Oil drops off its $82.15 high after EIA inventories data showed a build of a 1.3 mln barrels, 4 times greater than expected. While the daily oscillators in crude show signs of toppishness, the weekly trend remains positive and $84.85 is a vialble target for the week ($88 for month-end) remains a target for the month. USDJPY forms a bullish engulfing pattern eyeing 93, while USDCHF remains confined to 1.0280-1.0380. Watch Ashraf at 12:20 GMT tomorrow on CNBC analyzing sterling & the Bank of England decision
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15980 level on 4H seems to have been solid. Also we have interaction with trend line. We close above both and off we go. also look at the divergence between 30th Dec low and today. 15990 was 61.8fib level too! on our way up??
STERLING POLITICS goes from bad to worse, as 2 former Labour Party cabinet ministers called for a secret ballot on PM Brown's leadership ahead of the elections. Cable eyes a retest of the $1.5940s, while EURGBP eyes 0.9025 trend line. GBPCAD eyes the 1.6515 Dec low, which is the lowest since the Oct 15 high (when oil broke above 76). Dec ADP -84K (exp. -73K)The fact that the ADP has shown losses fewer than the 3-month moving average over the last 9 consecutive months highlights the improving trend in private payrolls as far as reduced firings are concerned.
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Jurgen Stark a member of the ECB’s Executive Board stated emphatically that the EU will not save Greece, triggering a massive selloff in the EUR/USD which tumbled more than 50 points below the 1.4300 level within minutes of the news. Mr. Stark noted that a liquidity injection would have negative consequences for European stock markets and also stated while the European economy has improved the recovery remains uncertain.
Less than a month ago Mr. Stark noted that, “we have 10 days and one year to address this question,(of accepting Greek collateral) ", with ECB committing to accepting Greek BBB rated securities in its refinancing operations until the end of 2010. Today’s unmistakably direct comments by Mr. Stark are a clear sign that European monetary officials want to serve notice to Greek fiscal authorities to get their budget in order.
Despite M. Starks’ bluster it is difficult to determine the exact implications of his words. Greece is an EU member and is therefore bound to the union by a series of treaties. A financial failure by one of the union’s members, would be the first such occurrence since the introduction of the euro and could put tremendous stress on the currency as a whole.
The financial problems with Greece expose the weakness in the North South divide in the union with fiscal conditions in Spain, Portugal and Italy considerably worse than those in Germany, France and Netherlands and euro’s status as a currency without a country comes under assault every time fiscal difficulties create political tensions in the union.
Nevertheless, tonight’s fireworks are merely an opening gambit in further negotiations with Greece and will likelybecome resolved especially if the region’s economy continues to recover in 2010 ameliorating some of the fiscal problems. Still, the concerns regarding the fiscal problems in EU could continue to weigh on the unit until markets see some concrete austerity plans from politicians in the region.
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