Friday December 17, 2004 - 19:47:32 GMT
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We saw the release of the CPI this morning, which was inline with expectations (.2% MoM and 2.2%YoY). We saw some initial dollar strength off the data as EUR/USD spiked lower from 1.3273 to 1.3226. The pair put in a high print of 1.3316 in the London session and proceeded to trade in relatively tight range prior to this data release. After the move lower to 1.3226, the pair quickly rebounded and attempted to trade with a 1.33 handle but failed and retreated. We have seen consolidation through the afternoon as the 1.33 figure appears to be capping the top side and 1.3250 is offering downside support. USD/JPY, which initially popped higher off the inline number (104.63), has since grinded lower through the afternoon but has held the 104 figure. This pair also appears to digesting the volatile moves we saw over the course of this week. Cable again exhibited some whippy price action as the pair roared from the 1.93 figure to a high of 1.9448 in London. The pair then ended right back to where it started (1.9300) off the U.S. economic data. It has since snapped back higher, as it is now testing the 1.9400 figure. One event to note over the weekend is the visit of the British chancellor of the exchequer, Gordon Brown to Washington DC, where he is expected to meet with treasury secretary John Snow and other representative of the IMF.
Technically Speaking: USD/JPY has put is a series of lower highs since yesterday when viewing a 30 minute chart. Any attempt higher has been met with offers, as the 105 figure is clearly upside resistance.
GAIN an EDGE: We look to sell USD/JPY on an approach to the 105 figure. We will offer half our position at 104.75 and the other at 104.95. If done, we will leave a stop at 105.18 and look to take profit at 103.58.
Either way, we expect another riveting week of trade in the f/x markets.
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