EURUSD Awaits PSI Resolution Near $1.32

The Australian touched 5-month high in early Asian trading but quickly gave back its gains in a lackluster session. Majors are essentially flat but EUR/CHF has made some headway to 1.2060. Scheduled news is light in Europe but a Greek deal is said to be close. Both of Tuesdays EURUSD Premium shorts are now in progress, while 1 of the AUDUSD short is also in play. Both gold longs hit targets. More below on US Crude and ES.

Australia posted a record trade balance in 2011 with December numbers beating the consensus ($1.7B vs $1.2B exp). That headline and optimism about China easing credit pushed AUD/USD marginally about the double top from Aug and Oct to 1.0756. In a sign of perhaps just how heavy long interest is in AUD, there was almost no short squeeze on the break and the pair quickly fell back to 1.0710.

A similar trade unfolded in gold as it touched above yesterdays highs to $1751 before slipping back to $1745.

EUR/USD traded in a narrow range with 1.32 capping rallies before the pair slipped back to 1.3166 as European traders began to arrive at their desks.

The calendar is a bit lighter in Europe today as Merkel travels to China and European parliament debates Eurobonds. At 0930 GMT, the January UK construction PMI is expected to slip to 52.5 from 53.2. Otherwise, there are no potentially market moving data points.

The focus will be on Greek PSI talks. Negotiations with private debt holders appear to have winded down and now the snags are with official accounts. The IMF wants to bring down Greek debt levels further and a number of ways to do that are being debated, with Germany offering strong resistance. According to the WSJ, options include ECB writedowns, losses at other central banks or a lower interest rate on official loans to Greece. The good news is that the Journal reports that the issues are minor and a deal could be reached within hours. We will believe it when we see it.

Both of Tuesdays EURUSD Premium shorts are now in progress, while 1 of the AUDUSD short is also in play. Both gold longs hit their targets. Find out about the ES & oil trade in here: http://ashraflaidi.com/products/sub01/access/?a=592 To become a subscriber, click here: http://ashraflaidi.com/products/