Wednesday September 8, 2004 - 18:55:12 GMT
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Forex: Chock Full O Nuts
The market was caught extremely short today and paid the price as the dollar was punched in the kisser as soon as Fed. Chairman Greenspan made his comments at 10:30am NY time. The dollar was pushed higher this morning to highs of 1.2792. The euro was looking very unhealthy and ready to take out the base of 1.1970 hitting a low of 1.2027, and the market was expecting hawkish comments from Fed Chairman Greenspan leading most to be caught long dollars and short euro. This was a smack in the face when the chairman said the most recent data suggests expansion regained some traction and inflation expectations eased. The dollar trading near its highs was sold off immediately to 1.2605 seen as a low in NY; the euro rebounded from 1.2030 to 1.2187 highs seen in the NY session. We had some initial data this morning as the BOC governing body of Canada hiked rates 25bps to 2.25% this was a number widely expected in the market and there was not to much initial reaction afterwards since the market seemed to be positioned correctly from yesterday. The AUDUSD was seen first looking to break key support at .6880 and has withstood selling pressure since last night regarding merger news as well and yet still managed to post highs of .6983. The cross dramatically changed direction as well on the move as EURJPY was sold off all morning to 131.84 and short squeeze along with stops have seen us make a 133.15 high in NY trading, the dollar against the yen has remained sidelined for the most part as the cross dragged euro up with it all day but look for this pair to be capped by exporter interest still hovering at the 110.00 level and again at 110.50 area.
TECHNICALLY SPEAKING: There is a lot to be taken with a grain of salt here as we looked poised to take out the lows in euro and have rebounded to make a high just in front of last Fridays pre NFP number. There is no news expected until Thursday with initial claims and Friday PPI and Trade Deficit figures. Until then we should stay within a 1.2200-1.2130.
GAIN AN EDGE:
We look to sell the euro on a rally still at 1.2230 with a 1.2280 stop loss and we should eventually take out the 1.1970 base to make new lows, our take profit will be 1.1880.
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