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Despite early fall to 1.4577, euro staged a strong rebound last week as SNB intervened in the forex market (selling Swiss franc against U.S. dollar and euro) after cutting interest rates by 25 basis points and this big white candle signals the retreat from 1.5880 has ended and further consolidation…

With no fireworks from this weekend’s 3 big event risks, the rallies in the currency and equity markets are fizzling. Having been up more than 150 points intraday, the Dow Jones Industrial Average ended the U.S. trading session down 7 points. This lack of follow through was replicated in the foreign exchange market with the Euro and British pound giving up earlier gains. Promises can only take the markets so far and the lack of concrete actions by the G20 has disappointed investors. Although we have previously mentioned that bear markets can rally as much as 25 percent, today’s intraday reversal is worrisome. Looking at the economic calendar this week, there is not much event risk to energize investors

According to the latest Treasury International Capital flow report, foreign investors were net sellers of U.S. investments and U.S. dollars in the month of January.

The euro and pound rose on the first trading day of the week as risk appetite returned to the currency market after US Treasury Secretary Tim Geithner promised to release details of a new plan to use a private and public partnership funds to remove toxic assets off the balance sheets of US banks. Both Asian and European equities rose providing a strong bid tone to the risk currencies. Cable rallied through the 1.4100 handle and euro approached the psychologically key 1.3000 level by midday European trade.

In an interview to 60 Minutes Fed Chairman Ben Bernanke forecast that US economy will begin to stabilize by the end of the year and stated that the greatest risk to the recovery was lack of political will. “The lesson of history, “ he noted, “ is that you do not get a sustained economic recovery as long as the financial system is in crisis.”

Twenty of the world’s largest nations are gathering in London this weekend to discuss potential solutions for the global economic crisis. Typically, G20 meetings of Finance Ministers and Central Bankers are not very market moving because there are far more heated debates and discussions than decisions.

The USD/CAD pair hit the trendline support (parallel to the 100 day moving average) we’ve been promoting since the beginning of 2009. After 13 daily hits on the trendline, we saw the pair move down there again during the Asian session on some USD weakness across the board. We continue to like the pair on [...]

Here we see Eur/Jpy broke out of a flag formation and traded higher to 128.50 area and is hanging around that level. We might see it pull back to test the top of the flag for support and then rally higher 131.00 to test that resistance. This also it will help support the Usd/Jpy and [...]

The former US Treasury Secretary Hank Paulson wrote that today’s financial crisis has made it abundantly clear that our financial system would benefit from a regulator whose focus is on risks across the financial system.

Says there is support for giving the Fed this duty.
It would require the Fed to have access to information from a [...]

AUD Westpac Leading Index m/m comes out better at -0.2% there was very little market reaction to the number.