Daily Recap - 02/16/2009

1. positive earning reports, Japan's better than expected preliminary GDP, and signs of coordinated EU action with respect to Greece helped traders work up some appetite for risk. The S&P 500 bounced almost 20 points as the US dollar and Japanese yen receded against their major counterparts. 
2. But caution is still warranted. the S&P is rallying straight into resistance at 1100. Even if it breaks above, it still has to deal with a much stronger resistance at 1150.
3. In addition, renewed concerns about Dubai's debt (although small in comparison) have resurfaced.
4. As expected, the USD is under consolidation. News that China reduced some of its US treasuries holdings last month certainly did not inspire any dollar strength.
5. Note worthy - DXY 50 and 200 MAs cross over in what is known as the "golden cross". Momentum traders will often interpret this event as confirmation of the trend which may suggest further strength for the USD.
6. Once again, Loonie and Aussie look strongest against both the dollar and yen.Aussie has regained strength after a recent RBA statement mentioned more interest hikes are in store for this year.
7. Note - speculation is growing that China will let its currency appreciate by up to 5% against the dollar.