South Africa’s central bank maintained its key repurchase rate unchanged at 5.5 percent, a move expected by market analysts. The main lending rate is at 30-year low. Gill Marcus, Bank’s Governor, said that the current monetary policy “is accommodative and supportive of the real economy”. Positive developments in the global economy reduced need for an interest rate cut, but investors think that an interest rate hike also isn’t likely to happen in the near future.

High lending rates help to attract to South Africa investors interested in so-called carry trades. Such investors borrow in countries with low interest rates (like the United States and Japan) and invest in currencies with high yield. Bloomberg economists estimated that the South African currency has returned 2.6 percent this year in such trades.

USD/ZAR traded at 7.9060 as of 7:01 GMT today after it dropped from 7.9320 to 7.9070 yesterday.

If you have any questions, comments or opinions regarding the South African Rand, feel free to post them using the commentary form below.
source form: topforexnews

Yen is gaining against the euro as worries about what happens to talks about Greek debt creeps into the picture. Risk appetite is slowly fading away as investors and Forex traders worry that a deal regarding Greek debt may not go through. Additionally, investors are also weighing the latest earnings data, which isn’t as good as expected.

However, there is enough good news about the US economy that some risk appetite is hanging on, as evidenced by some high beta currencies, such as the UK pound, retaining some of their gains.

In Japan, some business leaders are asking that the policy makers add a cap to the Japanese yen. The Swiss put a cap on their currency in 2011, and businesses in Japan are concerned about what happens if the yen appreciates too far and interferes with their exports. A franc-style cap on the yen might prevent that.

At 14:30 GMT USD/JPY is higher at 77.1805, up from the open at 77.1095. EUR/JPY is lower at 99.6650, down from the open at 100.0150. GBP/JPY is higher at 119.7550, up from the open at 119.4350.

If you have any questions, comments or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.
source form: topforexnews

Back in October, private bondholders agreed to a steep haircut in order to help Greece, but many analysts think that even with the concessions from private bondholders the debt will be unsustainable going forward. As a result of some of this uncertainty, a bit of risk aversion is showing through the recent risk appetite.

Euro losses have been somewhat limited, thanks to better economic news in the United States, especially with the jobs data. Additionally, recent eurozone data has been reasonably strong, especially with the recent ZEW readings. However, there is still plenty of downside potential for the euro going forward, especially if the Greek debt problem isn’t resolved. There is still plenty of weakness for the euro, though, and enough uncertainty that the euro is wavering. It will be interesting to see if the eurozone problems are resolved.

At 16:36 GMT EUR/USD is down to 1.2933 from the open at 1.2968. EUR/GBP is down to 0.8327 from the open at 0.8372. EUR/JPY is down to 99.5035 from 100.0150.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

source form: topforexnews

The Bank of Mexico left its benchmark overnight interbank funding rate at the record low 4.50 percent as inflation exceeded expectations for three consecutive months. Inflation accelerated to 3.82 percent in the fourth quarter from 3.14 percent in the third quarter after the peso declined, being the worst performer among major currencies of Latin America, and a drought pushed up food prices. The high inflation rate harmed economic growth. The Mexican economy grew 3.68 percent in October, while it expanded 4.52 percent in September. The central bank predicted that economic growth will be 3.5 percent this year, down from 4 percent in 2011.

Some analysts think that the Mexican central bank will keep lending rates stable for a prolonged time to support growth of the economy. Yet the rally of peso amid improving prospects for the global economy may change outlook for Mexico’s economy, prompting Mexico’s bank to change its policy and perhaps to raise rates.

USD/MXN dropped from 13.2110 to 13.1640 as of 18:14 GMT today after rising to 13.2800 earlier. Today’s maximum was 13.1570 — the lowest rate since October 31.

If you have any questions, comments or opinions regarding the Mexican Peso, feel free to post them using the commentary form below.

source form: topforexnews

British retail sales rose 0.6 percent in December for a month ago, when sales were down 0.5 percent. Automotive fuel and textile, clothing and footwear stores were the biggest contributors to the increase. At the same time, sales in household goods stores and other stores declined.

Investors are worried that Greece wouldn’t be able to reach an agreement with private bondholders on a debt swap that are crucial for securing a next portion of bailout. It looks like Forex market again has seen a same pattern as in the previous week: market participants were optimistic for the most part of the week, but lost their optimism by the weekend.

GBP/USD jumped from 1.5484 to close at 1.5574, near its daily high of 1.5576 (the highest level since January 5), while GBP/JPY climbed from 119.39 to 119.95 and its intraday maximum was 119.98 (the price not seen since January 4). At the same time, EUR/GBP dropped from 0.8369 to 0.8300.

If you have any questions, comments or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.
source form: topforexnews

In the interim, it could be worth keeping an eye on some interesting Euro cross rates which all seem to be overextended and potentially at risk for reversals. EUR/JPY has stalled out yet again by multi-year lows and ahead of key psychological barriers at 100.00, while EUR/AUD trades by +20 year lows and could also be looking to carve some form of a base. Meanwhile, EUR/GBP has been under some intense pressure in recent trade, and threatens a retest of its 2011 lows from early January.

Looking ahead, the Italian austerity package will head to the Senate for final vote, while on the economic calendar, Italian retail sales, and UK current account and GDP highlight the European docket. Things could pick up into the US with the final revisions to US Q3GDP due, along with initial jobless claims, Chicago Fed national activity index, leading indicators, the house price index and Michigan confidence. US equity futures and oil prices trade relatively flat, while gold looks to be rolling back over.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: The market has finally taken out the key October lows at 1.3145 to confirm a lower top by 1.3550 and open the next downside extension towards the 2011 lows from January at 1.2870. Daily studies are however looking a little stretched and at this point we could see some corrective action before the market resumes its downward trajectory. Look for any rallies to be well capped in the 1.3300 area from where the next lower top will be sought out.

USD/JPY:The market has managed to successfully hold above the bottom of the daily Ichimoku cloud to further strengthen our constructive outlook and we look for the formation of a inter-day higher low by 76.55 ahead of the next major upside extension back towards and eventually through the recent multi-day highs by 79.55. Ultimately, only a close back below the bottom of the Ichimoku cloud would negate outlook and give reason for pause, while a daily close back above 78.30 accelerates.

GBP/USD: Rallies have been very well capped ahead of 1.5800 and it looks as though a lower top has now been carved out by 1.5780 ahead of the next major downside extension back towards the October lows at 1.5270. Key support comes in by 1.5400 and a daily close below this level will be required to confirm bias and accelerate declines. Ultimately, only back above 1.5780 would negate bearish outlook and give reason for pause.

USD/CHF: The recent break above the critical October highs at 0.9315 is significant and now opens the door for the next major upside extension over the coming weeks back towards parity. A confirmed higher low is now in place by 0.9065 following the recent break over 0.9330, and next key resistance comes in by 0.9785. Ultimately, only back under 0.9065 would delay constructive outlook.

source form: dailyfx

EUR/USD: The market has finally taken out the key October lows at 1.3145 to confirm a lower top by 1.3550 and open the next downside extension towards the 2011 lows from January at 1.2870. Daily studies are however looking a little stretched and at this point we could see some corrective action before the market resumes its downward trajectory. Look for any rallies to be well capped in the 1.3300 area from where the next lower top will be sought out.

source form: dailyfx

GBP/USD:Rallies have been very well capped ahead of 1.5800 and it looks as though a lower top has now been carved out by 1.5780 ahead of the next major downside extension back towards the October lows at 1.5270. Key support comes in by 1.5400 and a daily close below this level will be required to confirm bias and accelerate declines. Ultimately, only back above 1.5780 would negate bearish outlook and give reason for pause.

source form: dailyfx

USD/JPY:The market has managed to successfully hold above the bottom of the daily Ichimoku cloud to further strengthen our constructive outlook and we look for the formation of a inter-day higher low by 76.55 ahead of the next major upside extension back towards and eventually through the recent multi-day highs by 79.55. Ultimately, only a close back below the bottom of the Ichimoku cloud would negate outlook and give reason for pause, while a daily close back above 78.30 accelerates.

source form: dailyfx

Gold has been technically and fundamentally supported for several years. The technical patterns arebeginning to break down which could mean the shiny metal has the potential to sell off from current levels.

A break below 1532 would confirm a new downtrend and offer a trader an entry to sell.

(Created using FXCM’s Marketscope 2.0 charts)

Last week, Gold broke below the 40 week moving average for the first time since January 2009. This technical indicator is watched by many large institutions to give clues about trend direction.

(Created using FXCM’s Marketscope 2.0 charts)

Additionally, Gold broke below the 200 Day Simple Moving Average last week which is another technically bearish sign. Earlier today, gold pierced the 200 SMA from the bottom side and immediately turned lower. This respect for these important moving averages indicates the appetite for owning gold at these prices is waning.

Therefore, we’ll look for technical reasons to sell gold. Since the low of late September 2011 is 1532, place an entry to sell 1 point below at 1531. Prices trading to these levels will indicate that prices are trading at levels not seen in 5 months which also indicates technical weakness. Place a stop just above a recent swing high on a break below 1531.

source form: dailyfx