Thursday September 23, 2010 - 03:56:11 GMT
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Japanese Intervention Plan Getting No Support from Central Banks
The USD JPY hit a key 50% price at 80.40 as forecast,
triggering some light profit-taking. Although traders anticipate another round
of intervention, there has been no notable central bank activity at this time.
This could mean that aggressive traders will continue to push the Dollar/Yen
lower into the next retracement level at 80.04.
The 50% correction of the â€śIntervention Rallyâ€ť in less than
a week proves that the Bank of Japan and Japanese officials will have to work
harder to weaken the Japanese Yen. I warned before the intervention that they
seldom work without the cooperation of other central banks. The Fedâ€™s strong
hint at further stimulus was a sign that it was not on the same page as the BoJ
since its poor assessment of the U.S. economy was bad of the Dollar.
Whether the Fed is deliberately weakening the U.S. Dollar
can be debated, the bottom-line is, Japan
can cry all it wants about the strong Yen weakening its economy, but the Fed is
not concerned because the U.S.
economy has problems of its own.
After hovering on both sides of an uptrending Gann angle at
.9570 on Wednesday, the Aussie Dollar finally succumbed to selling pressure,
triggering a break from its high and putting it in a position to form a daily
closing price reversal top.
A late session comeback, however, helped the Aussie avoid
forming the bearish topping pattern. The intraday action does suggest, however,
that the selling may be greater than the buying at its current price level.
Weakness in U.S.
equity markets was to blame for todayâ€™s break in the AUD USD. Once it became
clear that the stock market did not have enough buying power to regain
Tuesdayâ€™s high, demand for higher risk assets fell, triggering a profit-taking
break in the Australian Dollar.
Although the Australian economy is much stronger than the U.S. economy at this time and its central bank
has been raising interest rates while the Fed is likely to begin another round
of stimulus, investors are concerned that the faltering U.S. economy may derail the entire
global recovery. This concern is encouraging bullish Aussie Dollar traders to
take a little off the top while traders reassess their risk parameters.
A strong overnight rally triggered a sharp move to the
upside, putting the GBP USD in position to challenge a key resistance cluster
at 1.5728 to 1.5736. The Sterling
backed-off early in the session at 1.5714 before settling into a range.
Early this morning the Bank of England minutes stated that the central bank
members were concerned about a slow-down in the economy and were open to fresh
stimulus measures. This news may have helped limit gains in the British Pound
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