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Friday June 16, 2006 - 09:07:02 GMT
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ACM - www.ac-markets.com
Remember the key reversal on the weekly chart
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The Dollar was unable to advance on Thursday despite some strong economic data: Initial Claims unexpectedly fell to 295k, pulling the 4-week average to 315k. The June Empire State Survey also fared better then forecast, rising a strong 16points to 29. With these the Dollar had a very brief spike, EURUSD reached a low of 1.2580, Cable traded at 1.8450 and USDCHF rose to 1.2335. The return-move came on the back of much lower then expected Net Foreign Treasury Purchases, they stood at $46.7Bln in April after a revised figure of $70.4Bln in March. A strong market reaction followed with the Dollar being sold across the board, EURUSD rose to 1.2650, Cable spiked to 1.8540, USD fell to 114.65 and the Swiss Franc strengthened to 1.2285. FED Bernanke toned-down the recent hawkish comments. While inflation needs to be watched closely as energy prices remain high in the medium-term, their impact on core inflation has been limited only. Bernanke seems more concerned about the fact that higher import-prices will increase the current account deficit even further in the medium-term, saying it would be helpful if China and other countries were to increase domestic consumption and added that global efforts are needed to reduce the US current account gap. A recent poll conducted among Japanese Analysts suggest that a rate hike is still highly likely this summer, with 70% of the respondents expecting a 25bp rate increase before September.
Todays Key Issues:
Euroland April Industrial Production at 9amGMT is forecast to grow by a slightly lower 0.3% (0.4% March), YoY it increased 3%. YoY increase of Labor costs should stand at 2.4% US 1st Quarter Current Account is due at 12.30GMT, expectations are for a slight reduction in the Deficit to $210Bln from $223Bln in Q4. Preliminary June U. Michigan Sentiment Index will be out at 13.50GMT, it ought to remain near 79, unchanged from last month.
The Risk Today:
1-H EURUSD: The pair is well supported this morning, we have bypassed the 1.2640 area and it seems to reach 1.2700 next, key resistance for today lies at 1.2750. Of course on Monday we had looked at the key reversal on the weekly chart, the view that the week must close underneath of 1.2640 remains pre-dominant and we suggest selling spikes of the current Euro-rally. With 1.2700 expected fairly strong, selling here at 1.2660 and more at 1.2680 should get rewarded with a dip to at least 1.2630, 1.2585 seems likely, 1.2530 possible on surprise data.
1H GBPUSD: 3-day bullish trend, this morning we have broken and remained above the 1.850 key resistance, bullish trend-line at 1.8520. While it holds, further ascent towards 1.8610 is possible, a weekly close above 1.8530 is bullish towards 1.87 next week. In case of a break, the pair could drop sharply, there is space down to key support at 1.8350.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2745 K ||1.8660 S ||116.00 S ||1.2470 K |
|1.2700 S ||1.8610 S ||115.30 S ||1.2380 M |
|1.2680 M ||1.8560 M ||114.95 M ||1.2335 S |
|1.2660 ||1.8535 ||114.70 ||1.2280 |
|1.2635 T ||1.8520 T ||114.65 S ||1.2260 K |
|1.2585 S ||1.8460 M ||113.85 K ||1.2240 S |
|1.2530 S ||1.8350 K ||113.35 T ||1.2200 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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