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Old 02-29-2012, 04:09 AM   Nav to Top  #1
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Default Providio's Daily Currency Commentary for Feb 28, 2012

Currencies:**** 28Feb With Greece’s restructuring not a headline today, FX markets are essentially quite this morning. Outside of the Yen, all our tracked currencies have Low Volatility.
*We call particular attention to a developing seasonal dynamic in the Yen. Additionally, a news story caught our eye this morning calling for a correction in the Dollar/Yen rates based on technical factors.

Aussie: 28Feb Modestly higher to near unchanged this morning on confusing data out of the US and prospects of ECB refinancing.
Our Momentum indicator has been negative for a week. The market has struggled with the 1.0800 highs and 1.0575 has served as recent support. The flattening 200-day moving average lies well below at 1.0352, but served as solid resistance throughout the end of last year.
Seasonal Snapshot: Divergence between the 15yr pattern (negative) and the modestly positive 5&30yr patterns ends with modestly negative tone for the first part of March.

British: 28Feb After rebounding from yesterday’s sell-off, Sterling continues to struggle with the 159.00 level. The classic falling Trend pattern has held as the morning’s high is well below yesterday’s test of the resistance at 1.5900. Look for major support at the lower boundary (1.5650) of its recent consolidation. This is also the support at the 38.2% retracement of the move higher. If this fails, the next “major” support is near the 50% retracement at 15571 and also the 15550 round number.
Since peaking at the falling 200-day Moving Average on Feb 8, it has offered a classic falling trend profile; lower highs and lower lows. After the sustained 19-session rally, the sell off is likely to become a material affair.
The falling 200-day moving average roughly coincides with falling trend line resistance at 1.5850 and may keep a lid on any rallies.
Seasonal Snapshot: Decidedly negative bias in all three patterns lasts until 10Mar.

Canadian 28Feb The Loonie is still trying to maintain itself above par levels. It has bounced yet again off the still falling 200-day Moving Average.
Our Momentum indicator remains negative but the Rate of Change is rising. If “par” fails to hold, it should settle in as a material resistance area.
Seasonal Snapshot: All three patterns are positive until mid March.

Dollar Index: 28Feb While the 200-day Moving Average is till rising, it has started to flatten. Additionally, today’s action makes new lows. All our Technical indicators point to lower action.
Seasonal Snapshot: Choppy consolidation in all three patterns until mid March.

Euro-FX: 28Feb The euro seems to be building a series of inside days indicating continuing consolidations. If this continues, a Flag or pennant pattern will emerge which would indicate a likely move higher.
Recent strength has the market straying outside our upper Bollinger Band and Momentum is still sustaining a positive shift.
The 200-day Moving Average remains well above and falling, though its steepness is starting to wane.
Seasonal Snapshot: Positive tone in all three patterns tops out on 19March.

Yen: 28Feb As we stated above, there seems to be a story developing of both a seasonal and Technical bounce being touted. Yen is by far our most negative USD denominated FX contract and yet it’s showing some signs of a turn. However, this is likely to be short-lived and may show up as a pausing pattern that plays out with lower action as it completes its pattern.
We focus readers’ attention on the upcoming fiscal year repatriation dynamics, typically supportive of the Yen. Please see Seasonal notes below. If our Rate of Change continues to rise, this warrants attention. Protect profits if short.
Seasonal Snapshot: Very correlated to recent market dynamics. After a decidedly negative tone, all three patterns turn to go positive on 20Feb. The medium term, 15yr is more pronounced to start, then the 5&30yr join the party on 24-25Feb. The patterns last until roughly 03Mar.

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