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Thursday July 13, 2006 - 09:13:12 GMT
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ACM - www.ac-markets.com
BOJ rate announcement tonight
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The Dollar had a strong day on Wednesday, while the direction had been set early on in Europe, volatility greatly increased after a better than expected US Trade Deficit of $63.84Bln in May. The biggest move was seen in Cable which fell nearly 2 cents after it had been unable to advance through the strong 1.8500 resistance. EURUSD was also weaker, it briefly traded through its 1.2700 key support, but held on to this level for the daily close, allowing us to maintain a bullish outlook towards 1.30. USDCHF finally underperformed, only a high of 1.2370 was seen leaving the pair neutral to continue ranging 1.2260/1.2350, its key resistance lies above 1.2400. USDJPY had a very strong spike. As the 114.65/85 key resistance was bypassed, stop-loss orders were triggered, driving the pair to a high of 115.70. The move comes just a day before an expected BOJ rate hike and reduces the risk of an even stronger Dollar spike in case that rates are left at zero%. Many speculative YEN longs have been washed away in this move and we believe these players will only re-enter the market after the BOJ rate decision tonight, augmenting the risk of an even faster move south in USDJPY. ECBâ€™s Trichet said that a close eye needed to be kept on price developments of oil and commodities. He added that a progressive withdrawal of monetary accommodation remains warranted. The ECB is believed to raise interest rates to 3% on August 3rd.
Todays Key Issues:
US Weekly Jobless claims at 12.30GMT are thought to rise to 318k from 313k last week, the 4-week average should cross the 310k level for the first time in a month. The BOJ rate announcement is due at 3amGMT. We go with the bulk of analysts when we expect the zero-rate policy to end tonight. A hike of between 10bp to 25bp should be seen.
The Risk Today:
4-H EURUSD: 1.2700 remains key support, last night the day closed above of it, but we were again forced to re-draw the bullish trend-line. Short-term bearish trend at 1.240 this morning may keep the European market in tight range, clearing that level should see the pair ascend to 1.28 and allows us to maintain medium-term outlook for 1.30. A break through 1.27 risks a continuation of yesterdays fall, taking the pair down to its medium-term trend-line at 1.2560.
Daily GBPUSD: While yesterdays move down surprised with its violence, it has breeched no important levels on our daily chart, but simply delayed a possible bullish break of 1.85. Medium-term support is key level, it stands at 1.8295 today, while initial resistance at 1.8405 holds we do risk a test of that level in the short-term. Alternative is a rise to yesterdays 1.8485 high, a possible weekly close above key resistance is very bullish, targeting 1.90.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2820 S ||1.8540 T ||116.60 S ||1.2410 K |
|1.2785 S ||1.8490 K ||115.75 S ||1.2350 S |
|1.2735 T ||1.8415 S ||115.40 T ||1.2305 M |
|1.2720 ||1.8385 ||115.15 ||1.2290 |
|1.2700 K ||1.8360 S ||115.05 M ||1.2260 K |
|1.2670 S ||1.8330 M ||114.65 P ||1.2220 M |
|1.2620 M ||1.8295 K ||113.80 S ||1.2150 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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