Stocks and Dollars

Personal consumer expenditure (PCE) rose 0.7% in December following a downwardly revised 0.3% gain (previously reported as 0.4%) in November. The increase in December was above market expectations for a 0.5% gain. On a volumes basis, PCE was up 0.4% in the month following a 0.2% (was 0.3%) gain in

GDP output in November rose a stronger than expected 0.4%, which represented a doubling of the 0.2% gain recorded in October. Expectations had been for a more moderate 0.3% gain. The strength in the most recent month was skewed toward service-producing industries, which rose 0.5% although goods-producing industries managed to rise 0.1%.

Political tensions and street protests in Egypt weighed on risky assets at the end of last week boosting safe haven currencies including the US dollar, the yen and the Swiss franc. However, as we start a new week safe havens have come off their highs but European equities are following

Foreign exchange traders had plenty to deal with after weekend turmoil in Egypt raised demand for safe haven units only for a return of inflation fears to quickly reassert its hallmark. At the same time the Irish central bank reminded euro bulls of the challenges of trying to run what’s

EUR/CHF recovers strongly after dipping to 1.2779 and the strength of the recovery mixes up near term outlook. We’ll turn neutral first. On the downside, below 1.2779 will reaffirm the case that rebound form 1.2401 is completed at 1.3067 already. In such case, bias will be back to the downside

EUR/JPY recovers after dipping to 111.41 and intraday bias is turned neutral. Nevertheless, note that consolidations from 114.00 might extend further. Though, even in case of another fall, downside should be contained by 109.56 cluster support (61.8% retracement of 106.81 to 114.00 at 109.55) and bring rally resumption. The broader

Further decline is still in favor in USD/CHF with 0.9520 support turned resistance intact. Current fall from 0.9782 is still in progress to 0.9300 low. Break there will bring down trend resumption towards 0.9 psychological level. On the upside, above 0.9520 support turned resistance will flip bias back to the

Intraday bias in USD/JPY remains neutral at this point. On the downside, below 81.84 will bring deeper fall to 80.93 support and possibly below. On the upside, above 83.19 will revive the case that rise from 80.93 is still in progress and turn bias back to the upside for 83.67 and then 84.49.