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Wednesday August 30, 2006 - 09:10:33 GMT
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ACM - www.ac-markets.com
Dollar is again in relatively steady tone after yesterday volatile market range
By Jean-Claude Braha - ACM Senior Trader
Yesterdays News and Events:
The limited net change in the US dollar overnight masked a fairly volatile range as the market had unexpected counter reaction to consumer sentiment and the FOMC minutes. A disappointing consumer confidence index triggered a rally in the USD and pushed EURUSD down to a low of 1.2750, while the FOMC minutes caused a sell off in the USD and pushed EURUSD to a high of 1.2840. This last meeting suggested the central bank will certainly not raise interest rates again after pausing a 2-year tightening campaign. But this sell-off was not very aggressive as the market is waiting for late week monthly US jobs report. It will help clarify the strength of the economy and whether the Fed will keep rates at 5.25%. GbpUsd was trading yesterday in volatile range 1.9030 to 1.8997 and stabilized again this morning at 1.9005 level. The euro made new peak against the Yen while the ECB seen pressing ahead with more rate hikes just as the BOJ is expected to lift rates from its actual 0.25%. The EurJpy made new high this morning at 150.13. JPY, Labor market data for July yesterday came out in line with expectations with the unemployment rate dipping slightly to 4.1% from 4.2% in June. Meanwhile USDJPY traded in a narrower 116.51 to 117.01 range, with JPY getting some support from a further drop in oil prices below US$70/bbl. EurChf is showing new signs of weakness with weekly low 1.5745 from Monday high 15826.
Todays Key Issues:
GB BoE July Consumer Credit is due at 08:30 gmt; expected Â£ 1B against Â£ 0.81B. GB July Mortgage Lending is due Â£9.2B against Â£9B. At 09:30 gmt Swiss KOF indicator is expected 2.65 against 2.61. US figures at 12:15 gmt and 12:30 gmt; respectively US ADP national Employment August 112k vs 99k and revised second quarter GDP +3.2% vs 2.9% YoY. Canadian July Industrial Product Prices due at 12:30 gmt +0.2% vs 1.1% MoM. In addition, Canadian 2nd quarter Current Account expected $5.2B to 7.2B against 10.7B Q1.
The Risk Today:
As yesterday EURUSD is volatile but firmer with support at 1.2725 on Aug 25. The recent rejection off 1.2941, on Aug 21 and subsequent sell-off however is expected to weigh overall. The next key support is 1.2700, Aug 14 low. A break of this level would let us go to 1.2660 lower support. On the higher end, break up of 1.2941 is required to reinstate a bullish trend. USDCHF is consolidating around 1.2270, and is not near going out range 1.2186 â€“ 1.2450. GBPUSD is testing high 1.9030, Aug 16 peak however a clear break is still required to pave the way for a retest of key resistance at 1.9146, the Aug 8 high. On the downside, support and key bear trigger lies at 1.8775. USDJPY is maintaining a positive trend while support at 116.09, Aug 23 low remains intact. The next upside trigger is still at 117.42, Aug 25 high where a break would pave the way for strength towards 117.89, the July 19 high.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2941 K ||1.9195 S ||118.70 T ||1.2595 S |
|1.2920 S ||1.9110 T ||117.90 S ||1.2450 T |
|1.2842 M ||1.9025 M ||117.42 P ||1.2350 M |
|1.2838 ||1.9010 ||116.92 ||1.2270 |
|1.2725 S ||1.8850 M ||116.40 T ||1.2250 T |
|1.2700 K ||1.8740 S ||114.65 S ||1.2200 S |
|1.2660 M ||1.8540 K ||114.00 K ||1.2186 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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