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Wednesday May 3, 2006 - 09:22:57 GMT
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ACM - www.ac-markets.com
Australia with a surprise rate hike
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The Dollar continued its slide, the Euro bullish trend is unharmed after 3 weeks, Cable reached a new high, nearing its September high at 1.8500. Tries for any kind of deeper correction to the sharp USD fall over the past few weeks have so far been fruitless, today we are trading at or near key levels in EURUSD 1.2665, GBPUSD 1.8500, USDCHF 1.2270, the possibility of a break and daily close beyond these levels cannot be ruled out, if it does, expect currencies to rise an additional 2% before the week ends.
Australian RBA this morning surprised markets with a 25bp rate hike to 5.75%. The tightening came with a statement of strong economic growth prospects in the world and in Australia in particular, domestic spending is up, the business environment remains strong and the credits continue to be in high demand. Growth in inflation has increased faster than expected on the back of high energy and commodity prices. The Australian Dollar had a strong run up to a new 7-month high of 0.7690, as in other currencies, it is nearing the Sep’05 top which lies at 0.7765.
FED Pianalto warned that the US Current Account cannot keep growing indefinitely, saying that foreign investors including government bodies will eventually become reluctant to add additional Dollars to their portfolios. This is surely not new, but comes add an odd time with the Dollar trading at 6-month lows – is it intent, to lead the market to continue with the current trend?
Todays Key Issues:
Euroland March PPI at 9amGMT ought to grow by an unchanged 0.4%, the YoY increase stands at 5.1% - this is high. Euroland March Unemployment will be released at the same time, it is expected to remain stable at 8.1%
At 2pm US March Factory Orders are forecast to increase 1.5% after just 0.2% the previous month. April Non-manufacturing ISM is due at the same time and is thought to stand at 59.5, down from 60.5 in March.
The Risk Today:
EURUSD: Medium-term trend-line at 1.2600 is still key, while above we should try the 1.2665 resistance, a break should see us make a new top above 1.27, max upside today 1.2770. Risk to the downside is for 1.2500.
1-H GBPUSD: 4-day trend-line at 1.8355 has survived a first test this morning, while above that we remain bullish and expect to test the 1.8500 resistance, maintaining a bullish outlook to move beyond that and reach 1.87 next. A break to the downside risks 1.8220 in the short-term and could easily extend down to 1.8150.
1-H USDJPY: 1-week bearish trend-line has reached 113.40, strong resistance level, view remain for a lower Dollar, a retry of the 112.35 level is on the cards, expect to extend that low to 111.55 by Friday. A break on top risks an immediate return to 114.00, next larger resistance at 114.85..
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2770 S ||1.8590 S ||114.50 S ||1.2450 M |
|1.2695 M ||1.8500 K ||114.00 S ||1.2385 S |
|1.2665 S ||1.8475 M ||113.50 T ||1.2350 T |
|1.2640 ||1.8420 ||113.20 ||1.2340 |
|1.2635 M ||1.8410 T ||112.95 M ||1.2300 M |
|1.2560 T ||1.8360 T ||112.35 S ||1.2270 K |
|1.2485 K ||1.8320 M ||111.60 K ||1.2205 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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- POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.
- 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.
- POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.
- POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.
- POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.
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