Forex News

The debate about Dominique Strauss-Kahn’s successor as the head of the IMF is in full swing. Sadly all sides seem to be more interested in the origin of the candidate than his or her qualifications.

Divergent views among central banks may continue While the ECB has started to tighten monetary policy, the BoE and the Fed have remained on hold. Recent comments from different central bank officials indicate that differences in policy stance may continue.

GBP/USD has sold off towards and held above its one year uptrend at 1.6089. We would allow for a small rebound from here. However we do not believe that the market will struggle to reassert the long term bull trend.

Given the dearth of market-moving economic data, ‘headline-watching’ especially regarding official comments about Greece should dominate today’s session.

Nothing much is boiling out there at the moment… Things are simmering below the surface but the market is in a cautious on hold mood it seems… EURUSD & EURJPY charts looks just the same (=USDJPY at a standstill)…

The Treasury rally has lost momentum, with yields failing to break decisively below this year’s lows. The near-term strategy call on yields and the curve is neutral.

We recommend going long CHY-JPY at current levels. We think this makes sense by taking account of fundamentals, intervention risk in yen and technical indicators:

The “re”-words. Restructuring, reshaping, re-profiling – the dictionary of terms for measures to tackle the Greek debt problem is growing inflationary.

This week’s initial jobless claims reading fell to 409,000 (consensus 420,000), providing relief after three straight elevated readings in which claims averaged 449,000 per week.

Developed macro 1.       In a day almost devoid of European data, the focus will be on EU/ECB speakers once again, as dissensions persist over a possible Greek debt “re-profiling”. 2.       The BOJ is expected to stay on hold.

The S&P 500 may have some more gains left. If it crosses above 1,351, new highs above 1,370 are probable.