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Monday May 1, 2006 - 09:13:17 GMT
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ACM - www.ac-markets.com
USDJPY is poised to fall hard
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
April ended with an extremely volatile Friday, Cable took the lead with an explosive movement to 1.8265, bypassing a 1-year falling resistance at 1.8230. The euro has reached a 1-year high of 1.2640, 1.2665 is the mid-way point of the 20-cent fall in 2005 and one may expect the current move up to slow-down this week. USDJPY on the other hand lagged the others on Friday, falling just 50 ticks on the day to end the week at 113.65. With a lot of potential to catch up this week, traders were quick to sell the pair early in Asia, so far a low of 113.05 has been reached and there is room for an additional 150 points lower.
The US GDP was not the reason for the Dollars fall, growth stood at 4.8% in Q1, the highest in over 2 years and slightly better than expected, but the market discounted the data as being priced into the current prices, doubting that the strong GDP will change the FEDs interest outlook based on this. The U. Michigan Consumer Sentiment, down 1.5 points to 87.4 was the starting signal to selling Dollars, the movement was greatly re-enforced with a very bad release of the April Chicago Purchasing Managers Index, down more than 3 points to 57.2.
Treasury Secretary Snow on Friday further fueled the Dollar sell-off when he pointed to the prior weeks G7 communiqué as having to speak for itself. The issue of currency re-valuation in China is far from being resolved, the Chinese may go a next step soon, meanwhile the market is hardly going to sit back and with only 38% of the Dollars 2005 rise corrected against the Japanese YEN so far, risk is to extend the current move by another 3-4% in the near future.
Todays Key Issues:
Large parts of Europe are closed today, with Germany, France and Italy all observing Labor day, the UK is closed for May Bank Holiday, trading should be fairly thin in the morning.
US March Personal Income is due at 12.30GMT, it is forecast to rise by 0.4% after a 0.3% increase in February. Personal Spending should maintain its 0.4% increase from last month.
At 2pm US April ISM Manufacturing activity is likely to remain steady at unchanged 55.2.
The Risk Today:
1H EURUSD: Bullish trend is going in its 4th week, having bypassed the September high of 1.2590 with a weekly close above is significant, but the next large resistance lies at 1.2665, expect the rise to slow dramatically this week, giving trend-lines time to catch-up. Today strong initial support 1.2590, trend-line at 1.2520, key support 1.2485. On top, bypassing 1.2665 leaves space to 1.2760 this week, next large target is 1.2900.
Daily USDJPY: Lowest weekly close since September has breeched the 38% retracement level of the overall rise in 2005. This is bearish, expectations are to move ahead to next large target of 109.25 in the course of the next 3-5 weeks. For today initial resistance at 113.40, trend-line at 113.65 and key resistance at 113.90, support at 113.05, 112.65 and 112.25, target this week is 111.60.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2760 S ||1.8380 S ||113.90 K ||1.2550 K |
|1.2710 M ||1.8330 M ||113.65 T ||1.2440 S |
|1.2665 K ||1.8285 M ||113.40 S ||1.2415 T |
|1.2620 ||1.8240 ||113.25 ||1.2400 |
|1.2590 M ||1.8230 T ||113.05 M ||1.2375 S |
|1.2520 T ||1.8180 M ||112.65 S ||1.2335 M |
|1.2485 K ||1.8130 K ||112.25 S ||1.2260 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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01:30 CN- CPI
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- POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.
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- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.
- POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.
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