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TJ Marta
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  • Daily FX View: GBP Higher As Labor Data Outweigh BoE Concerns 0 comments
    Dec 18, 2013 7:32 AM

    SEK higher on strong confidence reports; FOMC meeting in focus, USD may fall on statement if taper delayed, reaction may be tempered by Bernanke commentary.

    • USD outperforms 11 of 16 major peers, March is earliest start for QE taper given disinflation and weakness in underlying labor market
    - Weakening personal consumption, impact of rising interest rates on housing and political uncertainty around debt ceiling debate add further support to taper delay
    • GBP outperforms 23 FX peers on strong labor data even as BoE expresses concern on FX strength
    - ILO unemp. rate 3mos for Oct. 7.4% vs est. 7.6%, low since April 2009, modest downtrend accelerating
    - BoE minutes indicate concern that while strong FX has helped contain inflation, might also impede growth
    - GBP/USD +0.59% at 1.6360, session range 1.6262/1.6365
    - View: Bearish bias negated by strong data-induced rebound
    -- Higher toward 1.6646 Dec. 10, new high since 2011
    -- Support: ~1.626 Oct. 1, 23 highs; 1.6236 Oct. 22 close
    • EUR/GBP -0.73% at 0.84032, session range 0.84028/0.84658
    - View: Bearish
    -- Correcting from top of downtrending channel in place since Aug.
    -- Momentum lower from extreme overbought
    • EUR mixed vs majors
    - German IFO business climate as expected 109.5; continuing uptrend since Oct. 2012 to high since Apr. 2012
    - EUR/USD -0.09% at 1.3755, session range 1.3744/1.3778
    - View: Bearish
    -- Consolidating below Dec. 11 high since Oct.
    -- Momentum indicators down from overbought levels consistent with EUR tops since Sept. 2012
    -- Support: 1.3711 Feb. 1 high
    -- Resistance: 1.3811 Dec. 11 high
    • SEK higher vs 22 of 23 FX peers on better than expected confidence surveys, all at highs since 2011
    - Mfg. conf. for Dec. 106.6 vs est 105.1; cons. conf. 105.4 vs est. 104.7; eco tendency survey 109.5, as expected
    - EUR/SEK -0.41% at 8.9855, session range 8.9710/9.0335
    - View: Bearish
    -- Falling from Dec. high since 2012
    -- Momentum lower: MACD differential, RSI lower, stochastics at high since late-Nov., may signal turn
    -- Support: 8.9636, double-top high from Nov. 28/29, 8.82 Dec. 4 low
    • NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.

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