Daily Market Analysis: Currency Report

Fact or fiction, dreams or reality, rumors or news, which ever this is, it is the driving forces in the currency markets this afternoon. The International Monetary Fund (IMF) is planning to expand its lending capacity to $1 trillion from the current $385 billion to protect the global economy from the negative consequences of the European debt crisis, according to an official at a Group of 20 nations.

The expansion discussions will probably take place at the coming G-20 Finance Chiefs meeting in Mexico on Feb 25-26, where contributions from (BRIC) China, Brazil, Russia, India, Japan and oil-exporting nations are the main base for the expansion. The question is will they be able to find contributions to do so, and how would these contributions be limited to the EU. The IMF charter

How would the US veto power work in this instance? Today’s report contains no facts just a fact that a discussion will be held.

The euro responded to this news, moving up in afternoon trading the EUR/USD rose to $1.2845 from $1.2728, the duet subsequently consolidated at 1.2839, jumping 0.81%.

The big story unfolding is in Greece where Prime Minister Lucas Papademos said he would consider raising legislation to force a private-sector haircut on the debt if a deal can’t be reached voluntarily. Greek talks remained stalled as it is becoming more and more obvious that Greece will sooner or later default regardless of the negotiations and this temporary solution.

The European currency was propped up when Reuters reported that an analyst at Fitch said the agency did not expect Italy to default.

Support Levels at S1: 1.2979 1.2857 1.2824
Resistance Levels 1.2723 1.27 1.2627
 
GBP/USD: The GBP/USD is currently trading around 1.5405 after recording a high of 1.5436 and a low of 1.5328, while the trading range for today is among key support at 1.5125 and key resistance at 1.5555.

The pair rose on the daily charts, on some weakness in the USD but remained in a tight range

The jobless report from the U.K. gave some support to the duo as claims for the month of December recorded a drop to 1.2 thousands compared with 3.0 thousands in November,which was furtherrevised down to 0.002 , ILO unemployment for the three months ended November climbed to 16-year high to 8.4%, exceeding both prior and median forecasts of 8.3%. Tomorrow will be unemployment reports in the US. If these figures are at or above forecast we could see the USD rally against the GBP. Although most of the movement will be from EU news and rumors as it was today.

Fact or fiction, dreams or reality, rumors or news, which ever this is, it is the driving forces in the currency markets this afternoon. The International Monetary Fund (IMF) is planning to expand its lending capacity to $1 trillion from the current $385 billion to protect the global economy from the negative consequences of the European debt crisis, according to an official at a Group of 20 nations.

The question is will they be able to find contributions to do so, and how would these contributions be limited to the EU. The IMF charter requires assistance to all countries. How would the US veto power work in this instance? Today’s report contains no facts just a fact that a discussion will be held.

There are support levels for tomorrows trading at:

S: 1.5217 1.525 1.5286
R: 1.5355 1.5388 1.5424

GOLD: The gold markets rose again during the session on Wednesday as the sentiment for gold seems to be getter better and better. The $1,650 level has given way, and we think the grind higher could continue at this point in time. The area was a tough fight, and because of that, it looks like the move upwards is starting to be taken seriously.

Looking at the charts, the $1,650 level should be support now that we have not only broke and closed above it, but also that we have a nice large hammer from Tuesday. The $1,700 level will be resistive, but we believe it to be a minor level and the market should be able to grind through it .

While we may not see $50 a day gains going forward, this market does look healthy overall. The demand for gold remains, and this is true for most commodities. As the central banks continue to tinker with monetary policy, gold will thrive. We are buying at this point, and will continue to do so in pullbacks.