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Yen Carry Trade Unwinds Ahead of G7 Meeting
Japanese yen rises in forex trading
The Japanese yen is up in currency trading on the FX market as the yen carry trade unwinds as a forex trading strategy ahead of the G7 meeting. Reuters explains the dynamics behind the yen carry trade and the G7 meeting:
But investors, cautious ahead of the G7 meeting and also key U.S. inflation data next week, were unwinding positions.
"If people are worried the G7 might again issue a statement that the yen is undervalued, people will be uncomfortable being short yen going into the G7 meeting," said Johan Javeus, currency strategist at SEB in Stockholm.
"The market is overly worried... They (the G7) are likely to stick to their usual words. But with record high levels in euro/yen the market might be inclined to take some profits."


Australian Dollar Forex Forecast
Aussie expected to remain strong through weekend in forex trading
The Australian dollar forex forecast calls for a stronger Aussie over the weekend. Economic data is driving the economy, and the Australian dollar is up against the U.S. dollar on the FX market. The Herald Sun reports on the Aussie in forex trading:
[Currency strategist Robert] Rennie said the dollar would likely strengthen over the weekend unless news out of the G7 surprises the market.
"If nothing comes out of G7, it's pretty much plain sailing for the Aussie," he said.
Westpac expects the dollar to remain comfortably above 80 US cents at least until mid-year.


U.K. Pound Down v. Japanese Yen, But Up v. U.S. Dollar
The sterling and currency trading on the FX market
The U.K. pound is losing ground to the Japanese yen in forex trading on the currency market, but it is gaining against the U.S. dollar. Indeed, the sterling is expected to perhaps reach the $2 mark against the dollar in forex trading in the next few weeks. Bloomberg reports on the U.K. pound in currency trading on the FX market:
Against the dollar, the pound rose to $1.9863 from $1.9793 yesterday. BNP Paribas said the currency extended gains after it broke a key resistance of $1.980, citing charts that predict price movements. Resistance is a level where sell orders may be clustered. BNP's technical analysts expect the British unit to rise to $2 in the next few weeks.


Euro Hits Lifetime High Against Japanese Yen in Forex Trading
Asian session profitable for euro in currency trading
The euro is still rising in currency trading on the FX market. It hit a new lifetime high against the Japanese yen in the Asian forex trading session, and is expected to remain strong. Forbes reports on the euro and Japanese yen:
Earlier in the Asian session, the euro struck a new lifetime high of 160.88 yen against the yen, even though the European Central Bank (ECB) now seems likely to raise interest rates only in June, rather than in May, dealers said.The euro is also moving up against the U.S. dollar in forex trading, based on the fact the U.S. data continues to be weak, and the ECB is expected to lift interest rates in June.


GFT Market Recap: London Session
The USD weakened against the other majors, ahead of the G-7 Ministers Meeting. The JPY was the main beneficiary as there is speculation that there will be comments out of the G-7 saying the JPY weakness is unwarranted.

RANGES
10:00pm-6:00am EST

Low
High
EUR/USD
1.3500
1.3538
GBP/USD
1.9809
1.9870
USD/JPY
118.20
118.92
USD/CHF
1.2073
1.2152


European Mid Morning Update 13th April 2007
Dollar weak but position squaring ahead of the weekend G7 will limit losses
French CPI rose in line with expectations at +0.4% MoM and +1.2% YoY over February. While this is a rise from January’s annualized +1.0% it should be remembered that this was an eight year low and thus the inflationary picture in France is still subdued. As with the Italian numbers earlier the main component fuelling the rise was the increase in oil prices which were higher by +1.6% MoM. With intrinsic price pressures still contained the next few months could well see moves in CPI correlated to oil prices. The ECB will be comfortable with this result.
The following economic releases are due later today:
FebruaryEuro-zone Industrial Production s.a. (MoM) +0.4%Euro-zone Industrial Production w.d.a. (YoY) +4.1%U.S. Trade Balance US$ -60.0bn
MarchU.S. PPI (MoM) +0.7%U.S. PPI (YoY) +3.0%U.S. PPI (excl Food & Energy) (MoM) +0.2%U.S. PPI (excl Food & Energy) (YoY) +1.8%
AprilUniversity of Michigan Confidence 87.5
Although the Asian session has seen the Dollar under pressure there is little to push the Dollar much further with the economic calendar quite thin. Indeed, with the weekend G7 meeting there is probably more potential for a tidying up of positions which suggests the Dollar should benefit today awaiting communiqués from the financial ministers. Almost certainly Forex will not likely receive any more attention or comment than in the past with the general statement declaring that rates should reflect economic fundamentals.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSDRes: 119.71-07 1.3590-16 1.2180-00 1.9980-85Res: 119.17-53 1.3553-65 1.2130-40 1.9878-15
Spt: 118.10-40 1.3450-70 1.2068-82 1.9810-20Spt: 117.34-51 1.3395-11 1.2029-34 1.9750-60

European Morning Update 13th April 2007
Dollar on the soft side in Asia but losses should be limited
There have been no economic releases in Asia today except for and IDS report which reported a quarterly rise in U.K. wage settlements of 3.5%. While the number is the same as the 3M figure reported in January and up from 3.42% in February, it actually marks the highest level since September 2001. Over a quarter of all settlements were 4.0% or above due to the increasing tendency to reference RPI and the recent trend is pointing to an increase in settlements above 4% which will only force the BOE to hike rates.
The IMF’s Rato has added fuel to the rumors of carry trades being discussed over this weekend’s G7 meeting by commenting that such trades need be monitored carefully due to the risk of a sharp move in exchange rates. He identified the Aussie and Kiwi Dollars as the main beneficiaries. At the moment the JPY crosses still remain firm and this should continue in the short to medium term.
It seems customary for the BOJ to state their confidence in the U.S. economy since Japan’s growth has a strong link to the strength of this growth. He repeated this morning that he agreed with Bernanke that there is a “high probability” of achieving a gradual slowdown without tipping the economy into recession even though there are risks from lower CAPEX and high inflation.
The following economic releases are due later today:
FebruaryEuro-zone Industrial Production s.a. (MoM) +0.4%Euro-zone Industrial Production w.d.a. (YoY) +4.1%U.S. Trade Balance US$ -60.0bn
MarchEuro-zone 25 New Car Registrations French CPI (MoM) +0.5%French CPI (YoY) +1.2%U.S. PPI (MoM) +0.7%U.S. PPI (YoY) +3.0%U.S. PPI (excl Food & Energy) (MoM) +0.2%U.S. PPI (excl Food & Energy) (YoY) +1.8%
AprilUniversity of Michigan Confidence 87.5
We had what appears to be a signal of direct gains in EURUSD yesterday. This does look positive and within this pair what we have to watch now are the two scenarios that I have been pondering – the daily expanded flat at 1.3559 and the direct rally to 1.3666. We have reached 1.3523 this morning and we need look at the next move. Now the slight confusion is the lack of follow-through in USDCHF which really didn’t make too much progress on the downside. I think this may well be the differentiator between the two scenarios.
However, for today we note all the way through the risk for a pullback in the Dollar and we tend to feel that some Dollar strength should be seen into today’s close. Watch Dollar resistance levels at 1.3406-20 Euro, 1.2244-50 Swissie and 1.9703-23 Pound.
For USDJPY we have seen a dip slightly earlier than expected but there does seem to be good support between 118.40-80 and while that holds it remains with a Dollar bullish bias and may well see gains prompted by the EURJPY upside which should keep on the uptrend.
Aussie – watch 0.8340-60 and USDCAD 1.1276-1.1320. These areas should be triggering a reversal.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSDRes: 119.71-07 1.3590-16 1.2244-50 1.9912-15Res: 119.17-53 1.3523-53 1.2181-07 1.9835-53
Spt: 118.10-40 1.3440-70 1.2118-31 1.9777-83Spt: 117.34-51 1.3395-11 1.2029-74 1.9703-23


Pro Commentary Lite 12th April 2007 ... USDCHF
An excerpt from FX-Strategy's Pro Commentary

Price: 1.2146
Resistance:
1.2181
1.2210
1.2250
1.2282
Support:
1.2131
1.2118
1.2078
1.2029
Bias:
While 1.2118-31 supports we feel there may be room for a return to 1.2244-50
Daily Bullish:
Losses were seen as preferred and these reached just below the 1.2140-50 support, stalling at 1.2131. We see support here and at 1.2118 and feel this may well hold any losses and if so a move back above 1.2155 should then lead to a test of the 1.2181 pivot area with break there forcing a move back to the 1.2207-12 area which could cause a small pullback ahead of a retest of 1.2244-50. At this point we feel it will hold for a second test lower. Thus only above 1.2250-55 would retest 1.2282.
MT Bullish:
The failure to break lower is causing the wave structure to develop a potential strong break higher. A move above 1.2281-00 would heighten this with resistance then at 1.2354, 1.2402 and 1.2525. (April 9th)
Daily Bearish:
Losses reached just below the 1.2140-50 support and we do still see minor risk of this extending to 1.2118. However, at this point we feel it may hold. Thus a more bearish stance will require a break of 1.2118 and if seen would extend the downside to 1.2074-82 where we need to take a little care. Further support is then seen at 1.2029-50 which should hold if seen.
MT Bearish:
We have seen losses that have moved below 1.2145 but the nature of the decline is a little uncertain and before we get further bearish we will need a break below 1.2229-50. (April 13th)

ELLIOTT WAVE COMMENTS
12th April
It certainly looks as if we may have seen a Wave –x- at the 61.8% retracement at 1.2281. This would imply additional losses but since we have had only two ABC structures higher it may be prudent to keep in mind the possibility of a third ABC pattern.
Price has reached a 76.4% retracement at 1.2250 and this may just imply a triangle which would see support around 1.2140-50. Thus use this as a clue – below would imply losses to the 1.2029-34 area being a 138.2% projection in a potential Wave iii of a new Wave (a) lower.
13th April
Care is required at this point which could still see a return to 1.2244-50 in an expanded flat. Given the wave structures elsewhere we would need to see break of the wave equality target at 1.2068.
Ian Copsey


GFT Daily Forex Market Commentary
Forex Market Commentary for April 13, 2007 by Cornelius Luca
GFT Daily Forex Market Commentary
The dollar sank across the board on Thursday, as the incessant demand for the commodity currencies spilled over the European currencies and the yen as well. The dollar is starting to look a bit oversold, but this shouldn’t last for long. Following a brief bounce, the US currency should encounter further weakness. This being said, Friday will see the release of the Trade balance report for February, the PPI report for March and the University of Michigan survey for April. Any of these reports may be market movers, but the trade report should be disregarded. Euro/dollar
Euro/dollar resumed its strong uptrend on Thursday and reached a new over two-year high. Above 1.3525, resistance follows at 1.3555 and 1.3588. There is a pivotal high at 1.3666.
Immediate support is seen at 1.3480. Below 1.3420, the next levels are 1.3365 and 1.3340. Distant support is pegged at 1.3300. Oscillators are rising.
NEAR-TERM: Mildly bullish MEDIUM-TERM: Bullish LONG-TERM: Bullish
Dollar/yen
One day after climbing to its highest level since late February, dollar/yen slipped on Thursday. Sideways to lower trading remains favored, but watch out for the big levels nearby. Below 118.75, strong support remains at 118.25 from a 50-point pivot that targets 117.75 and 118.75.
Initial and key resistance is still seen at 119.65 from another 50-point pivot that targets 119.15 and 120.15. Above 120.75, distant resistance now comes at 121.05 from another 50-point pivot.
Oscillators are rising.
NEAR-TERM: Slightly bearish MEDIUM-TERM: Slightly bullishLONG-TERM: Bullish
Sterling/dollar
Sterling/dollar climbed higher on Thursday, and should push up today as well. Immediate resistance is at 1.9840. The pound will likely attack the area between 1.9905 and 1.9935. Naturally, there is psychological resistance at 2.0000.
Initial support is at 1.9780. Next floors are at 1.9750 and 1.9705. Below 1.9680, strong support follows at 1.9640. A pivotal low is at 1.9590. Oscillators are rising.
NEAR-TERM: Slightly bullish MEDIUM-TERM: Mixed LONG-TERM: Mixed
Dollar/Swiss franc
The dollar/Swiss franc fell to a one-week low on Thursday, but trimmed losses after testing briefly the bottom of its rising channel. More sideways to lower trading is likely today. Support is seen at 1.2135, which marks the bottom the channel. If this floor breaks, then dollar/Swiss franc would likely challenge the 1.2075 level. A key level follows at 1.2050. Initial resistance comes at 1.2200. 1.2240 follows that. Above 1.2282, strong resistance comes at 1.2330.
Oscillators are mixed.
NEAR-TERM: Mixed with bearish bias MEDIUM-TERM: Mixed with upside biasLONG-TERM: Mixed