Yen Selling Accelerates Into Weekend

U.S. Dollar Trading (USD) the USD had a mixed end to the week losing groundagainst the Euro but enjoying solid gains against the Yen with USD/JPY breakingabove Y90 and testing Y91 by the end of the New York session. The USD isbenefitting from a wave of verbal interventions in the FX market from Japan toUK. New Homes Sales fell in December to 369k vs. 398k previously. Looking ahead, December Durable Goods Orders forecast at 0.8% vs.1.6% previously. Also Pending Home Sales forecast at 0.5% vs. 1.7% previously.

The Euro (EUR) The Euro dominated other currencies on Friday withthe single currency cementing its place as the strongest of the G7. EUR/JPY surged to Y122.50 and EUR/CHF to 1.2500with both the Japanese and Swiss both heavily intervening in there FX markets.The ECB and EU have not been talking down the Euro although they note therecent strength. The Sterling (GBP) the GBP/USD continued to come under pressure fallingunder 1.5800 with the BOE expected to announce new QE expansion and remaindovish on the UK economy going forward. GBP/JPY is one bright spot gaining atthe Yen’s expense up to Y144. Looking ahead, M3 Money Supply forecast at 3.9% vs. 3.8% previously.

The Japanese Yen (JPY) remained under constant selling pressure withJapanese officials talking of Y95-100 as normal levels for the USD/JPY. At the WEFJapanese EconMin Amari played down fears of Japan breaking FX rules stating hewas only trying to stop deflation and not target the exchange rate explicitly.USD/JPY closed at Y91. Australian Dollar (AUD) the AUD/USD found buyers scarce with the technicalbreak to the downside out of the recent 1.05-1.06 range suggesting more lossesare likely. The main reason for selling has been EUR/AUD unwinding with thecross hitting fresh trend highs above 1.2900. AUD/USD fell to the low 1.0400region where we have plenty of historical support close by. Strong Chinese datamay limit losses of the AUD/USD going forward.Looking ahead, Bank holiday for Australia Day Monday.

Oil & Gold (XAU) Gold is under pressure from the resurgent USD and USeconomy. Recently we have seen the precious metal discount the global QE whichhad supported Gold recently.OIL/USD did better than most against the USD aboveto gain slightly as the 2013 outlook improved.

Pairs to watch

AUD/USD Broken majorsupport, new downtrend?

USD/JPY Overbought butholding at highs above Y90

TECHNICALCOMMENTARY