USD lower, stops and active buying lift the majors - Evening Session - GMT

•    USD lower, stops and active buying lift the majors
•    Volumes light to modest
•    Equities firm but off highs

Today’s Economic Reports
All times EASTERN (-5 GMT)

•    8:30am USD Trade Balance
•    8:30am USD Unemployment Claims
•    8:30am USD Import Prices m/m
•    10:35am USD Natural Gas Storage

Looking Ahead to Friday
All times EASTERN (-5 GMT)

•    8:30am USD Core Retail Sales m/m
•    8:30am USD PPI m/m
•    8:30am USD Retail Sales m/m
•    8:30am USD Core PPI m/m
•    9:55am USD Prelim UoM Consumer Sentiment
•    9:55am USD Prelim UoM Inflation Expectations
•    10:00am USD Business Inventories m/m

Summary

The USD is under pressure this morning trading to new weekly lows across the board overnight. Opening New York the USD is making lows against most of the major pairs in technical and stop driven trade. Traders note that in EURO active bids have been seen suggesting that the rally in EURO has some teeth to it; EURO high prints in New York at 1.3232 with lows overnight at 1.3000 in early Asia. Traders note that an Asian sovereign was on the bid around the 1.3170 area in European trade suggesting that large players are wrong-footed into the previous highs at the 1.3080 area. GBP is lagging the EURO rally at this point managing a high print in Europe at 1.5000 before backing off to open New York around the 1.4920 area; traders note that the Sterling-EURO cross is trading at new lifetime highs suggesting the pressure on GBP is from cross-spreaders. Active Yen cross-spreading may also be affecting GBP as all Yen crosses were lower overnight adding a bit of upside pressure to the majors. USD/JPY continues to languish at the lows with tighter ranges as the 01.50 area continues to support on the dips; high prints in the rate at 92.89 with lows in early New York at 91.45. Traders note that in USD/JPY option defense may be in play at the 91.25 and 91.00 area suggesting a potential technical bounce should the shorts decide to cover. Equities remained firm overnight as well helping to support the major pairs but USD/JPY cannot overcome upside resistance at this point. Two-way action was seen for the most part with buyers scarce under the 92.00 area traders say. USD/CHF was firm initially on expectations for a SNB rate cut; the bank cut 3-month forwards in LIBOR expectations by 50 BP but the response to the rate was muted. Traders note large stops building on a break of the 1.1880 area and low prints so far overnight at 1.1891 in early New York. Gold prices firming overnight may have been lending some support to CHF suggesting that a long-liquidating break in the rate is coming. Aggressive traders can sell rallies in USD/CHF with a technical resistance area of 1.2020 to the upside. USD/CAD is firm into early New York with highs at 1.2613 and lows at 1.2461; the rate still holding off tech support at the 1.2420 area so far today. With additional downside pressure on the USD coming during the day USD/CAD could find stops under the 1.2400 area in play. In my view, the USD will end the week still lower so if holding open EURO or GBP longs be ready to Add on a dip as both pairs likely to test next  level  resistance by Friday afternoon. The shorts in the majors are getting cooked and a long-liquidation break in the USD is building momentum. When the longs finally capitulate the break in the Greenback could be severe. Look for more two-way action as the majors consolidate these gains and prepare for another advance.