A Listless Start to the Week Ahead of the Wednesday Witching

mover was the JPY both against the USD and more importantly on the crosses and EUR/JPY was by far and away the most serious move of the lot. A move that only best be described as ugly if I’m honest. The market is firmly in a risk-off sort of mood as we start the week, but having said that we are still only drifting for the time being and perhaps looking to recover and rest again on breakout levels from Friday.

Data on the day is mute and the lead can only really come from headlines. Speaking of which the G20 summit in Mexico came to its conclusion over the weekend.  Apart from hearing that there will be further delays about asking the IMF for extra cash (April the time frame now), little else of any real note came out of the meeting. Of course volatility in the FX market was another hot topic, but lip service was paid rather than anything definitive on the topic. Greece also made the headlines, however we’re now looking for a mid-March deadline (just not sure what for this time).

This week we focus on what will be a witching day of sorts on Wednesday when we have obviously month end, but also and more importantly the LTRO. Having gone from estimates of 1 trillion EUR to be borrowed to now hovering around the 300/400bn mark, it’s hard to truly gauge where the number lies, but as always time will tell.

On the majors, the EUR/USD rally continues, despite taking a small pause this morning, and it's entirely likely we will push towards the 1.3600 area ahead of Wednesday. Dips are well supported today into 1.3380/00, with stops lined up below 1.3330.

The AUD/USD us now a function of more political discord down under, and now that the bloodnut (Julia Gillard) has secured her tenure as PM once again, perhaps things for the little battler will also settle down somewhat. The AUDUSD is looking admittedly softer, but this is more a function of EURAUD having taken out resistance and trading higher since Friday.

Today is likely to be a drifting sort of day and I would recommend taking the time to choose your levels carefully, as in about 12 hours or so the landscape will look decidedly different.