Fed Keeps Target Lending Rate Near Zero
UFXBank Research from UFX Bank at 01/26/10
Daily Review 26/01/2010
USD Dollar (USD) – The Dollar is consolidating moderate losses across the board on prospects the Federal Reserve will keep its target lending rate near zero to spur growth, pulling back after rising sharply last week. Existing Home Sales came out 5.45M worse than 5.95M expected. Wall Street finished with small gains after falling considerably last week. Dow Jones rose 0.23% and NASDAQ gained 0.25%. Commodities rose higher. Crude oil is back above $75 a barrel. Gold (XAU) trades near $1,100 an ounce. Today, the CB Consumer Confidence is expected at 53.5 vs. 52.9 previously.
EURO (EUR) – The Euro gained modestly versus the Dollar and is trading near 1.4150. The Gfk German Consumer Climate came out 3.2, unchanged as expected. If the pair remains below 1.42 the continuance of the downtrend is expected. Overall, EUR/USD traded with a low of 1.4110 and with a high of 1.4193. Today, German IFO Climate Index is expected at 95 vs. 94.7 previously.
EUR/USD – Last: 1.4160
Resistance 1.422 1.4265 1.43
Support 1.4125 1.4065 1.403
British Pound (GBP) – The Pound recovered from Friday’s losses and posted important gains across the board and was the best performer among majors. The Sterling rose in expectance of today's 4th quarter GDP figures. In the intraday charts GBP/USD seems to have created a double top and is expected to go down but the 200 day moving average might act as a strong support and send it upwards. Overall, GBP/USD traded with a low of 1.6087 and a high of 1.6260. Today, 4th quarter GDP is expected at 0.4% vs. -0.2% previously. The BBA Mortgage Approvals is expected at 45K vs. 44.7K previously.
GBP/USD - Last: 1.6250
Resistance 1.6285 1.6315 1.635
Support 1.6165 1.6095 1.6075
Japanese Yen (JPY) – The Dollar strengthened slightly versus Yen but was unable to cross above 90.50 resistance level. Bank of Japan left the Overnight Call Rate unchanged at 0.1% in order to stimulate growth by offering cheaper loans for companies. If the pair breaks below 89.80, an acceleration of the downtrend can be seen. Overall, USD/JPY traded with a low of 89.65 and a high of 90.35. Today, Trade Balance is expected with 0.61T versus 0.49T prior.
USD/JPY-Last: 90.2
Resistance 90.5 90.8 91.2
Support 89.8 89.45 89.05
Canadian dollar (CAD) – Canada’s dollar traded at almost the lowest level in more than a month versus its U.S. counterpart and underperformed its commodity linked peers as global stocks and oil fluctuated. The USD/CAD is in an uptrend and a break above the 1.06 level is expected. Overall, USD/CAD traded with a low of 1.0531 and with a high of 1.0611.No economic data expected today.
USD/CAD - Last: 1.0550
Resistance 1.062 1.0675 1.073
Support 1.0535 1.049 1.0465
