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DOLLAR: Not surprisingly the Dollar is lower this morning as concerns toward EU debt are apparently being temporarily pushed to a back burner position. However, the debt concerns haven’t dissipated they are just a little stale or perhaps temporarily over exposed. It does seem as if the recovery bounce in equities is serving to undermine the Dollar this morning, as higher equity price action gives off the impression of a trade that is going to be interested in slightly riskier investments. It is possible that favorable Coke earnings, a favorable US Treasury auction result and hope for the Senate Jobs bills could add to the downside tilt in the Dollar throughout the trade today. However, we doubt that traders will want to remain negative toward the Dollar beyond the US trading session today. Apparently the markets are currently of a mind that recent Greek maneuvers are capable of staving off more near term concerns and that also is prompting some long liquidation of the Dollar. We see the 80.00 level as a critical support zone, with longer term up trend channel support seen down at 79.46, but that up trend channel support line climbs up to 79.62 on Wednesday.
EURO: While the Euro is seeing some technical short covering buying in the early trade today, the scheduled number flow from the Euro zone wasn’t exactly overly beneficial to the bull case. In fact, a German CPI reading overnight actually declined by 0.6% and that would seem to point to deflation rather than inflation in the Euro zone. Therefore suggestions from Trichet that the EU needed to keep inflation expectations anchored, hardly serves to foment inflationary views toward the Euro. However, the Euro was certainly aggressively oversold into last week’s lows and a slight recovery effort in the equity markets today could allow for a temporary rise back above the 1.3750 level in the March Euro. In the end, we just don’t see the catalyst for an end to the downtrend pattern in the Euro.
YEN: News of a further tempering of the Greek situation and higher equity market action overnight has undermined the Yen from a flight to quality perspective. Up trend channel support is seen all the way down at 110.22 today, with that support level rising to 110.38 on Wednesday. In an indirect way, the Toyota problems could be a slight undermine to the Yen, but the biggest blow to the yen might come from a temporary unsustainable reaction to the upcoming US jobs bill.
Aggressive traders should be willing to sell the March Yen on any rally today back above the 112.00 level.
SWISS: Like the Euro, the Swiss was technically overdone around the lows last week and now the currency is due a temporary corrective bounce. At least for the near term, the Greece situation is apparently going to shift to a back burner status and that should also allow the Swiss to recover. Initial resistance is seen up at 94.00 but we can’t rule out a temporary rally back above that level in the coming 8 hours of trade. In other words, US corporate earnings, US auction results and the promise of another US jobs bill seems to have taken the Greece story out of the headlines.
POUND: Despite seeing some recovery action in other non dollar currencies this morning, the Pound is not showing much in the way of a bounce mentality. In fact, one might have expected the Pound to benefit from slightly higher equity market action overnight but apparently the Pound isn’t easily cheered. A widening of the UK trade deficit overnight seems to have undermined the Pound, as the trade took those readings as confirmation that the recovery progress in the UK is still very questionable. In short, the trend in the Pound looks to remain down with only a brief pause above the 1.55 level today.
CANADIAN DOLLAR: The Canadian is getting some temporary support from what appears to be a slight improvement in global macro economic sentiment. However, we just don’t see the fundamental news to suggest that equities, commodities and the Canadian are poised for sustainable upside action ahead. Therefore, aggressive and short term traders should consider getting short the March Canadian on a minor bounce today back to the 93.83 level.
TODAY’S MARKET IDEAS: Minor Dollar weakness early today, not an end to the recent uptrend pattern.
