Forex Analysis: Yen Poised to Extend Overnight Gains on Risk Aversion

By Ilya Spivak, Currency Strategist

The Japanese Yen appears poised to extend a recovery started at the open of the trading week as risk aversion grips financial markets anew.

Talking Points

• Japanese Yen Outperforms in Asia, More of the Same Likely This Week
• Australian, Canadian Dollars Vulnerable on Returning Risk Aversion
• Soft Eurozone PPI May Weigh on Euro Ahead of ECB Policy Decision

The Japanese Yen outperformed in overnight trade as Asian stocks declined, driving demand for safety-linked currencies. The MSCI Asia Pacific equity index fell 0.3 percent. The newswires attributed the move to profit-taking after the benchmark regional gauge hit a 17-month high last week.

Broadly speaking, a short lull in headline-driving event risk will give financial markets an opportunity for some reflection in the week ahead.The most significant lingering uncertainty over the coming months remains the outlook for US economic growth and there is much to consider in the aftermath of last week’s volatility

On one hand, risk appetite reacted favorably to a last-minute agreement averting the so-called “fiscal cliff”, but the reaction seemed overdone. While the smaller-scale tax hike baked into the accord is preferable to a far larger and broader increase that would have been triggered without a deal, it is nonetheless a headwind from an economic growth perspective.

Meanwhile, fears of an early end to the Fed’s stimulus efforts after the release of minutes from December’s FOMC sit-down seem likewise overblown. The adoption of the “Evans rule” linking rates to explicit inflation and unemployment targets was already mildly hawkish in that it set a firm exit strategy. However, even if the Fed halts asset purchases by mid-year, it will expand its balance sheet by close to $0.5 trillion.

On balance, the fiscal side of the equation seems to carry a greater degree of near-term uncertainty than the monetary one. That suggests the path of least resistance likely favors risk aversion. Near-term correlation studies suggest such a scenario is likely to prove most damaging for the Australian and Canadian Dollars while producing outsize gains for the Yen.

The economic calendar is relatively quiet in European hours. November’s Eurozone PPI figures are expected to put the year-on-year wholesale inflation rate at 2.4 percent, the lowest in four months. A particularly soft reading may weigh on the Euro ahead of this week’s ECB monetary policy announcement.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
23:50	JPY	Monetary Base (YoY) (NOV)	11.8%	-	5.0%
23:50	JPY	Loans & Discounts Corp (YoY) (DEC)	0.44%	-	0.26%
0:01	GBP	Lloyds Employment Confidence (DEC)	-42	-	-42
5:00	JPY	Vehicle Sales (YoY) (DEC)	-3.4%	-	-3.3%

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
8:00	GBP	Halifax House Prices sa (MoM) (DEC)	0.0%	1.0%	Low
8:00	GBP	Halifax House Prices 3Mths/Year (DEC)	-0.6%	-1.3%	Low
8:00	CHF	Foreign Currency Reserves (DEC)	423.0B	427.4B	Low
9:30	EUR	Euro Zone Sentix Investor Confidence (JAN)	-14.2	-16.8	Low
10:00	EUR	Euro Zone PPI (YoY) (NOV)	2.4%	2.6%	Medium
10:00	EUR	Euro Zone PPI (MoM) (NOV)	-0.2%	0.1%	Medium

 Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2960	1.3106
GBPUSD	1.5964	1.6115

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Natural Gas Drops as Late January Weather Forecasts Turn Milder

Natural gas futures fell in New York, reversing an earlier gain, amid revised forecasts for milder weather in late January that would reduce demand and a government report showing record production.

Gas slid as much as 1.5 percent after MDA Weather Services said a midday weather update showed warmer weather for the Midwest and the East over the next 11 to 15 days. Output in the contiguous U.S. states climbed 0.4 percent to a record 73.54 billion cubic feet a day in October from the previous month, according to the Energy Department’s monthly EIA-914 report.

“The market is holding out hope that colder weather at the end of January will salvage the heating season,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “The problem is the 11- to 15-day forecast turned warmer. Less heating demand than originally expected will mean slightly higher end-of-season storage levels. The 914 data is just affirmation that supplies are continuing to grow.”

Natural gas for February delivery dropped 4 cents, or 1.2 percent, to $3.247 per million British thermal units at 1:01 p.m. on the New York Mercantile Exchange. Trading volume was 32 percent below the 100-day average. Gas prices have risen 5 percent from a year ago.

April $2.50 puts were the most active options in electronic trading on the Nymex. They fell 0.4 cent to 0.9 cent on volume of 1,873 lots at 12:51 p.m. Puts accounted for 73 percent of the volume so far today.

The price spread of February futures to April contracts, representing cold-weather versus warm-weather months, widened 0.2 cent to 5.2 cents, increasing for the first time in three days.

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Euro Rises From Almost 3-Week Low Before ECB Meeting; Yen Climbs

The euro rose for a second day against the dollar, reversing earlier losses, after failing to drop below its 50-day moving average.

The 17-nation currency advanced from almost a three-week low after resisting a decline below the $1.2993. The euro fell earlier before the European Central Bank meets this week amid concern the region’s economy is faltering. The yen strengthened from almost the weakest level in 29 months against the dollar even amid speculation Japan’s government will announce additional stimulus measures.

4:50

Jan. 4 (Bloomberg) -- Adam Cole, head of global currency strategy at Royal Bank of Canada, discusses the U.S. budget deal and efforts by Japanese Prime Minister Shinzo Abe to weaken the yen. He speaks from London with Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)

“The euro simply didn’t break much lower and stayed quite nicely around the $1.30 level,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, said in a “Bloomberg on the Economy” radio interview with Sara Eisen and Scarlet Fu. “The temptation therefore is to try to push it a little bit higher.”

The euro appreciated 0.2 percent to $1.3101 at 12:24 p.m. New York time after falling earlier to $1.3017. It touched $1.2998 on Jan. 4, the lowest since Dec. 12. The yen gained 0.5 percent to 87.73 per dollar, rising against most major peers, after declining to 88.41 on Jan. 4, the weakest level since July 15, 2010. The Japanese currency advanced 0.2 percent to 114.94 to the euro.

New Zealand’s dollar gained versus the majority of its 16 most-traded counterparts. It rose 0.4 percent to 83.53 U.S. cents and strengthened 0.2 percent to NZ$1.5686 per euro.

The euro has strengthened 1 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. New Zealand’s dollar slipped 0.1 percent, the U.S. dollar dropped 0.5 percent, while the yen tumbled 7.1 percent.

Low Volatility

A gauge of price swings remained below average. JPMorgan Chase & Co.’s G7 Volatility Index, based on three-month options for Group of Seven currencies, was at 7.77 percent after touching 7.54 percent on Jan. 3, the lowest level since Dec. 21. The average in 2012 was 9.23 percent.

Lower volatility makes investments in currencies with higher benchmark interest rates more attractive as the risk in such trades is that market moves will erase profits.

Europe’s economy is forecast to shrink 0.1 percent this year after a 0.4 percent drop in 2012, its first contractions since 2009, according to the median estimate of economists surveyed by Bloomberg. The U.S. may grow 2 percent, compared with 2.2 percent in 2012.

More ‘Discerning’

“The risk-on, risk-off dynamic has morphed into a little bit more of a discerning currency-by-currency analysis,” Thomas Molloy, chief dealer at FX Solutions LLC, an online currency- trading company in Saddle River, New Jersey, said in a telephone interview. “There’s a little bit of an expectation that this year, 2013, will be the year that currencies that have good news will have strong currencies, currencies with bad news will have weaker currencies -- rather than the close-your-eyes and risk- on, risk-off trade that we had in 2012.”

ECB President Mario Draghi’s Governing Council, which cut economic and inflation projections last month, will keep its main refinancing rate at a record low of 0.75 percent on Jan. 10, according to the median estimate of 55 economists in a Bloomberg News survey. Five predicted the central bank will reduce the benchmark to 0.5 percent.

“The ECB meeting will be the focus this week,” said Jane Foley, a senior currency strategist at Rabobank International in London. “If there is more speculation about the ECB cutting interest rates, that could undermine the euro against the dollar.”

Citigroup Inc. forecast the ECB will cut rates as soon as February.

‘Cyclical Headwinds’

“Signals by President Draghi that the Governing Council may be moving closer to lowering rates could add to the cyclical headwinds” for the euro, London-based currency strategists Valentin Marinov and Josh O’Byrne, wrote today in a client note.

The yen rallied after falling against the dollar for eight consecutive weeks amid speculationJapan’s newly elected Prime Minister Shinzo Abe will boost efforts to spur growth.

The government will announce 12 trillion yen ($137 billion) of fiscal stimulus this month to boost the nation’s shrinking economy, the Yomiuri newspaper said today. The extra budget for this fiscal year through March will include 5 trillion yen to 6 trillion yen of public-works spending, the newspaper reported, without saying where it obtained its information.

The yen’s 14-day relative strength index versus the dollar dropped to 15.5 on Jan. 4, below the level of 30 that some traders view as a signal an asset has fallen too fast. The index was 22 today.

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Stocks Slip Before Earnings as Dollar Weakens, Yen Gains

Stocks slipped before the start of earnings season, pulling the Standard & Poor’s 500 Index down from a five-year high, and the Dollar Index fell for the first time in four days. European banks rose as regulators eased liquidity rules while Italian bonds slid.

The S&P 500 dropped 0.6 percent to 1,457.79 and the Stoxx Europe 600 Index (SXXP), which closed last week at its highest level since February 2011, fell 0.4 percent at 12:58 p.m. in New York. BNP Paribas SA and Barclays Plc paced ban gains in Europe. The yen advanced against all 16 major peers, adding 0.6 percent versus the U.S. currency, while the Dollar Index retreated from the highest level since November. Treasuries and commodities were little changed.

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Traders work on the floor of the New York Stock Exchange (NYSE). Photographer: Scott Eells/Bloomberg

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Alcoa Inc. will unofficially start the U.S. earnings reporting season after the market closes tomorrow, with analysts predicting 2.9 percent growth in fourth-quarter profit for S&P 500 companies. Photographer: Stephen Morton/bloomberg

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The yen rose 0.4 percent to 87.81 per dollar after touching 88.41 last week, the weakest since July 2010. Photographer: Akio Kon/Bloomberg

Alcoa Inc. (AA) will unofficially start the U.S. earnings reporting season after the market closes tomorrow, with analysts predicting 2.9 percent growth in quarterly profit for S&P 500 companies. European Central Bank President Mario Draghi’s Governing Council will meet Jan. 10 to focus on nursing the euro region back to economic health.

“We’ve come a long way in a very short time,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, in a phone interview. “I’m expecting better-than-anticipated earnings. Yet we need to see some consolidation first.”

Market Leaders

Utilities, energy and consumer companies led losses in nine of the 10 main industry groups in the S&P 500 today. Illumina Inc. tumbled 7.3 percent after Roche Holding AG Chairman Franz Humer told a Swiss newspaper that a deal to buy the U.S. genetics company is off the table. Applied Materials Inc., the world’s largest producer of chipmaking equipment, lost 2.1 percent after being downgraded at JPMorgan Chase & Co.

Boeing Co. tumbled 2.1 percent after a 787 Dreamliner operated by Japan Airlines Co. caught fire on the ground this morning at Boston’s Logan International Airport.

Bank of America Corp., the second-biggest U.S. bank by assets, slipped 0.5 percent after agreeing to pay Fannie Mae$3.6 billion to resolve home-loan repurchase claims. The lender will also pay $6.75 billion to repurchase residential mortgages sold to Fannie Mae. The deal will “substantially resolve outstanding claims for compensatory fees” between the two companies, according to the statement.

Earnings at banks and diversified financial companies are forecast by analysts to have grown 28 percent and 71 percent, respectively. Earnings at insurance companies fared the worst among 24 groups, decreasing 48 percent amid claims from Superstorm Sandy, according to analyst estimates compiled by Bloomberg.

Weekly Rally

Stocks surged last week, sending the S&P 500 up 4.6 percent for its biggest gain in 13 months, after U.S. President Barack Obama and lawmakers reached a compromise that averted the package of spending cuts and tax increases known as the fiscal cliff.

Fed Vice Chairman Janet Yellen said on Jan. 5 that communication of policy aims plays a “big role” in supporting the economy now that the central bank’s benchmark interest rate is close to zero. Fed Bank of Philadelphia President Charles Plosser said the same day that the central bank should take the steps necessary to ensure inflation stays near its goal of 2 percent.

Almost two shares fell for each that gained in the Stoxx 600 today as energy and utility companies contributed the most to the decline in the index. A gauge of banks advanced 1.8 percent, trading at a 17-month high, as BNP Paribas climbed 1.9 percent and Barclays increased 3.8 percent.

Basel Rules

Central bankers meeting yesterday in Basel, Switzerland, allowed lenders to use a wider range of assets to meet the so- called liquidity coverage ratio amid warnings the proposal would strangle lending and stifle the economic recovery.

The cost of insuring against default on bank debt fell, with the Markit iTraxx Financial index of credit-default swaps dropping four basis points to 121

Japan’s currency strengthened 0.6 percent to 87.68 yen per dollar after touching 88.41 on Jan. 4, the weakest level since July 2010. The yen’s relative strength index versus the dollar slid to 15.5 on Jan. 4, the least since December 2001 and below the 30 level that traders view as a signal that an asset’s price has fallen too fast. The yen added 0.2 percent against the euro. Europe’s 17-nation currency increased 0.3 percent to $1.3108.

Debt Sales

Italy’s 10-year bond yield rose eight basis points to 4.35 percent and the rate on similar-maturity Spanish debt climbed six basis points to 5.11 percent. Spain plans to sell bonds on Jan. 10 and Italy will auction securities the following day.

Silvio Berlusconi’s People of Liberty party reached an agreement with the Northern League to run together in Italy’s February elections, the former prime minister said today on RTL radio. The Northern League, which served in all three of Berlusconi’s governments, opposed his candidacy for premier.

Benchmark 10-year Treasury yields were little changed at 1.89 percent.

Economists cut their forecasts for Treasury yields in 2013 to the least since Bloomberg began compiling the predictions as jobs data tempered speculation the Federal Reserve will stop buying bonds this year. Ten-year yields will be 2.14 percent by Dec. 31, according to a survey of banks and securities companies as of Jan. 4, with the most recent projections given the heaviest weightings. It’s the lowest level based on Bloomberg data that start in July.

Emerging Markets

The MSCI Emerging Markets Index (MXEF) fell 0.2 percent, after seven straight weeks of gains, the longest stretch since October 2010. Brazil’s Bovespa sank 0.9 percent and India’s Sensex lost 0.5 percent. China’s CSI 300 Index (SHSZ300) advanced 0.5 percent, entering a bull marketafter rallying more than 20 percent from 2012’s low.

The S&P GSCI Index of 24 commodities drifted between gains and losses as coffee, cocoa and gas oil rallied more than 0.9 percent, while lead, natural gas and zinc dropped at least 0.9 percent to lead declines. Oil was little changed at $93.15 a barrel, after gaining 2.5 percent last week. Copper declined for a third day.

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Euro pares losses, trades little changed vs dollar

Jan 7 (Reuters) - The euro pared losses to trade little changed against the dollar on Monday as the New York session began with investors adjusting positions ahead of a European Central Bank policy meeting later in the week.
Analysts said the euro was more likely to remain under pressure as markets refocus on the euro zone's debt crisis with any indication of monetary stimulus or comments on economic weakness seen pushing it lower.
But some investors speculated there was too much bearishness and that if the ECB was not too negative, the euro could rally.
Currency speculators became net buyers of the euro for the first time since August 2011 in the week to Dec. 31, according to data from the Commodity Futures Trading Commission released on Friday.
The euro was last down 0.05 percent at $1.3057, well off the session low of $1.3016.

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Crude Oil Drops From Highest in Three Months.

Crude slid for the first time in three days in New York on speculation that this week’s gains were unjustified as the U.S. budget deal is insufficient to ensure growth in the world’s biggest oil-consuming country.
Futures lost as much as 0.7 percent after rallying 2.6 percent in the past two sessions as U.S. lawmakers passed a bill to undo automatic tax increases and spending cuts that threatened the nation’s economic recovery. The accord won’t reduce deficits enough to avoid a sovereign-rating downgrade, Moody’s Investors Service said yesterday. Technical indicators showed crude may have risen too quickly, according to data compiled by Bloomberg.
“We’re seeing short-term jitters on the back of Moody’s comments of a potential downgrade in the pipeline if things are not improved in the coming months,” said Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark.
West Texas Intermediate for February delivery dropped as much as 63 cents to $92.49 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.76 as of 1:05 p.m. London time. The contract yesterday climbed 1.4 percent to $93.12 a barrel, the highest settlement for a contract nearest to expiration since Sept. 18.
Brent for February settlement on the London-based ICE Futures Europe exchange fell as much as 84 cents to $111.63. Prices advanced 3.5 percent in 2012, a fourth annual gain. The North Sea crude was $19.37 a barrel more than WTI.
Trading volume in WTI was 26 percent below the 100-day average for the time of day, while Brent was 6 percent above.

Debt Ratio

The ratio of U.S. government debt to gross domestic product will likely peak at about 80 percent in 2014 and may stay at about that level for the rest of the decade, New York-based Moody’s said yesterday in a statement. The ratings company assigns the U.S. its top Aaa ranking and has a negative outlook on the grade.
“Further measures that bring about a downward debt trajectory over the medium term are likely to be needed,” Moody’s said.
WTI yesterday settled higher than the 30-day upper Bollinger Band for the fourth time in a week, signaling the market is overbought, according to data compiled by Bloomberg. Prices decreased in mid-September after closing above the same indicator, about $92.49 a barrel today.
The crude’s 14-day relative strength index for front-month prices rose to 68.1 yesterday, the highest level since Sept. 14. A reading above 70 is a signal to investors that price increases may have been excessive. It is at 64.9 today.
“We’re getting a mild sell signal and the coincidence of those levels mean that some traders will be bailing out,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “What we’re seeing is longs closing out, taking some profit.”

Oil Inventories

U.S. crude stockpiles probably fell by 500,000 barrels to 370.6 million in the seven days ended Dec. 28, according to the median estimate of nine analysts surveyed by Bloomberg before an Energy Department report tomorrow. A drop of that size would leave supplies at the lowest level since the week to Oct. 12.
The Energy Department is scheduled to release its weekly report in Washington two days later than usual because of the New Year holiday. The industry-funded American Petroleum Institute will publish its inventory data later today.
Stockpiles at Cushing, Oklahoma, America’s largest storage hub and the delivery point for the New York contract, increased 2.21 million barrels to a record 49.2 million in the seven days ended Dec. 21, the Energy Department reported on Dec. 28.

Seaway Expansion

WTI slid 7.1 percent in 2012 as the U.S. shale boom deepened a supply glut at Cushing. That left it at an average $17.47 barrel below Brent last year, compared with a premium of about 95 cents in the 10 years through 2010.
“Final work is being performed” on the Seaway pipeline that was reversed in May to carry crude from Cushing to the Gulf Coast, owners Enterprise Products Partners LP (EPD) and Enbridge Inc. (ENB) said yesterday. Capacity is being expanded to 400,000 barrels a day from 150,000 and operations will start at full rates by the end of next week, according to a joint statement.
The U.S. House vote to pass legislation avoiding the so- called fiscal cliff capped a final push as Republicans balked at a bipartisan Senate bill. House Speaker John Boehner ordered a vote even as 151 of 236 Republicans, including Majority Leader Eric Cantor, ultimately voted no. President Barack Obama said he’d sign the bill into law.

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Forex: Euro Continues to Struggle as Yen Leads as US Fiscal Tensions Linger

ASIA/EUROPE FOREX NEWS WRAP

The Japanese Yen and the US Dollar have continued their post-US budget deal announcement rebound on Thursday, as the European currencies continue to sell-off as capital returns to the market at the beginning of 2013. Despite an eleventh hour deal that prevented the US economy from sliding towards its most severe contraction since the depths of the financial crisis, US politicians have seemingly failed to set forth a meaningful deal that inspires hope for further compromise.

Certainly, with both Democrats and Republicans digging into their respective positions – one on the back of a perceived victory, the other on the back of a perceived defeat – the upcoming fight over the debt limit appears it will be a brutal one. Adding fuel to the fire were reports last night that Speaker of the House John Boehner (R-OH) would be abandoning his policy to negotiate with President Barack Obama (D) one-on-one, meaning that any new agreements passed will take the traditional route: through the bureaucratic, self-interested halls of Congress.

When considering the fiscal follies of the United States alongside the reloaded QE program by the Federal Reserve, there are two very significant forces at work against the US Dollar. But as history has shown the past few years, and especially during July-August 2011, just because credit risk is increased or yields are undermined, that doesn’t mean the US Dollar can find appeal; it remains the world’s reserve currency. But these concerns have been great enough to offset traders’ distaste for the Yen, which is the best performing currency on the day.

Taking a look at European credit, weakness in peripheral bonds has weighed on the Euro. The Italian 2-year note yield has increased to 1.707% (+3.3-bps) while the Spanish 2-year note yield has increased to 2.465% (+3.8-bps). Likewise, the Italian 10-year note yield has increased to 4.288% (+2.4-bps) while the Spanish 10-year note yield has increased to 5.007% (+1.7-bps); higher yields imply lower prices.

RELATIVE PERFORMANCE (versus USD): 11:20 GMT

JPY: +0.36%

AUD: -0.01%

NZD: -0.07%

CAD:-0.08%

GBP:-0.41%

CHF:-0.49%

EUR:-0.61%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.14% (-0.05% past 5-days)

ECONOMIC CALENDAR

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

TECHNICAL ANALYSIS OUTLOOK

EURUSD: The pair failed once again at its May highs, posting a massive reversal yesterday (Inverted Hammer) and trading towards the descending trendline off of the September and October highs. The bearish RSI divergence seen on the daily chart (as well as the 4H) is being resolved, setting up a potential buying opportunity in the coming days; however, negative momentum is proving swift. Support comes in at 1.3060 and 1.2940 (ascending TL off of July and November lows). Resistance is 1.3170, 1.3280/85, and 1.3380/85 (mid-March swing high).

USDJPY: The pair has exploded to its highest level since July 2010, leaving the December 2008/January 2009 lows in focus at 87.00/20. Given BoJ policy, any dips seen in the USDJPY are viewed as constructive for further bullish price action (the market remains very net-short). Support comes in at 86.00 and 84.70/85 (200-DMA, November 2009 low). Resistance is 87.00/20 and 88.00/50.

GBPUSD: The pair has fallen back from 1.6300, again, though with no follow through yet, my levels remain the same (they haven’t changed since early-December). Resistance comes in at 1.6300/10 (post-QE3 announcement high in mid-September) and 1.6350/60 (monthly R1). Support is 1.6170, 1.6085/90 (50-EMA), and 1.6035 (100-EMA).

AUDUSD:The AUDUSD couldn’t break descending trendline resistance off of the July 2011 and February 2012 highs, which come in at 1.0530/55 today, but that doesn’t mean the uptrend is over just yet. With price holding just below the monthly R1 at 1.0535 and thelong-term Symmetrical Triangle starting to break to the upside, consolidation may be ahead the next few sessions. Support is at 1.0500/15, 1.0460, and 1.0235/80. Resistance is 1.0555/75 and 1.0605/25 (August and September highs.

S&P 500: The S&P 500is back above a very significant zone of 1445/50 (descending trendline off of September and October highs, 100% Fibonacci extension off of the November 16 low, the November 23 high, and the November 28 low extension), and a move higher necessarily points to 1470/75. Support comes in at 1425, 1400, 1390 (200-DMA) and 1345/50 (November low).

GOLD: As noted previously, “December is historically a bad month for precious metals. I will continue to look to get long as low as 1675.” While I’m interested in price down here, selling pressure is intense; though I suspect that a retest of the breakout leading up to QE3 in September could draw buying interest again at 1645. Resistance is 1700, 1735 and 1755/58. Support is 1661 (200-DMA) and 1645.

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