DOLLAR: The Dollar has also reversed course in the face of the surge in optimism in the wake of the latest US government “plan” for housing. Since the Dollar is clearly a flight to quality instrument, seeing a slight tempering of the anxiety in the equity markets logically prompts some profit taking in the Dollar. Unfortunately for the bull camp in the Dollar, up trend channel support in the March Dollar index is seen all the way down at 85.35 today and but that support climbs back up to 85.53 early next week. Surprisingly much weaker than expected Euro zone GDP data failed to provide the Dollar with any support this morning and that suggests the markets are fixated on something other than the data. Closer in support in the March Dollar index is seen at 85.97 and it is possible that the Dollar will see some late afternoon buying off the idea that the US stimulus package is thought to be finalized this weekend. Overall we suspect that ranges in the Dollar will be somewhat narrowed today.
EURO: With a record slide in the Euro zone 4th quarter GDP reading and similarly weak German GDP readings also floated last night the Euro looks to remain mired in this week’s consolidation zone. However, some players might want to press the Euro later in the trading session off the idea that the ECB might be pressed for more aggressive easing in this weekend’s G7 meeting. In fact, the trade thinks that the US Treasury Secretary is set to push both the ECB and Italy to provide aggressive easing steps and that could leave the Euro open to a slide back to consolidation support of 128.02. Overall it is very difficult to get bulled up toward the Euro because of the sagging euro zone fundamentals and also because of a generally bearish technical picture on the Euro charts.
YEN: Just seeing the latest “plan” to save the US housing market was enough to turn up the profit taking pressure on the Yen. However, the Yen was and still is a flight to quality currency and given the slightly overbought levels around this week’s highs, it is not surprising to see the March Yen streaking back toward the early February lows. In fact, as long as the latest plan is being spun as a positive and as long as the stock markets are showing signs of bouncing, the bear camp in the Yen has the edge.
SWISS: The Swiss remains in a down trend pattern on the charts with a series of lower highs clearly in place. Apparently the Swiss doesn’t even warrant a short covering bounce this morning in the wake of a slide in the US Dollar and to us that clearly points to a currency that is way out of favor.
POUND: After a literal beating early in the week, the Pound has clearly seen some technical short covering buying interest. We also suspect that the Pound is seeing some benefit from the latest US plan to save those behind on their mortgages. However, the ills in the UK banking sector and the lingering problems in the UK economy are not eliminated by the latest US plan and therefore we have to suggest that a March Pound rally back up at 146.96 will still be considered a sale. Some players suggest that the Pound will be dealt a slight blow by the developments from the weekend G7 meeting and that could push the Pound down early next week.
CANADIAN DOLLAR: Apparently the Canadian has rejected the sub 80.00 level and would now seem to be poised to climb all the way back to the 82.50 level on the charts. Apparently the latest US housing plan and or the proximity to the official passage of the US stimulus package, is providing the Canadian with renewed buying interest today. While it might not last long, the bulls in the Canadian have an initial edge today.