1056 GMT [Dow Jones] EUR/USD posted a fresh low last week but its failure to close below the previous week's low highlights the over-extended nature of the move and warns of a short-squeeze ahead says MIG Bank's Howard Friend. This squeeze could extend to the 1.39 area before exhaustion, but then be followed by a slide toward 1.30 and 1.2885 over coming weeks and months. Friend says only a daily close above 1.4217 negates this scenario. EUR/USD now at 1.3629.
1011 GMT [Dow Jones] Dubai's woes are back in the headlines, with 5-year CDS rising to their highest since March 2009. That is not good news for UK banks and in turn sterling, as the former have a high exposure to that part of the world says a trader. GBP/USD now at 1.5673.
0957 GMT [Dow Jones] GBP/USD has been locked in a contracting range since February 5th and given the preceding downtrend this range is likely to resolve on the downside says Barclays Capital. The near-term range is between 1.5750 and 1.5550 but below the matter opens risk for a test of 50% retracement support at near 1.5275. GBP/USD now at 1.5670.
0928 GMT [Dow Jones] The USD is mostly higher and the EUR is mostly lower as the market waits to see if the meeting of Europe's finance ministers produces any more details of Greek package. News that Dubai World is still battling to reschedule about $22bn of debts is only helping a general rise in risk aversion. Japanese 4Q growth of 1.1% is better than expected but deflation remains a problem. The dollar is up at Y90.06 while the EUR sinks to $1.3595. GBP is down at $1.5669.
0927 GMT [Dow Jones] It's a big week for UK data notes Barclays Capital with Tuesday's CPI likely to trigger an exchange of letters between BOE governor King and the Chancellor. Wednesday's MPC minutes should give more insight into the surprisingly dovish Inflation Report with labor market data also on the menu. Thursday brings public sector finances for January which are likely to be key to the full year borrowing requirement since this month is a particularly important one for receipts. Friday brings retail sales which are likely to be distorted by bad weather.
0922 GMT [Dow Jones] Indonesia shares end down 0.7% at 2517.456 in light volume, led by local funds' selloff in most blue chips after Friday's gain. "I think the market will continue to consolidate tomorrow as many investors will likely still stay on the sidelines for Lunar New Year holidays," says trader at First Asia Capital; tips index in 2500-2530 range. Among decliners: car maker Astra (ASII.JK) down 1.0% at IDR34,950, coal miner Indika (Indy.JK) down 3.3% at IDR2,225, while rival Bumi (BUMI.JK) down 2.2% at IDR2,225.
0907 GMT [Dow Jones] USD/IDR higher late in thin trade, last at 9,355 vs 9,335 late Friday; pair biased tad higher on short-covering after IDR gained last week but trade muted as many Asian markets closed for Lunar New Year, dealers say; "there's not much movement," one says; dealers tip market to trade in range Tuesday, 9,335-9,365 band eyed.
0854 GMT [Dow Jones] There is the risk of a EUR rally, warns Credit Agricole. The bank reckons that those running short EUR positions could be in trouble if details of a Greek package are now released. This, the bank says would foster "a substantial narrowing of Greek spreads and an associated rally in the EUR."
0838 GMT [Dow Jones] EUR/GBP is trading lower and GBP/USD ticking higher as sterling garners support from the strong February Rightmove housing price data, which showed asking prices have jumped by 3.2%, the biggest monthly move in almost three years. However, BNP Paribas notes viewer traffic declined, suggesting that higher asking prices are unlikely to translate into a lasting stabilization of the housing market. For GBP/USD the bank sees support at 1.5550, but says once this gives way then risk is toward 1.5220. GBP/USD now trades at 1.5686. EUR/GBP at 0.8681.
0836 GMT [Dow Jones] The IMM data showing net EUR shorts at a new record high is bad news for the single currency in more ways than one, says UBS. First, the bank notes, changes in positioning have preceded EUR moves over the last six months. So even if shorts fall now, the EUR has further to decline. Second, the growth in short EUR positions has accelerated over the last three weeks, suggesting that the market is content with the positions accumulated. And third, this new data were taken last Tuesday, before the disappointing results of the EU Council meeting was known. "It is likely that short positioning has deepened further still (since then)," the bank adds.
0832 GMT [Dow Jones] Japanese 4Q growth at 1.1% may have come in stronger than expected but the JPY is hardly getting any support. Danske Bank says "The GDP deflator showed bigger deflationary pressures than expected, which might explain why the JPY has seen pressure overnight," the bank says, noting that it is still too early to rule out more QE in Japan.
0812 GMT [Dow Jones] The euro is likely to stay under siege regardless of the results of the Ecofin meeting says UniCredit. EUR/USD may have survived another test of 1.3583 support Monday but unless it can get back above 1.3840 the risk is toward 1.3440 says the bank. EUR/USD now at 1.3610.
0755 GMT [Dow Jones] iTraxx Japan Series 12 traded at 153 bps vs Friday's 145 bps due to demand for protection against bankruptcy as concerns grow that China's monetary tightening could slow economic growth, weighing on Japan's exports. "Investors have become worried about whether Tokyo shares will fall further. Under such circumstances, they will likely continue buying CDS," pushing iTraxx higher, says Akira Nomura, credit analyst at Mizuho Securities. Adds, focus also on how global stock markets will develop after meetings of Europe finance ministers on Greece's debt problem, which slated to be held Monday, Tuesday. Among single-name CDS deals earlier in day, Obayashi Corp. (1802.TO) at 255 bps vs 240 bps on Feb. 10.
0336 GMT [Dow Jones] USD/JPY last at 90.17, tad stronger than 89.98 level in New York Friday; Mizuho Corporate Bank senior dealer Satoshi Tate says Japanese speculators supporting pair around 90.00, though reasons not clear; "There was some (dollar/yen) selling right after the stronger-than-expected Japan GDP, but the pair was well supported at 90.00," with USD/JPY off intraday low of 89.98. Adds calm trade expected ahead as U.S. markets closed for holiday; focus on meeting of European Finance Ministers to discuss Greece debt issue.
0239 GMT [Dow Jones] Brown Brothers Harriman reckons multi-year bear market for USD has ended and bull market has begun, with USD set to rise in medium, long term. Tips EUR/USD to drop at least to 1.20 "though a move to parity cannot be ruled out," with GBP hobbled by "ruinous crisis" in UK finances; expects USD/JPY to rise toward 120 due to Japan's poor productivity growth and aging population. Reckons USD demand will be boosted by relatively cheap valuation, faster U.S. economic bounce resulting in quicker rate hikes than other developed economies, and bigger productivity gains; may trigger more U.S. stock buys by Americans, now keeping as much as 20%-25% of their equity investments in other markets.
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