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ForexLive North American wrap
Market trimmed long USD/JPY position in latest week: COT
Reuters: Democratic Senate leaders urge Obama to take “any lawful step” to insure no default…
Germany’s Schaeuble: Euro area is over worst of crisis–BBG
An oldie but a goodie
Us December budget deficit $260 million. That’s right, million
I thought Ireland was the poster child for righting one’s ship
Where the forecasters stand
AUD/USD fades back to breakout point
HSBC: Buy AUD/JPY
Ireland affirmed at BBB+ by S&P
I leave you kids alone for a just a few hours…
European equity close: Small gains
The market is exciting but don’t get excited
Plosser said it’s ‘conceivable’ Fed could raise rates in 2014
Oil comes off the boil
I can’t find anything to like about gold
USD/JPY cruises through option cut
NIESR GDP estimate -0.3%
Fed’s Plosser says he’s not a ‘big fan’ of QE

Posted: 11 Jan 2013 01:15 PM PST

US Nov trade deficit $48.7B vs $41.3B exp
Canada Nov trade balance -$1.96B vs -$0.17B prior
UK NIESR GDP estimate -0.3% through Dec
Goldman says to buy EUR/USD
HSBC: Buy AUD/JPY
Merkel: EU must show solidarity with Cyprus
Fed’s Plosser warns about global currency war
Plosser: ‘Conceivable’ Fed could hike rates in 2014
Irish Dec consumer sentiment 49.8 vs 63.8 in Nov
Spanish 10-year yields fall below 5%
Italian 10-year yields down 7bps to 4.09%
EUR/CHF hits one-year high above 1.22
On the day, EUR leads and NZD trails
On the week, EUR leads and JPY lags (+350 pips)

I came in expecting consolation after the big moves on Thursday but the euro kept on rollin’ — all the way up to 1.3366, taking out barriers at 1.3300 and 1.3350.

USD/JPY came into US trading near the lows of the session at 88.74 but (once again) the market was buying any dip and the pair flashed to a fresh cycle high at 89.45. Chatter about 89.50 barriers and there will most-definitely be corporate sellers at 90.00.

Cable tried to track higher with the euro but had its knees kicked out by the NIESR estimate, dropping down to 1.6090 from 1.6160. It recovered in late trading to 1.6133.

USD/CAD fell to the lowest since mid-October, tripping some stops below 0.9825 but (as is the custom) most of the declines evaporated.

Gold fell hard, down to $1654 from $1676 for no particular reason but there was chatter about hedge fund sales.

Have a great weekend.

Market trimmed long USD/JPY position in latest week: COT

Posted: 11 Jan 2013 12:42 PM PST

The commitments of traders data released weekly by the CFTC shows an 8% drop in market’s short yen position despite the continued strong USD/JPY rally. That’s a sign the rally still has legs.

Reuters: Democratic Senate leaders urge Obama to take “any lawful step” to insure no default…

Posted: 11 Jan 2013 12:15 PM PST

…if debt ceiling not raised on time.

Do a deal, then you won’t have to resort to gimmicks. It ain’t that hard.

Germany’s Schaeuble: Euro area is over worst of crisis–BBG

Posted: 11 Jan 2013 12:11 PM PST

Can’t sound the all-clear yet

Sounds about right…EUR/USD headed into the weekend

An oldie but a goodie

Posted: 11 Jan 2013 11:47 AM PST

A friend sent this around last week. It’s a classic of the genre.

Us December budget deficit $260 million. That’s right, million

Posted: 11 Jan 2013 11:02 AM PST

That’s the lowest since December 2007, when there was a monthly surplus. Last month the US posted a $172.1 bln deficit.

The market had expected a $22.5 bln deficit.

I thought Ireland was the poster child for righting one’s ship

Posted: 11 Jan 2013 10:30 AM PST

Maybe so, but its banks still may need more capital, the Irish Times reports.

Where the forecasters stand

Posted: 11 Jan 2013 10:08 AM PST

I don’t often look at these because the bank forecasters are a pack of dogs chasing their tails but it’s the start of the year and things are moving so let’s take a look.

These are the consensus forecasts for the end of the time period shown.

Tips for reading this. 1) Ignore the ‘forward’ line. 2) the period is for the end of the period 3) click to enlarge 4) have a chuckle at anyone who thinks he can forecast out to 2017

Commodity currencies.

What’s most instructive is that I can go back a month and tell you that the consensus Q1 forecast on USD/JPY was 82. The only forecasters who were close were RBS and Italian hedge fund Aletti Gestielle. For what it’s worth, they both currently see the pair peaking at 92.00 around mid-year.

Forecasts for EUR/USD range between 1.13 and nearby 1.35. Expect to see those revised higher in the coming days/weeks.

AUD/USD fades back to breakout point

Posted: 11 Jan 2013 09:21 AM PST

AUD/USD has slipped as low as 1.0533 on the failure to crack 1.0600 (high of 1.0599).

Last week and earlier this week, the 1.0520/30 level was the sticky spot. It’s typical for a pair to go back and retest a break so I’m not surprised to see it back here.

Yesterday, I suggested these levels might be a good spot to buy and I stand by that. A stop at 1.0500 is a good place to cut out if risk trades sour next week.

On a deeper retracement, I would look to buy again ahead of Chinese GDP and industrial production data to be released next Friday. Given the outstanding Chinese trade numbers, I expect an upside surprise.

HSBC: Buy AUD/JPY

Posted: 11 Jan 2013 09:03 AM PST

At 94.26, targeting 99.30. Via Bloomberg

Ireland affirmed at BBB+ by S&P

Posted: 11 Jan 2013 08:57 AM PST

I leave you kids alone for a just a few hours…

Posted: 11 Jan 2013 08:50 AM PST

…and I come back to see that you’ve had a party and raided the liquor cabinet.

EUR/USD has broken to multi-month highs after vaulting 1.3308 early in the US session. Ongoing expectations that the ECB has halted the contagion from PIG and kept Spain and Italy afloat by providing a safety net via the OMT. News that Spain’s Sabadell is set to payback 20% of LTRO funding this month is helping the euro as well. That helps shrink the ECB balance sheet and it shows a modicum of strength in the troubled Spanish banking sector.

A continued large slide in the JPY contributes to the bid tone in EUR/USD as EUR/JPY adds what feels like a big-figure a day. 120.00 is a big, fat target for the EUR/JPY bulls which feels almost inevitable at this stage.

1.3305/10 bids are seen on dips near-term while 1.3380 is next resistance on the daily charts. We trade now just above 1.3350.

European equity close: Small gains

Posted: 11 Jan 2013 08:39 AM PST

UK FTSE +0.2%
German DAX +0.1%
French CAC flat
Spain IBEX +0.4%
Italy MIB +0.3%

Small gains or losses on the week for the indexes, which is a positive signs after the huge gains in the first week of the year.

The market is exciting but don’t get excited

Posted: 11 Jan 2013 08:16 AM PST

2012 was a poor year for trends and volatility in the FX market but so far 2013 has been outstanding. The big move in the yen (and potentially in the euro) could make it a great year.

I hinted about ‘animal spirits’ earlier and I want to emphasize the point. When markets start moving 200 pips per day it’s easy to get greedy.

We spent months talking about what would happen to USD/JPY when it was at 79.00 and now that it’s at 89.00, it’s obvious where the money was to be made.

The natural feeling is to believe you ‘missed’ the trade. When you feel that way, the classic pitfall is to chase at bad levels or fade it out of disbelief.

One of the hardest lessons to absorb is this: there will always be another trade. If you missed this one, so what? A shark won’t chase a tunafish across the Atlantic. When a lion is hungry it won’t chase a zebra across Africa.

Stay patient.

Plosser said it’s ‘conceivable’ Fed could raise rates in 2014

Posted: 11 Jan 2013 07:53 AM PST

Fed would stop asset purchases before raising rates
Changing threasholds would be ‘terribly confusing’
Manufacturing may pick up

When one of the biggest hawks on the FOMC says it’s ‘conceivable’ that means it’s probably not going to happen.

Oil comes off the boil

Posted: 11 Jan 2013 07:35 AM PST

WTI crude is down $1 today but it has been sizzling for the past four weeks.

A break of trendline support could inspire more selling but as long as the global economy continues to improve, oil will continue to rise.

I can’t find anything to like about gold

Posted: 11 Jan 2013 07:25 AM PST

The US dollar has been torched on most crosses over the past week yet gold is virtually unchanged after the $10 drop in the past hour.

A weak US dollar, central banks printing and the S&P 500 at a 5-year high — all that should work in favor of gold.

Yet gold can’t rally. This is the weakest gold market in years. That doesn’t mean it will drop — because it’s in one of the greatest bull markets in generations — but something needs to happen ASAP.

USD/JPY cruises through option cut

Posted: 11 Jan 2013 07:17 AM PST

There was a lot of chatter with big numbers on USD/JPY options.

Obviously the numbers weren’t big enough and the cut passed well-above 89.00. The takeaway is the same one that you know already — the yen is weak, very weak.