Greece on the Brink, EURUSD Back to $1.2730s

The euro was locked in a tight range as good news about France's credit rating competed with concerns from Greece. The commodity currencies rallied substantially while other currencies were relatively unchanged. The Asia-Pacific calendar is fairly quiet with Japanese leading indicators on the docket. Tuesday's Premium trades and charts are in progress.

Markets were unusually tame in US trading, especially once Europe closed. The EUR/USD range for the session was traced out early as the pair bounced from 1.2763 to 1.2815. Consolidation played out for the remainder of the day before the euro slipped to the lower bound on a late report out of Greece suggesting restructuring could be forced and that Greece will need a larger bailout than agreed in October.

The euros early strength came from Fitch, who said a French downgrade is unlikely in 2012.

Commodity currencies climbed on broadly positive risk sentiment. The S&P 500 gained 0.9% to 1292. EUR/AUD hit a fresh record low of 1.2361. The Canadian dollar got a modest boost from December housing starts, which were an annualized 200.2K compared to the 188.5K expected. Starts totaled 193K in the year and were accelerating into year end, showing that Canadas housing market is overheated but that the day of reckoning is still far on the horizon.

Italian benchmark 10-year yields ticked lower but remain above 7%.

Asia-Pacific Preview

Its a slower session in Asia on Wednesday. AUD benefitted from soft Chinese import data yesterday because it made a cut in the reserve ratio more likely. At 0500 GMT, the Japanese leading index is expected to improve to 92.9 from 90.0.

Tuesday's latest include 4 new charts (2 on USDCAD and 2 on silver) to map out the Gold/Silver strategy as well as the latest on the emerging bounce in risk appetite. Direct Access to today's Intermarket Insights found here: http://ashraflaidi.com/products/sub01/access/?a=580