The bullish reversal on risk sentiment in Asian session due to Aussie and Chinese data continued to dominate the rest of the day after better than expected US Manufacturing data.

Good sovereign demand appearing below 1.2725 in early London session helped market to trigger stops above 1.2750 and Euro being bought for EURCHF and EURJPY as a wash currency on a risk on theme accelerated the pace of the rally up to 1.2856.

I reckon market players ignoring the first negative print of ADP in 2010 may end up taking profit in long risk positions or use these levels to re-enter short risk positions before tomorrow’s NFP.

1.2785-1.2865 range is possible to dominate the Asian session before we see any clear sign on USD theme.

Good Luck All.

The dovish FOMC minutes suggesting a possible re-invest in MBS instead of Treasuries if things gets ugly clouded the mood overnight despite better than expected US Jun existing home and consumer confidence data.

The rumor of big demand for US Dollars during month-end fixings did not have major impact as market expected overnight. EURUSD failing to break 1.2620 support with lows printing at 1.2625 caused a short squeeze during London session and pair traded up to 1.2744 and failed to take stop orders out above 1.2750.

Italian (74.2% higher 1 mnth change) and Irish ( 66% higher 1 mnth change) 5yr CDS grinding higher helping EURUSD to resist at moment against further QE winds in US.

1.2615-1.2775 range still dominates the pair while daily oscillators suggesting a possible test of weekly support at 1.2520 as long as daily closing stays below 1.2775.

Commodities heading lower on global growth concerns while Gold taking the advantage of safe heaven status and breaking the weekly resistance at 1235, suggests a further topside rally for XAU at the moment.

Canadian C/A and GDP failing to impress markets so far this week and risk aversion in the market led USDCAD testing the 1.0670 resistance and forming a double top on daily charts. A weekly close above 1.0695 increases a rally possibility up to 1.18s with a head & shoulder break out .

Good Luck All

Asian and NY investors managed to keep the post-Friday optimism limited yesterday.

The scope of stimulus by BoJ did not impress the market players and that led USDJPY failing to break 86.00.
Equities ticking lower in US and for the rest of Europe on a UK Bank Holiday brought risk aversion / take profit related selling pressure to xxx-jpy in addition to BoJ disappointment.

Directional sellers capping the topside in USDCHF around 1.0310/30 area in Asian session yesterday help to boost the Franc strength on a risk averse day and pair traded down to 1.0237. The good support still remains solid between 1.0215-1.0230 for the pair which held it firmly last week.

EURUSD, despite further QE belief in the market, printed the lows in a stop-loss rush price action this morning at 1.2633 after 1.2775 resistance held it firmly yesterday.  We hear good demand starting around the good support of 1.2620.  A daily close below this support changes the outlook for EURUSD and opens the further downside risk for 1.2475/1.2490 area.  Short position stop orders reported above 1.2750 on the topside.

I believe we trade in a 1.2615-1.2685 range in Asian session today.

Good Luck All.

Bernanke sounding  moderately dovish at Jackson Hole last Friday turns the eyes into FOMC minutes tomorrow to let us know if FED brings the 2nd wave of QE.  Non-farm payrolls on Friday and ISM data will also help to decide on the direction later.

Short risk covering in xxx-jpy and squeeze in JGBs caused USD-JPY rallying up to 85.77 and fresh bids appeared to buy the dips at 85.40/50 area  while the next target 86.30 to watch on the topside if 85.90 breaks. With eyes on BOJ in Asian session, we may see levels trading on both ends of the range today.

In EURUSD, market positioning for a rally pre-US numbers and Bernanke speech capped the topside on Friday.  1.2777, the 38.2% Fibonacci retrace of 1.1877 to 1.3334 rally, holds it firmly overnight while the risk is a test of 1.2855/1.2865 area with buyers on dips around 1.2715 and 1.2685..

Good Morning,

U.S. manufacturing and inflation data increased the worries that a double-dip recession could be at hand. The greenback weakened against the majors while Oil fell below $77 after US data curbing the expectations for the strength of US economy and future demand growth.

Above in addition to Chinese data in Asian session yesterday increased the pace/momentum of EURUSD rally after the break of 1.2765 and pair printed 1.2955 as o/n highs.  With a possible tp and fresh sellers between 1.2950/1.2985 area, the first knee-jerk asian opening may drag EURUSD down to 1.2875/85 support while the topside target of the broken Head&Shoulder formation on daily charts in the last of week June,2010 still suggests a test of 1.3055.  The weekly support level is also yesterday s good resistance level in Asia at 1.2745/50 area.

Despite equity markets in US ended almost  flat on Thursday following positive developments at BP Plc and Goldman Sachs, I reckon we are going to see the decouple of USD trading vs. majors and EM/Commonwealth currencies.

AUD failing to break of 0.8860 and getting squeeze down to 0.8825 just before recovering to yesterday Asia highs at 0.8840 after Sydney close shows the overall choppy conditions. 0.8650/65 downside target with 0.8715 holding the first line, I think it s not a bad idea to sell above 0.8825 with a tight stop around 0.8875…

USDJPY traded heavily on the back of JBG in Asia and 2Y US-JP spread  later on the day brought extra supply to the pair to break 88.00 and print 87.23 lows.  87.05/87.75 may dominate the Asian session while a pullback in GBPJPY and AUDJPY may put some extra pressure to the pair.

Have a great weekend.