EUR/USD:1.3136/38: The spike, higher towards 1.3170, did not take place, so nothing was done. Today we would wait for move close to 1.3148-55 to sell for 50% of equity. However if a dip takes place below 1.3090, then sell the break, for a move to 1.3030-40. Overall keep stops for shorts at 50 pips over cost.

GBP/USD:1.9495/97: The shorts from 1.9600, was exited at 1.9480, as planned. Now we would sell again under 1.9520 and if done, keep a 50 pip stop for a 80-100 pip dip again.

USD/CHF:1.2345/50: The longs from 1.2350, could continue for 50% of equity, with a 50 pip stop for a 90-100 pip upmove.

USD/JPY119.40/45: Nothing was done yesterday. Today we can look to buy the Dollar close to 119.30 and if done keep a 50 pip stop for a possible 90-100 pip upmove in the interim.

EUR/JPY:156.88/94: The shorts 158.40 and then again on from 157.40-50, were exited on Friday at 156.30. No trades are recommended today.

It seems the market is getting tired of selling US dollars and has instead opted to take profit on dollar shorts ahead of the three day weekend in the US. Economic data continued to disappoint, but the disappointments were still not significant enough to stop the Federal Reserve from raising interest rates. This morning, producer prices fell 0.6 percent in the month of January; housing starts dropped 14.3 percent while consumer confidence slipped to 93.3. Even though PPI is fairly important, the drop was in line with expectations and prices excluding food and energy increased by 0.2 percent. As if to assure the market that the Federal Reserve is not worried about the drop in PPI, Chicago Fed President Moscow came on the wires after the release and said that the Fed still needs to clamp down on inflation and will continue to look to raise interest rates. He was optimistic about growth, downplayed the weakness in the housing market and warned that inflation risks remain to the upside.
Elsewhere, Euro zone economic data continues to outperform with the trade surplus increasing from 2.0 billion to 2.5 billion in the month of December. Looking ahead, the risks that the Value Added tax may begin to hurt the economy are increasing and business confidence could reflect that outlook.
Meanwhile, It has been a tough week for the British pound as weak economic data caused the currency to under perform against both the Euro and US dollar. There was no UK data released on Friday but the EU Commission raised their GDP forecast for the UK from 2.6 percent to 2.7 percent this year. At this point, there is only a slim chance for a rate hike in March. However, with the UK, things change frequently and next week’s busy economic calendar could easily shift the market’s outlook. The Bank of England will be releasing the minutes from their monetary policy meeting earlier this month.
At the other end, the best performing currency pair of the week was the Japanese Yen. The combination of a strong GDP report and liquidation of yen shorts have sent the Yen soaring against all of the majors on the prospect that the Bank of Japan could raise interest rates next week.