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Friday May 5, 2006 - 09:29:48 GMT
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ACM - www.ac-markets.com
Hawkish Trichet saves Euro rally
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
European traders were set for a bearish move on the Euro, when ECB President Trichet stepped in with some hawkish comments to drive the currencies to yet another high. EURUSD reached 1.2725, USDCHF traded at 1.2250 and Cable spiked to 1.8550, this keeps the bullish trends in place and we expect the week to end with the lowest Dollar in nearly one year.
The day had started with disappointing data in Europe, the Services Survey unexpectedly slowed to 58.2 and March Retail Sales were reported to have lost 0.8%. The ECB rate meeting was a non-event until Trichet started his press conference with some very hawkish remarks:
He said that recent data implied a pick up in activity, growth ought to accelerate and upside pressure on inflation remains. He enforced the view that the ECB could hike rates again as early as June when saying that the ECB remained strongly vigilant about preventing rising inflation. This caused the Euro to jump sharply, upon breaking 1.2665 stop-loss buying orders were triggered, driving the pair to close the day above 1.27 for the first time since mid-May of last year.
NY FED Geithner stressed the risk of rising energy prices, saying that while so far the economy has handled the price increase fairly well, further price increases could cause a lot more damage. He is also alarmed by the fact that the lower housing market has so far not slowed spending and fears that the US twin deficit will continue to grow.
Todays Key Issues:
ECB President Trichet will hold another press conference today at 11GMT, expect another hawkish set of remarks, helping the Euro to hold at very high levels.
US April Nonfarm payrolls at 12.30GMT are forecast to increase by another 200k, the unemployment rate should remain at 4.7%. US March Consumer Credit is also due at the same time, it should rise by nearly 1Bln to $4,1Bln.
The Risk Today:
1-H EURUSD: We have re-drawn our bullish trend-line after the 2nd near-break yesterday, trend-line lies at 1.2615 this morning, additional strong support nearby at 1.2665. Outlook is positive, expectations are to hold high levels and rise to above 1.27 again to end the week at a new high, 1.2735 is likely to be seen, max upside is limited to 1.2820 today, next medium-term resistance at 1.2900.
Weekly GBPUSD: The 1.8507 top was broken with a higher daily close last night, repeating this feat tonight is bullish for additional rise next week, next target at 1.8775. For today, key support at 1.8450, a breech risks a low close and return towards 1.82. For now we can remain positive in the short-term, minor resistance 1.8515, stronger at 1.8550 and potential to climb another 1-cent once that top is broken.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2830 S ||1.8630 S ||114.85 K ||1.2550 K |
|1.2750 M ||1.8585 M ||114.50 M ||1.2400 S |
|1.2715 S ||1.8550 S ||114.10 S ||1.2325 M |
|1.2685 ||1.8490 ||113.75 ||1.2310 |
|1.2665 K ||1.8480 M ||113.55 T ||1.2250 S |
|1.2640 M ||1.8450 S ||113.40 K ||1.2215 M |
|1.2600 S ||1.8400 S ||112.80 S ||1.2150 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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