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Thursday July 6, 2006 - 09:32:31 GMT
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ACM - www.ac-markets.com
ECB bound to leave rates on hold
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The US Dollar moved up on Wednesday, fending off the risk of a medium-term fall that may simply be postponed. EURUSD lost 120 pips from its 1.2840 high on Tuesday, Cable dropped 1.5 cents to a 1.8330 low. USDJPY outperformed its European counterparts with a spike to 115.80. As mentioned yesterday, the Dollars rise was jump-started by the North Korean missile tests. Leaders in Pyongyang indicate that further tests will be carried out in the near future and risks that the situation will escalate further rather then calm down may keep the Dollar bid for now. Commodity and energy prices have also gone bid on the back of potential geopolitical risks in North-east Asia, Gold reached an intra-day high of $630, Brent Crude has crossed the $74 per barrel-mark, levels last seen in early May, the all-time high stands at $74.98. The 2nd reason for the strong dollar performance yesterday was a surprise increase in the June ADP employment report, showing Private Payrolls increasing by 368k, causing analysts to jack up their forecast for tomorrowâ€™s US Employment report. As the July BOJ meeting is moving closer, talk of a possible rate hike next week captures a lot of attention. BOJ Governor Fukui dropped some hawkish comments, saying that CPI should maintain its positive trend and that the economy is set to recover steadily. And Chief Cabinet Secretary Abe discounts the threat of the missile issue as he does not expect its fallout to harm the Japanese economy.
Todays Key Issues:
The Bank of England rate decision is due at 11amGMT. Once again we expect them to hold key rates steady at 4.5% The ECB will announce their decision at 11.45GMT, it will be followed by a press conference at 12.30GMT. No rate hike is expected this time around, analysts will look out for signs to confirm the view of a possible rate hike in early August. US Jobless Claims are due at 12.30, they are forecast to remain near 315k for a 2nd week, leaving the 4-week average underneath of 310k. US Non-Manufacturing ISM is due at 2pmGMT, the Index stood at 59 in May and ought to climb to 60 for June. At the same time we also expect May Pending Home Sales, theyâ€™ve dropped 3.7% in April and are believed to drop another 1%.
The Risk Today:
1-H EURUSD: Yesterdays drop to 1.2710 signifies a 38% correction of last weeks bullish move, this is the initial support today, a break can see the Dollar progress to 1.2670 key support, an intra-day a low of 1.2635 would be possible. In the mid-term we like to maintain a bullish Euro view, targeting a rise through 1.2850 to approach the 1.30 level next, in order to maintain a bullish view from here, the 1.2670 level must hold. Failure to do so risks a return to last weeks lows near 1.2500.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2885 S ||1.8620 K ||116.60 S ||1.2500 S |
|1.2790 M ||1.8500 S ||116.00 S ||1.2425 K |
|1.2760 S ||1.8400 S ||115.70 M ||1.2365 M |
|1.2745 ||1.8360 ||115.45 ||1.2305 |
|1.2720 M ||1.8350 S ||115.35 S ||1.2300 S |
|1.2700 S ||1.8280 M ||114.65 K ||1.2260 K |
|1.2670 K ||1.8225 K ||113.80 S ||1.2225 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
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Thu 19 Oct
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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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