.8090 is interpreted as having first wave finished at 1.9142, subsequent second wave correction completed at 1.8517. Third wave rally has completed at 1.9913 while the fourth wave correction has already ended with three subwaves down to 1.9183. Current rise from 1.9183 will likely be the final advance of this rise from 1.8090. The channeling property of the terminal points of 1.9142, 1.8517, 1.9913 and 1.9183 is supporting this case.

Having said that, resistance should significantly increase as cable meets 2.0106 (92 high). With bearish divergence condition still being displayed in weekly RSI as well as daily MACD, risk of medium term reversal will significantly increase. Hence, focus will be on reversal signal as cable approaches this zone. Break of 1.9723/26 support will warn that the rise from 1.9183 has completed and put rising channel support (now at 1.9394) back into focus. However, a strong break of mentioned 2.0106 resistance will path the way towards 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677.

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USD/CHF

Daily Pivots: (S1) 1.2010; (P) 1.2049; (R1) 1.2077;

USD/CHF recovers mildly after breaking marginally lower to 1.2001 earlier today. At this point, mentioned 1.2029 cluster support (78.6% retracement of 1..1878 to 1.2571 at 1.2026) is not taken out decisively. Nevertheless, further decline is still in favor as long as USD/CHF stays below 1.2150 resistance. Sustained break of 1.2029 cluster support will confirm that whole fall from 1.2571 has resumed for 1.1878 low. However, strong rebound from here and a break of 1.2150 resistance suggest that USD/CHF is still bounded in consolidative trading that started at 1.2029 and would bring rebound towards 1.2282 again.

In the bigger picture, medium term outlook remains bearish with USD/CHF staying below both 55 days EMA and 55 weeks EMA. Daily and weekly MACD are both still staying negative, supporting this view too. The preferred interpretation at this point is that the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Further decline should be seen to 1.1878 low and sustained break will add more credence to this view and bring further medium term weakness towards 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404.

However, note that USD/CHF is still bounded in wide range of 1.1878 to 1.2768. A rebound to above 1.2354 resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.

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USD/JPY

Daily Pivots: (S1) 118.17; (P) 118.59; (R1) 119.09;

USD/JPY recovers mildly after fall from 119.86 has reached as low as 117.60 earlier today. As discussed before, the corrective rise from 115.13 could have already completed at 119.86, after being limited by falling trend line (122.05, 121.61) and failed to take out 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) decisively. Bearish divergence condition in 4 hours MACD and RSI are supporting this case. At this point, short term bias will remain on the downside as long as USD/JPY stays below 118.75 resistance and further decline should be seen towards 117.20 support and then 116.38. Above 118.75 will turn USD/JPY into consolidation but it will take a break above 119.86 high to revive short term bullishness. Otherwise, risk remains on the downside.

In the bigger picture, break of 116.38 support will revive the original case that the whole up trend from 108.99 has completed at 122.17. In this case, the corrective nature of the rise from 108.99 swings favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The fall from 121.17 should then the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first with much possibility of further fall to retest 108.99 low.

On the upside, sustained trading above 119.48 fibo resistance (61.8% retracement of 122.17 to 115.13) will dampen our original view and indicate that a stronger rebound is underway. Also, price actions from 122.17 is probably developing into sideway consolidation to rise from 108.99 only, instead of as the third leg of consolidation that started at 121.38. In such case, a rest of 122.17 high could then be seen. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best.

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EUR/JPY

Daily Pivots: (S1) 160.73; (P) 161.17; (R1) 161.92;

EUR/JPY recovers mildly after fall from 162.42 reached as low as 159.60 earlier today. As discussed before, a short term top should be formed at 162.42 after 4 hours MACD was dragged below signal line and EUR/JPY has failed to take out medium term and short term channel resistance decisively. Attention is now on short term rising channel support (now at 159.25). Break will encourage deeper decline to 158.01 cluster support (38.2% retracement of 150.75 to 162.42 at 157.96) first. On the upside, above 161.55 will suggest that fall from 162.42 has completed. But it will take a break of 162.42 high to revive short term bullishness. Otherwise, risk remains on the downside.

In the bigger picture, we're treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 with a diagonal triangle already. Fourth wave correction has ended at 150.75 and rise from there represents the final advance in this structure. The channeling property of 143.60, 137.16, 159.63 and 150.75 is supporting this case.

Having said that, risk of a medium term reversal is also increasing with EUR/JPY now pressing the medium term channel resistance. Break of the short term channel support indicate that rise from 150.75 has completed and give a serious warning signal that the whole rise rise from 130.60 has ended. Focus will then turn to medium term channel support (now at 152.37). However, sustained break of the mentioned channel resistance will suggest that the underlying outlook is more bullish than we thought and will path the way towards 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64.

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Forex Daily Technical Report

Yen Rebounds, Risk Aversion Back


The Japanese yen continues to rebound across the board today on a couple of yen bullish factors. Firstly, there are rumors that China's delay its GDP release due to much stronger than forecast numbers and could prompt the PBoC to raise interest rates. The Shanghai stock index is hit down by 4% on such rumor and yen has benefited on risk aversion buying. Secondly, there are also continuous speculation that BoJ will raise interest rates again in May, in particular after today's strong data today which showed Japan's tertiary sector index increased by 1.0% mom in Feb, much better than forecast of -0.4% drop. This is taken as a sign of turnaround in the sluggish services sector.

Technically speaking, both USD/JPY and EUR/JPY is showing sign of short term reversal. More importantly, after failing to take out resistance levels, the risk of a larger scale fall in these pairs are increasing and further yen buying will be triggered if near term support in these crosses are broker. Meanwhile, other majors and commodity pairs will likely be dragged down buy their respective yen crosses in case this happens.

One of the major focus today will be the release of Mar CPI from Canada which is expected to accelerate from 2.0% yoy to 2.2% yoy. Core CPI is expected to moderate slightly from 2.4% yoy to 2.3% yoy. Canadian dollar has been rebounding persistently after bottoming 1.1874 against dollar in Feb, partly supported by rising energy prices, partly on investment flows and partly due to easing concern of a BoC rate cut. Stronger than expected number will likely put further pressure in the USD/CAD. From US, Mar leading indicators and Apr Philly Fed index will be featured.

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A Quiet End To The Week Expected

European Morning Update

In a quiet Asian session the USDJPY remains on the firm side after yesterday's decline and failed to react to the All Industry Activity Index which saw robust rise on the back of yesterday's Tertiary Index of +0.9% in February. Forecasts had been for a -0.3% drop. However, January's number was revised equally as sharply lower from +0.7% to -0.2% so the net impact was a mild upward move. Overall Yen neutral.

We also saw several positive numbers out of Australia although the impact was again neutral on the Aussie Dollar. The Conference Boards Leading Index of Economic Activity leaped higher by 1.4% in February to confirm a still buoyant economy which is expected to remain positive for the coming 3-6 months. This was followed by a 1.0% MoM rise in new motor vehicle sales and an annualized +11.2%. Consumers are still willing to spend with the labor market strong and the economy still with strong prospects.

Finally the terms of trade came in at +1.7% in Q1. That is lower than the Q4 performance at +3.4% but still represents steady growth. Export prices were flat in the quarter while import prices dipped by 1.7%. Prospects are therefore for a firm Q1 GDP while inflation should remain moderate.

The following economic releases are due later today:

March

French Consumer Spending (MoM) +0.3%
French Consumer Spending (YoY) +5.8%
Swiss Producer & Import Prices (MoM) +0.3%
Swiss Producer & Import Prices (YoY) +2.3%
Italian Trade Balance Non-EU EUR - 1.3bn
U.K. Retail Sales (MoM) +0.5%
U.K. Retail Sales (YoY) +4.7%

Yesterday saw quite a few moves go my way and overall it was positive to see the Dollar make some gains against most currency pairs and of course losses against the Yen. Now, the pullbacks from the Dollar highs have been quite deep while Dollar-Swiss and Dollar-Canada actually saw losses so the fat lady could still be singing…

I will still point to the Dollar cycles in the Europeans which still appears to be looking for a 2-3 weeks now of strength and thus I'll peg my hat on the Dollar bullish side. However, as always in this market there is also absolutely no sense in trying to make the market bow to you own demands. The break levels are clear and if we see any breach of the Dollar lows so far (or close targets such as the Euro at 1.3666) then the implication does look more bearish and for several hundred more points yet.

Thus we end the week having seen some evidence of a potential correction in the Dollar but there is still some work to be done for the market to take this on board. Take care today but we'll be able to plan better next week.

Ian Copsey
Global Forex Trading

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FX Overnight Briefing

Financial News - US & Far East

• Equities in New York
• U. S. crude oil down
• Yen steadies as stock market worries ease

Today's Main Events

• GBP: Retail sales
• USD: Fed's Mishikin speaks

American Timezone:

Equities in New York

U.S. stocks barely budged on Thursday as a rally in health-care shares after solid earnings from companies such as Schering-Plough Corp. offset worries about possible interest-rate hikes in China.

Schering-Plough posted a 55 % rise in firstquarter profit, well above expectations. Its stock jumped 8.6 % and led advances in the S&P 500 index, followed by shares of Amgen.

Closing levels

Dow Jones: 12,808.63 (0.04 %)
S&P500: 1,470.73 (-0.12 %)
NASDAQ: 2,505.35 (-0.21 %)

Yen rises

The yen strengthened for a third straight day against the dollar and rose versus the euro on speculations on higher interest rates in China and Japan will encourage investors to reduce risk.

U.S. crude oildown

U.S. crude oil futures ended about 2 % lower on Thursday, amid profit taking ahead of the front month May contract's expiration on Friday.

Far East Timezone:

Yen steadies as stock market worries ease

The yen steadied on Friday after U.S. share prices managed to hold up despite sharp drops in other stock markets on worries about an overheating Chinese economy, calming fears of a massive unwinding of yen carry trades.

The yen rose broadly on Thursday after strong Chinese economic growth data triggered fears of interest rate hikes, hitting Asian stock markets and prompting investors to cut back on short positions in the Japanese currency.

'Movements in stock markets continue to be the main factor in the currency market, although the Dow's solid performance overnight soothed worries about yen carry trades a bit,' said Tsutomu Soma, a senior manager at Okasan Securities.

In the carry trade, investors borrow the lowyielding Japanese currency to buy higheryielding assets abroad.

The Nikkei rose 0.47 % to 17,452 in early trade on Friday.

The dollar was at 118.60 yen, a bit higher from late New York trade on Thursday.

The euro hit a two-year high of USD 1.3629 against the dollar in early trade as expectations that the European Central Bank will boost interest rates in coming month supported the single currency.

Yen not too weak - Watanabe says

Japan's economy is on the road to recovery and the yen, already beginning to reflect that, is at acceptable levels, the country's top financial diplomat Hiroshi Watanabe told Reuters on Thursday.

'Our economy is on the right track and that should be reflected in the market. This is going on at the moment. We have confidence in the market on this,' Watanabe told a news conference in the United Arab Emirates capital Abu Dhabi.

'The yen is not too weak just now. At times it goes up and comes down. It is marketdetermined,' Watanabe, vice finance minister for international affairs, said as he arrived for the news conference.

'We have no worries about the yen from a domestic perspective. The yen is getting better,' he said.

EUR/JPY traded between 161.12 and 161.74

USD/JPY traded between 118.25 and 118.77

Jyske Markets - FX Research

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Daily Investment Tips

USD

Dollar weakened yesterday. EUR/USD rose to 1.3620 and GBP/USD still defended the 2.0 support. March leading indicator rose 0.1% which matched with the market expectation. April Philadelphia index rose 0.2 which is far below the market expectation of 3.0 and bearish to the dollar. I believe that in the short run the dollar was affected by the carry trade activities and as the carry trade continues, the dollar will bearish.


YEN

The Yen is mixed recently. Earlier a rumor said that BoJ will raise rate again next month which induced the carry trade unwinding. Most major currencies against the Yen retraced back down. However, the carry trade continues and EUR/JPY rose back to 161.50 and GBP/JPY rose to 237.60 which is bearish to the Yen. The support is at 117.60 and the resistance is at 119.50.


NZD

Kiwi maintained the strength yesterday and NZD/USD rose to 0.74 level. Earlier the carry trade unwound and pressured the Kiwi in the short term. However, the market expected that RBNZ will likely to raise rate next week and supported the Kiwi. March REINZ house price index rose 2.5% and 13.7% at the annual rate. EUR/NZD fell to 1.83 and GBP/NZD fell to 2.69 which is bullish to the Kiwi. The support is at 0.7200 and resistance is at 0.7460.

CMC Markets

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Asia Market Update

Chinese equities recover some losses after yesterday's correction

Chinese equities rebound strongly after yesterday's heavy selling: Traders said that a strong CNY could help offset some of the concerns about a possible PBoC interest rate hike, and bargain hunters stepped in to boost Chinese stocks. The emerging consensus seems to be that yesterday's GDP figures don't point to an overheating economy and will please the Communist Party (it's hard to create a 'harmonious society' without strong growth and job creation). Today's gains on Chinese stock markets are being driven by shares of power companies and consumer stocks.

Forex: The JPY was soft after the German Finance Minister Steinbrueck gave the green light for the carry trade to carry on, saying that he sees no need for EU finance ministers and central bankers to discuss the EUR at a weekend meeting. The USD was trading mixed in Asia. The Philadelphia Fed survey showed that prices paid, employment, and new orders components were firmer than the prior month, so dealers are refraining from thrashing the USD. The CAD took a breather after its recent rally. The consensus is that the CAD bullish fundamentals remain intact, and that there is virtually no chance of the reserve bank cutting rates. In Asian currencies, traders said that active forward trades by Korean exporters are likely to push USD lower against KRW. The KRW lost some strength after the Bank of Korea said that excessive speculative trading can cause disorder in forex markets.

Mixed Japanese data doesn't provide clarity on BoJ rumors: (JP FEB ALL INDUSTRY ACTIVITY INDEX MOM: 0.9% V -0.3% expected; Prior revised to -0.2% from 0.7% prior) The JPY showed little initial reaction to the activity index (a volatile data series) as the strong headline figure counterbalanced the sharp downward revision of the prior number. JPY bulls await stronger data to add credibility to rumors that the BoJ will hike rates much sooner than expected.

Equities: Asian equities rebounded mildly from yesterday's losses. At the time of writing this, the Nikkei has not managed to retrace yesterday's losses. The Nikkei rebound is expected to be limited as most buying is coming from players looking for a technical bounce. Gains on the Nikkei are being driven by exporters as the USD/JPY pair rose above 118.00. In Japanese corporate news, shares of KDDI rose on a press report that the company's FY profit may exceed its original forecast, and Toyota gained on news of production expansion. The ASX 200 index is higher, but trading remains cautious. Gains down under are being led by miners and Coca-Cola Amatil. South Korean equities are higher by more than 1.0% on gains in shares of exporters. Shares of LG Electronics are lower by more than 1.5% following the company's earnings report. The Hang Seng is tracking Chinese shares higher as bargain hunters bought blue-chips.

Commodities: Spot gold and crude traded in tight ranges. Shanghai Copper is lower for the second consecutive session on fears that the Chinese government will seek to slow China's economy.

Trade The News Staff
Trade The News, Inc.

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US Dollar and Japanese Yen: Will the Wild Intraday Swings Continue

• US Dollar and Japanese Yen: Will the Wild Intraday Swings Continue
• Euro: ECB Officials Say Current Euro Level Is Not a Concern
• UK and Canada Look Ahead to Retail Sales Figures Tomorrow

US Dollar

Over the past few trading days, we have seen a great deal of intraday volatility in the currency markets. The battle between top pickers and carry traders has been fierce with Asian and European traders opting for the former and US traders opting for the latter. Carry traders aren't giving up quite yet as we see evidence of consistent buying throughout the US trading session. This is the same sort of price pattern that we saw yesterday, which indicates that the battle is continuing with no clear winner in sight. What the price action does tell us is that there are strong players on both sides of the spectrum and should one triumph over the other, the reversal or continuation will be just as sharp as the rally that we have seen over the past month. Dollar bearishness is still the dominant force in the market as economic data continues to disappoint. Jobless claims were originally expected to drop significantly after the blip reported the prior week, but instead, claims only edged lower slightly. The Philadelphia Fed survey remained unchanged at 0.2, confirming the lack of growth in the manufacturing sector. With both the Empire State Manufacturing and the Philly Fed surveys falling short of expectations, the national ISM index for the month of April which is not due for release until a week and a half from now, will probably remain very close to the 50 boost / bust level. Looking ahead, we have zero data on the US calendar until next Tuesday. The only things to focus on are the speeches by Federal Reserve President Mishkin on the outlook for the US economy and Treasury Secretary Paulson at the China conference. Given the hot GDP numbers reported by China yesterday, we definitely expect some critical comments by the Treasury Secretary. With nothing on the calendar, the obsession with whether carry trades will or will not continue should remain dominant.


Euro

Liquidation of EUR/JPY carry trades sent the Euro tumbling to 1.3565 against the US dollar. Despite this minor hiccup, Euro traders are still intent on taking the currency pair for a test of its December 2004 1.3667 all time highs as their determination was evidenced in the currency pair's complete turnaround during the US trading session. For the first time in this latest wave of Euro strength, we heard comments from ECB officials about the level of the currency. Interestingly enough, rather than being critical about the currency's strength, he said that the Euro's exchange rate level is not a concern and that inflation remains a risk. His view that interest rates remain accommodative is aligned with the central bank's overall stance. This is yet another green light on the road to further gains in the EUR/USD as we look forward to at least one and possibly two interest rate hikes by the end of the year. Eurozone data is beginning to disappoint with German producer prices falling short of expectations while Italian industrial orders actually dropped in the month of February, contrasting with the market's forecast for a rise. We will be watching carefully to see if this anomaly becomes a trend. Looking ahead, we have French consumer spending and the Italian trade balance tomorrow. On a day devoid of any US data, strong numbers could drive the currency pair to fresh record highs.


British Pound

After plunging back below the 2.000 mark momentarily, the GBP/USD stabilized throughout the US trading session. The initial selling was triggered by liquidation out of GBP/JPY which saw a 300 pip wide trading range today. Now trading at 2.0018 at the New York close, the sterling bid tone may return with a vengeance as traders set their targets on tomorrow's retail sales report. Although the growth in consumer spending is expected to slow from the prior month, the sharp rise in wages could lead to an upside surprise. The report is still expected to only add to the already vehemently hawkish bias that is purporting a continually appreciating currency. No other central bank has as clear of a need to raise interest rates as the Bank of England. Incidentally, the market has now even begun to price in the possibility of a 50 basis point hike in May. Although this is very unlikely, the BoE has long been a policy maker that likes to catch the market by surprise.


Japanese Yen

The Japanese Yen was the story of the day as stronger economic data from Japan and China sent the currency tumbling against everything in sight. The early Asia trading session started with a sharp surprise in the tertiary activity index for the month of February. Originally expected to drop by 0.5 percent, activity actually accelerated by 1.0 percent. We expect this trend of upside surprises to continue as the recent weakness of the Japanese Yen boosts overall economic growth. Consumer spending on the other hand was not so hot. Tokyo department store sales fell 2.2 percent while nationwide sales dropped by 1.5 percent. Bank of Japan Governor Fukui downplayed the data by saying that consumer spending remains solid. The second wave of JPY buying was triggered by the sharp rise in Chinese GDP. Despite their efforts to cool growth, the economy has only continued to expand at an impressive pace. This spurred speculation that the central bank may be forced to raise interest rates. The Chinese stock market suffered greatly as a result and the Yen pairs followed suit. The recovery afterwards however still reflects the market's obsession with the carry trade.

Commodity Dollars :AUD, NZD, CAD

The Commodity Currencies are all weaker on the day as the liquidation of high yielding currencies sent the Australian, New Zealand and Canadian dollars tumbling against the US dollar. Australian data disappointed with consumer inflation expectations dropping in the month of April. We are expecting Australian import and export prices tonight. Softer numbers are expected as the strong Australian dollar drives inflation lower. We do think that any risk will be to the upside however. Canadian data on the other hand continues to remain hot with consumer prices accelerating by 0.8 percent month over month and 2.3 percent year over year. Wholesale sales were strong and we expect tomorrow's retail sales to rebound as well.

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USD Drifts Lower

At 4:30 AM UK March Retail Sales m/m (exp 0.5%, prev 1.4%)
At 8:30 AM Canada February Retail Sales m/m (exp -0.1%, prev -0.2%)
Canada February Retail Sales ex-autos m/m (exp -0.1%, prev -0.2%)

The dollar traded to a fresh multi-year low against the euro in the early Friday session to 1.3627, a level not seen since Dec 2004 when the single currency reached a record high at 1.3664. Given recent price action, particularly yesterday's first close above 1.36 -- the pair remains well bid with traders intent on pushing the euro to a new all-time high against the dollar.

The outlook for the greenback continues to deteriorate with the US economy showing further signs of slowdown and increased likelihood for a Fed rate cut this year. There is no US data slated for today, but next week will see several key gauges on the state of the economy - with indicators on the housing market, consumer confidence, manufacturing, inflation and most importantly, growth. We'll receive a first glimpse of Q1 GDP next Friday and it is expected to reveal further slowing in economic activity, down to 2.0% versus Q4 at 2.5%. Also, traders will closely scrutinize the PCE reading - the Fed's preferred indicator of inflation, for clues on the timing of a potential rate cut this year.

Opportunity to Sell Yen?

China's robust economic growth rate yesterday sparked fresh demand for the yen, which often trades as a proxy for the renminbi. A closer look at this recent strengthening of the yen reveals an opportunity to sell the currency against its higher-yielding counterparts, such as the euro, sterling, Aussie and to a lesser extent, the dollar. We are not anticipating additional rate hikes from the Bank of Japan this year and expect the incoming data to remain mixed at best. On the other hand, the ECB, BoE and RBA are all seen further tightening policy in order to rein in inflationary pressure - thus widening the yield gap.

USDJPY recovered after dropping through the 118-level to touch the lower support line of its ascending channel from early March at 117.60. Additionally, the pair quickly bounced off its 200-day moving average located around the 118-level. Resistance for the pair begins at 119, followed by 119.50 and 119.80. Subsequent ceilings will emerge at 120, backed by 120.30 and 120.65. Support begins at 118, followed by 117.60, and 117.20. Subsequent floors are eyed at 117, backed by 116.50 and 116.35.

Euro Closes Above 1.36

The euro climbed to a new 2-year high against the dollar at 1.3627, as traders continue to push the pair to a new all-time high. The pair also posted its first close above the 1.36-handle, boding well for the pair to continue toward a record high above the 1.3664-level.

EURUSD will encounter interim resistance at 1.3630, followed by key resistance at the pair's all-time high at 1.3664, likely to garner speculative selling and 1.37. Support begins at 1.36, followed by 1.3560 and 1.3530. Additional support is eyed at 1.35, backed by 1.3470 and 1.3420.

MG Financial Group