Risks Rising Of BRL Verbal Intervention

Risks rising of BRL verbal intervention says SocGen noting the currency's strong performance of late. "We believe that verbal intervention risks will be significant at around 1.75 for USD/BRL," Societe Generale says. Notes on this basis, there is limited upside for the currency from the standpoint of intervention risks. USD/BRL currently trades at 1.7865 compared with 1.7880 late Tuesday in New York.

Another Up Day Likely For GBP/USD

Another up day likely for GBP/USD, says Barclays Capital, before it pulls back again. Now at 1.5344, the bank pegs near-term resistance levels at 1.5410 and 1.5425, where it expects to see renewed selling interest. Although a break above 1.5425 warns of a stronger bounce underway to the 1.55 area. GBP/USD now at 1.5348

Emerging Market Currencies Pare Early Gains

Emerging market currencies pare early gains as the EUR/USD rally fades weighing on sentiment. ZAR and TRY both lose ground against the USD, while the PLN, HUF and CZK all pare early gains against the EUR. Looking ahead the data calendar is light in emerging markets, with only Brazil's decision on interest rates later Wednesday likely to garner significant attention with the central bank widely expected to cut 50bps to 10.5%. Elsewhere, market participants will keep a close eye on Hungary's PM who is scheduled to speak at the European parliament Wednesday. EUR/PLN currently trades at 4.3474, after falling below 4.33 earlier. EUR/HUF currently trades at 306.31 after falling below 305 for the first time this year earlier in the session. EUR/CZK trades at 25.558, while USD/TRY trades at 1.8411 and USD/ZAR trades up at 8.0291.

USD/HKD Down; Local Stock Cues Eyed, 7.7610 Support

The USD/HKD extends losses after China's positive GDP data Tuesday and the recent strength in local stocks, says a senior trader at a local bank. The pair is at 7.7634 from 7.7651 this morning and 7.7662 late Tuesday. The HSI is up 0.05% after a 3.2% gain Tuesday. "The weaker U.S. dollar offshore is weighing on the pair, and I expect the pair to hover between 7.7610-7.7650 band in the near term. If the local stocks continue to rise, it will push down the pair further in the near term," the trader says.

USD/IDR Down On Moody's Indonesia Ratings Upgrade

The USD/IDR is lower as Moody's upgrade of Indonesia's credit worthiness to its lowest investment grade of Baa3 vs Ba1 is expected to spur fund inflows into the government's local bonds. "We expect new long-term international investors will buy the government bonds as Moody's upgrade is the second one after Fitch's action last month," a dealer says; The USD/IDR is down at 9,140 vs 9,180 late yesterday; meanwhile, government's rupiah bonds are higher across the board with the 10-year yield falling 3.1 bps to 5.99% and 20-year down 3 bps at 6.99%; the 30-year edges down 5.1 bps to 7.25%

USD/MYR Lower; 3.1100-3.1220 Tipped N/T

The USD/MYR is lower at 3.1135 vs 3.1220 late Tuesday in Asia, tracking the greenback's weakness against most Asian currencies. Much of the dollar-selling activity is driven by exporters, a local trader says, although weak local shares and the December inflation data due later in the day "prevent the ringgit from rising further," she adds, tipping the USD/MYR to stay in a 3.1100-3.1220 range in the near term.

USD/TWD Off Lows On Central Bank Dollar-Buying

The USD/TWD is off earlier lows after Taiwan's central bank was spotted buying dollars around 29.950 in the late session, two traders say. The pair is at 29.978, bouncing back from an intraday low of 29.880 but remains lower than 29.995 in late Asian trade Tuesday. One of the traders tips the pair to hover in the 29.90-30.00 region Thursday, with markets keeping an eye on developments in Europe. Taiwan's onshore FX market will remain open on Thursday and Friday, while the local stock and bond markets will be closed two days ahead of the Chinese New Year holiday

EUR/USD Still A Sell Around 1.28 - UniCredit

EUR/USD is still a sell around 1.28, says UniCredit, as investors will remain skeptical about riding any euro rebound in the current scenario. EUR/USD is now at 1.2780 from a high of 1.2808.

Foreign exchange market to continue to see European debt

Foreign exchange market to continue to see European debt
Forex – The euro is likely to post further losses in the coming week after it dropped on Friday to its lowest against the US dollar in nearly 17 months and tumbled to an 11-year low versus the yen following a downgrade in credit ratings of nine euro zone countries. As widely expected, Standard and Poor's said it has downgraded the credit ratings of euro zone countries led by France, Spain, Italy and Austria. S&P, however, left Germany's triple A rating unchanged, with a stable outlook. Speculation about the downgrade roiled the currency market earlier in the session, and the actual ratings news provoked little market reaction. But analysts said the more serious blow to the euro's cause was the breakdown in talks between Greece and its creditor banks to slash the country's huge debt. Greece has warned of "catastrophic" results if a deal to swap bonds is not reached soon.
On Thursday the Euro had climbed to a one-week peak against the US dollar as a solid sale of Spanish and Italian debt and more upbeat comments about the euro-zone economy from the European Central Bank chief eased concerns about the region's debt. The ECB, held rates steady at 1 percent as widely expected after two successive rate reductions, with bank president Mario Draghi citing "signs of stabilisation activity at low levels" in the euro zone economy. Draghi also said the ECB's flood of cheap, three-year money is helping the euro-zone's banking system substantially and supporting confidence in the bloc's economy, which is showing some signs of stabilisation.
US data on Thursday disappointed investors who were seeking signs of an improving economy. US initial claims for jobless benefits hit a six-week high and retail sales rose at the weakest pace in seven months in December. Retail sales increased a less-than-expected 0.1 percent, despite continued strength in auto purchases, a Commerce Department report showed. Robust factory output and improved hiring have fuelled the view that the US economy has so far resisted a global slowdown as the euro zone grapples with a likely recession. A Labour Department report that showed a surprisingly sharp increase in initial unemployment claims to a six-week high of 399,000 last week reinforced lingering concerns about the economy. However, analysts said the government may have had trouble adjusting the claims for seasonal fluctuations following the holiday shopping season.
http://www.ytwhw.com/2012/0118/Foreign-exchange-market-to-continue-to-see-European-debt.html