Yen cross selling

First signs of action this morning with some selling of Yen crosses. EURJPY sold off a little from 136.80 to 136.40 has seen the other crosses follow, with USDJPY drifting off to 95.40. EURUSD has drifted off back under 1.4300 and AUDUSD is taking a back seat as it awaits the GDP number.

UK Nationwide Consumer Index rises 2 points in May

The Index rose 2 points in May to a reading of 53 from 51 in April, the highest since November 2008.

People were also hopeful that conditions would improve in 6 months, with the expectations index rising to 76 from 71, the highest in more than a year.

Unfortunately it has had no influence on GBPUSD this morning, which is trapped between 16550 - 16600.

GBPUSD: Option related selling at 1.6600

The same option related sellers that capped the Cable at 1.6600 overnight are likely to dominate proceedings today. GBPUSD has traded in a tight 50 points over the last 6 hours with good interest on either side. Middle Eastern bids on the downside at 1.6500 and below.

Look for a break either side of 1.6550 - 1.6600 for the next direction.

Europe & NY see all the moves

Look like we are in for some more Asian session consolidation. It seem Europe and Ny are seeing the explosive moves at the moment.

EURUSD has the December spike high of 1.4360 in its sights today with intraday support coming in at 1.4260. We will be lucky to see even that range. Asian session will probably be dominated by EURJPY flows and direction. Technical traders may try buying at 136.50 for quick plays back up to 137.00, but real bids at not until 135.60/70.

Some signs that EUR/JPY is starting to top out

I am a long way from turning bearish or even neutral on this pair and I still have a target at 149 in the back of my head but the price action overnight should give bears some cause for hope.

EUR/JPY opened at 136.70 yesterday morning and despite the fact that the EUR/USD rallied hard again, the USD/JPY fall managed to keep pace leaving the cross virtually unchanged. With a prior big top close by at 137.40 and now an hourly double-top potential at 137.25, the signs are fairly strong that a top might be forming.

I’ve been hearing for days of big stops above 137.75, so if you’re short or going short, then I suggest you consider chopping out above there.

No sign of consolidation phase

I must say I am a bit surprised to see cable and EUR up at these levels this morning. I thought yesterday that the market had reached saturation point for the bulls and that a healthy retracement was about to ensue. Luckily I avoided going short. More of the same I guess today with dips being greeted by Sovereign buying interest. Don’t buck a trend.

Good luck today.

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New York forex wrap; Greenback unhelped by green shoots

• US pending home sales leap 6.7%, biggest rise in 7 years
• ECB’s Constancio: No deflationary spiral in eurozone but inflation could be lower than expected, does not foresee accelerated dollar losses
• NAHB says US housing market at or near bottom
• UK cabinet shuffle in the works
• Auto sales better than expected though sharply down from year ago; GM calls bottom for auto market
• Russia Medvedev eyes basket of reserve currencies to supplement dollar:  CNBC
• Commodities little changed; US index breaks 61.8% Fibo of July/March rally
• S&P rises marginally, up 0.2%. Banks issued more stock today

The dollar extended its across-the-board slide as the risk assumption trade concentrated on the greenback today. Hopes for a bottom in the important US housing market were raised by a jump in pending home sales while even the auto sector saw improved sales in May from April. Geithner’s defense of the dollar in Beijing did not impress the market, nor did his assurances that the Chinese are supportive of US economic policy.Momentum is trumping traditional economic analysis and risk-taking is trumping all else.

EUR/USD reach 1.4280in early NY trade, sold off to 1.4210 where a pair of Asian regional central banks bought. Prices reached 1.4330 in afternoon trade after the auto sales figures were released.

Cable continues to soar with the market absorbing news that Abu Dhabi sold its big stake in Barclays as well as persistent talk of a cabinet shuffle as Brown’s popularity plummets.

Commodity currencies continue to soar on hopes China will lead the recovery. AUD rose to 0.8230 despite a dovish RBA , CAD to 1.0792 and kiwi to 0.6595, breaking the 50% retracement of its decline which began in early 2008.

The BIS bought some USD/CHF today, helping push EUR/CHF up in the 1.50/1.5250 range that has prevailed in recent weeks.

ADP will be eyed for signs of improvement in the US labor market. It is early in the cycle for employment to rebound but if it does it will help cement the notion of a US economic recovery. Central bank meetings will dominate Thursday while non-farm payrolls are the headliner on Friday.

Dollar continues across-the-board slide

Risk-loving investors have turned oil prices and equities higher, putting the reflation trade back on track. The combination of an improving US (and global) economy is helping lift spirits but not the dollar. US debt levels will balloon in the near-term no matter what the economy does and will likely balloon in the long-term as well.

Cable, EUR, AUD and NZD are all at or near session highs with momentum outstripping fiundamentals at the moment regardless of what crosses the tape…EUR/USD trades at 1.4315, GBP/USD at 1.6575, AUD/USD at 0.8225, and NZD/USD, at 0.6590 after breaking its 50% retracement…

Automakers join Realtors in calling a market bottom

GM says the bottom of the car market comes this spring. The NAHB said the same about housing earlier today. Hope they are right

EUR/USD is firm, as are equities. EUR/USD trades at 1.4315 while the S&P is up 0.4%.