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Thursday August 17, 2006 - 08:40:47 GMT
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ACM - www.ac-markets.com
Confirmation that the FED hiking cycle is ending
Yesterdays News and Events:
The US Dollar lost ground on Wednesday after US July CPI data showed more sign that inflation is well contained at the moment, therefore the FED does not need to raise rates any further for the time being. Outlook on where interest rates will stand at yearend have been lowered by analysts, we expect this outlook to continue to weigh on the Dollars value in the coming weeks.
Biggest winner of the day was once more the British Pound. Cable withheld early pressure on its medium-term raising support at 1.8885. BOE Minutes released earlier indicated that the British Economy is strong enough to absorb higher interest rates and while no particularly hawkish comments were made, we believe that the BOE could hike rates by another 25bp in early autumn. GBPUSD traded up through the 1.8970 double-top to spike at 1.9030, at this level short-term traders were looking to take profit and the Pound returned to close the day at 1.8960. EURUSD followed up to a high of 1.2865 and extended gains to 1.2880 this morning. Outlook is bullish currencies, expect to scratch the 1.30 EURUSD level in the near term. Meanwhile, USDCHF has again been lagging, the pair dropped only to its 1.2260 key support level. While it closed the day above that last night, the market is testing this level this morning, a lower daily close is bearish for 1.20.
Todays Key Issues:
UK July Retail Sales at 8.30am are forecast to grow by a slower 0.2% (0.9%), YoY it should increase by 4.5% (3.7%). Euroland July CPI data at 9am GMT is expected to drop by 0.1%, Core CPI should easy by 0.2%. June Industrial Production due at the same time ought to remain unchanged, YoY growth should easy to 4.4% from 4.9% last month. US data starts with weekly Initial Claims, they are thought to ease to 315k (319K) while the 4-week average should increase 1k to 413k. US July Leading Indicator at 2pmGMT is forecast to remain unchanged, it grew 0.1% in June. The Philadelphia FED Index, due at 4pm, should increase to 8.5 in August from 6 last month.
The Risk Today:
1-H EURUSD: It has made a new high of 1.2880 this morning, short-term bullish trend-line at 1.2835. Remain long, expect to trade up to the August high of 1.2920 with the prospect of bypassing this and extending this rise to 1.30. In case of a dip, allow to stretch the downside to 1.2815, a lower daily close ends this short-term move and risks a return to the 1.2750 area first.
4-H USDJPY: The pair has followed the general Dollar selling, it has now reached the 2-week bullish trend-line at 115.35. This is an important level for bulls, allowing for intra-day dips to as low as 115.15, expect stop-loss orders to be lined up as it trades through 115, risk of a short-term fall to 114.65 seems high. In case that the Dollar withstands pressure today, USDJPY should reverse from here and could swing back to 116.00 fairly easily.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2940 S ||1.9130 S ||116.35 T ||1.2450 S |
|1.2900 S ||1.9030 S ||116.05 S ||1.2340 T |
|1.2870 M ||1.9000 M ||115.70 M ||1.2315 S |
|1.2865 ||1.8970 ||115.35 ||1.2260 |
|1.2830 T ||1.8920 T ||115.35 T ||1.2260 K |
|1.2815 M ||1.8885 M ||115.35 M ||1.2220 M |
|1.2740 S ||1.8850 S ||114.65 K ||1.2150 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
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John M. Bland, MBA
- 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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