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Tuesday May 9, 2006 - 05:48:23 GMT
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ACM - www.ac-markets.com
Pause before FOMC storm
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The euro reached another high, 1.2785 was reached mid-morning in Europe. Cable rallied up to 1.8690 thanks to a higher then expected PPI in the UK in April, with this the inflation is bag in its target area and BOE doves take a backseat. As the up-move in Europe lost momentum, the interest shifted to USDJPY, which got sold down to 111.00. Much of the selling was done through EURJPY and GBPJPY. Both Crosses lost about 1% on the day, pulling down the Euro and Cable, they soon stood below the days opening levels. Overnight, the retracement continued and the Euro fell to 1.2685, near its bullish trend-line at 1.2675.
ECB Governing Council Member Garganas hawkish statement did nothing to stop his currencies weakening in the New York market. He sees Euroland growth accelerating faster than expected, pointing to healthy German Industrial Production, rising car registrations and falling Unemployment. He did not want to comment on some analysts expectations that the ECB could go ahead with a 50bp rate increase in June, except for confirming, that there had been members advocating it.
According to Japanese Jiji-news agency, next weeks monthly BOJ report will mention an expanding economy for the first time in 15 years! If that is the case, a first rate hike could come as early as the following month.
Todays Key Issues:
German March Industrial Production at 10amGMT ought to rise by 0.5%, pushing the good February result higher to a 7% YoY growth.
No major data in the US today, weekly Store Sales are due at 11.45am (ICSC) and at 12.55 (Redbook). At 2pm finally, a look at March Wholesale trade data, they ought to rise 0.5% after a 0.8% increase in February.
The Risk Today:
4-H EURUSD: Much closer to the bullish trend-line, buyers can get in with a tight stop, target for the week remains 1.2885 but no real progress is expected today ahead of the FED rate decision, potential sellers should act upon a break of the trend, expect a near 100-point dip to 1.2590 or even lower to the 1.2530 key support.
1-H USDJPY: A low of 111.00 but a daily close above of the 111.55 key support. For now however there is a bearish trend-line at 111.95 and a new attempt through 111.60 can get stated anytime, next medium-term target is 109.20, support at 111.00 and 110.50 on the way lower. Failure to close the day low will see us break the bearish trend, in which case a rise towards 113.40 must be expected first, before the market goes for the next deeper dive.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2820 S ||1.8720 S ||113.35 K ||1.2520 T |
|1.2765 S ||1.8630 S ||112.50 S ||1.2420 S |
|1.2730 M ||1.8585 M ||111.95 T ||1.2315 M |
|1.2700 ||1.8560 ||111.70 ||1.2290 |
|1.2675 T ||1.8510 K ||111.60 K ||1.2260 K |
|1.2645 M ||1.8430 S ||111.00 S ||1.2230 M |
|1.2535 K ||1.8200 S ||110.50 M ||1.2090 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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