US Bounced With Cautions | June 17, 2011

USDJPY Asian strength could not last through the US session as it sold off steadily to lose 40 points approximately.

Markets traded in the mixed last nights as it bounced slightly from yesterday allowing the SP500 and Dow both to have gained 0.54% and 0.18% respectively. The upside moves were supported by very thin volumes, hence lacking the conviction that could proves potential recovery, which it did not. Moreover, the choppy move was actually behind “quadruple witching”, where expiries of multiple contracts are coming up and hence traders are unwind or rolling into new contracts. Given the lack of fundamental for this upside movements, there will still be a downside risk and selling pressure is still very much alive.

EUR’s reaction last night was no surprise, sustaining its declination and had the EURUSD fell as much as 1% in the early part of the session. The pressures saw EURUSD to trade near the 1.047 mark before regaining some of its losses to rally 0.2% on the back of speculation that both EU and IMF may assist Greece and preventing default.

AUDUSD capitulated through to 1.05 just before the US opens to trade near 1.0475. This weakness was the same as any other currencies, cautioning the potential disaster in Greece. However, AUDUSD made some gains to trade above 1.05 running into some resistances at 1.0555 up until near the final quarter of the session where a 60 points sell offs eventuated before it found some support at 1.05 and rebounded to session highs. The AUDUSD is proving to be resilient and directionless to a certain extent. This motion will continues into the next session and until Monday comes, which would have been after the Greek meeting this Sunday, where the Finance minister will shed some lights on how Greece will finance their debts, some direction will be provided to AUD.

USDJPY Asian strength could not last through the US session as it sold off steadily to lose 40 points approximately. The weakness in this pair has been mentioned in the last couple of reports and we envisage that it will always attempt to run the downside at every chance it gets.

In the next 24 hours, the majority of activities will be based on two things; Greek’s crisis and quadruple witching. No fundamental announcements will be made until Japan releases its trade numbers coming Monday.