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ANALYSIS

Daily Outlook 28 January 2013

U.S. Dollar Trading (USD) the USD had a mixed end to the week losing ground against the Euro but enjoying solid gains against the Yen with USD/JPY breaking above Y90 and testing Y91 by the end of the New York session. The USD is benefitting from a wave of verbal interventions in the FX market from Japan to UK. 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 with the 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 the recent strength. The Sterling (GBP) the GBP/USD continued to come under pressure falling under 1.5800 with the BOE expected to announce new QE expansion and remain dovish on the UK economy going forward. GBP/JPY is one bright spot gaining at the 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 with Japanese officials talking of Y95-100 as normal levels for the USD/JPY. At the WEF Japanese 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 technical break to the downside out of the recent 1.05-1.06 range suggesting more losses are likely. The main reason for selling has been EUR/AUD unwinding with the cross 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 data may 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 US economy. Recently we have seen the precious metal discount the global QE which had supported Gold recently. OIL/USD did better than most against the USD above to gain slightly as the 2013 outlook improved.

AUD/USD Broken major support, new downtrend?

USD/JPY Overbought but holding at highs above Y90

TECHNICALCOMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3349

1.3410

1.3455

1.3487

1.3500

USD/JPY

88.17

89.15

90.90

91.82

92.03

GBP/USD

1.5678

1.5706

1.5770

1.5852

1.5905

AUD/USD

1.0375

1.0395

1.0420

1.0485

1.0505

XAU/USD

1652.00

1663

1661

1685

1710

OIL/USD

95.00

96.00

96.10

97.50

98.00