All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

USD/JPY - 95.00 Ahead?

Last updated 4/30/2010 5:32 AM ET (GMT -5) 0 Comments - Add your comment

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

Top Stories

• Barroso assures the market Germans will pass the Greek bailout deal
• UK election - Tories take the lead
• Asia up 1.2%, Europe up .4% as risk appetite returns
• OIl all the way back to $86/bbl
• Gold hitting new highs at $1174/oz.

Overnight Eco

• AUD HIA New Home Sales 0.9% vs. -5.2%
• AUD Private Sector Credit
• JPY Manufacturing PMI 53.5 vs. 52.4
• JPY Household Spending 4.4% vs. 0.7%
• JPY Tokyo Core CPI -1.9% vs .-2.0%
• JPY Unemployment Rate 5.0% vs. -4.9%
• JPY Prelim Industrial Production 0.3% vs. 0.9%
• JPY BoJ Rate Decision 10bp
• EUR Unemployment Rate 10.0%

Event Risk on Tap

• CAD GDP expected at 0.5%
• CAD RMPI expected at 0.6%
• CAD IPPI expected at 0.3%
• USD Advance GDP expected at 3.4%
• USD Employment Cost Index expected at 0.6%
• USD Chicago PMI expected at 60.2
• USD Revised UoM Consumer Sentiment expected at 71.3

Price Action

• USD/JPY rallies to 93.25 as risk flow return and BOJ remains still
• AUD/USD good housing data push it above .9300
• GBP/USD just below 1.5400 as market grapples with election news
• EUR/USD short covering continues as 1.3300 taken out to the upside

Risk FX continued its short covering rally on the last trading day of the week as European officials assured the markets that the Greek bailout deal would be completed shortly. Jose Barroso the European Commission President said that he was confident the rescue package would be ready “in days.” As the result, EUR/USD rallied through the 1.3300 barrier in early morning European dealing.

As we wrote yesterday, “With the unit now grossly oversold and eco data supportive some light short covering could push it back above 1.3300 before the week’s end.” Having reached the target the euro may now  find  some resistance around the 1.3400 level but with the Greek crisis under control for the time being, the single currency has lost much of its downside momentum and may spend the next several weeks consolidating at these levels unless currency traders see further turmoil in the credit markets.

There were no surprises on the economic front with European unemployment printing at 10% as expected while CPI reading rose to 1.5% - the highest level in nearly two years.  Still the data  had little impact on the market and many analysts argue that as a result of the massive rescue package for Greece, the ECB will have to maintain a loose monetary policy irrespective of any price pressures in the region. That factor could weigh negatively on the euro late into the year if the Fed begins to tighten while Mr. Trichet and company are forced to remain stationary.  For now however, the unit was befitting from the easing or risk aversion sentiment and appears to have stabilized at these levels.

In UK, the focus will turn to politics as the election campaign enters its final days.  The strong  performance of Tory leader David Cameron in last night’s final televised debate has turned the markets more optimistic  about the prospect of a Tory win. Even if Mr. Cameron is forced to form a coalition government, Mr. Glegg has indicated that he would be open to the idea of sharing power with the Tories, thus lessening the chances of protracted political battle and a hung Parliament.

The pound may rally to the 1.5500 level if polling continues to favor Tories as campaigning enters its final days. Still as we noted earlier, “the euphoria over the pro-business Tories will last only as long UK economic data continues to surprise to the upside. Any slowdown in growth will revive concerns over the country’s extremely fragile fiscal condition and could trigger the type turmoil that we are seeing in European credit markets.”

In North America today the market could see conflicting US economic data with GDP missing slightly to the downside but the Chicago PMI possibly beating its forecast. Overall US economic data continues to show steady improvement and that fact is being reflected in USD/JPY which has held the 94.00 level for the past several days and has burst through 94.40 resistance in overnight trade. With BOJ officials stating that the Japanese monetary will continue to remain stationary and with Japanese economic data overnight relatively mixed, the 3 month LIBOR spread between US and Japanese rates continues to widen out which is indicative of further upside in USD/JPY& nbsp; as 95.00 now comes into view

FX Upcoming

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

Loading...

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.