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Tuesday May 16, 2006 - 10:37:17 GMT
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ACM - www.ac-markets.com
Dollar profits from Commodities weakness
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
Oil and Gold was sold off heavily yesterday, Brent Crude lost $3 to end the day at $69, Gold is down almost $50 from its peak last Friday. The Dollar managed to gain against most major currencies, faring best against commodity currencies such as the AUD and the CAD, both of which have clearly broken their respective bullish trends that have been in place for more than a month.
The Euro held on to its medium-term trend for a long time after an initial sell-off in Europe, meanwhile USDCHF and Cable remained bid for the Dollar throughout the day. The FED release of a weaker than expected Empire State Survey of 12.36 in May (15.8 April) only temporarily stopped the Dollar from gaining, by the time NY closed, Cable had continued lower to reach 1.8760 and while this is not low enough to harm the Pounds 3-week bullish-trend, EURUSD in turn closed the day outside of its bullish trend for the first time in more than a month.
BOJ Governor Fukui said that it will take several more weeks to reduce excess liquidity in the market and that the end of this process will not immediately lead to an increase in interest rates. The intention is of course to tone down expectations of an interest rate hike in June/July, and to slow down the YEN appreciation against the Dollar without having to actively intervene. The pair rose to a high of 110.85 in general Dollar buying yesterday, but turned to trade back to 110.00 overnight.
Todays Key Issues:
UK April PPI data is due at 8.30GMT, it ought to increase by 0.7%, up from +0.4% last month. YoY increase of 2.5%
German May ZEW Economic Sentiment Index at 9am is expected to soften slightly from 62.7 in April to around 60.0.
At 12.30GMT US April PPI and Housing Starts will be released. The first ought to increase by 0.8% from +0.5% last month for a YoY increase of 4.2%, Housing Starts are forecast to remain unchanged at 1.95m units.
US April Capacity Utilization at 1.15pm should maintain a level above 81% and April Industrial Production finally ought to increase by 0.4%.
The Risk Today:
EURUSD: The medium-term trend was broken at 1.2825 and a low of 1.2780 traded overnight. Strong resistance at 1.2845 this morning, while underneath this correction should deepen, 1.2760 next, key support lower at 1.2655. Intra-day ascension towards .2895 should be sold, a daily close above that is needed to keep a bullish outlook.
4H GBPUSD: Unlike EURUSD, Cable has corrected 50% of the accelerated rise from 1.85, trading at 1.8820 this morning, we nicely held the 3-week bullish trend, trend-line at 1.8760 this morning, we stay bullish while above. Expect a rise to test strong resistance at 1.8885, a daily close above this is further bullish for a new test of the 1.90 resistance. A break at 1.8760 will stop the rise, a correction will target the 1.8510 key support.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2970 S ||1.9000 K ||111.50 K ||1.2260 K |
|1.2895 S ||1.8885 S ||110.65 S ||1.2200 M |
|1.2845 M ||1.8860 M ||110.20 M ||1.21350 S |
|1.2810 ||1.8820 ||110.15 ||1.2110 |
|1.2760 S ||1.8790 M ||109.70 M ||1.2060 K |
|1.2720 M ||1.8755 T ||109.20 K ||1.2020 S |
|1.2655 K ||1.8710 S ||108.50 S ||1.1970 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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