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<Back to Latest Research
NY Session: USD and JPY firm as risk sentiment declines

Updated Mar 19, 2013 4:20:00 PM By Eric Viloria, CMT

Safe havens are stronger again today as the Cyprus government rejected a tax on bank deposits, which raised uncertainty over how the troubled nation will obtain necessary aid. The USD is stronger against all of its major counterparts with the exception of the JPY amid demand for safety. The JPY is outperforming in the G10 space today – an indication that the yen still remains a haven. With current Bank of Japan Governor Shirakawa stepping down today and Kuroda taking his place at the head of the BoJ, there is scope for JPY weakness as more aggressive easing is likely from the new leadership.

EUR tumbles but will the 200-day SMA hold?

Cyprus lawmakers rejected a proposed bank levy with 36 votes against it, 19 abstentions, and 0 votes for it. Earlier in the session, rumors that the country’s Finance Minister resigned sent the euro lower however these rumors were soon denied. EUR/USD dipped to session lows of around 1.2845 and has since rebounded back and is currently around the 1.29 figure after the ECB said that it will provide liquidity to Cyprus, within existing rules. The pair is above a significant technical pivot around the 1.2870/80 level which is where the 200-day simple moving average converges with the 50% retracement of the rally from July lows to February highs.

US housing data slightly better

February housing market data in the US showed continued improvement with starts rising by 0.8% m/m to 917K (cons. 915K) and building permits jumping by 4.6% from the prior month to 946K in February (cons. 925K). The FOMC kicked off its 2-day meeting today which will conclude tomorrow with a policy statement, updated economic projections, and press conference by Chairman Bernanke. We expect no change in policy and we think that the Fed is likely to acknowledge improvement in the US economic outlook despite elevated external risks and unresolved fiscal issues.

Loonie weak after data

Canadian economic releases were disappointing with a smaller than expected monthly increase in January wholesale sales of +0.3% (cons. +0.4%) while manufacturing sales surprisingly declined by -0.2% m/m in January (cons. +0.6%). The Loonie softened following the data and USD/CAD broke back above the 1.0250 zone which is where the daily Tenkan line and 55-day SMA reside.

US equities were choppy and finished the day mixed with the Dow Jones Industrial Average closing marginally higher by about +0.03% while the S&P 500 slumped by -0.24%. UST yields are lower across the curve as risk sentiment is lower and as the Fed is expected to stay the course with its current accommodative stance. The precious metals gold and silver are currently higher by about +0.43% and +0.03% respectively.

Data watch

On the data front for the upcoming Asia/Pacific session are New Zealand 4Q current account balance figures and the January Westpac leading index due out of Australia.

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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