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Tuesday August 1, 2006 - 09:30:50 GMT
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ACM - www.ac-markets.com
July ends bid for Currencies
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The month of July has seen the Dollar surge Middle-east crisis worries. The effect was relatively short-lived as it became clear that there was neither a quick nor easy fix to an ongoing problem. Economic data releases in the US were no reason to keep buying Dollars. The pace of economic growth is slowly reclining and the FED seems set to replace its 2-year tightening course to keeping rates on hold, forecasts going beyond the year expect the FED to eventually loosen monetary policy early next year, with this prospect attracting fresh Dollar investments will be more of a challenge. Currencies have only lost little value this past month, in EURUSD the Dollar was unable to move through its 1.25 key support and returned near its opening levels above 1.27, a mirror image of price action seen in June and after stalling for two full months we see an increased risk of a strong move that should carry EURUSD beyond its 1.30 long-term resistance level. On Monday Currencies started very bid, EURUSD managed a 3-week high of 1.2785 but follow-on buyers were missing in a quiet session and the pair retraced after the US Chicago PMI came to stand at a surprisingly strong 57.9, up from 56.5 in June, overnight the pair dipped to 1.2720. GBPUSD reached a 7-week high of 1.8690 from where it retraced to 1.8620, breaking its steep very short-term bullish trend. While we risk further correction to 1.8560 we remain very bid in the medium-term to move on to 1.90 next. BOJ Governor Fukui said he would not rule out any additional interest rate hike by the end of the year, adding it would move in small steps only, its timing of was unclear. He reasoned that keeping rates too low for too long would risk overheating corporate activity. Finally he said that downside risks in the US economy were of great concern, this will of course double the risk of a quick ascension of the Japanese Yen, a move the BOJ would like to avoid.
Todays Key Issues:
UK Manufacturing PMI at 9.30GMT is believed to fall slightly to 54.5 from 55.1 in June. Euroland June Unemployment rate is released at 10am, it should remain put at 7.9% US June Personal Consumption and Income are due at 12.30GMT. After growing 0.4% Incomes ought to increase 0.7%, while Consumption should remain grow at a steady 0.4%. At 2pm US June Construction Spending should be unchanged, it fell 0.4% the prior month. June Pending Homes Sales are due to report unchanged, they grew 1.3% in May and the ISM Manufacturing Report for July should stand at a slightly weaker 53.5 from 53.8 in June.
The Risk Today:
4-H EURUSD: After making a new high at 1.2785 it has fallen back to its 1-week bullish trend-line at 1.2730. While this holds it can continue trying for higher levels, minor resistance 1.2760, strong 1.2820, target 1.2850. A breech to the downside risks a short-term dip to 1.2700 strong support, 1.2640/60 must hold to maintain a medium-term bullish outlook for 1.30 this month.
1-H USDJPY: 114.20 held well yesterday and the pair retraced to 114.80. This is the short-term bearish trend-line, like to sell here for a new dip to at least 114.40, bypassing yesterdays low will see us reach the 113.50 target quickly. Keep a tight stop as a move through 114.95 should see the pair spike to 115.30 or as high as 115.60.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2850 S ||1.8850 K ||115.30 K ||1.2495 T |
|1.2820 S ||1.8740 M ||115.10 M ||1.2420 S |
|1.2770 M ||1.8675 S ||114.80 T ||1.2365 M |
|1.2735 ||1.8650 ||114.75 ||1.2345 |
|1.2730 T ||1.8620 S ||114.40 M ||1.2325 M |
|1.2700 S ||1.8585 M ||113.85 M ||1.2300 S |
|1.2665 K ||1.8530 K ||113.50 K ||1.2260 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Wed 18 Oct /ul>
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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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