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Daily Forecasts - Currency Technicals and Fundamentals

|Includes: CurrencyShares Australian Dollar Trust ETF (FXA), FXB, FXC, FXE, FXF, FXY, UDN

EUR/USD Commentary and Trade Ideas

News that the Russians are going to swap a portion of their $401B reserves from US Treasuries to IMF bonds was cited as one of the reasons the euro climbed versus the dollar in the European session.  Stronger global equities are causing some advisers to conject that German, Brazilian, or Australian stock ownership is more appropriate than US Treasuries.  This rallied the pair to trade a little above 1.4140 where we exited our short position.  The US Treasury today is auctioning $19B of 10 year paper, and it will be interesting to see the market's reception of this note which is currently yielding 3.9%.  An IBD editorial this morning commented on Washington's record debt, over 1 trillion for the first eight months of this fiscal year, is twice the previous record.  President Obama lectured Congress yesterday about spending too much money,but then said borrowing to pay for the initial costs of his universal health care was a good thing.  Other democrats now want to include dental and mental health care in the plan.  How much longer is the rest of the world going to loan this administration trillions for a myriad of new US social programs?  The choppiness continues in this pair, as the market is currently trading at a little over 1.40.  Should the sell off continue, I want to try the buy side, however, a day on the sidelines may provide some clarity..

Bias

:  Higher 

Bias Term

:  Long 

Support

: 1.3950  1.3820  1.3750 

Resistance

: 1.4040  1.4140  1.4200



GBP/USD Commentary and Trade Ideas

The Gordon Brown survival feat which has helped the pound recovery may be running it's course as the pound begins to stall.  It was reported this morning that UK manufacturing did recover for the second month in a row, furthering optimism about a renewed economic activity.  The recovery, after the sell off prompted by rumors of Brown's demise, was quick.  The market is acting like it wants to pause, perhaps retreat to the 1.62 level  pending future developments.   Longer term the market looks ok, so it is a little risky scalping against the major trend.

Bias

:  Higher 

Bias Term

:  Long 

Support

: 1.6290  1.6150  1.5980 

Resistance

: 1.6390  1.6450  1.65.60



USD/JPY Commentary and Trade Ideas

This market sold off close to the order to cover our short at 97, then promptly rallied above 98 and is approaching our stop at 98.40.  It was reported that Japanese machinery orders were worse than expected, indicating the pending recovery is still pending.  Perception though that the worse is now behind us, and there are better investment opportunity elsewhere than the stodgy, mature Japanese economy is given as reason for yen weakness.  If this market is unable to revisit the 99 level quickly a sell off to the 96.50 is a target.

Bias

:  Neutral 

Bias Term

:  Medium 

Support

:  97.50  96.50  95.00

Resistance

: 98.50  99.50  100.40



USD/CHF Commentary and Trade Ideas

The franc strengthened against the dollar yesterday to a little under the support, and subsequently turned higher, now trading above 1.08.   Let's try to buy 1.0790 with a 100 point stop, with an objective of 1.0950.  Rumors of possible loan default by Latvia is meaningful since defaults are not contained at the border and spread through out the region.  Swiss banks have the risk of large toxic loans to multiple countries, and a strong franc does magnifies the problems.
 

Bias

:  higher 

Bias Term

:  Longer 

Support

: 1.0760  1.0690  1.0620 

Resistance

: 1.0890  1.0990  1.1110



USD/CAD Commentary and Trade Ideas

Crude continues to march higher, trading above 71 the morning but that was not enough to prevent a 200 point rally from the early morning low of 1.0945.  The Canadian home price index released this morning was negative, and the trade balance indication exports of Canadian manufacturing products was lagging.  I prefer to scalp the market from the long side, trying to buy a pull back to 1.1000.  It will be interesting to see how the CAD behaves when the bull run in crude ends.  

Bias

:  Higher 

Bias Term

:  Long 

Support

: 1.1050  1.0990  1.0920 

Resistance

: 1.1140  1.1230  1.1310



AUD/USD Commentary and Trade Ideas

The AUD continues to probe a return back to previous high of .8263.  Australian consumer confidence improved for the second month in a row.  Our .8030 did not work as we were taken out at .8100.  Still not sure what fresh news is going to keep the bull happy, but this story has been on the best seller list for a while.

Bias

:  Neutral 

Bias Term

:  Long 

Support

: .8000  .7915  .7800 

Resistance

: .8060  .8150  .8220



NZD/USD Commentary and Trade Ideas

Later today the Reserve Bank of New Zealand  announces the result of there meetings and if there will be any changes in the central bank rate of 2.5%.  One currency advisory service acknowledged that the strength in the kiwi may be a hindrance to their  economic recovery, and the central bank may intervene to weaken the currency.  We will see what the reports bring us this evening.

Bias

:  Neutral 

Bias Term

:  Medium 

Support

: .6200  .6090  .6010 

Resistance

: .6350  .6450  .6540