Not a Member? Join Now!   Already a Member? Sign In!

The NY Morning Review

The Peoples Bank of China signalled the intention to lower the reserve requirements banks need to hold on balances at the bank by 50 basis points over the weekend in a way to stimulate economice activity in a declining housing market and as a result of weakness expected by a slower Euro economy.  The move led to a move into risk on the Sunday night opening and that bias has remained as NY is set to open.  The dollar is down against all the major currencies.  Against the Yen the dollar has faired the best, nearly unchanged from Friday’s levels. Over night, the Trade Balance numbers for the month of January showed a record deficit of -1.48 trillion Yen.  Exports fell 9.3% from the same month last year, while imports increased on the back of high energy imports. Despite the worsening trade data, the USDJPY fell (Yen higher).  The market may be ready for a consolidation/correction after the move higher this month. Since the most recent low on February 1st at 76.02 the pair has move steadily higher to 79.88.  Along the way the price has moved above the 100 and 200 day MA (1st close above the 200 day MA since April 13th 2011.  On Friday, the price closed above the 38.2% of the move down from the April 11 high at the 79.36 level -  a bullish development. In today’s fall from the high, this retracement level is the low for the day.  A move below this level will be needed to give the seller/profit takers more comfort in their bearish move today.  In the EU, the leaders will be meeting in Brussels today to discuss whether or not the next tranche of aid will be heading to Greece (130 billion expected). The market seems to optimistic that a package will be approved today. Time is running short as on March 20, Greece is scheduled to pay off 14.5 billion EURO of maturing debt.  The details of the Private Sector Involvement in the restructuring of their bond holdings is also not yet resolved.    There is much to do still and although it seems that the expectation is for a solution today, there will always be the chance for continued market skepticism and or disappointment as the reality of Greece’s debt burden continues to weigh on the troubled country and the EU. For traders today, the US holiday (Presidents Day) will only make liquidity risk higher.  Event and market risk are already at a high level. So be sure to follow the technical clues from the markets price action.