Next Friday's Payrolls

The markets are eagerly awaiting Friday's first showing of US 4Q GDP, and Lloyds Banking Group's economics team are looking for a 4.6% annualised rise. However, the bank asks whether it matters at all in the context of Wednesday's FOMC decision to keep rates lower for an extended period. Instead, the bank wonders whether next Friday's payrolls are key.

Yen move 95

Look for USD/JPY to push higher towards Y95 in one month, says Trader. Notes JPY is weakening after both the slightly-hawkish FOMC statement as well as the latest disappointing retail sales from Japan showing a 0.3% fall on the year last month - the 16th consecutive month of contraction. The pair is now at Y90.38.

EUR/JPY Today

EUR/JPY fell to it lowest level in nearly nine months Wednesday; however, Trader says there's more downside to come. Now at 125.60, she says a weekly close below the 50% Fibonacci retracement target of 125.65 should add to bearish momentum, which is already the strongest in a year. For a strategy, Elliott favors selling at market, adding at 126.50 with a stop above 128.55 for short-term targets of 124.45 and 122.45.

GBP/USD Today

GBP/USD has held up well since Tuesday's poor 4Q GDP showing, and a London-based trader says this is in no small part thanks to a large bid out of Asia around 1.61. On Tuesday the spot based at 1.6093, so far today the low has been 1.6113.

Yen .......... a veiw

USD/JPY likely to hold above 88.00 through end of February, as risk aversion surrounding China economic outlook not likely to last long, says FX analyst. "The yen may be rising now (versus the dollar) on worries about Chinese monetary tightening, but it's hard to imagine that China will rush to tighten monetary policy so sharply" as would choke off its economic recovery, he says. USD/JPY resistance over that period 93.00 vs last 89.23 on EBS. Meanwhile, if signs of U.S. economic strength emerge in weeks ahead, rekindling speculation for Fed rate hike later this year, USD/JPY in March could rise to 95.00 while unlikely to slip below 90.00.

IMF Outlook

The IMF presented a brighter outlook for this year, with the world economy forecast to expand at a 3.9% pace instead of the 3.1% estimate given in October. Global growth is expected to continue to pick up in 2011, with the forecast edging up to 4.3% from 4.2%. "Policies need to foster a rebalancing of global demand, remaining supportive where recoveries are not yet well-sustained," the IMF said in its update to the World Economic Outlook.

Focus Yen

Economic outlook for China, U.S., considered leading force in world economy, still key focus for markets, rather than S&P's cut to Japan outlook, says senior market economist. USD/JPY last 89.63, almost same levels before S&P's decision came earlier; pair hit 90.45 after S&P's remarks. Says "yen-selling caused by S&P's decision was largely limited. JGB players -- mostly Japanese -- are not in a rush to buy overseas assets for a flight-to-safety by selling (our own) country's debt and the yen." Amid uncertainty over possibility of China's additional monetary policy, U.S. banking regulations proposed by Obama administration, "investors are not in a position where they want to sell the yen, considered now as a safe haven." Says attention rather on how China, U.S. economic conditions will affect stock, currency markets down the road.

USD/JPY Today

USD/JPY sold off sharply ahead of its 9-day moving average at 90.79, but is still not oversold and momentum is decidedly bearish, says Trader. She now looks for a drop to the 61% Fibonacci retracement target of 88.25 some time this week, and to position for such a move would sell at market, with a stop above 90.65. USD/JPY now at 90.11.

EUR/JPY Today

EUR/JPY slumped to a near nine-month low of 126.12 in Asia Tuesday and Trader looks for more downside ahead. She says moving averages have crossed to bearish and although the cross is very oversold, bearish momentum is now at its strongest since April '09. While keeping an eye out for the authorities she favors small shorts at market, adding at 128.00 with a stop above 128.55, looking for 126.15, 125.75 and 124.35 on the downside. EUR/JPY now at 127.10.

Yen .......... a move

USD/JPY shoots up to around 90.20 from 89.60 after S&P cuts Japan sovereign 'AA' long-term outlook to negative from stable, but traders say JPY selling is knee-jerk and exaggerated by thin trading; USD/JPY likely doesn't have much more upside. Past Japan sovereign rating cuts haven't hurt JPY and other Japan assets for long, because majority of Japanese debt held by domestic investors who largely ignore rating agencies.

GBP/USD Rally

GBP/USD's upside correction is looking tired says analyst. The rally halted ahead of its 61.8% retracement target of 1.6460 Tuesday and while further gains toward the 1.6655-1.6745 pivot levels cannot be ruled out, analyst says this view is less likely. Instead, a break below 1.6230 would further alleviate upside pressure and open risk toward the 200 DMA at 1.6169 and then 1.6120 and the recent low of 1.5896. GBP/USD trades at 1.6272.

EUR/USD .......Trend

EUR/USD may be down, but it may not be out, suggests Trader. Points to the good reception for Greece's auction of 13-week T-bills Tuesday, suggesting investors are willing to give Greece and the euro the benefit of the doubt. Also, the bank's economic surprises index point to upside surprises for euro-zone data, but downside ones for US numbers. "The market seems too bearish on Europe's short term economic prospects compared to the US's," the bank says, suggesting PPI and housing starts data from the US later Wednesday could well bear this out.

Forex Focus : YEN

Once again, the JPY has been providing a safe haven in an uncertain world, according to Forex Focus by Trader. But, it is only a matter of time before the Japanese currency is stripped of its haven status and resumes its role as the carry trade funding currency of choice.

EUR/JPY Today

EUR/JPY's sustained drop below 130.00 Wednesday bodes ill for the cross, with key support at 129.00 already breached and 127.00 the next target, says Trader. Now at 128.90, Elliott favors selling rallies to 129.35 and 129.70, with a stop above 130.50 to target 127.25.

EUR/USD rally

Positive equities markets failed to offer EUR/USD a cushion Tuesday and the full break of its 200-day MA around 1.4300, and loss of key support at 1.4215 opens risk toward the August 14 low of 1.4080 says Trader. Now trading at 1.4181 and Trader says selling EUR/USD on any rally remains the theme, at least as long as EMU woes loom.

GBP/USD Today

The BOE minutes release, at 0930 GMT, should not reverse the GBP/USD bullish trend, which remains intact above 1.6240 support, says Trader. Topside the bank has targets of 1.6360 and key resistance at 1.6465, which capped Tuesday. GBP/USD now at 1.6260.

GBP/USD Today

GBP/USD has eroded resistance at 1.6348 and 1.6412 and skewed near-term risks to the upside says Analyst. She now sees potential toward 1.6480, 1.6655 and 1.6745. With the pair at 1.6414 she says the rate will stay bid intraday while above 1.6330, failure at the current rate though would alleviate immediate upside pressure and open risk toward the 200-day MA at 1.6160.

Bearish EUR/JPY

Bearish pressure has increased on EUR/JPY says Trader, however, the euro is now slightly oversold so the cross may hesitate around 130.00 Tuesday. That said Elliott still favors the downside and would sell at market, adding at 131.00 with a stop above 132.45 looking for short-term targets of 130.00, 129.60 and then 127.75. EUR/JPY now at 130.33.

The GBP's recent rally

The GBP's recent rally is totally unconvincing, according to Forex Focus by Trader. Much of the rise has been driven by hopes that the Bank of England will hike rates sooner than later. But, even if the central bank does tighten policy, this is hardly likely to be helpful for the currency in the longer run.

USD/JPY Today

USD/JPY support between 90.75-60 is holding out but with US yields falling sharply late last week, this prop will likely be tested repeatedly this week says Trader. Sooner or later that support will give way and once support at 90.45 and the retracement target of 90.35 are overcome, stop-loss selling should drive the rate down to the 88.00 area says the bank. USD/JPY now at 90.95.

EUR/USD ....A Veiw

Look for EUR/USD to remain supported at 1.4450, and offered in the 1.4550/1.4600 area. But, says Trader, a hawkish Beige Book later in the day, nourishing a frontloading of Fed rate hikes, could lead the pair below 1.4400. The pair is now at 1.4484.

EUR/USD Today 11-01-2010

EUR/USD is correcting higher from its 200-day MA at 1.4259, a potential bear-flag has been negated and topside risk toward 1.4570-1.4685 now looks to be the likely outcome says analyst. EUR/USD now trades at 1.4530.

Hopes should help GBP

Bad news for UK Prime Minister Gordon Brown should start becoming good news for the GBP, according to Forex Focus. The greatest threat to UK prosperity is the country's enormous fiscal deficit, which Brown shows little sign of reducing fast. However, a victory for the opposition Conservative Party in elections later this year should mean greater fiscal stability, which should prevent the GBP from falling.

USD/JPY Today

The weekly USD/JPY charts suggest the current rally is running out of steam, says Trader. She looks for more signs of topping Monday, with a drop below the recent low of 91.00. For a strategy Elliott favors selling at 92.25, adding at 93.00, with a stop above 94.00 for short-term downside targets of 91.25, 91.00 and then 90.00. USD/JPY now trades at 92.35.

Buy Euro on Dips Now??

EUR/USD's rise through 1.4500 after the US payrolls could well set the pair up for more gains. "Greece's woes are still looming, but buying EUR/USD on dips should now be favored," the trader says. The pair is now at 1.4511.

EUR/USD Today

EUR/USD is in a near-term corrective rally which has already reached its first targets of 1.4435 and 1.4480 . Trader sees further upside risks toward 1.4570 and 1.4685 but says despite this a negative tone will prevail while the latter holds and only a daily close above the 55-day MA at 1.4741 will change this outlook. EUR/USD now at 1.4432.