Daily Coffee Market Outlook

NY- Sell (1)- The USD was the main driver of proceedings yesterday and this does not look set to change today. A woeful day for Europe Wednesday as the UK unemployment disappointed, and further details emerged in Greece regarding a certain investment bank helping massaging its deficit and mislead investors. The latter sent the cat amongst the pigeons once more, further damaging confidence in the Euro and evoking angry reactions from EU members, particularly Germany. It seems at the moment, the EU wants to show that it is behind the peripheral countries without having to put its money where its mouth is. Something must come to a head sooner or later. Euro weakness was excaserbated further as US housing data surprised to the upside and the FOMC minutes revealed the Fed was debating how to unwind some of its housing stimulus measures. Ice 'C' didnt react quite as negatively as might be thought, but the fact that these problems have been around for a few weeks now is watering down their impact. That is not to say however that it is not having an impact at all; last weeks up-swing has been reversed its seems and the possibility of March creeping above the 135 stability point unlikely. We look down then towards support at 128.50 and envisage a challenge here once more in the short-term. Pending a close below there, 123 becomes the next downside target.

Liffe- Sell (1)- Like NY, Ldn is dominated by the dollar (again) and macro developments in the EU. The switch appears to be where the majority of volume is centred, although it seems that some of the Mar/May strength is beginning to wane; possibly due to system funds having finished the majority of rolls needed to be done. We look for further weakness today accross the board and set our sights in March now towards 1250 following the close below 1280. 1300 should provide some sort of a cap to the upside should the USD weaken.